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<SEC-DOCUMENT>0000950135-05-001952.txt : 20050408
<SEC-HEADER>0000950135-05-001952.hdr.sgml : 20050408
<ACCEPTANCE-DATETIME>20050408140039
ACCESSION NUMBER:		0000950135-05-001952
CONFORMED SUBMISSION TYPE:	DEF 14A
PUBLIC DOCUMENT COUNT:		4
CONFORMED PERIOD OF REPORT:	20050519
FILED AS OF DATE:		20050408
DATE AS OF CHANGE:		20050408
EFFECTIVENESS DATE:		20050408

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			HASBRO INC
		CENTRAL INDEX KEY:			0000046080
		STANDARD INDUSTRIAL CLASSIFICATION:	GAMES, TOYS & CHILDREN'S VEHICLES (NO DOLLS & BICYCLES) [3944]
		IRS NUMBER:				050155090
		STATE OF INCORPORATION:			RI
		FISCAL YEAR END:			1227

	FILING VALUES:
		FORM TYPE:		DEF 14A
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-06682
		FILM NUMBER:		05741099

	BUSINESS ADDRESS:	
		STREET 1:		1027 NEWPORT AVE
		STREET 2:		P O BOX 1059
		CITY:			PAWTUCKET
		STATE:			RI
		ZIP:			02861
		BUSINESS PHONE:		4014318697

	MAIL ADDRESS:	
		STREET 1:		200 NARRAGANSETT PARK DRIVE
		CITY:			PAWTUCKET
		STATE:			RI
		ZIP:			02862-0200

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	HASBRO BRADLEY INC
		DATE OF NAME CHANGE:	19850814

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	HASBRO INDUSTRIES INC
		DATE OF NAME CHANGE:	19840917

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	HASSENFELD BROTHERS INC
		DATE OF NAME CHANGE:	19720615
</SEC-HEADER>
<DOCUMENT>
<TYPE>DEF 14A
<SEQUENCE>1
<FILENAME>b53906hidef14a.htm
<DESCRIPTION>HASBRO, INC.
<TEXT>
<HTML>
<HEAD>
<TITLE>Hasbro, Inc.</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="center" style="font-size: 18pt"><B>SCHEDULE 14A INFORMATION</B>


<P align="center" style="font-size: 10pt">PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES<BR>
EXCHANGE ACT OF 1934 (AMENDMENT NO. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; )


<P align="left" style="font-size: 10pt">Filed By The
Registrant&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="Wingdings">&#120;</FONT>

<DIV>&nbsp;</DIV>

<P align="left" style="font-size: 10pt">Filed By A Party Other Than
The
Registrant&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="Wingdings">&#111;</FONT>

<DIV>&nbsp;</DIV>







<P align="left" style="font-size: 10pt">Check the appropriate box:


<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Preliminary Proxy Statement</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right"><FONT face="Wingdings">&#120;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Definitive Proxy Statement</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Definitive Additional Materials</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Soliciting Material Pursuant to sec.240.14a-12</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 24pt"><B>HASBRO, INC.</B>

<DIV align="center" style="font-size: 10pt">(Name of Registrant as Specified In Its Charter)</DIV>


<P align="left" style="font-size: 10pt">Payment Of Filing Fee (Check The Appropriate Box):


<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right"><FONT face="Wingdings">&#120;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>No fee required.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Fee computed on table below per Exchange Act Rules&nbsp;14a-6(i)(1) and 0-11.</TD>
</TR>

</TABLE>


<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Title of each class of securities to which transaction applies:</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Aggregate number of securities to which transaction applies:</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">3)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule&nbsp;0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">4)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Proposed maximum aggregate value of transaction:</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">5)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Total fee paid:</TD>
</TR>

</TABLE>


<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Fee paid previously with preliminary materials.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.</TD>
</TR>

</TABLE>


<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Amount Previously Paid:</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Form, Schedule or Registration Statement No.:</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">3)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Filing Party:</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">4)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Date Filed:</TD>
</TR>

</TABLE>


<P>












<P align="center" style="font-size: 10pt">
</DIV>


<!-- PAGEBREAK -->
<P><HR noshade><P>

<!-- TOC -->
<A name="toc"><DIV align="CENTER" style="page-break-before:always"><U><B>TABLE OF CONTENTS</B></U></DIV></A>

<P><CENTER>
<TABLE border="0" width="90%" cellpadding="0" cellspacing="0">
<TR>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="76%"></TD>
</TR>
<TR><TD colspan="9"><A HREF="#000">NOTICE OF ANNUAL MEETING OF SHAREHOLDERS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#001">PROXY STATEMENT</A></TD></TR>
<TR><TD colspan="9"><A HREF="#002">ELECTION OF DIRECTORS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#003">GOVERNANCE OF THE COMPANY</A></TD></TR>
<TR><TD colspan="9"><A HREF="#004">COMPENSATION OF DIRECTORS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#005">CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#006">COMPARISON OF FIVE YEAR CUMULATIVE TOTAL SHAREHOLDER RETURN AMONG HASBRO, S&#38;P 500 AND RUSSELL 1000 CONSUMER DISCRETIONARY ECONOMIC SECTOR(1)</A></TD></TR>
<TR><TD colspan="9"><A HREF="#007">REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEE OF THE BOARD OF DIRECTORS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#008">EXECUTIVE COMPENSATION</A></TD></TR>
<TR><TD colspan="9"><A HREF="#009">PROPOSAL TO APPROVE AN AMENDMENT TO THE 2003 STOCK INCENTIVE PERFORMANCE PLAN</A></TD></TR>
<TR><TD colspan="9"><A HREF="#010">EQUITY COMPENSATION PLANS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#011">VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF</A></TD></TR>
<TR><TD colspan="9"><A HREF="#012">PROPOSAL TO RATIFY THE SELECTION OF KPMG LLP AS THE COMPANY&#146;S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE 2005 FISCAL YEAR</A></TD></TR>
<TR><TD colspan="9"><A HREF="#013">REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#014">ADDITIONAL INFORMATION REGARDING INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</A></TD></TR>
<TR><TD colspan="9"><A HREF="#015">SHAREHOLDER PROPOSAL</A></TD></TR>
<TR><TD colspan="9"><A HREF="#016">HASBRO, INC. GLOBAL HUMAN RIGHTS STANDARDS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#017">RESPONSE OF THE HASBRO, INC. BOARD OF DIRECTORS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#018">OTHER BUSINESS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#019">IMPORTANT NOTICE REGARDING DELIVERY OF SHAREHOLDER DOCUMENTS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#020">COST OF SOLICITATION</A></TD></TR>
<TR><TD colspan="9"><A HREF="#021">Appendix A HASBRO, INC. STANDARDS FOR DIRECTOR INDEPENDENCE</A></TD></TR>
<TR><TD colspan="9"><A HREF="#022">Appendix B HASBRO, INC. 2003 STOCK INCENTIVE PERFORMANCE PLAN AND FIRST AMENDMENT</A></TD></TR>
</TABLE>
</CENTER>
<!-- /TOC -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>HASBRO, INC.</B>
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<!-- link1 "NOTICE OF ANNUAL MEETING OF SHAREHOLDERS" -->
<DIV align="left"><A NAME="000"></A></DIV>

<DIV align="center" style="font-size: 10pt;">
<B>NOTICE OF ANNUAL MEETING OF SHAREHOLDERS</B>
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Time:</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
10:00&nbsp;a.m. local time
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Date:</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Thursday, May&nbsp;19, 2005
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Place:</I></B></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Hasbro, Inc. Corporate Offices</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    1027 Newport Avenue</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Pawtucket, Rhode Island 02862</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Purpose:</I></B></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Elect twelve directors.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Approve an Amendment to the 2003 Stock Incentive Performance
    Plan.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Ratify the selection of KPMG LLP as the Company&#146;s
    independent registered public accounting firm for the 2005
    fiscal year.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Consider and vote upon a shareholder proposal entitled
    &#147;Hasbro, Inc.-Global Human Rights Standards.&#148;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Transact such other business as may properly come before the
    meeting and any adjournment or postponement of the meeting.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Other Important Information:</I></B></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Hasbro&#146;s Board of Directors recommends that you vote your
    shares <B>&#147;FOR&#148; </B>each of the nominees for director,
    <B>&#147;FOR&#148; </B>the approval of the amendment to the 2003
    Stock Incentive Performance Plan and <B>&#147;FOR&#148; </B>the
    ratification of KPMG LLP as the Company&#146;s independent
    registered public accounting firm for fiscal 2005.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Hasbro&#146;s Board of Directors recommends that you vote your
    shares <B>&#147;AGAINST&#148; </B>the &#147;Hasbro, Inc.-Global
    Human Rights Standards&#148; proposal.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Shareholders of record of Hasbro common stock at the close of
    business on March&nbsp;31, 2005 may vote at the meeting.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    You are cordially invited to attend the meeting to vote your
    shares in person. If you are not able to do so, you may vote by
    Internet, by telephone or by mail. See the enclosed proxy card
    and proxy statement for specific instructions. <B>Please vote
    your shares.</B></TD>
</TR>

</TABLE>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    By Order of the Board of Directors</TD>
</TR>

<TR>
    <TD style="font-size: 24pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Barry Nagler</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <I>Secretary</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Dated: April&nbsp;8, 2005
</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>HASBRO,&nbsp;INC.</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>1027 Newport Avenue</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>Pawtucket, Rhode Island 02862</B>
</DIV>

<DIV align="center" style="font-size: 3pt; margin-top: 7pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 30%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 5pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<!-- link1 "PROXY STATEMENT" -->
<DIV align="left"><A NAME="001"></A></DIV>

<DIV align="center" style="font-size: 10pt;">
<B>PROXY STATEMENT</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>2005 ANNUAL MEETING OF SHAREHOLDERS</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>To be held May&nbsp;19, 2005</B>
</DIV>

<DIV align="center" style="font-size: 3pt; margin-top: 8pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 30%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 8pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND THE
ANNUAL MEETING</B>
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR>
    <TD valign="top">
    <B>Q:</B></TD>
    <TD></TD>
    <TD valign="top">
    <B>Why am I receiving these materials?</B></TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>A:</B></TD>
    <TD></TD>
    <TD valign="top">
    The Board of Directors (the &#147;Board&#148;) of Hasbro, Inc.
    (the &#147;Company&#148; or &#147;Hasbro&#148;) is sending these
    proxy materials to you on or about April&nbsp;8, 2005 in
    connection with Hasbro&#146;s 2005 Annual Meeting of
    Shareholders (the &#147;Meeting&#148;), and the Board&#146;s
    solicitation of proxies in connection with the Meeting. The
    Meeting will take place at 10:00&nbsp;a.m. local time on
    Thursday, May&nbsp;19, 2005 at Hasbro&#146;s corporate offices,
    1027 Newport Avenue, Pawtucket, RI 02862. The information
    included in this proxy statement relates to the proposals to be
    voted on at the Meeting, the voting process, the compensation of
    Hasbro&#146;s directors and most highly paid executive officers,
    and certain other required information. Hasbro&#146;s 2004
    Annual Report to Shareholders is also enclosed with this mailing.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>Q:</B></TD>
    <TD></TD>
    <TD valign="top">
    <B>What proposals will be voted on at the Meeting?</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>A:</B></TD>
    <TD></TD>
    <TD valign="top">
    There are four proposals scheduled to be voted on at the Meeting:</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Election of twelve directors.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Approval of an Amendment to the 2003 Stock Incentive Performance
    Plan.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Ratification of KPMG LLP as the Company&#146;s independent
    registered public accounting firm for fiscal 2005.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    A shareholder proposal entitled &#147;Hasbro, Inc.-Global Human
    Rights Standards.&#148;</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR>
    <TD valign="top">
    <B>Q:</B></TD>
    <TD></TD>
    <TD valign="top">
    <B>What shares owned by me can be voted?</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>A:</B></TD>
    <TD></TD>
    <TD valign="top">
    All shares of the Company&#146;s common stock, par value
    $.50&nbsp;per share (&#147;Common Stock&#148;) owned by you as
    of March&nbsp;31, 2005, the <I>record date</I>, may be voted by
    you. These shares include those (1)&nbsp;held directly in your
    name as the <I>shareholder of record</I>, including shares
    purchased through Hasbro&#146;s Dividend Reinvestment and Cash
    Stock Purchase Program and (2)&nbsp;held for you as the
    <I>beneficial owner </I>through a broker, bank or other nominee.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>Q:</B></TD>
    <TD></TD>
    <TD valign="top">
    <B>What is the difference between holding shares as a
    shareholder of record and as a beneficial owner?</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>A:</B></TD>
    <TD></TD>
    <TD valign="top">
    Most Hasbro shareholders hold their shares through a broker,
    bank or other nominee rather than directly in their own name as
    the shareholder of record. As summarized below, there are some
    distinctions between shares held of record and those owned
    beneficially.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Shareholder of Record</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If your shares are registered directly in your name with
Hasbro&#146;s Transfer Agent, EquiServe Trust Company, N.A.
(&#147;EquiServe&#148;), you are considered, with respect to
those shares, the <I>shareholder of record</I>, and these proxy
materials are being sent directly to you by EquiServe on behalf
of Hasbro. As the <I>shareholder of record</I>, you have the
right to grant your voting proxy directly to Hasbro or to vote
in person at the Meeting. Hasbro has enclosed a proxy card for
you to use.
</DIV>

<P align="center" style="font-size: 10pt;">1

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Beneficial Owner</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If your shares are held in a stock brokerage account or by a
bank or other nominee, you are considered the beneficial owner
of shares held <I>in street name</I> and the proxy materials are
being sent to you by your broker or nominee who is considered,
with respect to those shares, the <I>shareholder of record.</I>
As the beneficial owner, you have the right to direct your
broker or nominee on how to vote and are also invited to attend
the Meeting. However, since you are not the <I>shareholder of
record</I>, you may not vote these shares in person at the
Meeting unless you receive a proxy from your broker or nominee.
Your broker or nominee has enclosed a voting instruction card
for you to use. If you wish to attend the Meeting and vote in
person, please mark the box on the voting instruction card
received from your broker or nominee and return it to them so
that you can receive a legal proxy to present at the Meeting.
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR>
    <TD valign="top">
    <B>Q:</B></TD>
    <TD></TD>
    <TD valign="top">
    <B>How can I attend the Meeting?</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>A:</B></TD>
    <TD></TD>
    <TD valign="top">
    You may attend the Meeting if you are listed as a <I>shareholder
    of record </I>as of March&nbsp;31, 2005 and bring proof of
    identification. If you hold your shares through a broker or
    other nominee, you will need to provide proof of ownership by
    bringing either a copy of a brokerage statement showing your
    share ownership as of March&nbsp;31, 2005, or a legal proxy if
    you wish to vote your shares in person at the Meeting. In
    addition to the items mentioned above, you should bring proof of
    identification.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>Q:</B></TD>
    <TD></TD>
    <TD valign="top">
    <B>How can I vote my shares in person at the Meeting?</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>A:</B></TD>
    <TD></TD>
    <TD valign="top">
    Shares held directly in your name as the <I>shareholder of
    record </I>may be voted in person at the Meeting. If you choose
    to do so, please bring the enclosed proxy card and proof of
    identification. Shares beneficially owned may be voted by you if
    you receive and present at the Meeting a proxy from your broker
    or nominee, together with proof of identification. Even if you
    plan to attend the Meeting, we recommend that you also submit
    your proxy as described below so that your vote will be counted
    if you later decide not to attend the Meeting.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>Q:</B></TD>
    <TD></TD>
    <TD valign="top">
    <B>How can I vote my shares without attending the Meeting?</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>A:</B></TD>
    <TD></TD>
    <TD valign="top">
    Whether you hold shares directly as the shareholder of record or
    beneficially in street name, you may direct your vote without
    attending the Meeting. You may vote by granting a proxy or, for
    shares held in street name, by submitting voting instructions to
    your broker or nominee. In most instances, you will be able to
    do this over the Internet, by telephone or by mail. Please refer
    to the summary instructions below and those included on your
    proxy card or, for shares held in street name, the voting
    instruction card included by your broker or nominee.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <B>By Internet</B>&nbsp;&#151; If you have Internet access, you
    may submit your proxy from any location in the world by
    following the &#147;Vote-by-Internet&#148; instructions on the
    proxy card.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <B>By Telephone</B>&nbsp;&#151; You may submit your proxy by
    following the &#147;Vote-by-Telephone&#148; instructions on the
    proxy card.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <B>By Mail</B>&nbsp;&#151; You may do this by marking, dating
    and signing your proxy card or, for shares held in street name,
    the voting instruction card provided by your broker or nominee,
    and mailing it in the enclosed, self-addressed, postage prepaid
    envelope. No postage is required if mailed in the United States.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>Q:</B></TD>
    <TD></TD>
    <TD valign="top">
    <B>How are votes counted?</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>A:</B></TD>
    <TD></TD>
    <TD valign="top">
    Each share of Common Stock entitles its holder to one vote on
    all matters to come before the Meeting, including the election
    of directors. In the election of directors, you may vote
    &#147;FOR&#148; all of the nominees or your vote may be
    &#147;WITHHELD&#148; with respect to one or more of the
    nominees. For the other proposals, you may vote &#147;FOR&#148;,
    &#147;AGAINST&#148; or &#147;ABSTAIN&#148;. If you
    &#147;ABSTAIN&#148;, it has the same effect as a vote
    &#147;AGAINST&#148; the proposal.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    If you sign your proxy card with no instructions, your shares
    will be voted in accordance with the recommendations of the
    Board with respect to the election of directors, the
    ratification of the selection of KPMG as the independent auditor
    for 2005 and other matters which may be considered at the Meeting</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">2

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    for which discretionary voting is permitted. Please note that,
    as is described below, this does not apply to any units of the
    Hasbro Stock Fund which you hold in Hasbro&#146;s Retirement
    Savings Plan.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    With respect to the proposed amendment to the 2003 Stock
    Incentive Performance Plan and the &#147;Hasbro,
    Inc.&nbsp;&#151; Global Human Rights Standards&#148; shareholder
    proposal, discretionary voting authority is not permitted. For
    these proposals proxy cards which are signed without
    instructions will not be voted.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>Q:</B></TD>
    <TD></TD>
    <TD valign="top">
    <B>Can I change my vote or revoke my proxy?</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>A:</B></TD>
    <TD></TD>
    <TD valign="top">
    You may change your proxy instructions at any time prior to the
    vote at the Meeting. For shares held directly in your name, you
    may accomplish this by granting another proxy that is properly
    signed and bears a later date, by sending a properly signed
    written notice to the Secretary of the Company or by attending
    the Meeting and voting in person. To revoke a proxy previously
    submitted by telephone or through the Internet, you may simply
    vote again at a later date, using the same procedures, in which
    case your later submitted vote will be recorded and your earlier
    vote revoked. Attendance at the Meeting will not cause your
    previously granted proxy to be revoked unless you specifically
    so request. For shares held beneficially by you, you may change
    your vote by submitting new voting instructions to your broker
    or nominee.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>Q:</B></TD>
    <TD></TD>
    <TD valign="top">
    <B>What does it mean if I receive more than one proxy or voting
    instruction card?</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>A:</B></TD>
    <TD></TD>
    <TD valign="top">
    It means your shares are registered differently or are held in
    more than one account. Please provide voting instructions for
    all proxy and voting instruction cards you receive.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>Q:</B></TD>
    <TD></TD>
    <TD valign="top">
    <B>Where can I find the voting results of the Meeting?</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>A:</B></TD>
    <TD></TD>
    <TD valign="top">
    We will announce preliminary voting results at the Meeting and
    publish final results in our quarterly report on Form&nbsp;10-Q
    for the second quarter of fiscal 2005.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>Q:</B></TD>
    <TD></TD>
    <TD valign="top">
    <B>What is the quorum for the Meeting?</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>A:</B></TD>
    <TD></TD>
    <TD valign="top">
    Holders of record (the &#147;Shareholders&#148;) of the Common
    Stock on March&nbsp;31, 2005 are entitled to vote at the Meeting
    or any adjournments thereof. As of that date there were
    178,218,518&nbsp;shares of Common Stock outstanding and entitled
    to vote and a majority of the outstanding shares will constitute
    a quorum for the transaction of business at the Meeting.
    Abstentions and broker non-votes are counted as present at the
    Meeting for purposes of determining whether there is a quorum at
    the Meeting. A broker non-vote occurs when a broker holding
    shares for a customer does not vote on a particular proposal
    because the broker has not received voting instructions on the
    matter from its customer and is barred by stock exchange rules
    from exercising discretionary authority to vote on the matter.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>Q:</B></TD>
    <TD></TD>
    <TD valign="top">
    <B>How do participants in the Hasbro Retirement Savings Plan
    vote their shares?</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>A:</B></TD>
    <TD></TD>
    <TD valign="top">
    If your account in the Hasbro Retirement Savings Plan has units
    of the Hasbro Stock Fund, the accompanying proxy card indicates
    the number of shares of Common Stock beneficially owned by you
    under the Retirement Savings Plan. When a participant proxy card
    is returned properly signed and completed, Fidelity Management
    Trust Company (the &#147;Trustee&#148;) will vote the
    participant&#146;s shares in the manner directed by the
    participant. If the participant makes no directions, the Trustee
    will not vote the shares.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>Q:</B></TD>
    <TD></TD>
    <TD valign="top">
    <B>What happens if I have consented to electronic delivery of
    the proxy statement and other annual meeting materials?</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>A:</B></TD>
    <TD></TD>
    <TD valign="top">
    If you have consented to electronic delivery of the annual
    meeting materials you will receive an email notice with
    instructions on how to access the proxy statement and annual
    report on the Company&#146;s website, and in the case of the
    proxy card, on EquiServe&#146;s website. The notice will also
    inform you how to vote your proxy over the Internet. You will
    receive this email notice at approximately the same time paper
    copies of the annual meeting materials are mailed to
    shareholders who have not consented to receive materials
    electronically. Even if you have consented to electronic
    delivery of the annual meeting</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">3

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<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    materials, you may still receive a paper copy of the notice of
    the annual meeting. Your consent to receive the annual meeting
    materials electronically will remain in effect until you specify
    otherwise.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>Q:</B></TD>
    <TD></TD>
    <TD valign="top">
    <B>If I am a shareholder of record how do I consent to receive
    my annual meeting materials electronically?</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B>A:</B></TD>
    <TD></TD>
    <TD valign="top">
    Shareholders of record that choose to vote their shares via the
    Internet will be asked to choose a delivery preference prior to
    voting their shares. After entering the authentication number on
    your proxy card, choose whether you would like to receive proxy
    material via <I>electronic </I>or <I>postal </I>delivery. If you
    would like to receive future proxy materials electronically
    simply select that option and enter and verify your current
    e-mail address. During the year, shareholders of record may sign
    up to receive their annual meeting materials electronically over
    the Internet using their Hasbro stock account number and social
    security or taxpayer identification number. The Hasbro stock
    account number is located on a registered shareholder&#146;s
    dividend checks and Dividend Reinvestment Plan statements, if
    they participate in the Dividend Reinvestment Plan. To sign up
    registered shareholders can go to the website
    <I>http://www.econsent.com/has. </I>Shareholders of record with
    multiple Hasbro accounts will need to consent to electronic
    delivery for each account separately.</TD>
</TR>

</TABLE>

<!-- link1 "ELECTION OF DIRECTORS" -->
<DIV align="left"><A NAME="002"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>ELECTION OF DIRECTORS</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>(Proposal&nbsp;No.&nbsp;1)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Twelve directors are to be elected at the Meeting. All of the
directors elected at the Meeting will serve until the 2006
Annual Meeting of Shareholders (the &#147;2006 Meeting&#148;),
and until their successors are duly elected and qualified, or
until their earlier death, resignation or removal.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Board has recommended as nominees for election as directors
to serve until the 2006 Meeting the persons named in the table
below. All of the nominees are currently directors of the
Company. E. John Rosenwald,&nbsp;Jr., whose term as a director
expires at the Meeting, is retiring and is not standing for
re-election. The shareholders are not being asked to elect a
thirteenth director at the Meeting and the proxies cannot be
voted for more than twelve directors at the Meeting. Effective
at the Meeting the total number of directors comprising the
Board is being reduced from thirteen to twelve.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Unless otherwise specified in the accompanying proxy card, the
shares voted pursuant thereto will be cast for the persons named
below as nominees for election as directors. If, for any reason,
any of the nominees named below should be unable to serve as a
director, it is intended that such proxy will be voted for the
election, in his or her place, of a substituted nominee who
would be recommended by management. Management, however, has no
reason to believe that any nominee named below will be unable to
serve as a director.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table sets forth as to each nominee for election
at the Meeting: (i)&nbsp;his or her age; (ii)&nbsp;all positions
and offices with the Company; (iii)&nbsp;principal occupation or
employment during the past five years; (iv)&nbsp;other
directorships of publicly held companies or investment
companies; and (v)&nbsp;period of service as a director of the
Company. Except as otherwise indicated, each person has had the
same principal occupation or employment during the past five
years.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="29%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Positions with Company,</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Has Been</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Principal Occupation and</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>A Director</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="center" nowrap><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Age</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Other Directorships</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Since</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD colspan="11" align="left" valign="top">
    <I>Nominees for Terms Expiring in 2006</I></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Basil L. Anderson</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>60</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Vice Chairman, Staples, Inc. (office supply company) since 2001.
    Prior thereto, Executive Vice President&nbsp;&#151; Finance and
    Chief Financial Officer of Campbell Soup Company (consumer
    products company) since 1996. Director of Becton, Dickinson and
    Company, Charles River Associates Incorporated, Moody&#146;s
    Corporation and Staples, Inc.</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>2002</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">4
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; ">

<TR style="font-size: 1pt;">
    <TD width="29%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Positions with Company,</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Has Been</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Principal Occupation and</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>A Director</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="center" nowrap><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Age</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Other Directorships</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Since</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Alan R. Batkin</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>60</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Vice Chairman, Kissinger Associates, Inc. (strategic consulting
    firm) since 1990. Director of Diamond Offshore Drilling, Inc.,
    Overseas Shipholding Group, Inc. and Cantel Medical Corp.
    Mr.&nbsp;Batkin also serves on the boards of two funds within
    the Merrill Lynch IQ Investment Advisors Fund family.</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>1992</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Frank J. Biondi,&nbsp;Jr.</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>60</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Senior Managing Director, WaterView Advisors LLC (private equity
    fund specializing in media) since 1999. Prior thereto, Chairman
    and Chief Executive Officer of Universal Studios (major film,
    TV, and recorded music company) from 1996 to 1998. Director of
    Amgen, Inc., Harrah&#146;s Entertainment, Inc. and The Bank of
    New&nbsp;York.</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>2002</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    John M. Connors,&nbsp;Jr.&nbsp;</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>62</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Chairman of Hill, Holliday, Connors, Cosmopulos, Inc.
    (full-service advertising agency) since 1995.</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>2004</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    E. Gordon Gee</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>61</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Chancellor, Vanderbilt University since 2000. Prior thereto,
    President, Brown University from 1997 to 2000. Prior thereto,
    President, The Ohio State University. Director of Dollar General
    Corporation, Gaylord Entertainment Company, The Limited, Inc.
    and Massey Energy Company.</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>1999</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Jack M. Greenberg</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>62</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Chief Executive Officer of McDonald&#146;s Corporation
    (restaurant franchiser) from August 1998 to December 2002.
    Chairman of the Board of McDonald&#146;s Corporation from May
    1999 until December 2002. Director of The Allstate Corporation,
    First Data Corporation and Manpower, Inc.</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>2003</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Alan G. Hassenfeld</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>56</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Chairman of the Board since 1999. Prior to May 2003, Chairman of
    the Board and Chief Executive Officer since 1999. Prior thereto,
    Chairman of the Board, President and Chief Executive Officer.
    Director of salesforce.com, inc.</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>1978</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Claudine B. Malone</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>68</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    President and Chief Executive Officer, Financial and Management
    Consulting, Inc. (consulting firm) since 1984. Director of
    LaFarge North America, Lowe&#146;s Companies, Inc., Novell Inc.
    and Science Applications International Corporation.
    Ms.&nbsp;Malone previously served as a Director of Hasbro from
    1992 to 1999.</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>2001</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Edward M. Philip</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>39</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    President and Chief Executive Officer of Decision Matrix Group,
    Inc. (research and consulting firm) since May 2004. Prior
    thereto Senior Vice President of Terra Networks, S.A. (global
    internet company) from October 2000 to January 2004. Chief
    Financial Officer and Secretary of Lycos, Inc. from December
    1995 to October 2000. Chief Operating Officer of Lycos, Inc.
    from December 1996 to October 2000.</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>2002</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Eli J. Segal</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>62</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Chairman of the Board, SchoolSports, Inc. (magazine and internet
    content provider) since 2000. Prior thereto, President and Chief
    Executive Officer, the Welfare to Work Partnership (nonpartisan
    business organization) from 1997 to 2000. Director of A.C. Moore
    Arts and Crafts, Inc.</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>2001</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">5

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; ">

<TR style="font-size: 1pt;">
    <TD width="29%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Positions with Company,</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Has Been</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Principal Occupation and</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>A Director</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="center" nowrap><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Age</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Other Directorships</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Since</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Paula Stern</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>60</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Chairwoman, The Stern Group, Inc. (international advisory firm
    in the areas of business and government strategy) since 1988.
    Alkire Chair in International Business, Hamline University, from
    1994 to 2000. Director of Avaya, Inc., Avon Products, Inc. and
    The Neiman Marcus Group, Inc.</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>2002</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Alfred J. Verrecchia</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>62</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    President and Chief Executive Officer since May 2003. Prior
    thereto, President and Chief Operating Officer from 2001 to May
    2003. Prior thereto, President, Chief Operating Officer and
    Chief Financial Officer from 2000 to 2001. Prior thereto,
    Executive Vice President, Global Operations and Chief Financial
    Officer from 1999 to 2000. Prior thereto, Executive Vice
    President, Global Operations and Development during 1999.
    Director of CVS&nbsp;Corporation, FM Global and Old Stone
    Corporation.</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>1992</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Those directors who are also executive officers of the Company
serve as officers and directors of the Company&#146;s various
subsidiaries at the request and convenience of the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Vote Required.</I> The affirmative vote of a majority of
those shares of Common Stock present (in person or by proxy) and
entitled to vote at the Meeting on the election of directors is
required to elect directors. Broker non-votes are not counted as
present and entitled to vote for the election of directors for
purposes of determining if a director receives an affirmative
vote of the majority of the shares present and entitled to vote.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;
<B>THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS VOTE <U>FOR</U> THE ELECTION OF THE TWELVE NOMINEES
NAMED ABOVE.</B>
</DIV>

<P align="center" style="font-size: 10pt;">6

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "GOVERNANCE OF THE COMPANY" -->
<DIV align="left"><A NAME="003"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>GOVERNANCE OF THE COMPANY</B>
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Code of Conduct</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Hasbro has a Code of Conduct which is applicable to all of the
Company&#146;s employees, officers and directors, including the
Company&#146;s Chief Executive Officer, Chief Financial Officer
and Controller. The Code of Conduct addresses such issues as
conflicts of interest, protection of confidential Company
information, financial integrity, compliance with laws, rules
and regulations, insider trading and proper public disclosure.
Compliance with the Code of Conduct is mandatory for all Company
employees, officers and directors. Any violation of the Code of
Conduct can subject the person at issue to a range of sanctions,
including dismissal.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Code of Conduct is available on Hasbro&#146;s website at
www.hasbro.com, under &#147;Corporate Information&nbsp;&#151;
Investor Information&nbsp;&#151; Corporate Governance.&#148;
Although the Company generally does not intend to provide
waivers of, or amendments to, the Code of Conduct for its Chief
Executive Officer, Chief Financial Officer, Controller, or any
other officers, directors or employees, information concerning
any waiver of, or amendment to, the Code of Conduct for the
Chief Executive Officer, Chief Financial Officer, Controller, or
any other executive officer or director of the Company, will be
promptly disclosed on the Company&#146;s website in the location
where the Code of Conduct is posted.
</DIV>

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    <TD></TD>
    <TD>
    <B><I>Corporate Governance Principles</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Hasbro has adopted a set of Corporate Governance Principles
which address qualifications for members of the Board of
Directors, director responsibilities, director access to
management and independent advisors, director compensation and
many other matters related to the governance of the Company. The
Corporate Governance Principles are available on Hasbro&#146;s
website at www.hasbro.com, under &#147;Corporate
Information&nbsp;&#151; Investor Information&nbsp;&#151;
Corporate Governance.&#148;
</DIV>

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    <TD></TD>
    <TD>
    <B><I>Director Independence</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Hasbro&#146;s Board has adopted Standards for Director
Independence (the &#147;Independence Standards&#148;) in
accordance with the New York Stock Exchange&#146;s corporate
governance listing standards. The Independence Standards specify
criteria used by the Board in making determinations with respect
to the independence of its members and include strict guidelines
for directors and their immediate family members with respect to
past employment or affiliation with the Company or its
independent auditor.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Independence Standards restrict commercial relationships
between directors and the Company and include the consideration
of other relationships with the Company, including charitable
relationships, in making independence determinations. Using the
Independence Standards the Board has determined that each of its
members, with the exceptions of Alan G. Hassenfeld, E. John
Rosenwald,&nbsp;Jr. and Alfred J. Verrecchia, are independent.
The Independence Standards are available on Hasbro&#146;s
website at www.hasbro.com, under &#147;Corporate
Information&nbsp;&#151; Investor Information&nbsp;&#151;
Corporate Governance&#148; and are attached as Appendix&nbsp;A
to this proxy statement.
</DIV>

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</TR>

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    <TD></TD>
    <TD>
    <B><I>Board Meetings and Director Attendance at the Annual
    Meeting</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During 2004, the Board held six meetings. All directors attended
at least 75% of the aggregate of (i)&nbsp;the Board meetings
held during their tenure as directors during 2004 and
(ii)&nbsp;the meetings of any committees held during their
tenure as members of such committees during 2004. Although the
Company does not have a formal policy requiring attendance of
directors at the annual meeting of shareholders, the expectation
of the Company and the Board is that all directors will attend
the annual meeting of shareholders unless conflicts prevent them
from attending. Twelve members of the Board attended the 2004
Annual Meeting of Shareholders.
</DIV>

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    <TD></TD>
    <TD>
    <B><I>Presiding Non-Management Director and Communicating with
    the Board</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Executive sessions of the non-management members of the
Company&#146;s Board of Directors are presided over by the
presiding non-management director (the &#147;Presiding
Director&#148;), who is also the Chair of the Nominating,
Governance and Social Responsibility Committee. Interested
parties may contact the Presiding Director confidentially by
sending correspondence to c/o&nbsp;Chair of the Nominating,
Governance and Social Responsibility Committee, Hasbro, Inc.,
P.O. Box&nbsp;495, Pawtucket, Rhode Island 02860. Persons may
also contact the Board of Directors as a whole through the
Presiding Director in the manner set forth in the preceding
sentence.
</DIV>

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    <TD></TD>
    <TD>
    <B><I>Board Committees</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I>Audit Committee.</I></B> The Audit Committee of the Board,
which currently consists of Basil L. Anderson (Chair), Alan R.
Batkin, Claudine B. Malone and Edward M. Philip, held ten
meetings in 2004. The Audit Committee is responsible for the
appointment, compensation and oversight of the Company&#146;s
independent auditor and assists the Board in fulfilling its
responsibility to oversee management&#146;s conduct of the
Company&#146;s financial reporting process, the financial
reports provided by the Company, the Company&#146;s systems of
internal accounting and financial controls, and the quarterly
review and annual independent audit of the Company&#146;s
financial statements. The current Audit Committee Charter
adopted by the Board is available on the Company&#146;s website
at www.hasbro.com, under &#147;Corporate Information&nbsp;&#151;
Investor Information&nbsp;&#151; Corporate Governance.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Board has determined that each member of the Audit Committee
meets both the Company&#146;s Independence Standards and the
requirements for independence under the New York Stock
Exchange&#146;s corporate governance listing standards. The
Board has determined that all four of the Company&#146;s current
Audit Committee members (Basil L. Anderson, Alan R. Batkin,
Claudine B. Malone and Edward M. Philip) qualify as Audit
Committee Financial Experts, as such term is defined in the
rules and regulations promulgated by the Securities and Exchange
Commission.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Board does not have a policy setting rigid limits on the
number of audit committees on which a member of the
Company&#146;s Audit Committee can serve. Instead, in cases
where an Audit Committee member serves on more than three audit
committees, the Board evaluates whether such simultaneous
service would impair the service of such member on the
Company&#146;s Audit Committee. Three members of the
Company&#146;s Audit Committee, namely Mr.&nbsp;Anderson,
Mr.&nbsp;Batkin and Ms.&nbsp;Malone, serve on more than three
public company audit committees. In each of these cases, the
Board has made a determination that such simultaneous service
does not impair such person&#146;s service on the Company&#146;s
Audit Committee.
</DIV>

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<B><I>Compensation and Stock Option Committee.</I></B> The
Compensation and Stock Option Committee of the Board, which
currently consists of Alan R. Batkin, Frank J. Biondi,&nbsp;Jr.
(Chair), Jack M. Connors,&nbsp;Jr. and Eli&nbsp;J. Segal, held
four meetings in 2004. The Compensation and Stock Option
Committee is responsible for overseeing all employee
compensation and benefit plans, is authorized to make grants and
awards under the Company&#146;s employee stock equity plans and
shares responsibility for evaluation of the Company&#146;s Chief
Executive Officer with the Nominating, Governance and Social
Responsibility Committee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The current Compensation and Stock Option Committee Charter
adopted by the Board is available on the Company&#146;s website
at www.hasbro.com, under &#147;Corporate Information&nbsp;&#151;
Investor Information&nbsp;&#151; Corporate Governance.&#148; The
Board has determined that each member of the Compensation and
Stock Option Committee meets both the Company&#146;s
Independence Standards and the requirements for independence
under the New York Stock Exchange&#146;s corporate governance
listing standards.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I>Executive Committee.</I></B> The Executive Committee of
the Board, which currently consists of Basil L. Anderson, Frank
J. Biondi,&nbsp;Jr., Alan G. Hassenfeld (Chair) and Eli J.
Segal, did not meet in 2004. The Executive Committee acts on
such matters as are specifically assigned to it from time to
time by the Board and is vested with all of the powers that are
held by the Board, except that by law the Executive Committee
may not exercise any power of the Board relating to amendment of
the Articles of Incorporation or By-laws of the Company,
adoption of a plan of merger or consolidation, the sale, lease
or exchange of all or substantially
</DIV>

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<DIV align="left" style="font-size: 10pt;">
all the property or assets of the Company or the voluntary
dissolution of the Company. The current Executive Committee
Charter adopted by the Board is available on the Company&#146;s
website at www.hasbro.com, under &#147;Corporate
Information&nbsp;&#151; Investor Information&nbsp;&#151;
Corporate Governance.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I>Nominating, Governance and Social Responsibility
Committee.</I></B> The Nominating, Governance and Social
Responsibility Committee of the Board (the &#147;Nominating
Committee&#148;), which currently consists of E.&nbsp;Gordon
Gee, Jack M. Greenberg, Eli J. Segal (Chair) and Paula Stern,
met four times in 2004. The Nominating Committee identifies and
evaluates individuals qualified to become Board members and
makes recommendations to the full Board for possible additions
to the Board and on the director nominees for election at the
Company&#146;s annual meeting. The Nominating Committee also
oversees and makes recommendations regarding the governance of
the Board and the committees thereof, including the
Company&#146;s governance principles, Board and Board committee
evaluations and the compensation of non-employee directors, and
shares with the Compensation and Stock Option Committee
responsibility for evaluation of the Chief Executive Officer.
Further, the Nominating Committee oversees the Company&#146;s
codes of business conduct and ethics, and analyzes issues of
social responsibility and related corporate conduct. The current
Nominating, Governance and Social Responsibility Committee
Charter adopted by the Board is available on the Company&#146;s
website at www.hasbro.com, under &#147;Corporate
Information&nbsp;&#151; Investor Information&nbsp;&#151;
Corporate Governance.&#148; The Board has determined that each
member of the Nominating Committee meets both the Company&#146;s
Independence Standards and the requirements for independence
under the New York Stock Exchange&#146;s corporate governance
listing standards.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In making its nominations for election to the Board the
Nominating Committee seeks candidates who meet the current
challenges and needs of the Board. As part of this process the
committee considers a number of factors, including, among
others, a candidate&#146;s employment and other professional
experience, past expertise and involvement in areas which are
relevant to the Company&#146;s business, business ethics and
professional reputation, independence, other Board experience,
and the Company&#146;s desire to have a Board that represents a
diverse mix of backgrounds, perspectives and expertise. The
Nominating Committee will consider nominees recommended by
shareholders for election to the Board if such nominations are
made in accordance with the process set forth below under
&#147;Shareholder Proposals and Director Nominations&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Nominating Committee uses multiple sources for identifying
and evaluating nominees for directors, including referrals from
current directors, recommendations by shareholders and input
from third party executive search firms. Third party executive
search firms assist the Nominating Committee by identifying
candidates with expertise and experience relevant to the
Company&#146;s business who are interested in serving on the
Company&#146;s Board. The Nominating Committee will consider and
evaluate candidates recommended by shareholders on the same
basis as candidates recommended by other sources. As of
December&nbsp;17, 2004 the Nominating Committee had not received
a recommended nominee for election to the Board in 2005 from an
individual shareholder, or group of shareholders, who
beneficially owned more than 5% of the Company&#146;s Common
Stock.
</DIV>

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    <TD></TD>
    <TD>
    <B><I>Additional Availability of Corporate Governance
    Materials</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition to being accessible on the Company&#146;s website,
copies of the Company&#146;s Code of Conduct, Corporate
Governance Principles and the charters of the four
Committee&#146;s of the Board of Directors are all available
free of charge upon request to the Company&#146;s General
Counsel and Secretary, c/o&nbsp;Hasbro, Inc., 1011 Newport
Avenue, P.O. Box&nbsp;1059, Pawtucket, Rhode Island, 02862-1059.
</DIV>

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    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Shareholder Proposals and Director Nominations</I></B></TD>
</TR>

</TABLE>

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    <TD width="3%"></TD>
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</TR>

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    <TD></TD>
    <TD>
    <B><I>General Shareholder Proposals</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Any proposal which a shareholder of the Company wishes to have
considered for inclusion in the proxy statement and proxy
relating to the Company&#146;s 2006 annual meeting must be
received by the Secretary of the Company at the Company&#146;s
executive offices no later than December&nbsp;9, 2005. The
address of the Company&#146;s executive offices is 1027 Newport
Avenue, Pawtucket, Rhode Island 02862. Such proposals must also
comply
</DIV>

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with the other requirements of the rules of the Securities and
Exchange Commission relating to shareholder proposals.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
With the exception of the submission of director nominations for
consideration by the Nominating Committee, which must be
submitted to the Company in the manner described below, any new
business proposed by any shareholder to be taken up at the 2006
annual meeting, but not included in the proxy statement or proxy
relating to that meeting, must be stated in writing and filed
with the Secretary of the Company by December&nbsp;26, 2005.
Except for shareholder proposals made pursuant to the preceding
paragraph, the Company will retain discretion to vote proxies at
the 2006 annual meeting with respect to proposals received prior
to December&nbsp;26, 2005, provided (i)&nbsp;the Company
includes in its 2006 annual meeting proxy statement advice on
the nature of the proposal and how it intends to exercise its
voting discretion and (ii)&nbsp;the proponent does not issue a
proxy statement.
</DIV>

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    <TD></TD>
    <TD>
    <B><I>Director Nominations</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company&#146;s By-laws provide that shareholders may
themselves nominate directors for consideration at an annual
meeting provided they give notice to the Secretary of the
Company not less than 60&nbsp;days nor more than 90&nbsp;days
prior to the one-year anniversary date of the immediately
preceding annual meeting and provide specified information
regarding the proposed nominee and each shareholder proposing
such nomination. Nominations made by shareholders in this manner
are eligible to be presented by the shareholder to the meeting,
but such nominees will not have been considered by the
Nominating Committee as a nominee to be potentially supported by
the Company.
</DIV>

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To be considered by the Nominating Committee, director
nominations must be submitted to the General Counsel and
Secretary of the Company at the Company&#146;s executive
offices, 1011 Newport Avenue, Pawtucket, Rhode Island 02862 at
least 120&nbsp;days prior to the one-year anniversary of the
release to the Company&#146;s shareholders of the proxy
statement for the preceding year&#146;s annual meeting. As such,
director nominations to be considered for the Company&#146;s
2006 Annual Meeting of Shareholders must be submitted no later
than December&nbsp;9, 2005. The Nominating Committee is only
required to consider recommendations made by shareholders, or
groups of shareholders, that have beneficially owned at least 1%
of the Company&#146;s Common Stock for at least one year prior
to the date the shareholder(s) submit such candidate to the
Nominating Committee and who undertake to continue to hold at
least 1% of the Company&#146;s Common Stock through the date of
the next annual meeting. In addition, a nominating
shareholder(s) may only submit one candidate to the Nominating
Committee for consideration.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Submissions to the Nominating Committee should include
(a)&nbsp;as to each person whom the shareholder proposes to
nominate for election or re-election as a director (i)&nbsp;the
name, age, business address and residence address of the person,
(ii)&nbsp;the principal occupation or employment of the person,
(iii)&nbsp;the class or series and number of shares of capital
stock of the Company that are owned beneficially or of record by
the person, (iv<I>) </I>any other information relating to the
person that would be required to be disclosed in a proxy
statement or other filings required to be made in connection
with solicitations of proxies for election of directors pursuant
to Section&nbsp;14 of the Securities Exchange Act of 1934, as
amended (the &#147;Exchange Act&#148;), and the rules and
regulations promulgated thereunder, and (v)&nbsp;confirmation
that the candidate is independent under the Company&#146;s
Independence Standards and the rules of the New York Stock
Exchange, or if the candidate is not independent under all such
criteria, a description of the reasons why the candidate is not
independent; and (b)&nbsp;as to the shareholder(s) giving the
notice (i)&nbsp;the name and record address of such
shareholder(s) and each participant in any group of which such
shareholder is a member, (ii)&nbsp;the class or series and
number of shares of capital stock of the Company that are owned
beneficially or of record by such shareholder(s) and each
participant in any group of which such shareholder is a member,
(iii)&nbsp;if the nominating shareholder is not a record holder
of the shares of capital stock of the Company, evidence of
ownership as provided in Rule&nbsp;14a-8(b)(2) under the
Exchange Act, (iv)&nbsp;a description of all arrangements or
understandings between such shareholder(s) and each proposed
nominee and any other person or persons (including their names)
pursuant to which the nomination(s) are to be made by such
shareholder(s), and (v)&nbsp;any other information relating to
such shareholder(s) that would be required to be disclosed in a
proxy statement or other filings
</DIV>

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required to be made in connection with solicitations of proxies
for election of directors pursuant to Section&nbsp;14 of the
Exchange Act and the rules and regulations promulgated
thereunder.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Nominating Committee may require that any proposed nominee
for election to the Board furnish such other information as may
reasonably be required by the Nominating Committee to determine
the eligibility of such proposed nominee to serve as director of
the Company. The written notice from the nominating shareholder
specifying a candidate to be considered as a nominee for
election as a director must be accompanied by a written consent
of each proposed nominee for director. In this written consent
the nominee must consent to (i)&nbsp;being named as a nominee
for director, (ii)&nbsp;serve as a director and represent all
shareholders of the Company in accordance with applicable laws
and the Company&#146;s articles of incorporation, by-laws and
other policies if such nominee is elected, (iii)&nbsp;comply
with all rules, policies or requirements generally applicable to
non-employee directors of the Company, and (iv)&nbsp;complete
and sign customary information requests upon the request of the
Company.
</DIV>

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<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>COMPENSATION OF DIRECTORS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
All members of the Board of Directors who are not otherwise
employed by the Company (&#147;Non-employee Directors&#148;)
receive a retainer of $45,000&nbsp;per year. The Chairs of the
Audit Committee, the Compensation and Stock Option Committee and
the Nominating, Governance and Social Responsibility Committee
each receive an additional retainer of $10,000&nbsp;per year for
their service as Chairs of these committees. The Company&#146;s
Presiding Director receives an additional retainer of
$40,000&nbsp;per year. Non-employee Directors receive a fee of
$1,500 for each Board or committee meeting attended. Action by
written consent is not considered attendance at a meeting for
purposes of fees to directors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Pursuant to the Deferred Compensation Plan for Non-employee
Directors (the &#147;Deferred Plan&#148;), which is unfunded,
Non-employee Directors must defer a minimum of 33% of the annual
Board retainer fee into a stock unit account, the value of each
unit initially being equal to the fair market value of one share
of Common Stock as of the end of the quarter in which the
compensation being deferred would otherwise be payable. Stock
units increase or decrease in value based on the fair market
value of the Common Stock. In addition, an amount equal to the
dividends paid on an equivalent number of shares of Common Stock
is credited to each Non-employee Director&#146;s stock unit
account as of the end of the quarter in which the dividend was
paid. Non-employee Directors may defer the remainder of their
retainer and/or meeting fees into the stock unit account or an
interest account, which bears interest at the five-year Treasury
rate. The Company makes a deemed matching contribution to the
stock unit account equal to 10% of the amount deferred by the
participant into the stock unit account, with one-half of such
Company contribution vesting on December&nbsp;31st of the
calendar year in which the deferred compensation otherwise would
have been paid and one-half on the next December&nbsp;31st,
provided the participant is a director on such vesting date.
Unvested Company contributions will automatically vest on death,
total disability or retirement by the director at or after age
seventy-two. Compensation deferred under the Deferred Plan,
whether in the stock unit account or the interest account, will
be paid out in cash after termination of service as a director.
Directors may elect that compensation so deferred be paid out in
a lump sum or in up to ten annual installments, commencing
either in the quarter following, or in the January following,
the quarter in which service as a director terminates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under the Hasbro, Inc. Retirement Plan for Directors (the
&#147;Retirement Plan&#148;), which is unfunded, each
Non-employee Director who was serving on the Board prior to
May&nbsp;13, 2003 (and who was not otherwise eligible for
benefits under the Company&#146;s Pension Plan), has attained
the age of sixty-five and completed five years of service on the
Board is entitled to receive, beginning at age seventy-two, an
annual benefit equal to the annual retainer payable to directors
during the year in which the director retires (which does not
include the fees paid to directors for attendance at meetings).
If a director retires on or after the director&#146;s
seventy-second birthday, the annual benefit continues for the
life of the director. If a director retires between the ages of
sixty-five and seventy-two, the number of annual payments will
not exceed the retired director&#146;s years of service. Upon a
Change of Control, as defined in the Retirement Plan,
participating directors and retired directors are entitled to
lump-sum payments equal to the present value of their benefits
under the Retirement Plan.
</DIV>

<P align="center" style="font-size: 10pt;">11

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Directors appointed to the Board on or after May&nbsp;14, 2003,
the date that the Company&#146;s shareholders approved the 2003
Stock Option Plan for Non-Employee Directors (the
&#147;2003&nbsp;Director Plan&#148;) which is described below,
are not eligible to participate in the Retirement Plan, and
automatically participate in the 2003&nbsp;Director Plan. The
benefits of the 2003&nbsp;Director Plan replace the benefits of
both the Retirement Plan and the 1994&nbsp;Director Plan
(described below) going forward. Non-employee Directors who were
serving on the Board prior to May&nbsp;13, 2003, and thus were
participating in the Retirement Plan, and who were not scheduled
to retire at the end of their current term in office as of the
time of approval by shareholders of the 2003&nbsp;Director Plan,
were given the opportunity to elect to participate in the
2003&nbsp;Director Plan effective on either May&nbsp;14, 2003,
May&nbsp;1, 2004, May&nbsp;1, 2005 or May&nbsp;1, 2006.
Directors who were serving on the Board prior to May&nbsp;13,
2003 and who did not elect to participate in 2003&nbsp;Director
Plan on one of these dates continue to participate in the
Retirement Plan in accordance with its terms. Directors serving
as of May&nbsp;13, 2003 who elected to participate in the
2003&nbsp;Director Plan stopped accruing further years of
service under the Retirement Plan and do not have their benefits
under the Retirement Plan adjusted for changes in the annual
retainer following the effective date of their participation in
the 2003&nbsp;Director Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under the Company&#146;s former Stock Option Plan for
Non-employee Directors (the &#147;1994&nbsp;Director
Plan&#148;), approved by shareholders on May&nbsp;11, 1994, each
Non-employee Director then in office received on May&nbsp;11,
1994 and each Non-employee Director who joined the Board after
May&nbsp;11, 1994 received upon becoming a director, a one-time
grant of a nonqualified, nontransferable ten-year option to
purchase&nbsp;11,250&nbsp;shares of Common Stock at 110% of the
fair market value per share of Common Stock on the date of
grant. The options became exercisable at a rate of 20%&nbsp;per
year commencing on the first anniversary of the date of grant,
except that exercisability was to be accelerated upon a
participant ceasing to be a member of the Board because of
permanent disability, death, retirement at or after age
seventy-two or after a Change of Control, as defined in the
1994&nbsp;Director Plan. The 1994&nbsp;Director Plan was
cancelled effective upon the date of shareholder approval of the
2003&nbsp;Director Plan and no further grants are being made
under the 1994&nbsp;Director Plan, provided, however, that
options previously granted under the 1994&nbsp;Director Plan
continue in effect in accordance with their terms.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company&#146;s 2003 Stock Option Plan for Non-Employee
Directors, which was approved by the Company&#146;s shareholders
at the 2003 Meeting, replaced the benefits of the Retirement
Plan and the 1994&nbsp;Director Plan described in the
immediately preceding paragraphs. Under the 2003&nbsp;Director
Plan each Non-employee Director who was serving as a director
immediately following the 2003 Meeting and whose effective date
for participation in the 2003&nbsp;Director Plan was
May&nbsp;14, 2003, received a one-time grant of a nonqualified,
nontransferable ten-year option to
purchase&nbsp;6,000&nbsp;shares of the Company&#146;s Common
Stock at the fair market value of the Common Stock on the date
of grant (the &#147;First Annual Options&#148;). The First
Annual Options become exercisable at a rate of
33<FONT style="font-size: 70%"><SUP>1</SUP></FONT>/<FONT style="font-size: 60%">3</FONT>%&nbsp;per
year commencing on the May&nbsp;1st&nbsp;next following the date
of grant, except that exercisability will be accelerated upon a
participant ceasing to be a member of the Board because of
permanent disability, death, retirement at or after age
seventy-two or after a Change of Control, as defined in the
2003&nbsp;Director Plan. On each subsequent May&nbsp;1st, all
Non-employee Directors then serving on the Board, with certain
exceptions, whose effective date for participation in the
2003&nbsp;Director Plan is on or prior to such May&nbsp;1st,
receive an additional option to purchase&nbsp;6,000&nbsp;shares
of the Company&#146;s Common Stock. These additional annual
options otherwise have the same terms as the First Annual
Options, except that the exercise price is based on the fair
market value of the Common Stock on the date of grant of such
additional annual options. Non-employee Directors initially
joining the Board after May&nbsp;14, 2003 receive, under the
2003&nbsp;Director Plan, an initial option to
purchase&nbsp;12,000&nbsp;shares of Common Stock upon their
election to the Board (the &#147;Initial Options&#148;). The
Initial Options have the same terms as annual options under the
2003&nbsp;Director Plan except that they become exercisable at a
rate of 20%&nbsp;per year commencing of the first anniversary of
the date of grant.
</DIV>

<P align="center" style="font-size: 10pt;">12

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<!-- link1 "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS" -->
<DIV align="left"><A NAME="005"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company&#146;s wholly-owned subsidiary, Hasbro Canada
Corporation (&#147;Hasbro Canada&#148;), leases an office and
warehouse facility from Central Toy Manufacturing Inc.
(&#147;CTM&#148;), a real estate corporation which is 25% owned
by the estate of Merrill Hassenfeld, a former Chief Executive
Officer and director of the Company. Sylvia K. Hassenfeld, a
former director of the Company and mother of Alan G. Hassenfeld,
is executrix and a beneficiary of the estate of Merrill
Hassenfeld. During 2000, the CTM lease was renewed for a
three-year term ending on January&nbsp;31, 2004 at rentals of
approximately $579,000, $589,000 and $599,000 Canadian for the
three years, respectively. During 2003 a new lease was signed
for a six-year term ending on January&nbsp;31, 2010, with one
three-year renewal option that Hasbro Canada can exercise at the
end of the term. The new lease also provides Hasbro Canada with
a right to terminate the lease on January&nbsp;31, 2007, or at
any time thereafter, upon six months&#146; written notice. The
rent provided for in this six-year lease is $525,000 Canadian
per year (approximately $427,000 U.S.&nbsp;at exchange rates in
effect at the end of 2004). In accordance with this new lease,
total rent paid by Hasbro Canada to CTM for the lease of the
office and warehouse facility in 2004 was approximately $427,000
U.S.&nbsp;at exchange rates in effect at the end of 2004. In
management&#146;s opinion, this lease is on terms at least as
favorable as would otherwise presently be obtainable from
unrelated parties.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Bear, Stearns&nbsp;&#38; Co. Inc. provides investment banking
and related services to the Company. In fiscal 2004, these
services included repurchasing, on behalf of the Company, a
portion of the Company&#146;s outstanding long-term debt using
proceeds from the Company&#146;s trade accounts receivable
securitization facility and cash on hand. E. John
Rosenwald,&nbsp;Jr., a director of the Company, is a director
and Vice Chairman of Bear, Stearns&nbsp;&#38; Co. Inc.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Lucas Licensing Ltd. (&#147;Licensing&#148;) and Lucasfilm Ltd.
(&#147;Film&#148; and together with &#147;Licensing&#148;,
&#147;Lucas&#148;) own in the aggregate exercisable warrants to
purchase&nbsp;15,750,000&nbsp;shares of Common Stock which were
obtained in arms-length negotiations with the Company in
connection with the Company&#146;s obtaining of certain rights.
The Common Stock subject to such warrants would, if all warrants
were fully exercised, constitute approximately 8.1% of the
Company&#146;s outstanding shares. Accordingly, under SEC
Rule&nbsp;13d-3, George W. Lucas,&nbsp;Jr., as owner, director
and an officer of Film and Licensing, may be deemed to own
approximately 8.1% of the Company&#146;s outstanding shares. See
&#147;Voting Securities and Principal Holders Thereof.&#148; In
fiscal 2004, the Company paid an aggregate of approximately
$1.2&nbsp;million in royalties to Licensing pursuant to license
agreements entered into at arms length in the ordinary course of
business.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In January 2003, the Company amended its license with Licensing
for the manufacture and distribution of STAR WARS toys and
games. Under the amended agreement the term was extended by ten
years and is expected to run through 2018. In addition, the
minimum guaranteed royalties due to Licensing were reduced by
$85&nbsp;million. In a separate agreement, the warrants
previously granted to Lucas were also amended. Under this
warrant amendment, the terms of each of the warrants issued to
Lucas were extended by ten years. The warrant amendment
agreement provides the Company with an option through October
2016 to purchase all of these warrants from Lucas for a price to
be paid at the Company&#146;s election of either
$200&nbsp;million in cash or $220&nbsp;million in Common Stock,
such stock being valued at the time of the exercise of the
option. Also, the warrant amendment agreement provides Lucas
with an option through January 2008 to sell all of these
warrants to the Company for a price to be paid at the
Company&#146;s election of either $100&nbsp;million in cash or
$110&nbsp;million in Common Stock, such stock being valued at
the time of the exercise of the option.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Alfred J. Verrecchia, the Company&#146;s President and Chief
Executive Officer, is Chairman of Lifespan, a hospital holding
company. Two of Lifespan&#146;s member hospitals are the Hasbro
Children&#146;s Hospital and the Miriam Hospital. In fiscal
2004, the Company donated approximately $3&nbsp;million in
aggregate to the Hasbro Children&#146;s Hospital and the Miriam
Hospital.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Andrea Patterson, daughter of E. David Wilson, is employed by
the Company as a Director of Human Resources. For fiscal 2004
Ms.&nbsp;Patterson was paid an aggregate salary and bonus of
$142,924, and was granted stock options to
purchase&nbsp;1,250&nbsp;shares of the Common Stock at an
exercise price equal to the fair market value of the Common
Stock on the date of grant. Michael Verrecchia, son of Alfred J.
Verrecchia, was employed by the Company as a Director of
Marketing until October&nbsp;22, 2004. Michael Verrecchia
returned to the Company on February&nbsp;14, 2005. For fiscal
2004, Mr.&nbsp;Verrecchia was paid an aggregate salary of
$81,601, and was granted stock options to
purchase&nbsp;1,500&nbsp;shares of Common Stock at an exercise
price equal to the fair market value of the Common Stock on the
date of grant.
</DIV>

<P align="center" style="font-size: 10pt;">13

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<!-- link1 "COMPARISON OF FIVE YEAR CUMULATIVE TOTAL SHAREHOLDER RETURN AMONG HASBRO, S&#38;P 500 AND RUSSELL 1000 CONSUMER DISCRETIONARY ECONOMIC SECTOR(1)" -->
<DIV align="left"><A NAME="006"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>COMPARISON OF FIVE YEAR CUMULATIVE TOTAL SHAREHOLDER
RETURN</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>AMONG HASBRO, S&#38;P 500 AND RUSSELL 1000</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>CONSUMER DISCRETIONARY ECONOMIC SECTOR(1)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following graph tracks an assumed investment of $100 on the
start dates indicated below in the Company&#146;s Common Stock,
the S&#38;P 500 Index and the Russell 1000 Consumer
Discretionary Economic Sector, assuming full reinvestment of
dividends and no payment of brokerage or other commissions or
fees. Past performance of the Company&#146;s Common Stock is not
necessarily indicative of future performance.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<IMG src="b53906hib5390607.gif" alt="(PERFORMANCE GRAPH)">
</DIV>

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<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;border-left:1.5pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;border-right:1.5pt solid #000000;">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD style="border-left:1.5pt solid #000000;">&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>1999</B></TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>2000</B></TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>2001</B></TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>2002</B></TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>2003</B></TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>2004</B></TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
</TR>


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    <TD align="center" nowrap style="border-top: 1pt solid #000000;border-left:1.5pt solid #000000;">&nbsp;</TD>
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    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;border-right:1.5pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top" style="border-left:1.5pt solid #000000;">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;Hasbro</DIV>
    </TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>100</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>60</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>93</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>64</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>122</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>112</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="left" style="border-top: 1pt solid #000000;border-left:1.5pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;border-right:1.5pt solid #000000;">&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top" style="border-left:1.5pt solid #000000;">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;S&#38;P 500 Index</DIV>
    </TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>100</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>92</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>82</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>63</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>80</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>90</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="left" style="border-top: 1pt solid #000000;border-left:1.5pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;border-right:1.5pt solid #000000;">&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top" style="border-left:1.5pt solid #000000;">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;Russell 1000 Consumer Discretionary Economic Sector</DIV>
    </TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>100</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>71</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>75</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>57</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>76</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>86</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right:1.5pt solid #000000;">&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD style="border-top: 1pt solid #000000;">&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    While the information for Hasbro&#146;s Common Stock and the
    S&#38;P 500 Index is as of the last trading day in Hasbro&#146;s
    fiscal year, the data for the Russell 1000 Consumer
    Discretionary Economic Sector is as of the last trading day in
    the calendar year.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">14

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEE OF THE BOARD OF DIRECTORS" -->
<DIV align="left"><A NAME="007"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>REPORT OF THE</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>COMPENSATION AND STOCK OPTION COMMITTEE</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>OF THE BOARD OF DIRECTORS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Hasbro Compensation and Stock Option Committee</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Compensation and Stock Option Committee (the
&#147;Committee&#148;) of Hasbro&#146;s Board of Directors is
responsible for overseeing all employee compensation and benefit
plans and is authorized to make grants and awards under the
Company&#146;s employee stock equity plans. In establishing the
cash compensation and equity awards for the Company&#146;s
Chairman and Chief Executive Officer, the Committee reviews
benchmarking information provided by outside compensation
consultants. In authorizing and approving cash compensation and
equity awards for executive officers other than the Chairman and
the Chief Executive Officer, the Committee reviews the
recommendations of the Chief Executive Officer in addition to
benchmarking information provided by outside consultants.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Committee is composed solely of persons who are both
&#147;Non-Employee Directors,&#148; as defined in
Rule&nbsp;16b-3 of the rules and regulations of the Securities
and Exchange Commission, and &#147;outside directors,&#148; as
defined in Section&nbsp;162(m) of the Internal Revenue Code of
1986, as amended (the &#147;Code&#148;). The Board of Directors
has determined that each member of the Committee is independent
under the Company&#146;s Independence Standards and the
requirements of the New York Stock Exchange&#146;s corporate
governance listing standards.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>2004 Compensation Policies With Respect to Executive
Officers</B>
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B></TD>
    <TD>
    <B><I>Executive Compensation Philosophy</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In structuring the compensation of the Company&#146;s executive
officers (including those five named executive officers
appearing in the Summary Compensation Table that immediately
follows this report) the Committee&#146;s fundamental objective
is to maximize the performance of the Company and maximize the
value of the Company to its shareholders. To achieve this
objective the Committee structures Hasbro&#146;s executive
compensation and benefits so as to:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    attract and retain talented executives who can make important
    contributions to the success of the Company,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    reward these executives for superior performance,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    provide executives with a strong incentive to increase the
    performance of the Company and the value of the Company to its
    shareholders,&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    achieve these objectives in as cost-effective a manner as
    possible from the Company&#146;s perspective.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Committee employed the assistance of two outside executive
compensation consultants to provide benchmarking information and
other assistance to the Committee in structuring the
Company&#146;s 2004 executive compensation program. Although
these two outside consultants have performed other services for
the Company, in the case of providing this assistance to the
Committee they were retained by, and reported directly to, the
members of the Committee. The outside consultants provided
additional information as to whether the Company&#146;s
executive compensation programs are reasonable and effective in
maximizing the performance of the Company and the return to the
Company&#146;s shareholders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Committee considers the requirements of Code
Section&nbsp;162(m) in determining the various elements of its
executive compensation program and, to the extent it is
consistent with meeting the objectives of the Company&#146;s
executive compensation program, structures such compensation to
maximize the ability of the Company to deduct such compensation.
However, the Committee reserves the right to award compensation
that would not be deductible under Section&nbsp;162(m) where the
Committee believes this is in the best interests of the Company
and its shareholders.
</DIV>

<P align="center" style="font-size: 10pt;">15

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B></TD>
    <TD>
    <B><I>Primary Elements of 2004 Executive Compensation</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Executive compensation for fiscal year 2004 was composed of four
primary elements:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    base salary,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    management incentive bonus awards,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    equity awards,&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    employee benefits.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Each of these elements is described in detail below.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B></TD>
    <TD>
    <B><I>Base Salary</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Base salaries for new executive officers are initially
determined by evaluating the responsibilities of the position
being filled, the experience of the individual being hired and
the competitive marketplace for comparable executive talent.
Subsequent yearly adjustments in base salaries are made only in
the event of changes in duties and responsibilities for the
executive, or significant lack of competitiveness of the base
salary with market compensation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Committee generally sets executive base salaries and target
bonus awards to be competitive with other consumer products,
leisure and lifestyle companies, as well as companies generally,
as surveyed in Hewitt Executive Total Compensation Measurement,
prepared by Hewitt Associates, LLP, and Towers Perrin&#146;s
Executive Compensation Databank. The Committee believes that
this positions the Company&#146;s salaries and target bonus
awards at a level that allows the Company to hire and retain
talented and highly motivated executives while also keeping the
cost of the Company&#146;s executive compensation at a
reasonable level as compared to comparable companies.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The salaries for all five of the Company&#146;s most highly
compensated executive officers in fiscal 2004 are included in
the Summary Compensation Table on page&nbsp;20 of this proxy
statement. For these five named executive officers, only
Mr.&nbsp;Goldner received an increase in base salary for fiscal
2004. Mr.&nbsp;Goldner&#146;s annual base salary was increased
from $550,000 in fiscal 2003 to $700,000 in fiscal 2004 to
reflect the significant additional responsibilities which he
undertook during 2004. As with the Company&#146;s five named
executive officers, except in cases of increases in
responsibility or significant lack of competitiveness with
market compensation, there were no increases in base salaries
for the Company&#146;s other executive officers in fiscal 2004.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B></TD>
    <TD>
    <B><I>Management Incentive Bonus Awards</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Approximately 1,270 of the Company&#146;s employees, including
all of the Company&#146;s executive officers, were awarded
management incentive bonuses with respect to fiscal 2004.
Management incentive bonus awards for the Company&#146;s
executive officers were determined under two programs for fiscal
2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The management incentive bonus eligibility of
Mr.&nbsp;Hassenfeld, Mr.&nbsp;Verrecchia, Mr.&nbsp;Goldner and
Mr.&nbsp;Wilson was determined pursuant to the Company&#146;s
2004 Senior Management Annual Performance Plan (the &#147;Annual
Performance Plan&#148;). Under the Annual Performance Plan, the
Committee designated fiscal 2004 corporate and business unit
performance goals for the Company at the beginning of the fiscal
year. These performance goals were based on the 2004 operating
plan and budgets approved by the Company&#146;s Board of
Directors and were the same performance criteria used for the
Company&#146;s other bonus eligible employees.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The setting of performance goals involved both selecting the
performance metrics that would be used to evaluate bonus
eligibility and establishing the performance targets for each of
those metrics. The Committee used four performance metrics to
measure corporate performance in 2004. The four corporate
performance criteria were total net revenues, net revenues
attributable to identified core brand drivers, operating margin
and free cash flow. Business unit performance objectives were
based on the first three of these criteria, namely total net
revenues, net revenues attributable to identified core brand
drivers and operating margin. In addition to establishing the
performance criteria and target performance objectives for each
such criteria, at the
</DIV>

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<DIV align="left" style="font-size: 10pt;">
beginning of 2004 the Committee also established target bonus
awards and maximum awards for each participant in the Annual
Performance Plan corresponding with various levels of
performance against the designated objectives.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For Mr.&nbsp;Hassenfeld and Mr.&nbsp;Verrecchia, management
incentive bonuses for 2004 were weighted 100% for corporate
performance against the four corporate performance targets
listed above. For Mr.&nbsp;Goldner and Mr.&nbsp;Wilson, who have
business unit responsibility, bonuses were weighted 40% for
corporate performance against the four corporate targets, and
60% for business unit performance, which consisted not only of
the performance of the Company&#146;s U.S.&nbsp;Toys and Games
segments respectively, but also of the performance of other
business units being overseen by Mr.&nbsp;Goldner and
Mr.&nbsp;Wilson, against the three business unit objectives.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The ultimate management incentive bonus paid with respect to
2004 was a function of the percentage of the performance goals
achieved, with the Committee reserving the right to lower the
bonus paid in its sole discretion in each case. The following
Summary Compensation Table includes the management incentive
bonus awarded to each of the Company&#146;s named executive
officers for fiscal 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For fiscal 2004, Mr.&nbsp;Hassenfeld, Mr.&nbsp;Goldner and
Mr.&nbsp;Wilson were awarded management incentive bonuses in the
amount of $815,000, $300,000 and $365,000, respectively. The
Company&#146;s performance in 2004 represented 78% achievement
of the corporate performance goals under the Annual Performance
Plan. The weighted achievement of all target corporate
objectives, U.S.&nbsp;Toy segment objectives and objectives of
the other areas of the Company&#146;s business overseen by
Mr.&nbsp;Goldner was 42%. The weighted achievement of all target
corporate objectives, Games segment objectives and objectives of
the other areas of the Company&#146;s business overseen by
Mr.&nbsp;Wilson was 80%.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
With respect to executive officers other than
Mr.&nbsp;Hassenfeld, Mr.&nbsp;Verrecchia, Mr.&nbsp;Goldner and
Mr.&nbsp;Wilson, target bonuses in fiscal 2004 were determined
pursuant to the Company&#146;s Management Incentive Plan (MIP).
The same corporate performance criteria and targets that were
used under the Annual Performance Plan were used under the MIP
for fiscal 2004. The bonuses under the MIP for the remaining
executive officers, all of whom are deemed to have
corporate-wide responsibility, were based 100% on corporate
performance. In all cases, the bonuses earned under the MIP
could be subject to adjustment downward to as low as 0% and
upward by a factor of up to an additional 50%, based on
individual performance against specified management objectives.
In all cases, the bonuses for corporate performance were
reviewed by the Committee and adjusted to reflect the individual
performance of the executive in question.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B></TD>
    <TD>
    <B><I>Long-Term Incentive Strategy and Equity Awards</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Committee is currently in the process of determining the
Company&#146;s future long-term incentive compensation strategy
and as part of that process is considering whether the Company
will begin to employ long-term incentive cash bonuses, stock
appreciation rights, restricted stock, restricted stock units
and/or other compensation vehicles as a more significant
component of overall long-term compensation. The Committee is
reevaluating the Company&#146;s current long-term compensation
strategy in light of a number of developments, including the
mandatory expensing of stock options, which is anticipated to
become effective in the third quarter of 2005, and the
increasing use of restricted stock and/or performance awards in
executive compensation. In recent years the Company has only
infrequently used restricted stock and restricted stock units as
a reward and retention mechanism, choosing instead to use stock
options as the predominant means of providing equity
compensation. No restricted stock or restricted stock unit
grants were made to the Company&#146;s executive officers in
2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In fiscal 2004, non-qualified stock options were granted to all
of the Company&#146;s executive officers pursuant to the
Company&#146;s employee stock option plans. The Committee
granted individual options to executive officers in order to
provide an incentive to motivate and retain those individuals
who are important to the Company&#146;s future success. Stock
options are designed to align the interests of executives with
those of shareholders by providing executives with a benefit
from price appreciation in the Common Stock after the date of
grant. In establishing the number of shares covered by the
option grants made to the Company&#146;s individual executive
officers, the Committee determined grant levels which it
believed compensated these individuals for stock price
appreciation in a manner commensurate with their duties and
contributions to the
</DIV>

<P align="center" style="font-size: 10pt;">17

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<DIV align="left" style="font-size: 10pt;">
performance of the Company and its stock. Stock options granted
under this program generally vest annually over the three-year
period following the date of grant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition, selected members of senior management have been
eligible every two years to receive a grant of premium-priced
stock options, with an exercise price set ten percent above the
market value of the Company&#146;s Common Stock at the time of
grant. Certain of the Company&#146;s executive officers,
including all of the named executive officers, were granted
premium-priced options in fiscal 2004. Both the fair market
value and premium-priced options granted to the named executive
officers in 2004 are included in the Summary Compensation Table
and in the Option Grants in Last Fiscal Year table that follow
this report. All stock options granted in fiscal 2004 had an
exercise price at least equal to the fair market value of the
Common Stock on the date of grant. In addition, the
premium-priced option grants made in 2004 provide that upon
exercise the executive will receive restricted stock that
generally must be held for the lesser of two years following the
date of exercise or the executive&#146;s period of employment
with the Company. The forms of fair-market value and
premium-priced option agreement, as well as the form of
restricted stock agreement, used by the Company have been filed
as exhibits to the Company&#146;s public reports.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The number of stock options previously awarded and outstanding
for each executive officer was reviewed and considered by the
Committee in determining the size of the executive&#146;s stock
option awards, which were allocated on the basis of individual
potential, responsibility and performance.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B></TD>
    <TD>
    <B><I>Employee Benefits</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition to receipt of salary, management incentive bonuses
and equity compensation, the Company&#146;s officers also
participate in certain employee benefit programs provided by the
Company. Executive officers participate in the Company&#146;s
Pension Plan, which is described on pages&nbsp;23 through 25 of
this proxy statement, and can participate in the Company&#146;s
401(k) Retirement Savings Plan (&#147;Retirement Plan&#148;) and
the Supplemental Benefit Plan (&#147;Supplemental Plan&#148;).
To the extent that the Company&#146;s matching contribution
exceeds certain limits applicable to the Retirement Plan, which
are determined pursuant to the Code, the excess is allocated to
the executive officer&#146;s account under the Supplemental
Plan. The Supplemental Plan is intended to provide a competitive
benefit for executive officers whose employer-provided
retirement contributions would otherwise be limited. The amount
of the Company&#146;s matching contribution to the named
executive officers under both the Retirement Plan and the
Supplemental Plan is included in the &#147;All Other
Compensation&#148; column of the Summary Compensation Table.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The executive officers of the Company are eligible for life
insurance benefits on the terms applicable to the Company&#146;s
other employees. In addition, Mr.&nbsp;Hassenfeld and
Mr.&nbsp;Verrecchia are provided with executive life insurance.
The cost of the Company&#146;s premiums for executive life
insurance programs for the named executive officers is included
in the &#147;All Other Compensation&#148; column of the Summary
Compensation Table.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The executive officers participate in the same medical and
dental benefit plans as are provided to the Company&#146;s other
employees.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Executive officers are also eligible to participate in the
Company&#146;s Nonqualified Deferred Compensation Plan, which is
available to all of the Company&#146;s employees who are in band
40 (director level) or above. The Nonqualified Deferred
Compensation Plan allows participants to choose various
hypothetical investment vehicles, the performance of which
determines the return on compensation deferred under the plan.
Potential investment choices include the Company&#146;s Common
Stock, as well as other equity indices. Earnings on compensation
deferred by the executive officers do not exceed the market
returns on the relevant investments.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Finally, the Company reimburses designated executive officers
for the cost of certain tax and financial planning services they
obtain from third parties. The cost to the Company for this
reimbursement to the named executive officers is included in the
&#147;Other Annual Compensation&#148; column of the Summary
Compensation Table.
</DIV>

<P align="center" style="font-size: 10pt;">18

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<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>2004 Compensation of the Chief Executive Officer</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Effective May&nbsp;14, 2003, Mr.&nbsp;Verrecchia was appointed
the Company&#146;s Chief Executive Officer and
Mr.&nbsp;Verrecchia served as the Company&#146;s Chief Executive
Officer throughout fiscal 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Mr.&nbsp;Verrecchia&#146;s base salary was increased from
$776,240 to $1,000,000 effective upon his elevation to Chief
Executive Officer in May 2003. Mr.&nbsp;Verrecchia&#146;s base
salary has not been increased since that time.
Mr.&nbsp;Verrecchia received a management incentive bonus for
fiscal 2004 amounting to $815,000. The Company&#146;s
performance in 2004 represented 78% achievement of the corporate
performance goals under the Annual Performance Plan. The
Committee set Mr.&nbsp;Verrecchia&#146;s base salary and
management incentive bonus award for 2004 at a level it believed
appropriately and competitively compensated Mr.&nbsp;Verrecchia
in respect to his responsibilities, experience and performance.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In fiscal 2004, Mr.&nbsp;Verrecchia was granted options (each
with three-year vesting) to purchase&nbsp;200,000 and
250,000&nbsp;shares of Common Stock, respectively. The first of
these options was granted at the market price on the date of
grant and the second was granted at an exercise price of 110% of
the market price on the date of grant. Upon exercise of the
premium-priced option, Mr.&nbsp;Verrecchia will receive
restricted stock that generally must be held for the lesser of
two years from the date of exercise or
Mr.&nbsp;Verrecchia&#146;s period of employment with the
Company. The Committee believes that the options granted in
fiscal 2004 were appropriate incentives to Mr.&nbsp;Verrecchia
to improve the Company&#146;s future performance and to further
align his interests with those of the Company&#146;s
shareholders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
All compensation decisions regarding Mr.&nbsp;Verrecchia were
made by the Committee, without the participation of
Mr.&nbsp;Verrecchia or other executive officers of the Company,
and were reviewed and approved by the Company&#146;s Board of
Directors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Report issued by Frank J. Biondi,&nbsp;Jr. (Chair), Alan R.
Batkin, Jack M. Connors,&nbsp;Jr. and Eli J. Segal as the
members of the Compensation and Stock Option Committee of the
Board of Directors as of the 2004 fiscal year end.
</DIV>

<P align="center" style="font-size: 10pt;">19

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<!-- link1 "EXECUTIVE COMPENSATION" -->
<DIV align="left"><A NAME="008"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>EXECUTIVE COMPENSATION</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table summarizes compensation paid by the Company
for services rendered during fiscal 2004, 2003 and 2002 by the
Chief Executive Officer of the Company and the four most highly
compensated executive officers of the Company in fiscal 2004
other than the person serving as Chief Executive Officer.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Summary Compensation Table</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 9pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="27%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>


<TR style="font-size: 7pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>Annual Compensation</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>Long Term Compensation</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Other</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Restricted</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Securities</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Annual</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Stock</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Underlying</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>All Other</B></TD><TD></TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="2" align="center" nowrap><B>Name and Principal Position</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Year</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Salary(a)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Bonus(a)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Compensation(b)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Awards(c)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Options</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Compensation(d)</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Alan G. Hassenfeld</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,038,462</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>815,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,902</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>225,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>179,333</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Chairman of the Board</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,003,971</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,896,631</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16,465</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>200,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>118,365</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD><FONT style="font-size: 9pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2002</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,005,900</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>915,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>38,409</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>450,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>63,581</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Alfred J. Verrecchia</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,038,462</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>815,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>450,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>178,614</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    President and Chief</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>907,886</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,996,170</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,296</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>425,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>99,309</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Executive Officer(e)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2002</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>765,200</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>605,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18,494</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>307,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>375,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>48,448</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Brian Goldner</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>722,308</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>300,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>225,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>69,775</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    President, U.S.&nbsp;Toy Segment(f)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>550,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>736,260</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,350</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>75,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>60,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD><FONT style="font-size: 9pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2002</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>550,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>450,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100,709</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>235,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>57,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    E. David Wilson</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>607,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>365,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,045</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>225,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>78,378</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    President, Games Segment</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>585,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>698,792</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>945</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>75,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>56,100</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    and Executive Vice President</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2002</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>585,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>350,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>904</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>225,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>57,600</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Global Business Integration(g)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    David D.R. Hargreaves</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>493,269</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>255,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>165,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>61,096</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Senior Vice President</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>457,586</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>575,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>50,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>45,665</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    and Chief Financial Officer(h)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2002</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>407,144</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>253,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,365</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>175,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>34,929</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(a)&nbsp;</TD>
    <TD align="left">
    Includes amounts deferred pursuant to the Company&#146;s
    Retirement Savings Plan and Nonqualified Deferred Compensation
    Plan (the &#147;Deferred Compensation Plan&#148;).</TD>
</TR>

</TABLE>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR>
    <TD valign="top">
    (b)</TD>
    <TD></TD>
    <TD valign="top">
    Fiscal 2003 was the last year in which the Company provided an
    automobile allowance to its executive officers. No officers
    received an automobile allowance in fiscal 2004. Includes the
    following amounts which were included in 2003 and 2002 taxable
    income, respectively, for each named individual in connection
    with a program whereby a leased automobile, or an automobile
    allowance, was provided to the executive by the Company: $3,965
    and $13,409 for Mr.&nbsp;Hassenfeld; $4,796 and $9,794 for
    Mr.&nbsp;Verrecchia; and $0 and $3,865 for Mr.&nbsp;Hargreaves.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Includes the amounts set forth in the following table paid by
    the Company and included in 2004, 2003 and 2002 taxable income,
    respectively, for each named executive officer in connection
    with a program whereby certain financial planning and tax
    preparation services are provided to the individual and paid for
    by the Company.</TD>
</TR>

</TABLE>

<CENTER>
<DIV style="margin-left: 6px"></DIV>

<TABLE width="92%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 9pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="69%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>

<TR style="font-size: 7pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Alan G. Hassenfeld</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,902</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>12,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>25,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Alfred J. Verrecchia</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,700</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Brian Goldner</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,350</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    E. David Wilson</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,045</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>945</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>904</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    David D.R. Hargreaves</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,500</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Also includes 2002 relocation and moving expenses reimbursed by
    the Company to Mr.&nbsp;Goldner of $100,709.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Mr.&nbsp;Hassenfeld receives certain limited assistance from the
    Company&#146;s finance, treasury and payroll departments related
    to personal matters. That assistance is provided at no
    incremental cost to the Company.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">20

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR>
    <TD valign="top">
    (c)</TD>
    <TD></TD>
    <TD valign="top">
    Generally, restricted stock vests three years after grant if the
    employee is still employed by the Company on that date. In the
    case of Mr.&nbsp;Verrecchia the restricted stock award in 2002
    was made in the form of deferred restricted stock units, whereby
    the restricted shares are deemed to be held in a deferred
    compensation account under the Company&#146;s Employee
    Non-Qualified Stock Plan. The equivalent of cash dividends on
    said units are deemed to be paid to Mr.&nbsp;Verrecchia&#146;s
    account under the Deferred Compensation Plan. To the extent that
    delivery of the actual shares to the employee after vesting
    would constitute income as to which the Company would be denied
    a deduction under Section&nbsp;162(m) of the Internal Revenue
    Code, as amended (the &#147;Code&#148;) the affected number of
    units will continue to be deemed to be held in the
    employee&#146;s deferred compensation account. Actual shares of
    restricted stock issued to employees have ordinary dividend and
    voting rights, while the holders of deferred restricted stock
    units have no voting rights with respect to the shares of Common
    Stock deemed represented by such units. The number and market
    value of restricted stock units held by Mr.&nbsp;Verrecchia at
    December&nbsp;26, 2004 (based upon the closing stock price of
    $19.19 on December&nbsp;23, 2004) were: 30,829 and $591,609.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (d)</TD>
    <TD></TD>
    <TD valign="top">
    Includes the individual&#146;s pro-rata share of the
    Company&#146;s matching contribution to the savings account of
    each individual under the Company&#146;s Retirement Plan and
    Supplemental Plan, such amounts being set forth in the following
    table.</TD>
</TR>

</TABLE>

<CENTER>
<DIV style="margin-left: 8px"></DIV>
<TABLE width="92%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 9pt; ">

<TR style="font-size: 1pt;">
    <TD width="66%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>

<TR style="font-size: 7pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Alan G. Hassenfeld</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>176,106</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>115,138</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>60,354</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Alfred J. Verrecchia</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>176,078</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>96,773</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>45,912</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Brian Goldner</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>69,775</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>60,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>57,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    E. David Wilson</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>78,378</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>56,100</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>57,600</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    David D.R. Hargreaves</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>61,096</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>45,665</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>34,929</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    These amounts are in part contributed to the individual&#146;s
    account in the Retirement Plan and, to the extent in excess of
    certain Code maximums, deemed allocated to the individual&#146;s
    account in the Company&#146;s unfunded Supplemental Benefit
    Retirement Plan (the &#147;Supplemental Plan&#148;).</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Also includes the following premiums paid by the Company for
    individual life insurance policies for Messrs.&nbsp;Hassenfeld
    and Verrecchia in fiscal 2004, 2003 and 2002 respectively, for
    Mr.&nbsp;Hassenfeld $3,227, $3,227 and $3,227, and for
    Mr.&nbsp;Verrecchia $2,536, $2,536 and $2,536.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Does not include the amounts set forth in the following table
    which were earned by the executives on compensation previously
    deferred by them under the Deferred Compensation Plan. Earnings
    on compensation deferred by the executive officers do not exceed
    the market returns on the relevant investments. Note that
    amounts set forth in brackets represent losses.</TD>
</TR>

</TABLE>

<CENTER>
<DIV style="margin-left: 8px"></DIV>
<TABLE width="92%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 9pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="66%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 7pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Alan G. Hassenfeld</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>16,066</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,384</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,639</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Alfred J. Verrecchia</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>106,234</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>233,671</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(252,498</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Brian Goldner</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>44,798</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>81,154</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(25,139</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    E. David Wilson</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12,307</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,997</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(480</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    David D.R. Hargreaves</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>155,238</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>249,219</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(143,638</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

</TABLE>
</CENTER>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(e)&nbsp;</TD>
    <TD align="left">
    Mr.&nbsp;Verrecchia, formerly President, Chief Operating Officer
    and Chief Financial Officer, was elected President and Chief
    Operating Officer in 2001 and President and Chief Executive
    Officer in 2003.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR>
    <TD valign="top">
    (f)</TD>
    <TD></TD>
    <TD valign="top">
    Mr.&nbsp;Goldner, formerly Senior Vice President and General
    Manager, U.S.&nbsp;Toys from 2000 to 2001, was elected
    President, U.S.&nbsp;Toys in 2001 and President, U.S.&nbsp;Toy
    Segment in 2003.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (g)</TD>
    <TD></TD>
    <TD valign="top">
    Mr.&nbsp;Wilson, formerly Senior Vice President and Sector Head,
    Games, was elected President, Games in 2001 and President, Games
    Segment and Executive Vice President Global Business Integration
    in 2004.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (h)</TD>
    <TD></TD>
    <TD valign="top">
    Mr.&nbsp;Hargreaves, formerly Senior Vice President and Deputy
    Chief Financial Officer, was elected Senior Vice President and
    Chief Financial Officer in 2001.</TD>
</TR>

</TABLE>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
*&nbsp;*&nbsp;*
</DIV>

<P align="center" style="font-size: 10pt;">21

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table sets forth certain information regarding
stock option grants in fiscal 2004 to the individuals named
above.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Option Grants in Last Fiscal Year</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="40%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Grant Date</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap><B>Individual Grants</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Value(a)</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% of Total</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="7">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Number of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Options</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="7">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Securities</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Granted to</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="7">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Underlying</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Employees</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Exercise</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Options</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>In Fiscal</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Price Per</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Expiration</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Grant Date</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="center" nowrap><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Granted(d)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Year</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Share</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Date</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Present Value</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Alan G. Hassenfeld</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100,000</TD>
    <TD align="left" valign="bottom" nowrap>(b)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>18.575</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5/19/2014</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>651,250</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>125,000</TD>
    <TD align="left" valign="bottom" nowrap>(c)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>20.4325</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5/19/2011</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>743,250</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Alfred J. Verrecchia</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>200,000</TD>
    <TD align="left" valign="bottom" nowrap>(b)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>18.575</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5/19/2014</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,302,500</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>250,000</TD>
    <TD align="left" valign="bottom" nowrap>(c)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>20.4325</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5/19/2011</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,486,500</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Brian Goldner</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>75,000</TD>
    <TD align="left" valign="bottom" nowrap>(b)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>18.575</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5/19/2014</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>488,438</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>150,000</TD>
    <TD align="left" valign="bottom" nowrap>(c)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>20.4325</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5/19/2011</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>891,900</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    E. David Wilson</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>75,000</TD>
    <TD align="left" valign="bottom" nowrap>(b)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>18.575</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5/19/2014</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>488,438</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>150,000</TD>
    <TD align="left" valign="bottom" nowrap>(c)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>20.4325</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5/19/2011</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>891,900</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    David D.R. Hargreaves</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>40,000</TD>
    <TD align="left" valign="bottom" nowrap>(b)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>18.575</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5/19/2014</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>260,500</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>125,000</TD>
    <TD align="left" valign="bottom" nowrap>(c)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>20.4325</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5/19/2011</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>743,250</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(a)&nbsp;</TD>
    <TD align="left">
    The Grant Date Present Values were determined using the standard
    application of the Black-Scholes option pricing methodology
    using the following weighted average assumptions: volatility
    40.39%, dividend yield 1.29% and a risk free interest rate of
    3.86% based on the options being outstanding for approximately
    five years. The Grant Date Present Values do not take into
    account risk factors such as non-transferability and limits on
    exercisability. In assessing the Grant Date Present Values
    indicated in the above table, it should be kept in mind that no
    matter what theoretical value is placed on an option on the date
    of grant, the ultimate value of the option is dependent on the
    market value of the Common Stock at a future date, and the
    extent if any, by which such market value exceeds the exercise
    price on the date of exercise.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR>
    <TD valign="top">
    (b)</TD>
    <TD></TD>
    <TD valign="top">
    These options are non-qualified, were granted at fair market
    value on the date of grant, and vest in equal annual
    installments over three years. All options become fully vested
    in the event of death, disability or retirement at the
    optionee&#146;s normal retirement date and are exercisable for a
    period of one year from the date of such disability or
    retirement, or in the case of death, from the appointment and
    qualification of the executor, administrator or trustee for the
    optionee&#146;s estate. An optionee taking early retirement may,
    under certain circumstances, exercise all or a portion of the
    options unvested at his or her early retirement date and may
    exercise such options for three months or such longer period as
    the Compensation and Stock Option Committee may approve. Unless
    otherwise approved by the Compensation Committee in its
    discretion, upon termination of employment for any other reason,
    only options vested at the date of the termination may be
    exercised, and are exercisable for a period of three months
    following termination.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (c)</TD>
    <TD></TD>
    <TD valign="top">
    These options are non-qualified, were granted at 110% of fair
    market value on the date of grant, and vest in equal annual
    installments over three years. All options become fully vested
    in the event of death, disability or retirement at the
    optionee&#146;s normal retirement date and are exercisable for a
    period of three years from such disability or retirement, or in
    the case of death, from the appointment and qualification of the
    executor, administrator or trustee for the optionee&#146;s
    estate. Unless otherwise approved by the Committee in its
    discretion, upon termination of employment for any other reason,
    only options vested at the date of termination may be exercised,
    and are exercisable for a period of six months following
    termination.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Upon exercise of these options the recipient receives restricted
    stock which must be generally held for the lesser of two years
    following the date of exercise or the executive&#146;s period of
    employment with the Company.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR>
    <TD valign="top">
    (d)</TD>
    <TD></TD>
    <TD valign="top">
    All of these awards were granted pursuant to the 2003 Stock
    Incentive Performance Plan (the &#147;2003 Plan&#148;). Upon a
    Change of Control, as defined in the 2003 Plan, all options
    become immediately</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">22

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    exercisable and will be canceled in exchange for a cash payment
    in the amount of the difference between the highest price paid
    for a share of Common Stock in the transaction or series of
    transactions pursuant to which the Change of Control shall have
    occurred or, if higher, the highest reported sales price of a
    share of Common Stock during the sixty-day period immediately
    preceding the date of the Change of Control. Participants may
    exercise options and satisfy tax withholding liabilities by
    payments in cash or by delivery of Common Stock equal to the
    exercise price and the tax withholding liability. In addition,
    participants may instruct the Company to withhold shares
    issuable upon exercise in satisfaction of tax withholding
    liability.</TD>
</TR>

</TABLE>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
*&nbsp;*&nbsp;*
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table sets forth as to each of the named
individuals: (a)&nbsp;information with respect to option
exercises during the fiscal year ended December&nbsp;26, 2004,
(b)&nbsp;the number of exercisable and unexercisable options
held on December&nbsp;26, 2004, the last day of the
Company&#146;s 2004 fiscal year; and (c)&nbsp;the value of such
options at December&nbsp;26, 2004 (based on the closing price of
the Common Stock of $19.19 on December&nbsp;23, 2004). The
number of options set forth below correspond to the number of
shares to which the options relate.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Aggregated Option Exercises in Last Fiscal Year and Fiscal
Year End Option Values</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="24%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Number of Securities</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Underlying Unexercised</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Value of Unexercised In-the-</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Number of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Options at</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Money Options</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Shares</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>December&nbsp;26, 2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>at December&nbsp;26, 2004</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Acquired on</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="center" nowrap><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Exercise</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Value Realized</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Exercisable</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Unexercisable</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Exercisable</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Unexercisable</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Alan G. Hassenfeld</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>67,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>349,097</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,530,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>575,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,655,967</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,505,723</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Alfred J. Verrecchia</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>45,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>264,015</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,260,334</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>911,666</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,365,537</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,925,454</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Brian Goldner</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>60,060</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>365,667</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>413,333</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,445,545</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>671,625</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    E. David Wilson</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>464,583</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>390,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>588,415</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>628,935</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    David D.R. Hargreaves</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>22,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>119,050</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>294,875</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>290,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,014,149</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>431,461</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
*&nbsp;*&nbsp;*
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Pension Plan Benefits Prior to January&nbsp;1, 2000
Amendment</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table shows the estimated annual benefits payable
upon retirement in specified remuneration and years of service
classifications under the Company&#146;s Pension Plan (the
&#147;Pension Plan&#148;) and under the Supplemental Plan, as
such plans were in effect prior to a January&nbsp;1, 2000
amendment to the Pension Plan.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Pension Plan Table</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="28%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="22" align="center" nowrap><B>Estimated Annual Retirement Benefit by Years of Service Classification(2)</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="center" nowrap><B>Average</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="22" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="center" nowrap><B>Compensation(1)</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>5</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>10</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>15</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>20</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>25</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>30(3)</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    $&nbsp;&nbsp;800,000</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>66,667</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>133,333</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>200,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>266,667</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>333,333</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>400,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;1,200,000</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>200,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>300,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>400,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>500,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>600,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;1,600,000</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>133,333</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>266,667</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>400,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>533,333</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>666,667</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>800,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;2,000,000</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>166,667</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>333,333</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>500,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>666,667</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>833,333</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,000,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;2,400,000</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>200,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>400,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>600,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>800,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,000,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,200,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;2,800,000</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>233,333</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>466,667</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>700,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>933,333</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,166,667</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,400,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;3,200,000</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>266,667</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>533,333</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>800,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,066,667</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,333,333</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,600,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;3,600,000</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>300,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>600,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>900,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,200,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,500,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,800,000</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">23

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    Covered compensation under the Pension Plan and the Supplemental
    Plan includes the average of salaries and bonuses paid for the
    five highest consecutive years during the ten years preceding
    retirement (&#147;Average Compensation&#148;). The salary and
    bonus information reflected in the preceding Summary
    Compensation Table shows salaries and bonuses for the years in
    which they are earned, not paid. For example, under the
    Company&#146;s bonus plans bonuses earned for performance in one
    year are generally paid in the beginning of the following year.
    As such, a bonus earned for performance in fiscal 2004 is
    reflected in the 2004 bonus column in the Summary Compensation
    Table. However, that bonus would generally be paid in the
    beginning of 2005 and thus is reflected in 2005 compensation for
    purposes of computing benefits under the Pension Plan and the
    Supplemental Plan. The aggregate salary and bonus paid to each
    of the individuals included in the Summary Compensation Table in
    fiscal 2004 for purposes of the plans were as follows:
    $2,935,093 for Mr.&nbsp;Hassenfeld; $2,934,632 for
    Mr.&nbsp;Verrecchia; $1,162,918 for Mr.&nbsp;Goldner; $1,306,292
    for Mr.&nbsp;Wilson; and $1,018,269 for Mr.&nbsp;Hargreaves.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    Estimated retirement benefit amounts shown are prior to
    reduction by an Internal Revenue Service designated amount keyed
    to a participant&#146;s Social Security entitlement. Amounts
    shown are computed on the single straight-life annuity option.
    Commencement of benefits prior to age&nbsp;65 and/or election of
    other payment options will reduce the annual benefit amount
    shown. Payments from the Supplemental Plan, which is unfunded,
    are not subject to provisions of the Code that limit benefits
    under the Pension Plan. As set forth in the above table and
    subject to the foregoing, the retirement benefit after thirty
    years of credited service is generally 50% of Average
    Compensation.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(3)&nbsp;</TD>
    <TD align="left">
    For purposes of determining annual benefits under the Pension
    Plan and the Supplemental Plan in the table above credited years
    of service cannot exceed 30.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Pension Plan Benefits, As Amended January&nbsp;1, 2000</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Effective January&nbsp;1, 2000, the Company amended the Pension
Plan as part of an overall redesign of its retirement programs.
The January&nbsp;1, 2000 amendments to the Pension Plan
implemented a number of changes. Among the significant changes,
the amendments to the Pension Plan provided for a lump sum
benefit or an annual benefit, both determined primarily on the
basis of Average Compensation and actual years of service
(including years of service in excess of 30&nbsp;years). Another
aspect of the amendments made the benefits under the Pension
Plan, as amended, portable after five years of service (defined
for vesting purposes) with the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Until January&nbsp;1, 2007, employees who were working for the
Company at the time of the January&nbsp;1, 2000 amendment to the
Pension Plan and who remain continuously employed by the Company
will receive, upon retirement, the higher of the benefits
provided to them by the Pension Plan as so amended, and the
benefits described in the table above for the Pension Plan
before it was amended. For such employees retiring on or after
January&nbsp;1, 2007, to compute their benefits the Company
determines what the employee&#146;s benefits would have been
under the unamended Pension Plan as of December&nbsp;31, 2006.
If the benefits under the unamended Pension Plan are higher than
the benefits provided for such employee under the Pension Plan
as amended, the employee&#146;s pension benefits are computed by
adding the benefits accrued under the old Pension Plan as of
December&nbsp;31, 2006 to the benefits accrued under the Pension
Plan, as amended, for periods of service after January&nbsp;1,
2007.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For employees joining the Company after January&nbsp;1, 2000,
benefits will only be computed with respect to the Pension Plan
as amended.
</DIV>

<P align="center" style="font-size: 10pt;">24
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table shows the estimated annual benefits payable
upon retirement in specified remuneration and years of service
classifications under the Company&#146;s Pension Plan and under
the Supplemental Plan, taking into account the January&nbsp;1,
2000 amendment to the Pension Plan. While both the table above
and the table below reflect retirement benefits payable at
age&nbsp;65, benefits shown in the table above will be reduced
for commencement of benefits prior to age&nbsp;65. Benefits in
the table below are unreduced for commencement of benefits on or
after age&nbsp;55.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Pension Plan Table</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="22%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="30" align="center" nowrap><B>Estimated Annual Retirement Benefit by Years of Service Classification(5)</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="center" nowrap><B>Average</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="30" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="center" nowrap><B>Compensation(4)</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>5</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>10</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>15</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>20</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>25</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>30</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>35</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>40</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    $&nbsp;&nbsp;800,000</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>38,535</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>77,070</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>115,605</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>154,140</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>192,675</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>231,210</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>269,745</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>308,280</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;1,200,000</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>58,535</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>117,070</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>175,605</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>234,140</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>292,675</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>351,210</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>409,745</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>468,280</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;1,600,000</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>78,535</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>157,070</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>235,605</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>314,140</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>392,675</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>471,210</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>549,745</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>628,280</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;2,000,000</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>98,535</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>197,070</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>295,605</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>394,140</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>492,675</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>591,210</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>689,745</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>788,280</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;2,400,000</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>118,535</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>237,070</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>355,605</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>474,140</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>592,675</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>711,210</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>829,745</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>948,280</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;2,800,000</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>138,535</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>277,070</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>415,605</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>554,140</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>692,675</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>831,210</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>969,745</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,108,280</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;3,200,000</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>158,535</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>317,070</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>475,605</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>634,140</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>792,675</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>951,210</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,109,745</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,268,280</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;3,600,000</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>178,535</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>357,070</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>535,605</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>714,140</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>892,675</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,071,210</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,249,745</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,428,280</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(4)&nbsp;</TD>
    <TD align="left">
    Covered compensation under the Pension Plan and the Supplemental
    Plan includes the average of total salaries and bonuses paid for
    the five highest consecutive years during the ten years
    preceding retirement (&#147;Average Compensation&#148;). See
    footnote (1)&nbsp;to the preceding table for an explanation of
    how salaries and bonuses paid relate to the salaries and bonuses
    reflected in the Summary Compensation Table.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(5)&nbsp;</TD>
    <TD align="left">
    Amounts shown are computed on the single-life annuity option.
    Commencement of benefits prior to age&nbsp;55 and/or election of
    other payment options will reduce the annual benefit amount
    shown. Payments from the Supplemental Plan, which is unfunded,
    are not subject to the provisions of the Code that limit
    benefits under the Pension Plan.</TD>
</TR>

</TABLE>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The following table sets forth, as to the five named
individuals, their years of credited service under the Pension
Plan and the Supplemental Plan:
</DIV>

<CENTER>
<TABLE width="92%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="78%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Credited Years</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>of Service</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Alan G. Hassenfeld</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>36</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Alfred J. Verrecchia</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>39</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Brian Goldner(1)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    E. David Wilson</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>24</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    David D.R. Hargreaves</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 4%; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff"></DIV>

<CENTER>
<TABLE width="92%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    Mr.&nbsp;Goldner was hired after January&nbsp;1, 2000 and is
    therefore only covered by the amended Pension Plan.</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Mr.&nbsp;Hargreaves is also entitled to a defined benefit from
the Hasbro U.K. Employee Benefits Plan (the &#147;U.K.
Plan&#148;) for his services while in the U.K., and the Hasbro
International Expatriate Pension Plan (the &#147;Expatriate
Plan&#148;). The single straight-life annuity benefit under the
Expatriate Plan is 2% of Average Compensation for each year of
service, reduced by benefits payable from the U.K. Plan, the
Pension Plan, the Supplemental Plan, and the annuity equivalent
of benefits attributable to the prior qualified and nonqualified
(a)&nbsp;Profit Sharing Plans and (b), for periods after 2000,
the Retirement Savings Plans. Expatriate Plan benefits are also
reduced by the Social Security entitlement described above.
Commencement of benefits prior to normal retirement at
age&nbsp;65 and other payment options will reduce benefits under
both the U.K. Plan and the Expatriate Plan. After 2006, accruals
under the Expatriate Plan are calculated based on the post-2000
Pension Plan and Supplemental Plan provisions. The annual single
straight-life annuity benefit earned by
</DIV>

<P align="center" style="font-size: 10pt;">25

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<DIV align="left" style="font-size: 10pt;">
Mr.&nbsp;Hargreaves under the U.K. Plan as of July&nbsp;24,
1992, the date his participation in the U.K. Plan ceased, is
9,617 pounds. This amount is adjusted each year for inflation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Change of Control and Employment Agreements</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following are summaries of the Company&#146;s change of
control and employment agreements with the named executive
officers included in the preceding tables and are therefore not
complete. We have filed copies of the forms of the agreements
with the Securities and Exchange Commission.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Change of Control Agreements.</I> Seven senior executives,
including all of the above-named individuals, are parties to
employment agreements, as amended (the &#147;Change of Control
Agreements&#148;) with the Company. The Change of Control
Agreements come into effect only upon a &#147;Change of
Control,&#148; as defined therein, and continue for three years
after such date (the &#147;Employment Period&#148;). If, during
the Employment Period, an executive&#146;s employment with the
Company is involuntarily terminated other than for
&#147;Cause,&#148; the executive is entitled to the
executive&#146;s (a)&nbsp;average annual salary for the five
years preceding the Change of Control (or such lesser number of
actual years employed) plus (b)&nbsp;the greater of (x)&nbsp;the
target bonus during the year of termination and (y)&nbsp;the
average annual bonus for the five years preceding the Change of
Control (or such lesser number of actual years employed), in
each case multiplied by three (or multiplied by two if the
special bonus described in the following sentence has already
been paid). In addition, if the executive remains employed
through the first anniversary of the Change in Control the
executive will receive a special bonus equal to one year&#146;s
salary and bonus, computed using the five-year look back period
described in the prior sentence.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If the executive&#146;s employment is involuntarily terminated
other than for &#147;Cause&#148; during the Employment Period
the executive would also be entitled to an amount equal to the
shortfall between the actuarial benefit payable to the executive
under the Company&#146;s retirement plans as a result of the
early termination and the amount the executive would have
received if the executive had continued in the employ of the
Company for the remainder of the Employment Period. In addition,
the executive and the executive&#146;s family would be entitled
to the continuation of medical, welfare, life insurance,
disability and other benefits for at least the remainder of the
Employment Period. If the executive is subject to the payment of
excise tax under Section&nbsp;4999 of the Code, the Company will
pay such executive an additional amount so as to place the
executive in the same after-tax position such executive would
have been in had such excise tax not applied.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition, the Change of Control Agreements permit an
executive to terminate the executive&#146;s employment for
&#147;Good Reason&#148; at any time during the Employment
Period, or for any reason during a 30-day period immediately
following the first anniversary of the Change of Control, and
receive the above-described severance benefits. &#147;Good
Reason&#148; includes diminution of the executive&#146;s
responsibilities or compensation, relocation or purported
termination otherwise than as expressly permitted by the Change
of Control Agreements. Under certain circumstances, certain
payments by the Company pursuant to the Change of Control
Agreements may not be deductible for federal income tax purposes
pursuant to Section&nbsp;280G of the Code.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A &#147;Change of Control&#148; is defined as the occurrence of
certain events, including acquisition by a third party of 20% or
more of the Company&#146;s outstanding voting securities, a
change in the majority of the Board, consummation of a
reorganization, merger, consolidation, substantial asset sale
involving, or shareholder approval of a liquidation or
dissolution of, the Company subject, in each case, to certain
exceptions. &#147;Cause&#148; is defined, for purposes of the
Agreements, as demonstrably willful or deliberate violations of
the executive&#146;s responsibilities which are committed in bad
faith or without reasonable belief that such violations are in
the best interests of the Company, which are unremedied after
notice, or conviction of the executive of a felony involving
moral turpitude.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Employment Agreements.</I> The Company and
Mr.&nbsp;Verrecchia entered into a Post-Employment Agreement,
effective as of March&nbsp;10, 2004 (the &#147;Post-Employment
Agreement&#148;). Under the Post-Employment Agreement, if
Mr.&nbsp;Verrecchia&#146;s employment is terminated by the
Company without &#147;Cause&#148; or by Mr.&nbsp;Verrecchia for
&#147;Good Reason&#148; (as such terms are defined in the
Post-Employment Agreement), then the Company shall pay
Mr.&nbsp;Verrecchia severance pay of up to three years&#146;
annual base salary and bonus,
</DIV>

<P align="center" style="font-size: 10pt;">26

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<DIV align="left" style="font-size: 10pt;">
contingent on Mr.&nbsp;Verrecchia executing a severance and
settlement agreement. If Mr.&nbsp;Verrecchia&#146;s employment
is terminated by the Company without Cause or by
Mr.&nbsp;Verrecchia with Good Reason: (i)&nbsp;on or before
September&nbsp;1, 2006, Mr.&nbsp;Verrecchia is eligible to
receive severance pay equal to thirty-six (36)&nbsp;months&#146;
base salary and monthly bonus, (ii)&nbsp;after September&nbsp;1,
2006, but before March&nbsp;1, 2008, Mr.&nbsp;Verrecchia is
eligible to receive severance pay of monthly base salary and
monthly bonus for the number of months which is equal to
thirty-six (36)&nbsp;less the number of whole months for which
Mr.&nbsp;Verrecchia is employed by the Company after
September&nbsp;1, 2006 and (iii)&nbsp;after March&nbsp;1, 2008,
Mr.&nbsp;Verrecchia is eligible to receive severance pay of
monthly base salary and monthly bonus for eighteen
(18)&nbsp;months. If Mr.&nbsp;Verrechia&#146;s employment is
terminated by the Company without Cause and at the time of such
termination the Company has in place a severance plan of general
applicability for which Mr.&nbsp;Verrecchia is eligible,
Mr.&nbsp;Verrecchia will be entitled to the greater of the
benefits offered under this general severance plan and those
offered under the Post-Employment Agreement. Finally, if
Mr.&nbsp;Verrecchia&#146;s employment is terminated by mutual
agreement of the Company and Mr.&nbsp;Verrecchia because of a
family medical emergency or other reason beyond
Mr.&nbsp;Verrecchia&#146;s control which results in him being
unable to work or because of a disability (as defined), then in
each case Mr.&nbsp;Verrecchia is entitled to eighteen
(18)&nbsp;months of monthly base salary and bonus.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For purposes of the Post-Employment Agreement, monthly base
salary is equal to the annual base salary paid to
Mr.&nbsp;Verrecchia for the fifty-two (52)&nbsp;weeks
immediately preceding the week of his termination, divided by
twelve (12). The monthly bonus shall equal the annual target
bonus for Mr.&nbsp;Verrecchia for the year in which his
employment is terminated, divided by twelve (12).
Mr.&nbsp;Verrecchia is also entitled to continuation of medical,
dental and certain other benefits during the period in which he
is receiving severance pay under the Post-Employment Agreement.
However, in the event of a Change in Control, the benefits
payable under the Post-Employment Agreement are reduced by the
amount of any benefits received by Mr.&nbsp;Verrecchia under the
Change of Control Agreements described above.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Post-Employment Agreement also provides Mr.&nbsp;Verrecchia
with certain enhanced retirement benefits. Unless
Mr.&nbsp;Verrecchia&#146;s employment is terminated by the
Company for Cause, he shall receive annuity payments in monthly
installments following the termination of his employment for the
remainder of his life in an annual amount equal to 1.5% of his
Final Average Pay (as defined) multiplied by
Mr.&nbsp;Verrecchia&#146;s years of service with the Company,
but not to exceed 60% of Final Average Pay. The enhanced
retirement benefit is also reduced by the benefits provided to
Mr.&nbsp;Verrecchia by the Pension Plan and Supplemental Benefit
Plan. If Mr.&nbsp;Verrecchia&#146;s employment terminates due to
his death, his spouse is entitled to the actuarial equivalent of
the enhanced retirement benefits described above.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Post-Employment Agreement contains certain post-employment
restrictions on Mr.&nbsp;Verrecchia, including an eighteen
(18)&nbsp;month non-competition agreement and provisions
protecting the Company&#146;s confidential information.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Compensation Committee Interlocks and Insider
Participation</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The members of the Compensation and Stock Option Committee of
the Board as of the 2004 fiscal year end were Alan R. Batkin,
Frank J. Biondi,&nbsp;Jr. (Chair), Jack M. Connors,&nbsp;Jr. and
Eli J. Segal. None of the members of the Compensation and Stock
Option Committee during fiscal 2004 had at any time been an
officer or employee of the Company or of any of its
subsidiaries. No executive officer of the Company served as a
member of the compensation committee or board of directors of
any other entity which had an executive officer serving as a
member of the Company&#146;s Board or Compensation and Stock
Option Committee during fiscal 2004.
</DIV>

<P align="center" style="font-size: 10pt;">27

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<!-- link1 "PROPOSAL TO APPROVE AN AMENDMENT TO THE 2003 STOCK INCENTIVE PERFORMANCE PLAN" -->
<DIV align="left"><A NAME="009"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>PROPOSAL&nbsp;TO APPROVE AN AMENDMENT TO THE 2003 STOCK
INCENTIVE</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>PERFORMANCE PLAN</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>(Proposal&nbsp;No.&nbsp;2)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On February&nbsp;17, 2005, the Board adopted, subject to
shareholder approval, an amendment (the &#147;Amendment&#148;)
to the Company&#146;s 2003 Stock Incentive Performance Plan (the
&#147;2003 Incentive Plan&#148;) and directed that the Amendment
be submitted to the shareholders of the Company for their
consideration. The Board unanimously recommends that the
shareholders approve the Amendment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Amendment authorizes an additional 5,000,000&nbsp;shares of
Common Stock for equity awards under the 2003 Incentive Plan. Of
these 5,000,000 additional shares being authorized, only 50%, or
2,500,000&nbsp;shares, would be available for stock awards other
than options and SARS.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Purpose of the Amendment</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The 2003 Incentive Plan is designed to advance the interests of
the Company and to increase shareholder value by providing key
employees and directors of the Company, or its affiliates, with
a proprietary interest in the growth and performance of the
Company, and to provide incentives for such individuals to
continue their service with the Company or its affiliates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Board believes that having an adequate ability to provide
selected employees of the Company with equity awards is critical
if the Company is to continue to attract and retain qualified
individuals who can make significant contributions to the
performance of the Company, and that such awards help align the
interests of those individuals with the shareholders of the
Company in enhancing the value of the Common Stock and improving
the Company&#146;s performance.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of March&nbsp;25, 2005 there were only approximately
1,255,332&nbsp;shares remaining available for future awards
under the 2003 Incentive Plan. The Company&#146;s only other
current plan providing for the grant of equity awards to the
Company&#146;s officers and employees is the 1995 Stock
Incentive Performance Plan (the &#147;1995 Plan&#148;). The 1995
Plan expires on December&nbsp;31, 2005 and no further awards can
be made under the 1995 Plan after that date. As of
March&nbsp;25, 2005 there were only approximately
1,479,761&nbsp;shares remaining available for future awards
under the 1995 Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Board believes that approval of the Amendment, making
additional shares available for future awards under the 2003
Incentive Plan, is critical to allow the Company to attract and
retain qualified individuals who can contribute to the
Company&#146;s performance.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For the reasons set forth above, the Board adopted the Amendment
and unanimously recommends its approval by the shareholders of
the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Key Features of the 2003 Incentive Plan, Incorporating the
Amendment</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Some of the key features of the 2003 Incentive Plan, as amended
by the Amendment, are:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    a prohibition against repricing stock options without
    shareholder approval;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    a prohibition against granting stock options at an exercise
    price less than fair market value;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    limits on awards that can be made to any individual in any
    calendar year;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    no more than 3,500,000 of the shares authorized by the plan may
    be used for stock grants;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the total shares authorized under the plan and currently
    available for future grant of awards, including the additional
    shares provided by the Amendment, constitute less than 4% of the
    outstanding Common Stock as of the record date;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    immediately following approval of the Amendment, the shares
    authorized under the plan, together with all shares of Common
    Stock then available or subject to outstanding awards under the
    Company&#146;s other equity incentive plans, including the 2003
    Director Option Plan, will not exceed 15% of the total</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">28

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD></TD>
    <TD align="left">
    of the Company&#146;s outstanding Common Stock and all shares
    then issuable pursuant to the Company&#146;s equity compensation
    plans;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    stock options granted under the plan must vest over a period of
    not less than three years, subject to limited exceptions set
    forth in the plan;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    restricted and deferred stock granted under the plan shall vest
    no earlier than three years from the date of grant, subject to
    limited exceptions set forth in the plan.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Description of 2003 Incentive Plan, as Amended by the
Amendment</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The 2003 Incentive Plan is intended to attract and retain
talented employees and directors for the Company and its
affiliates who are in a position to make significant
contributions to the success of the Company, to reward such
persons for making these contributions and to encourage such
persons to take into account the long-term interests of the
Company and enhancement of the Company&#146;s value for its
shareholders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Section&nbsp;162(m) of the Code places annual limitations on the
deductibility by public companies of compensation in excess of
$1&nbsp;million paid to each of the chief executive officer and
the other four most highly compensated officers, unless, among
other things, the compensation is performance-based. For
compensation attributable to stock options and stock
appreciation rights to qualify as performance-based, the plan
under which such stock options and stock appreciation right are
granted must state a maximum number of shares with respect to
which options and rights may be granted to an individual during
a specified period and must be approved by the Company&#146;s
shareholders. The 2003 Incentive Plan is intended to comply with
the provisions of Section&nbsp;162(m) so as to permit the
Company to claim an income tax deduction for total remuneration
paid in excess of $1&nbsp;million in any one year to the chief
executive officer or the other four highest compensated
executive officers, although the Company has not requested or
received, and does not expect to receive a ruling from the
Internal Revenue Service to that effect.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The 2003 Incentive Plan was originally adopted by the Board on
February&nbsp;12, 2003 and was approved by the Company&#146;s
shareholders at the 2003 Annual Meeting of shareholders. As
originally approved the 2003 Incentive Plan made
5,000,000&nbsp;shares of Common Stock available for the grant of
equity awards, 1,000,000&nbsp;shares of which could be used for
stock awards other than options and SARS.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following is a summary of the 2003 Incentive Plan, as
amended by the Amendment, and is therefore not complete. A
complete copy of the 2003 Incentive Plan, as well as the
Amendment to be considered by shareholders, is annexed to this
Proxy Statement as Appendix&nbsp;B.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Administration</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The 2003 Incentive Plan is administered by the Compensation and
Stock Option Committee of the Board. The Committee has the
authority to establish rules for the administration of the 2003
Incentive Plan; to select the employees and directors of the
Company and its affiliates to whom awards are granted; to
determine the types of awards to be granted and the number of
shares covered by such awards; and to set the terms and
conditions of such awards (including, without limitation, but
subject to the provisions described below, the power to
accelerate any vesting restrictions, waive, in whole or in part,
any forfeiture provisions or extend the term of any award).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Committee may also determine whether the payment of any
proceeds of any award shall or may be deferred and may authorize
payments representing dividends or interest or their equivalents
in connection with any deferred award. The Committee may provide
that awards denominated in stock earn dividends or dividend
equivalents. Determinations and interpretations of the Committee
will be binding on all parties.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Eligibility</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Employees and directors of the Company and of any other entity
that is directly or indirectly controlled by the Company
(collectively &#147;affiliates&#148;) are eligible to receive
awards under the 2003 Incentive Plan. As of
</DIV>

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<DIV align="left" style="font-size: 10pt;">
March&nbsp;25, 2005 there were approximately 510 employees
holding options or other awards granted under the 1995 Plan and
earlier stock option plans, and approximately 299 employees
holding options or other awards under the 2003 Incentive Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Incentive stock options may only be granted to employees of the
Company or of a &#147;parent corporation&#148; or
&#147;subsidiary corporation&#148; of the Company as those terms
are defined in Section&nbsp;424 of the Code.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Awards</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The 2003 Incentive Plan permits granting awards for:
(1)&nbsp;stock options, including incentive stock options
(&#147;ISOs&#148;) meeting the requirements of Section&nbsp;422
of the Code; (2)&nbsp;stock appreciation rights
(&#147;SARs&#148;); (3)&nbsp;stock awards, including restricted
and unrestricted stock and deferred stock, (4)&nbsp;performance
awards, and (5)&nbsp;cash awards that would constitute a
&#147;derivative security&#148; for purposes of Rule&nbsp;16b-6,
as promulgated under the Securities Exchange Act of 1934, as
amended (the &#147;1934&nbsp;Act&#148;), if not awarded pursuant
to a plan satisfying the provisions of Rule&nbsp;16b-3.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Shares Available and Limits on Awards</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If the Amendment is approved a total of 10,000,000&nbsp;shares
of Common Stock would be authorized for issuance pursuant to
equity awards under the 2003 Incentive Plan. Of the 10,000,000
total authorized shares, approximately 3,740,334&nbsp;shares
were subject to outstanding awards under the 2003 Incentive Plan
as of March&nbsp;25, 2005. As such, following approval of the
Amendment, and based on the number of outstanding awards as of
March&nbsp;25, 2005, approximately 6,255,332&nbsp;shares of
Common Stock would be available for future awards under the 2003
Incentive Plan. These 6,255,332 available shares represent less
than 4% of the outstanding Common Stock as of the record date.
No more than 35% of the total shares authorized for issuance
under the 2003 Incentive Plan, or 3,500,000&nbsp;shares, may be
delivered pursuant to awards other than stock options or SARs.
The number of shares that may be the subject of options or SARs
granted to any one individual may not exceed 1,000,000 in any
calendar year. The maximum benefit that may be paid to any
person under any other awards in any calendar year under the
2003 Incentive Plan will be, to the extent paid in shares,
200,000&nbsp;shares and, to the extent paid in cash,
$1&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If any shares subject to an option or award under the 2003
Incentive Plan are forfeited or if any such option or award
terminates, the shares previously covered by such option or
award will be available for future grant or award under the
plan. If another company is acquired by the Company or an
affiliate in the future, any grants or awards made and any of
the Company&#146;s shares delivered upon the assumption of or in
substitution for outstanding grants made by the acquired company
may be deemed to be granted or awarded under the 2003 Incentive
Plan, but will not decrease the number of shares available for
grant or award under the 2003 Incentive Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the event of any stock dividend, stock split, combination or
exchange of shares, recapitalization or other change in the
Company&#146;s capital structure, the Committee will make
appropriate adjustments to reflect such change with respect to
(i)&nbsp;the aggregate number of shares that may be issued under
the 2003 Incentive Plan and the limits on certain types of
awards under the plan; (ii)&nbsp;the number of shares subject to
awards under the plan; and/or (iii)&nbsp;the price per share for
any outstanding stock options, SARs and other awards under the
plan. To the extent consistent with applicable rules, the
Committee may make adjustments of the type described in the
preceding sentence to take into account other events and
circumstances if the Committee determines such adjustments are
appropriate to preserve the value of awards under the plan.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Additional Terms of Awards</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Options.</I> The Committee establishes the exercise price per
share for options, the term of options, the time at which they
may be exercised and such other terms as the Committee deems
appropriate, except that the exercise price of each option shall
be not less than the Fair Market Value (as defined below) of the
Common Stock on the date of grant.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;Fair Market Value&#148; for purposes of the 2003 Incentive
Plan shall mean the average of the high and low sales prices of
the Common Stock as reported in The Wall Street Journal for New
York Stock Exchange Transactions or similar successor
consolidated transactions reports for the relevant date (or the
comparable consolidated transaction reports for any other
national securities exchange or for NASDAQ National Market
Issues, if the Common Stock is admitted for trading or quotation
on said exchange or market), or, if no sales of Common Stock
were made on said exchange or market on that date, the average
of the high and low prices of Common Stock as reported in said
composite transactions report for the preceding day on which
sales of Common Stock were made on said exchange or market. As
of March&nbsp;24, 2005, the average of the high and low sales
prices of the Common Stock, as reported in the New York Stock
Exchange Composite Transactions, was $20.68.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Subject to the limitations described below, options will become
exercisable at such time or times, and on and subject to such
conditions, as the Committee may specify. Except in the case of
awards made in connection with the recruitment of new employees,
including new officers, or new directors, stock options shall
vest in equal annual installments over a period of not less than
three years. Notwithstanding the foregoing, the Committee may
provide for the acceleration of vesting of stock options upon
the death, disability, retirement or other termination of
employment or service of the participant. Unless the Committee
determines otherwise, payment of the purchase price in full in
cash is required upon option exercise.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Stock Appreciation Rights.</I> The holder of a SAR will be
entitled to receive the excess of the fair market value,
calculated as of the exercise date, of a specified number of
shares over the grant price of the SAR. SARs need not be granted
in tandem with stock options.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Stock Awards.</I> The 2003 Incentive Plan provides for the
award of restricted stock subject to forfeiture, deferred stock
and unrestricted stock. A stock award may provide the recipient
with all of the rights of a shareholder of the Company,
including the right to vote the shares and to receive any
dividends.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Stock awards generally will be subject to certain conditions
established by the Committee, including continuous service with
the Company, achievement of specific business objectives, and
other measurements of individual, business unit or Company
performance. Except in the case of awards made in connection
with the recruitment of new employees, including new officers,
or new directors, awards of restricted stock shall vest not
earlier than three years from the date of grant. Notwithstanding
the foregoing, the Committee may provide for the acceleration of
vesting of restricted stock awards upon the death, disability,
retirement or other termination of employment or service of the
participant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Performance Awards.</I> The Committee may grant awards under
the 2003 Incentive Plan, other than options and stock
appreciation rights, which are designed to qualify as
performance based compensation. In the case of grant of stock
awards or cash awards to executive officers of the Company
designated by the Committee as a &#147;covered employee&#148;
under Section&nbsp;162(m), the Committee may establish a
performance goal for such participant for the period of time
designated by the Committee at the time of grant of the award.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The performance goal for each participant shall be an
objectively determinable measure of performance based on any one
or a combination of the following criteria for the fiscal year:
cash net earnings; core brands growth; core brands net revenues;
cost control; earnings before income taxes; earnings before
interest and taxes; earnings before interest, taxes and
depreciation; earnings before interest, taxes, depreciation and
amortization; economic value added; free cash flow; gross
profit; net cash provided by operating activities; net earnings;
earnings per share; net earnings per share; net revenues;
operating margin; operating profit; return on assets; return on
capital investment; return on net revenues; return on
shareholders&#146; equity; sales; stock price; total shareholder
return on common stock relative to S&#38;P 500 Index; total
shareholder return on common stock relative to Russell 1000
Consumer Discretionary Index and working capital. These business
criteria may be measured on a consolidated basis or on a
segment, divisional, sector or other business unit basis (herein
collectively &#147;business unit&#148;), all as selected by the
Committee in each individual case.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The percentage vesting of any stock award and/or cash award
shall in each case be based on the percentage of the performance
goal achieved, as determined by the Committee, although the
Committee has
</DIV>

<P align="center" style="font-size: 10pt;">31

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<DIV align="left" style="font-size: 10pt;">
the discretion to reduce, or refuse to make (but not to
increase), any vesting of stock awards or payments of cash
awards payable as a result of the achievement of a designated
percentage of a performance goal.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Cash Awards.</I> Cash awards generally will be subject to
certain conditions established by the Committee, including
continuous service with the Company, achievement of specific
business objectives, and other measurements of individual,
business unit or Company performance.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>General.</I> Awards may be granted for no cash consideration
or for such minimal cash consideration as may be required by
applicable law. Awards may provide that upon their exercise or
vesting the holder will receive cash, Common Stock or any
combination thereof as the Committee shall determine. Any shares
of stock deliverable under the 2003 Incentive Plan may consist
in whole or in part of authorized and unissued shares or
treasury shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Neither ISO&#146;s, nor, except as the Committee otherwise
expressly provides, other awards may be transferred other than
by will or by the laws of descent and distribution, and during a
participant&#146;s lifetime ISO&#146;s (and, except as the
Committee otherwise expressly provides, other non-transferable
awards requiring exercise) may be exercised only by the
participant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Plan provides that immediately upon certain events
constituting a Change in Control all awards become 100% vested
and payable in cash as soon as practicable after the Change in
Control.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Number of Options Granted Under the Plan</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The awards that will be made and the amounts that will be paid
pursuant to the 2003 Incentive Plan in the future are
discretionary and are therefore not currently determinable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table sets forth the number of shares subject to
options granted during the period from February&nbsp;12, 2003 to
March&nbsp;25, 2005 under the 2003 Incentive Plan to the named
individuals, all current executive officers as a group and all
employees, excluding executive officers. As of March&nbsp;25,
2005, no awards other than stock options have been made pursuant
to the 2003 Incentive Plan. Except as set forth in the following
table, no directors, nominees for election as director or
associates of any directors have received any options under the
2003 Incentive Plan.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="68%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Number of Shares</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Subject to Awards</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="left" nowrap><B>Name and Position</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Granted Under the Plan</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Alan G. Hassenfeld</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>225,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Chairman</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Alfred J. Verrecchia</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>450,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    President and Chief Executive Officer</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Brian Goldner</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>225,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    President, U.S.&nbsp;Toy Segment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    E. David Wilson</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>225,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    President, Games Segment and Executive Vice President Global
    Business Integration</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    David D.R. Hargreaves</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>165,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Senior Vice President and Chief Financial Officer</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    All current executive officers as a group</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,494,750</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    All employees, excluding current executive officers as a group</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,507,750</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Amendment or Termination</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Board or the Committee may terminate the 2003 Incentive Plan
at any time, and shall have the right to amend or modify the
2003 Incentive Plan at any time, and from time to time,
provided, however, that no material amendment to the terms of
the 2003 Incentive Plan, including an amendment to reprice
options granted under the Plan, shall become effective without
shareholder approval. The 2003 Incentive Plan will terminate on
December&nbsp;31, 2008, unless terminated earlier by the Board
or the Committee.
</DIV>

<P align="center" style="font-size: 10pt;">32
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<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Federal Income Tax Consequences of Certain Awards</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following is a summary of the principal United States
federal income tax consequences generally applicable to certain
awards under the 2003 Incentive Plan. Note that there may be
state, local, foreign and other taxes applicable to participants
in the 2003 Incentive Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The grant of a stock option or SAR under the 2003 Incentive Plan
will generally create no immediate tax consequences for the
recipient or for the Company or an affiliate employing such
individual (the &#147;employer&#148;). An employee exercising an
ISO has no taxable income for regular income tax purposes (but
the alternative minimum tax may apply) in connection with the
exercise, and no tax deduction is available to the employer. In
general, an ISO that is exercised by the recipient more than
three months following termination of employment is treated as a
non-ISO for federal income tax purposes, as are stock options
granted to an employee and otherwise qualifying as ISO&#146;s
that in the aggregate first become exercisable in any calendar
year for stock having a grant-date value in excess of $100,000.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Upon exercising a stock option other than an ISO, the optionee
has ordinary income equal to the excess of the fair market value
of the shares acquired on the date of exercise over the option
exercise price, and a corresponding tax deduction is available
to the employer. Upon exercising a SAR, the amount of any cash
received and the fair market value on the exercise date of any
shares or other property received are taxable to the recipient
as ordinary income and a corresponding deduction is available to
the employer.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The tax consequence to an optionee of a disposition of shares
acquired through the exercise of a SAR or a stock option will
depend on how long the shares have been held and upon whether
the shares were acquired by exercising an ISO or by exercising a
SAR or stock option other than an ISO. An employee who disposes
of shares acquired upon exercise of an ISO, if the disposition
occurs within one year following the date of exercise or within
two years from the date of grant of the ISO, will have income,
taxable at ordinary income rates, equal in general to the spread
at exercise (or, with limited exceptions, to the gain on sale,
if less), and a corresponding deduction will be available to the
employer. Any additional gain recognized in the disposition will
be taxed as a capital gain, either at long-term or at short-term
gain rates depending on the employee&#146;s tax holding period
in the shares. Any gain or loss recognized upon a sale or
exchange of shares acquired upon exercise of a stock option
other than an ISO or a SAR will be taxed as a capital gain or
loss, long-term or short-term depending on the holder&#146;s tax
holding period in the shares. No deduction is available to the
employer in respect of these capital gains or losses.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If cash, shares of Common Stock or other property is transferred
under or in settlement of other awards under the 2003 Incentive
Plan, the recipient will generally recognize ordinary income at
the time of transfer equal to the excess of (a)&nbsp;the cash
(if any) transferred, plus the fair market value of the vested
shares or other vested property (if any) transferred over
(b)&nbsp;the amount (if any) paid for such shares or other
property by the participant, and a corresponding deduction will
be available to the employer. If any of the transferred shares
or other property is unvested (subject to a substantial risk of
forfeiture), the ordinary income associated with the transfer
will be includible and measured only when the property vests
(and the associated deduction will be similarly delayed), unless
the award recipient makes a special election to take the awarded
shares or other property into income at the time of transfer.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Some awards under the 2003 Incentive Plan could constitute or
give rise to &#147;nonqualified deferred compensation&#148;
subject to Section&nbsp;409A of the Code. Where applicable,
Section&nbsp;409A regulates, among other things, both the
deferral of compensation and the time and manner in which
previously deferred amounts may be paid.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Approval</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The affirmative vote of a majority of the shares of Common Stock
present (in person or by proxy) and entitled to vote at the
Meeting on the Amendment to the 2003 Incentive Plan is required
for approval of the Amendment. Abstentions are considered shares
entitled to vote on the proposal and as such abstentions are
</DIV>

<P align="center" style="font-size: 10pt;">33

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<DIV align="left" style="font-size: 10pt;">
the equivalent of a vote against the proposal. In contrast,
broker non-votes are not counted as present and entitled to vote
on the proposal and therefore have no effect on the outcome of
the vote.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
<U>FOR</U> APPROVAL OF THE AMENDMENT TO THE 2003 INCENTIVE
PLAN.</B>
</DIV>

<!-- link1 "EQUITY COMPENSATION PLANS" -->
<DIV align="left"><A NAME="010"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>EQUITY COMPENSATION PLANS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table summarizes information, as of
December&nbsp;26, 2004, relating to equity compensation plans of
the Company pursuant to which grants of options, restricted
stock, restricted stock units or other rights to acquire shares
may be granted from time to time.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Equity Compensation Plan Information</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="35%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Number of Securities</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Remaining Available for</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Number of Securities</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Future Issuance Under</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>to be Issued Upon</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Weighted-Average</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Equity Compensation</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Exercise of Outstanding</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Exercise Price of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Plans (Excluding</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Options, Warrants</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Outstanding Options,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Securities Reflected</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>and Rights</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Warrants and Rights</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>in Column(a))</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="center" nowrap><B>Plan Category</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(a)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(b)(3)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(c)</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Equity compensation plans approved by shareholders(1)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11,430,963</TD>
    <TD align="left" valign="bottom" nowrap>(4)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>18.89</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,048,636</TD>
    <TD align="left" valign="bottom" nowrap>(5)</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Equity compensation plans not approved by shareholders(2)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,650,632</TD>
    <TD align="left" valign="bottom" nowrap>(6)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>17.82</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD align="left" valign="bottom" nowrap>(7)</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>21,081,595</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18.40</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,048,636</TD>
    <TD align="left" valign="bottom" nowrap>(5)</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    The shareholder approved plans which were in effect as of
    December&nbsp;26, 2004 are the Company&#146;s 2003 Stock
    Incentive Performance Plan (the &#147;2003 Plan&#148;), 1995
    Stock Incentive Performance Plan (the &#147;1995 Plan&#148;) and
    2003 Stock Option Plan for Non-Employee Directors. The
    Company&#146;s 1994 Stock Option Plan for Non-Employee Directors
    (the &#147;1994 Plan&#148;), which was also approved by the
    Company&#146;s shareholders, was terminated effective
    May&nbsp;14, 2003, provided, however, that all awards
    outstanding under the 1994 Plan as of the date of its
    termination continue in effect in accordance with the terms of
    the plan.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    The Company&#146;s last non-shareholder approved plan, namely
    the 1997 Employee Non-Qualified Stock Plan (the &#147;1997
    Plan&#148;), expired on December&nbsp;31, 2002 and no further
    awards may be made pursuant to the 1997 Plan, provided, however,
    that all awards outstanding under the 1997 Plan as of the date
    of its termination continue in effect in accordance with the
    terms of the plan.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(3)&nbsp;</TD>
    <TD align="left">
    The weighted average exercise price of outstanding options,
    warrants and rights excludes restricted stock units and
    performance-based stock units.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(4)&nbsp;</TD>
    <TD align="left">
    Includes 10,000&nbsp;shares issuable pursuant to deferred
    restricted stock units.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(5)&nbsp;</TD>
    <TD align="left">
    Of these available shares, up to 1,029,000&nbsp;shares and
    1,000,000&nbsp;shares, respectively, could be issued as
    restricted stock or deferred restricted stock under the 1995
    Plan and the 2003 Plan.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(6)&nbsp;</TD>
    <TD align="left">
    Includes 30,829&nbsp;shares issuable pursuant to deferred
    restricted stock units.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(7)&nbsp;</TD>
    <TD align="left">
    The 1997 Plan expired on December&nbsp;31, 2002 and no shares
    remain available for future grant under plans not approved by
    the shareholders. See Note (2)&nbsp;above.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>1997 Employee Non-Qualified Stock Plan</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Number of Shares Subject to 1997 Plan.</I> The 1997 Plan,
prior to its termination on December&nbsp;31, 2002, provided for
the issuance of up to 18,000,000&nbsp;shares of Common Stock
pursuant to awards granted under the 1997 Plan.
</DIV>

<P align="center" style="font-size: 10pt;">34
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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Eligibility for Participation.</I> Any &#147;Employee&#148;
of the Company, as the term Employee is defined in General
Instruction&nbsp;A to Form&nbsp;S-8 promulgated by the
Securities and Exchange Commission, was eligible to participate
in the 1997 Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Awards.</I> The 1997 Plan provided for the grant of:
(1)&nbsp;non-qualified stock options; (2)&nbsp;stock
appreciation rights (&#147;SARs&#148;); (3)&nbsp;stock awards,
including restricted and unrestricted stock and deferred stock,
and (4)&nbsp;cash awards that would constitute a
&#147;derivative security&#148; for purposes of Rule&nbsp;16b-6,
as promulgated under the Securities Exchange Act of 1934, as
amended (the &#147;1934&nbsp;Act&#148;), if not awarded pursuant
to a plan satisfying the provisions of Rule&nbsp;16b-3.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Terms of Options.</I> The exercise price of stock options
granted under the 1997 Plan could not be less than the fair
market value of the Common Stock on the date of grant. Options
granted under the 1997 Plan were generally made exercisable in
yearly installments over three years. The terms of options
granted under the 1997 Plan were ten years.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Change in Control.</I> The 1997 Plan provided that
immediately upon certain events constituting a Change in Control
all awards become 100% vested and payable in cash as soon as
practicable after the Change in Control.
</DIV>

<P align="center" style="font-size: 10pt;">35

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<!-- link1 "VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF" -->
<DIV align="left"><A NAME="011"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF</B>
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Security Ownership of Certain Beneficial Owners</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table sets forth information, as of March&nbsp;2,
2005 (except as noted), with respect to the ownership of the
Common Stock (the only class of outstanding equity securities of
the Company) by certain persons known by the Company to be the
beneficial owners of more than 5% of such stock. Unless
otherwise indicated, to the Company&#146;s knowledge each person
has sole voting and dispositive power with respect to such
shares.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="63%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>Amount and Nature</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>of Beneficial</B></TD><TD></TD>
    <TD colspan="3" align="center" nowrap><B>Percent</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="center" nowrap><B>Name and Address of Beneficial Owner</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>Ownership(1)</B></TD><TD></TD>
    <TD colspan="3" align="center" nowrap><B>of Class</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
<TD>&nbsp;</TD>

    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>

    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
<TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Southeastern Asset Management, Inc.&nbsp;</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18,855,200</TD>
    <TD align="left" valign="bottom" nowrap>(2)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10.6</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    6410 Poplar Avenue<BR>
    Suite&nbsp;900<BR>
    Memphis, TN 38119</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Alan G. Hassenfeld</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>17,890,816</TD>
    <TD align="left" valign="bottom" nowrap>(3)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10.0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    1027 Newport Avenue<BR>
    Pawtucket, RI 02862</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Citigroup Inc.&nbsp;</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16,522,278</TD>
    <TD align="left" valign="bottom" nowrap>(4)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9.3</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    399 Park Avenue<BR>
    New York, NY 10043</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    George W. Lucas,&nbsp;Jr.&nbsp;</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>15,750,000</TD>
    <TD align="left" valign="bottom" nowrap>(5)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8.1</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    c/o Lucasfilm Ltd.<BR>
    5858 Lucas Valley Road<BR>
    Nicasio, CA 94946</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Ariel Capital Management, LLC</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>15,538,865</TD>
    <TD align="left" valign="bottom" nowrap>(6)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8.7</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    200&nbsp;E.&nbsp;Randolph Drive<BR>
    Suite&nbsp;2900<BR>
    Chicago, IL 60601</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    Based upon information furnished by each shareholder or
    contained in filings made with the Securities and Exchange
    Commission. There were 178,045,278&nbsp;shares of Common Stock
    outstanding on March&nbsp;2, 2005.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    Southeastern Asset Management, Inc., an investment advisor, has
    sole dispositive authority over 12,128,200&nbsp;shares and sole
    voting power over 8,779,600&nbsp;shares as a result of acting as
    an investment advisor to various investment advisory clients.
    Share ownership information is as of December&nbsp;31, 2004 as
    reported in a Schedule&nbsp;13G dated February&nbsp;7, 2005.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(3)&nbsp;</TD>
    <TD align="left">
    Includes 8,490,921&nbsp;shares held as sole trustee for the
    benefit of his mother, 829,347&nbsp;shares held as sole trustee
    of a trust for Mr.&nbsp;Hassenfeld&#146;s benefit and currently
    exercisable options or options exercisable within 60&nbsp;days
    of March&nbsp;2, 2005 to purchase&nbsp;1,488,334&nbsp;shares.
    Mr.&nbsp;Hassenfeld has sole voting and investment authority
    with respect to all shares except those described in the
    following sentence, as to which he shares voting and investment
    authority. Also includes 781,930&nbsp;shares owned by The
    Hassenfeld Foundation, of which Mr.&nbsp;Hassenfeld is an
    officer and director, 350,390&nbsp;shares held as one of the
    trustees of a charitable lead trust for the benefit of The
    Hassenfeld Foundation and 154,216&nbsp;shares held as one of the
    trustees of a trust for the benefit of his mother and her
    grandchildren. Mr.&nbsp;Hassenfeld disclaims beneficial
    ownership of all shares except to the extent of his
    proportionate pecuniary interest therein.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(4)&nbsp;</TD>
    <TD align="left">
    Share ownership information is as of December&nbsp;31, 2004 as
    reported in a Schedule&nbsp;13G dated February&nbsp;4, 2005. The
    filing indicates that Citigroup Inc. shares voting and
    dispositive power over all shares.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(5)&nbsp;</TD>
    <TD align="left">
    Represents exercisable warrants to
    purchase&nbsp;6,300,000&nbsp;shares owned by LucasFilm Ltd.
    (&#147;Film&#148;) and exercisable warrants to
    purchase&nbsp;9,450,000&nbsp;shares owned by its wholly-owned
    subsidiary, Lucas Licensing Ltd. (&#147;Licensing&#148;).
    Mr.&nbsp;Lucas, as founder, controlling person and sole director
    of Film and Licensing,</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">36

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD align="left">
    may be deemed to beneficially own the shares of Common Stock
    which may be purchased upon exercise of these warrants. Share
    ownership information is as of January&nbsp;30, 2003 as reported
    in a Schedule&nbsp;13D/A filed February&nbsp;10, 2003. See
    &#147;Certain Relationships and Related Transactions&#148;.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(6)&nbsp;</TD>
    <TD align="left">
    Ariel Capital Management, LLC an investment advisor, has sole
    dispositive authority over 15,533,555&nbsp;shares and sole
    voting power over 12,166,040&nbsp;shares as a result of acting
    as an investment advisor to various investment advisory clients.
    Share ownership information is as of December&nbsp;31, 2004 as
    reported in a Schedule&nbsp;13G dated February&nbsp;14, 2005.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Security Ownership of Management</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table sets forth information, as of March&nbsp;2,
2005, with respect to the ownership of the Common Stock (the
only class of outstanding equity securities of the Company) by
each current director of the Company or nominee for election to
the Board, each named executive officer and by all directors and
executive officers as a group. Unless otherwise indicated, each
person has sole voting and dispositive power with respect to
such shares.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="72%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Amount and</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Nature of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Beneficial</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Percent</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B>Name of Director, Nominee or Executive Officer(1)</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Ownership</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>of Class</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Basil L. Anderson(2)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>22,873</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Alan R. Batkin(3)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>35,936</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Frank J. Biondi,&nbsp;Jr.(4)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>15,314</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Jack M. Connors(5)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,206</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    E. Gordon Gee(6)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>25,744</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Brian Goldner(7)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>506,607</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Jack M. Greenberg(8)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,301</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    David D.R. Hargreaves(9)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>416,592</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Alan G. Hassenfeld(10)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>17,890,816</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10.0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Claudine B. Malone(11)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>23,345</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Edward M. Philip(12)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18,100</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    E. John Rosenwald,&nbsp;Jr.(13)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>182,242</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Eli J. Segal(14)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19,646</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Paula Stern(15)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>21,060</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Alfred J. Verrecchia(16)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,518,952</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    E. David Wilson(17)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>576,542</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    All Directors and Executive Officers as a Group<BR>
    (includes 20 persons)(18)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>22,165,150</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12.1</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="1%"></TD>
    <TD width="2%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>*&nbsp;</TD>
    <TD align="left">
    Less than one percent.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    Information in this table is based upon information furnished by
    each director and executive officer. There were
    178,045,278&nbsp;shares of Common Stock outstanding on
    March&nbsp;2, 2005.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    Includes currently exercisable options and options exercisable
    within sixty days of March&nbsp;2, 2005 to purchase an aggregate
    of 10,500&nbsp;shares as well as 11,373&nbsp;shares deemed to be
    held in Mr.&nbsp;Anderson&#146;s stock unit account under the
    Deferred Plan.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(3)&nbsp;</TD>
    <TD align="left">
    Includes 34,249&nbsp;shares deemed to be held in
    Mr.&nbsp;Batkin&#146;s stock unit account under the Deferred
    Plan.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(4)&nbsp;</TD>
    <TD align="left">
    Represents currently exercisable options and options exercisable
    within sixty days of March&nbsp;2, 2005 to purchase an aggregate
    of 12,750&nbsp;shares as well as 2,564&nbsp;shares deemed to be
    held in Mr.&nbsp;Biondi&#146;s stock unit account under the
    Deferred Plan.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">37

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<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>(5)&nbsp;</TD>
    <TD align="left">
    Represents currently exercisable options and options exercisable
    within sixty days of March&nbsp;2, 2005 to purchase an aggregate
    of 2,400&nbsp;shares as well as 2,806&nbsp;shares deemed to be
    held in Mr.&nbsp;Connor&#146;s account under the Deferred Plan.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(6)&nbsp;</TD>
    <TD align="left">
    Represents currently exercisable options and options exercisable
    within sixty days of March&nbsp;2, 2005 to purchase an aggregate
    of 17,250&nbsp;shares as well as 8,494&nbsp;shares deemed to be
    held in Mr.&nbsp;Gee&#146;s account under the Deferred Plan.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(7)&nbsp;</TD>
    <TD align="left">
    Includes currently exercisable options and options exercisable
    within sixty days of March&nbsp;2, 2005 to purchase an aggregate
    of 469,000&nbsp;shares.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(8)&nbsp;</TD>
    <TD align="left">
    Represents currently exercisable options and options exercisable
    within sixty day of March&nbsp;2, 2005 to
    purchase&nbsp;2,400&nbsp;shares as well as 4,901&nbsp;shares
    deemed to be held in Mr.&nbsp;Greenberg&#146;s stock unit
    account under the Deferred Plan.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(9)&nbsp;</TD>
    <TD align="left">
    Includes currently exercisable options and options exercisable
    within sixty days of March&nbsp;2, 2005 to purchase an aggregate
    of 353,208&nbsp;shares.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>(10)&nbsp;</TD>
    <TD align="left">
    See note (3)&nbsp;to the immediately preceding table.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(11)&nbsp;</TD>
    <TD align="left">
    Includes currently exercisable options and options exercisable
    within sixty days of March&nbsp;2, 2005 to purchase an aggregate
    of 9,000&nbsp;shares as well as 2,645&nbsp;shares deemed to be
    held in Ms.&nbsp;Malone&#146;s stock unit account under the
    Deferred Plan.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(12)&nbsp;</TD>
    <TD align="left">
    Represents currently exercisable options and options exercisable
    within sixty days of March&nbsp;2, 2005 to purchase an aggregate
    of 10,500&nbsp;shares as well as 7,600&nbsp;shares deemed to be
    held in Mr.&nbsp;Philip&#146;s stock unit account under the
    Deferred Plan.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(13)&nbsp;</TD>
    <TD align="left">
    Includes 32,242&nbsp;shares deemed to be held in
    Mr.&nbsp;Rosenwald&#146;s stock unit account under the Deferred
    Plan. Does not include shares held by Bear, Stearns&nbsp;&#38;
    Co. Inc. in investment accounts. Mr.&nbsp;Rosenwald is Vice
    Chairman of Bear, Stearns&nbsp;&#38; Co. Inc.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(14)&nbsp;</TD>
    <TD align="left">
    Represents currently exercisable options and options exercisable
    within sixty days of March&nbsp;2, 2005 to purchase an aggregate
    of 15,000&nbsp;shares as well as 4,646&nbsp;shares deemed to be
    held in Mr.&nbsp;Segal&#146;s stock unit account under the
    Deferred Plan.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(15)&nbsp;</TD>
    <TD align="left">
    Represents currently exercisable options and options exercisable
    within sixty days of March&nbsp;2, 2005 to purchase an aggregate
    of 12,750&nbsp;shares as well as 8,310&nbsp;shares deemed to be
    held in Ms.&nbsp;Stern&#146;s stock unit account under the
    Deferred Plan.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(16)&nbsp;</TD>
    <TD align="left">
    Includes currently exercisable options and options exercisable
    within sixty days of March&nbsp;2, 2005 to purchase an aggregate
    of 1,259,501&nbsp;shares as well as 30,829 deferred restricted
    stock units granted under the Company&#146;s employee stock
    option plans. Does not include 151,875&nbsp;shares owned by
    Mr.&nbsp;Verrecchia&#146;s wife, as to which Mr.&nbsp;Verrecchia
    disclaims beneficial ownership.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(17)&nbsp;</TD>
    <TD align="left">
    Includes currently exercisable options and options exercisable
    within sixty days of March&nbsp;2, 2005 to
    purchase&nbsp;544,583&nbsp;shares as well as 231&nbsp;shares
    (excluding fractional shares) deemed to be held in
    Mr.&nbsp;Wilson&#146;s account under the Deferred Compensation
    Plan.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(18)&nbsp;</TD>
    <TD align="left">
    Of these shares, all directors and executive officers as a group
    have sole voting and dispositive power with respect to
    20,878,614&nbsp;shares and have shared voting and/or dispositive
    power with respect to 1,286,536&nbsp;shares. Includes
    4,851,389&nbsp;shares purchasable by directors and executive
    officers upon exercise of currently exercisable options, or
    options exercisable within sixty days of March&nbsp;2, 2005;
    120,061&nbsp;shares deemed to be held in stock unit accounts
    under the Deferred Plan and the Deferred Compensation Plan; and
    30,829&nbsp;shares deemed to be held in deferred restricted
    stock unit accounts under the Company&#146;s 1997 Employee
    Non-Qualified Stock Plan.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">38

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<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>SECTION&nbsp;16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Section&nbsp;16(a) of the Securities Exchange Act of 1934, as
amended, requires the Company&#146;s directors and executive
officers, and persons who own more than ten percent of a
registered class of the Company&#146;s equity securities, to
file with the Securities and Exchange Commission and the New
York Stock Exchange initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities
of the Company. Executive officers, directors and greater than
ten-percent shareholders are required by regulation promulgated
by the Securities and Exchange Commission to furnish the Company
with copies of all Section&nbsp;16(a) forms they file.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
To the Company&#146;s knowledge, based solely on review of the
copies of such reports furnished to the Company and certain
written representations made by directors and executive officers
that no other reports were required during the last fiscal year
ended December&nbsp;26, 2004, all Section&nbsp;16(a) filing
requirements applicable to its officers, directors and greater
than ten-percent beneficial owners were complied with during
fiscal 2004.
</DIV>

<!-- link1 "PROPOSAL TO RATIFY THE SELECTION OF KPMG LLP AS THE COMPANY&#146;S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE 2005 FISCAL YEAR" -->
<DIV align="left"><A NAME="012"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>PROPOSAL&nbsp;TO RATIFY THE SELECTION OF KPMG LLP AS THE
COMPANY&#146;S INDEPENDENT</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>REGISTERED PUBLIC ACCOUNTING FIRM FOR THE 2005 FISCAL YEAR</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>(Proposal&nbsp;No.&nbsp;3)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Audit Committee has selected KPMG LLP, independent
registered public accounting firm (&#147;KPMG&#148;), to perform
the integrated audit of the consolidated financial statements
and effectiveness of internal control over financial reporting
of the Company for the fiscal year ending December&nbsp;25, 2005
(&#147;Fiscal 2005&#148;), and the Company&#146;s Board of
Directors has ratified this selection. A representative of KPMG
is expected to be present at the Meeting, will have the
opportunity to make a statement if so desired, and will be
available to respond to appropriate questions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Board is submitting the selection of KPMG as the
Company&#146;s independent registered public accounting firm for
Fiscal 2005 to the shareholders for their ratification. The
Audit Committee of the Board bears the ultimate responsibility
for selecting the Company&#146;s independent registered public
accounting firm and will make the selection it deems best for
the Company and the Company&#146;s shareholders. As such, the
failure by the shareholders to ratify the selection of
independent registered public accounting firm made by the Audit
Committee will not require the Audit Committee to alter its
decision. Similarly, ratification of the selection of KPMG as
the independent registered public accounting firm does not limit
the Committee&#146;s ability to change this selection in the
future if it deems appropriate.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Approval</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The affirmative vote of a majority of the shares of Common Stock
present (in person or by proxy) and entitled to vote at the
Meeting on the ratification of the selection of KPMG is required
for approval. Abstentions are considered shares entitled to vote
on the proposal and as such abstentions are the equivalent of a
vote against the proposal. In contrast, broker non-votes are not
counted as present and entitled to vote on the proposal and
therefore have no effect on the outcome of the vote.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
<U>FOR</U> RATIFICATION OF THE SELECTION OF KPMG AS INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM.</B>
</DIV>

<P align="center" style="font-size: 10pt;">39
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<!-- link1 "REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS" -->
<DIV align="left"><A NAME="013"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Audit Committee of the Board of Directors (the
&#147;Committee&#148;) is comprised solely of non-employee
directors, each of whom has been determined by the Board of
Directors to be independent under the Company&#146;s Standards
for Director Independence and the requirements of the New York
Stock Exchange&#146;s listing standards.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Committee operates under a written charter, which is
available on the Company&#146;s website (www.hasbro.com) under
Corporate Information, Investor Information, Corporate
Governance. Under the charter, the Committee&#146;s primary
purpose is to:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Appoint the independent auditor and oversee the independent
    auditor&#146;s work;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Assist the Board of Directors in its oversight of the:</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="5%"></TD>
    <TD width="1%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Integrity of the Company&#146;s financial statements;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Company&#146;s compliance with legal and regulatory requirements;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Independent auditor&#146;s qualifications and
    independence;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Performance of the Company&#146;s internal audit function and
    independent auditor.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In conducting its oversight function, the Committee discusses
with the Company&#146;s internal and independent auditors, with
and without management present, the overall scope and plans for
their respective audits. The Committee also reviews the
Company&#146;s programs and key initiatives to implement and
maintain effective internal controls over financial reporting
and disclosure controls.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Committee meets with the internal and independent auditors,
with and without management present, to discuss the results of
their examinations, the evaluations of the Company&#146;s
internal controls and the overall quality of the Company&#146;s
financial reporting. The Committee discusses with management and
the independent auditors all annual and quarterly financial
statements and Management&#146;s Discussion and Analysis of
Financial Condition and Results of Operations prior to their
filing with the Securities and Exchange Commission.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The independent auditors are responsible for performing an
independent integrated audit of the Company&#146;s financial
statements and effectiveness of internal control over financial
reporting and issuing an opinion as to whether the financial
statements conform with accounting principles generally accepted
in the United States of America.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Committee has reviewed and discussed with management the
audited financial statements for the fiscal year ended
December&nbsp;26, 2004. The Committee has also reviewed with the
independent auditors the matters required to be discussed by
Statement on Auditing Standards No.&nbsp;61 (Communications with
Audit Committees). In addition, the Committee discussed with the
independent auditors their independence from management and the
Committee has received from the auditors the written disclosures
required by Independence Standards Board Standard No.&nbsp;1
(Independence Discussions with Audit Committees).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Based on its review and discussions with management and the
independent auditors referred to in the preceding paragraph, the
Committee recommended to the Board and the Board has approved
the inclusion of the audited financial statements for the fiscal
year ended December&nbsp;26, 2004 in the Company&#146;s Annual
Report on Form&nbsp;10-K for filing with the Securities and
Exchange Commission. The Committee has also selected and the
Board has approved the selection of KPMG LLP as the independent
auditor for Fiscal 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Report issued by Basil L. Anderson (Chair), Alan R. Batkin,
Claudine B. Malone and Edward M. Philip, as the members of the
Audit Committee as of the 2004 fiscal year end.
</DIV>

<P align="center" style="font-size: 10pt;">40

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<!-- link1 "ADDITIONAL INFORMATION REGARDING INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM" -->
<DIV align="left"><A NAME="014"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>ADDITIONAL INFORMATION REGARDING</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left:-10 text-intdent:-20pt">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table presents fees for professional audit
services rendered by KPMG LLP for the audit of the
Company&#146;s annual financial statements for fiscal 2004 and
2003, as well as fees for other services rendered by KPMG to the
Company during fiscal 2004 and 2003.</div>




<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="5%">&nbsp;&nbsp;&nbsp;</TD>
    <TD width="63%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Audit Fees(1)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>4,728,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,060,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Audit-Related Fees(2)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>80,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>280,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Tax Fees(3)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,325,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,422,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    All Other Fees</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 20px; text-indent: -10px">
    Total Fees</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>6,133,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>4,762,000</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    Audit fees consist of work related to the integrated audit of
    the Company&#146;s consolidated financial statements and
    effectiveness of internal control over financial reporting for
    2004 and audit of the Company&#146;s consolidated financial
    statements for 2003. Audit fees also include consultations on
    accounting and reporting matters, as well as work generally only
    the independent auditor can reasonably be expected to provide,
    such as statutory audits and work in connection with filings
    with the Securities and Exchange Commission.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    Audit-Related Fees consist of fees for audits of financial
    statements of employee benefit plans, agreed upon procedures
    reports and in 2003 assistance to the Company in preparing for
    the reports and attestations required by Section&nbsp;404 of the
    Sarbanes-Oxley Act.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(3)&nbsp;</TD>
    <TD align="left">
    Tax Fees consist of fees for tax consultation and tax compliance
    services rendered to the Company and certain current and former
    employees.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Audit Committee has considered whether the provision of the
approved non-audit services by KPMG is compatible with
maintaining KPMG&#146;s independence and has concluded that the
provision of such services is compatible with maintaining
KPMG&#146;s independence.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Policy on Audit Committee Pre-Approval of Audit Services and
Permissible Non-Audit Services of the Independent Auditor</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Consistent with the rules and regulations of the Securities and
Exchange Commission regarding auditor independence, the Audit
Committee has responsibility for appointing, setting
compensation for and overseeing the work of the independent
auditor. In fulfilling this responsibility the Audit Committee
has established a policy to pre-approve all audit and
permissible non-audit services to be provided by the independent
auditor.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Prior to engagement of the independent auditor for the fiscal
year, management of the Company submits to the Audit Committee
for the Committee&#146;s pre-approval:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    A description of, and estimated costs for, the proposed audit
    services to be provided by the independent auditor for that
    fiscal year.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    A description of, and estimated costs for, the proposed
    non-audit services to be provided by the independent auditor for
    that fiscal year. These non-audit services are comprised of
    permissible audit-related, tax and other services, and
    descriptions and estimated costs are proposed for these
    permissible non-audit services.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Audit and permissible non-audit services which are pre-approved
by the Audit Committee pursuant to this review may be performed
by KPMG during the fiscal year. During the course of the year
management periodically reports to the Audit Committee on the
audit and non-audit services which are being provided to the
Company pursuant to these pre-approvals.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition to pre-approving all audit and permissible non-audit
services at the beginning of the fiscal year, the Audit
Committee has also instituted a procedure for the consideration
of additional services that
</DIV>

<P align="center" style="font-size: 10pt;">41

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<DIV align="left" style="font-size: 10pt;">
arise during the course of the year for which the Company
desires to retain KPMG. For individual projects with estimated
fees of $75,000 or less which have not previously been
pre-approved by the Audit Committee, the Chair of the Audit
Committee is authorized to pre-approve such services. The Chair
of the Committee reports any services which are pre-approved in
this manner to the full Audit Committee at its next meeting. Any
proposed additional projects with an estimated cost of more than
$75,000 must be pre-approved by the full Audit Committee prior
to the engagement of KPMG.
</DIV>

<P align="center" style="font-size: 10pt;">42

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<!-- link1 "SHAREHOLDER PROPOSAL" -->
<DIV align="left"><A NAME="015"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>SHAREHOLDER PROPOSAL</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>(Proposal&nbsp;No.&nbsp;4)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Introduction</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following proposal, <B><I>which is opposed by the Board,
</I></B>would require the affirmative vote of a majority of all
shares present (in person or by proxy) and entitled to vote at
the Meeting to be approved. Abstentions and broker non-votes are
each counted as present for purposes of establishing a quorum at
the Meeting. Abstentions are also considered shares entitled to
vote on the proposal and as such abstentions are the equivalent
of a vote against the proposal. In contrast, broker non-votes
are not counted as present and entitled to vote on the proposal
for purposes of determining if the proposal receives an
affirmative vote of a majority of the shares present and
entitled to vote.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
One of the Company&#146;s shareholders has submitted the
following resolution and supporting statement for inclusion in
this Proxy Statement. Upon a written or oral request made to the
Secretary of the Company, the Company will provide the address
and shareholdings (as they have been represented to the Company)
of the proponent of this resolution to any shareholder of the
Company.
</DIV>

<!-- link1 "HASBRO, INC. GLOBAL HUMAN RIGHTS STANDARDS" -->
<DIV align="left"><A NAME="016"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><U>HASBRO, INC.</U></B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B><U>GLOBAL HUMAN RIGHTS STANDARDS</U></B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Submitted by William C. Thompson,&nbsp;Jr., Comptroller, City
of New York,</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>on behalf of the Boards of Trustees of the New York City
Pension Funds</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Whereas, Hasbro, Inc.</B> currently has extensive overseas
operations,&nbsp;and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Whereas, </B>reports of human rights abuses in the overseas
subsidiaries and suppliers of U.S.-based corporations has led to
an increased public awareness of the problems of child labor,
&#147;sweatshop&#148; conditions, and the denial of labor rights
in U.S.&nbsp;corporate overseas operations,&nbsp;and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Whereas, </B>corporate violations of human rights in these
overseas operations can lead to negative publicity, public
protests, and the loss of consumer confidence which can have a
negative impact on shareholder value,&nbsp;and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Whereas, </B>a number of corporations have implemented
independent monitoring programs with respected human rights and
religious organizations to strengthen compliance with
international human rights norms in subsidiary and supplier
factories,&nbsp;and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Whereas, </B>many of these programs incorporate the
conventions of the International Labor Organization
(ILO)&nbsp;on workplace human rights, and the United
Nations&#146; Norms on the Responsibilities of Transnational
Corporations with Regard to Human Rights (&#147;UN Norms&#148;),
which include the following principles:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>1.</TD>
    <TD align="left">
    All workers have the right to form and join trade unions and to
    bargain collectively. (ILO Conventions 87 and 98; UN Norms,
    section D9).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>2.</TD>
    <TD align="left">
    Workers representatives shall not be the subject of
    discrimination and shall have access to all workplaces necessary
    to enable them to carry out their representation functions. (ILO
    Convention 135; UN Norms, section D9).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>3.</TD>
    <TD align="left">
    There shall be no discrimination or intimidation in employment.
    Equality of opportunity and treatment shall be provided
    regardless of race, color, sex, religion, political opinion,
    age, nationality, social origin, or other distinguishing
    characteristics. (ILO Conventions 100 and 111; UN Norms, section
    B2).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>4.</TD>
    <TD align="left">
    Employment shall be freely chosen. There shall be no use of
    force, including bonded or prison labor. (ILO Conventions 29 and
    105; UN Norms, section D5).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>5.</TD>
    <TD align="left">
    There shall be no use of child labor. (ILO Convention 138; UN
    Norms, section D6), and,</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">43
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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Whereas, </B>independent monitoring of corporate adherence to
these internationally recognized principles is essential if
consumer and investor confidence in our company&#146;s
commitment to human rights is to be maintained,
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Therefore,</B> be it resolved that the shareholders request
that the company commit itself to the implementation of a code
of corporate conduct based on the aforementioned ILO human
rights standards and United Nations&#146; Norms on the
Responsibilities of Transnational Corporations with Regard to
Human Rights, by its international suppliers and in its own
international production facilities, and commit to a program of
outside, independent monitoring of compliance with these
standards.
</DIV>

<!-- link1 "RESPONSE OF THE HASBRO, INC. BOARD OF DIRECTORS" -->
<DIV align="left"><A NAME="017"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>RESPONSE OF THE HASBRO, INC. BOARD OF DIRECTORS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
<U>AGAINST</U> PROPOSAL&nbsp;NO. 4 FOR THE FOLLOWING REASONS:</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A substantially similar proposal was submitted to Hasbro&#146;s
shareholders for their consideration at each of the
Company&#146;s last three annual meetings. The proposal was
rejected by Hasbro&#146;s shareholders at all three of these
meetings. At the 2004 Annual Meeting the proposal was rejected
by Hasbro&#146;s shareholders with 120,129,688&nbsp;shares
voting against the proposal, and 13,522,492&nbsp;shares voting
in favor.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Board of Directors and Hasbro&#146;s management carefully
reviewed the proposals submitted for consideration at the last
three annual meetings and have similarly reviewed the current
proposal in preparation for the 2005 Annual Meeting of
Shareholders. The Board of Directors and management continue to
believe that any changes to Hasbro&#146;s current Code of
Conduct and compliance procedures would neither help Hasbro
fulfill its well-established and continuing commitment to humane
global working conditions nor add value to the shareholders of
the Company. Hasbro&#146;s existing policies and practices,
which are comprehensive and progressive, already address the
concerns expressed in the above proposal and ensure compliance
with business ethics principles, as described in more detail
below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In 1993 Hasbro established its Global Business Ethics Principles
(&#147;Code of Conduct&#148;) to ensure that products
manufactured by or for Hasbro are not produced under inhumane or
exploitative conditions. Participation in the Hasbro program is
mandatory for all suppliers and vendors worldwide who do
business with Hasbro. Among many important areas, the Code of
Conduct governs:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    <I>child labor </I>(no person younger than sixteen or younger
    than the age for completing compulsory education in the country
    of manufacture (where such age is higher than sixteen) may be
    employed to produce Hasbro products);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    <I>working hours and compensation </I>(employers must comply
    with all applicable wage and hour laws or, if prevailing
    industry wage standards are higher, then employers must comply
    with or exceed these standards);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    <I>forced, prison, or indentured labor </I>(any person employed
    to produce Hasbro products must be voluntarily employed, except
    that rehabilitative programs which provide for employment may be
    assessed by Hasbro on a case by case basis);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    <I>health and safety </I>(facilities must operate in a healthy
    and safe manner, including, but not limited to, providing fire
    prevention, first aid, and hazardous waste disposal);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    <I>abuse and discrimination </I>(facilities must treat employees
    with dignity and respect and shall not subject employees to
    abuse, cruel or unusual disciplinary practice, or
    discrimination);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    <I>freedom of association </I>(facility employees have the right
    to choose (or not) to affiliate with legally sanctioned
    organizations without unlawful interference);&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    <I>monitoring by Hasbro </I>(Hasbro conducts periodic on-site
    inspections of working and living conditions, including
    unannounced visits, audits the production records and practices
    of the facilities and requires facilities to promptly address
    compliance issues or face termination by Hasbro).</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">44

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Hasbro&#146;s Code of Conduct sets forth workplace standards
with which all vendors manufacturing Hasbro products must
comply. Hasbro also reserves auditing and monitoring rights with
respect to all manufacturing facilities producing Hasbro
products. To date, all factories located in the Far East which
manufacture products for Hasbro have been audited by Hasbro
inspectors and by outside firms hired by Hasbro. Hasbro engages
two outside auditing firms to audit manufacturers&#146;
compliance with the Code of Conduct and local law. Since 1994,
Hasbro and its monitors have conducted over 1,450 manufacturing
facility inspections, including over 466 inspections in 2004.
Over the years, Hasbro has successfully worked with its
manufacturers to correct any unacceptable practices discovered
during the course of these inspections. Although serious
violations are rarely found, Hasbro has, after unsuccessful
attempts to have the vendor remedy them, terminated vendors for
failure to comply. In addition, on a number of occasions Hasbro
has met with shareholders to discuss its Code of Conduct and
compliance procedures, including findings of third party audits
engaged by Hasbro.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition to corporate efforts, Hasbro has been and continues
to be a leader in the toy industry (nationally and
internationally) on the issue of workplace standards and
compliance. Hasbro is a member of the Toy Industries of America
(&#147;TIA&#148;) and Juvenile Products Manufacturers
Association (&#147;JPMA&#148;) and sits on committees and forums
worldwide to strengthen workplace standards and compliance. For
example, Hasbro was at the forefront of developing industry-wide
standards for fire prevention and emergency preparedness through
the International Council of Toy Industries (&#147;ICTI&#148;).
Hasbro was a principal drafter of the factory audit checklists
for the ICTI Code of Business Practices and took a leadership
role in the 2002 revisions to the ICTI factory audit checklists
and guidance manual. Hasbro, as a member of TIA, strongly
supports and endorses industry efforts to improve factory
working conditions. In an effort to bring consistency to this
initiative Hasbro has taken a leading role in promoting the
adoption of ICTI&#146;s comprehensive workplace standards
throughout the industry. Hasbro itself is using the ICTI
checklist, guidance and corrective action documents as a basis
for monitoring factories and is requiring all of its Far East
manufacturing vendors to be ICTI-certified by the end of 2005.
Hasbro expects facilities manufacturing Hasbro products to apply
for and achieve ICTI certification by an approved, independent
auditing company. In addition, however, Hasbro will retain the
right to conduct its own audits. The ICTI checklist, guidance
and corrective action documents can be found at:
http://www.toy-icti.org/info/code.htm.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
To conclude, Hasbro is an industry leader in the area of global
working conditions and is proud of its efforts both on behalf of
the Company and the toy industry in general. Given Hasbro&#146;s
strong commitment to the Global Business Ethics Principles, its
extensive outside monitoring program, and its industry activism,
the Board of Directors believes that the Company&#146;s current
program is best suited to ensure compliance and leadership on
this important issue.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For the reasons outlined above, the Board has concluded that the
Company&#146;s current Code of Conduct and compliance programs
and procedures are in the best interests of the Company and its
shareholders and thus is opposed to the shareholder proposal.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
<U>AGAINST</U> PROPOSAL&nbsp;NO. 4.</B>
</DIV>

<P align="center" style="font-size: 10pt;">45

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<!-- link1 "OTHER BUSINESS" -->
<DIV align="left"><A NAME="018"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>OTHER BUSINESS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Management knows of no other matters that may be presented to
the Meeting. However, if any other matter properly comes before
the Meeting, or any adjournment thereof, it is intended that
proxies in the accompanying form will be voted in accordance
with the judgment of the persons named therein.
</DIV>

<!-- link1 "IMPORTANT NOTICE REGARDING DELIVERY OF SHAREHOLDER DOCUMENTS" -->
<DIV align="left"><A NAME="019"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>IMPORTANT NOTICE REGARDING DELIVERY OF SHAREHOLDER
DOCUMENTS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In accordance with a notice sent to certain street name
shareholders of our Common Stock who share a single address,
only one copy of this proxy statement and our Annual Report on
Form&nbsp;10-K for the year ended December&nbsp;26, 2004 is
being sent to that address unless we received contrary
instructions from any shareholder at that address. This
practice, known as &#147;householding&#148;, is designed to
reduce our printing and postage costs. However, if any
shareholder residing at such an address wishes to receive a
separate copy of this proxy statement or our Annual Report on
Form&nbsp;10-K for the year ended December&nbsp;26, 2004, he or
she may contact Karen Warren, Investor Relations, Hasbro, Inc.,
1027 Newport Avenue, Pawtucket, Rhode Island 02862, phone
(401)&nbsp;431-8697, and we will deliver those documents to such
shareholder promptly upon receiving the request. Any such
shareholder may also contact Investor Relations using the above
contact information if he or she would like to receive separate
proxy statements and annual reports in the future. If you are
receiving multiple copies of our annual report and proxy
statement, you may request householding in the future by
contacting Investor Relations at the address set forth above.
</DIV>

<!-- link1 "COST OF SOLICITATION" -->
<DIV align="left"><A NAME="020"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>COST OF SOLICITATION</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The cost of soliciting proxies in the accompanying form has been
or will be borne by the Company. In addition to solicitation by
mail, arrangements will be made with brokerage houses and other
custodians, nominees and fiduciaries to send proxies and proxy
material to their principals and the Company will reimburse them
for any reasonable expenses incurred in connection therewith.
The Company has also retained Morrow&nbsp;&#38; Co., Inc. to aid
in the solicitation of proxies at an estimated cost of $4,000
plus reimbursement of reasonable out-of-pocket expenses. In
addition to use of mail, proxies may be solicited by officers
and employees of the Company or of Morrow&nbsp;&#38; Co., Inc.
in person or by telephone.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
It is important that your shares be represented at the Meeting.
If you are unable to be present in person, you are respectfully
requested to vote by Internet, by telephone or by marking,
signing and dating the enclosed proxy and returning it in the
pre-addressed envelope as promptly as possible. No postage is
required if mailed in the United States.
</DIV>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    By Order of the Board of Directors</TD>
</TR>

<TR>
    <TD style="font-size: 24pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Barry Nagler</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <I>Secretary</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Dated: April&nbsp;8, 2005
</DIV>

<DIV align="left" style="font-size: 10pt;">
Pawtucket, Rhode Island
</DIV>

<P align="center" style="font-size: 10pt;">46

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<!-- link1 "Appendix A HASBRO, INC. STANDARDS FOR DIRECTOR INDEPENDENCE" -->
<DIV align="left"><A NAME="021"></A></DIV>

<DIV align="right" style="font-size: 10pt;">
<B>Appendix&nbsp;A</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>HASBRO, INC. STANDARDS FOR DIRECTOR INDEPENDENCE</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>MARCH&nbsp;4, 2004</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following are the standards that will be employed by the
Hasbro, Inc. (the &#147;Company&#148;) Board of Directors in
determining issues of director independence pursuant to the
Sarbanes-Oxley Act of 2002 and applicable rules of the New York
Stock Exchange. For purposes of these standards (i)&nbsp;the
Company is meant to include not only Hasbro, Inc., but all of
its subsidiaries and divisions, and (ii)&nbsp;a director&#146;s
immediate family is deemed to include the director&#146;s
spouse, parents, children, siblings, mothers and fathers-in-law,
sons and daughters-in-law and brothers and sisters-in-law, and
anyone else (other than employees) who resides in the
director&#146;s home.
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    The Board of Directors (the &#147;Board&#148;) must
    affirmatively determine that the director has no material
    relationship with the Company (either directly or as a partner,
    shareholder or officer of an organization which has a
    relationship with the Company). The Company will disclose this
    determination in compliance with all applicable rules and
    regulations.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    No director who is an employee (or whose immediate family member
    is an employee) of the Company can be independent until at least
    three years after such employment has ended.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    No director who is affiliated with or employed by (or whose
    immediate family member is affiliated or employed in a
    professional capacity by) a present or former internal or
    external auditor of the Company can be independent until at
    least three years after the end of either the affiliation or the
    employment or auditing relationship.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    No director can be independent if he or she directly or
    indirectly receives from the Company any fees or compensation
    other than that which is related solely to his or her service as
    a member of the Board or one of its committees. A director who
    accepts any consulting, advisory or other compensatory fees from
    the Company other than in this connection will not be considered
    independent. The same prohibition applies with respect to
    members of a director&#146;s immediate family.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    No director who (or whose immediate family member) is employed
    as an executive officer of another entity where any of the
    Company&#146;s present executives serve on that entity&#146;s
    compensation committee can be independent until at least three
    years after the end of such service or employment relationship.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    No director who is an executive officer or an employee (or whose
    immediate family member is an executive officer) of an entity
    that makes payments to or receives payments from the Company for
    property or services in amount which, in any single fiscal year,
    exceeds the greater of $1&nbsp;million or 2% of such
    entity&#146;s consolidated gross revenues, can be independent
    until three years after falling below such threshold.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    No director who is performing, or is a partner, member, officer,
    director or employee of any entity performing, paid consulting,
    legal, investment banking, commercial banking, accounting,
    financial advisory or other professional services work
    (&#147;professional services&#148;) for the Company can be
    independent until three years after such services have ended.
    Similarly, there can be no independence if a director&#146;s
    immediate family member is performing, or is an executive
    officer or other senior executive of an entity performing,
    professional services for the Company, until three years after
    such services have ended.</TD>
</TR>

</TABLE>

<DIV align="center" style="font-size: 10pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Additional Relationships to Consider in Determining Director
Independence</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following are suggested parameters that the Board has agreed
to consider in determining whether a director has a material
relationship or affiliation with the Company that would impact a
finding of independence. If a director satisfies all of the
criteria set forth below it would suggest that the director,
absent
</DIV>

<P align="center" style="font-size: 10pt;">A-1
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<DIV align="left" style="font-size: 10pt;">
other contrary considerations, does not have a material
relationship with the Company and is independent. If a director
fails to satisfy one or more of the criteria set forth below,
further Board inquiry and discussion is needed to determine if
the director has a material relationship with the Company or may
be found independent.
</DIV>

<DIV style="margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Business and Professional Relationships of Directors and
    Their Family Members</I></B></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    The director is not currently providing personally, and has not
    provided personally within the past three years, property, goods
    or services (other than services as a member of the Board or any
    committees thereof) to the Company or any of its executive
    officers.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    No member of the director&#146;s immediate family is currently
    providing personally, or has provided personally within the past
    three years, property, goods or services (other than services as
    an unpaid intern of the Company) to the Company or any of its
    executive officers.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    The director is not currently receiving personally, and has not
    received personally within the past three years, property, goods
    or services from the Company. The foregoing requirements do not
    apply to compensation, services or goods paid or provided to the
    director solely in connection with the director&#146;s service
    on the Board or any committees thereof, including $1,000 or less
    a year in the Company&#146;s products which may be given to the
    director or one or more of the director&#146;s family members as
    a director benefit.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    No member of the director&#146;s immediate family is currently
    receiving personally, or has received personally within the past
    three years, property, goods or services from the Company,
    excluding the de&nbsp;minimus Company product benefit mentioned
    above. The foregoing requirements do not apply to unpaid
    internships provided to a member of the director&#146;s
    immediate family.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    The director is not an executive officer or employee of any
    entity to which the Company was indebted at any time within the
    past three years or which was indebted to the Company at any
    time within the past three years in an amount that exceeded at
    the end of any such year the greater of (i)&nbsp;2% of such
    entity&#146;s consolidated assets or (ii)&nbsp;$1,000,000.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Compensation</I></B></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Notwithstanding the restriction described above with respect to
    direct or indirect receipt of consulting, advisory or other
    compensatory fees other than in connection with Board or
    committee service, arrangements between the Company and
    (i)&nbsp;entities affiliated with the director or
    (ii)&nbsp;immediate family members of the director, which may be
    deemed to provide a form of indirect compensation to the
    director, will not result in a loss of status as an independent
    director provided such relationships do not violate the
    requirements set forth above.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Charitable Relationships</I></B></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    The director is not an executive officer or an employee of an
    entity that has received charitable contributions from the
    Company in excess of $100,000 in any of the past three fiscal
    years.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    No member of the director&#146;s immediate family is an
    executive officer of an entity that has received charitable
    contributions from the Company in excess of $100,000 in any of
    the past three fiscal years.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Stock Ownership</I></B></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    The director&#146;s stock ownership, as determined in accordance
    with the rules of the SEC as applied to preparation of proxy
    statements, does not exceed 5% of the Company&#146;s outstanding
    stock.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Other Family Relationships</I></B></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    The director is not related to any other member of the
    Company&#146;s board of directors or any officer of the Company.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">A-2

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<!-- link1 "Appendix B HASBRO, INC. 2003 STOCK INCENTIVE PERFORMANCE PLAN AND FIRST AMENDMENT" -->
<DIV align="left"><A NAME="022"></A></DIV>

<DIV align="right" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Appendix&nbsp;B</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>HASBRO, INC.</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>2003 STOCK INCENTIVE PERFORMANCE PLAN</B>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>1.</B></TD>
    <TD>
    <B>Defined Terms</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Exhibit&nbsp;A, which is incorporated herein by reference,
defines the terms used in the Plan and sets forth certain
operational rules related to those terms.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>2.</B></TD>
    <TD>
    <B>Purpose</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Plan has been established to advance the interests of the
Company and to increase shareholder value by providing for the
grant to Participants of Stock-based and other incentive Awards
which provide such Participants with a proprietary interest in
the growth and performance of the Company and with incentives
for continued service to the Company and its Affiliates.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>3.</B></TD>
    <TD>
    <B>Term</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Plan shall become effective upon adoption of the Plan by the
Board, subject to shareholder approval within twelve months
after adoption. The Board may grant Awards under the Plan prior
to such shareholder approval, but any such Award shall become
effective as of the date of grant only upon such approval and,
accordingly, no such Award may be exercisable prior to such
approval. The Plan shall remain in effect until
December&nbsp;31, 2008 unless sooner terminated by the Board,
subject to Section&nbsp;10 hereof. After termination of the
Plan, no future Awards may be granted under the Plan, but
previously granted Awards shall remain outstanding in accordance
with their applicable terms and conditions.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>4.</B></TD>
    <TD>
    <B>Administration</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Administrator has full and exclusive discretionary
authority, subject only to the express provisions of the Plan,
to interpret, construe and implement the Plan; determine
eligibility for and grant Awards; determine, modify or waive the
terms and conditions of any Award; prescribe, implement and
modify forms, rules and procedures for operation of the Plan;
and otherwise do all things necessary to carry out the purposes
of the Plan. In the case of any Award intended to be eligible
for the performance-based compensation exception under
Section&nbsp;162(m), the Administrator will exercise its
discretion consistent with qualifying the Award for that
exception. Determinations of the Administrator made under the
Plan will be conclusive and will bind all parties and
Participants under the Plan. The Administrator shall be entitled
to rely on reports, opinions, or statements of officers or
employees of the Company as well as those of counsel, public
accountants and other professional or expert persons. No member
of the Administrator shall be subject to any individual
liability with respect to the Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Notwithstanding the foregoing, as is more fully set forth in
Section&nbsp;10 of the Plan, the Administrator may not make
material amendments to the Plan or reprice Stock Options granted
under the Plan without shareholder approval.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The grant of any Awards under the Plan is at the sole discretion
of the Administrator. The Plan does not entitle any person
eligible to participate in the Plan to any Awards and there is
no guarantee that any person eligible to participate will be
granted Awards under the Plan. No Participant shall have any
right by reason of the grant of any Award under the Plan to
continued employment by the Company. To the extent that Awards
are made under the Plan, the terms of Awards may differ between
different Award grants and Participants, whether or not such
Participants or potential Participants are similarly situated.
</DIV>

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<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>5.</B></TD>
    <TD>
    <B>Shares Subject to the Plan and Limits on Awards Under the
    Plan</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(a)&nbsp;<I>Number of Shares.</I> A maximum of
5,000,000&nbsp;shares of Stock may be delivered pursuant to
Awards under the Plan. No more than 1,000,000&nbsp;shares of
Stock may be delivered pursuant to Awards other than Stock
Options or SARs. Notwithstanding anything in the Plan to the
contrary, any shares of Stock that are issued by the Company,
and any Awards that are granted by, or become obligations of,
the Company, through the assumption by the Company of, or in
substitution for, outstanding awards previously granted by an
acquired company shall not be counted against the shares of
Stock available for delivery under the Plan and the terms and
conditions of any such awards shall be the original terms and
conditions thereof as adjusted by or pursuant to any applicable
acquisition agreements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;<I>Type of Shares.</I> Stock delivered by the Company
under the Plan may be authorized but unissued Stock or
previously issued Stock acquired by the Company. No fractional
shares of Stock will be delivered under the Plan. Any fractional
Shares which, but for this provision, would have been issued
shall be deemed to have been issued and immediately sold to the
Company for their Fair Market Value, and the Participant shall
receive from the Company cash in lieu of such fractional shares,
less all applicable withholding taxes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(c)&nbsp;<I>Award Limits.</I> The maximum number of shares of
Stock for which Stock Options may be granted to any person in
any calendar year and the maximum number of shares of Stock
subject to SARs granted to any person in any calendar year will
together be an aggregate of 1,000,000&nbsp;shares. The maximum
benefit that may be paid to any person under other Awards in any
calendar year will be, to the extent paid in shares,
200,000&nbsp;shares, and, to the extent paid in cash,
$1&nbsp;million. The foregoing provisions will be construed and
applied consistent with Section&nbsp;162(m).
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>6.</B></TD>
    <TD>
    <B>Eligibility and Participation</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Administrator will select Participants from among key
Employees and directors of the Company or its Affiliates who, in
the opinion of the Administrator, are in a position to make a
significant contribution to the success of the Company and its
Affiliates. Eligibility for ISOs is limited to employees of the
Company or of a &#147;parent corporation&#148; or
&#147;subsidiary corporation&#148; of the Company as those terms
are defined in Section&nbsp;424 of the Code.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>7.</B></TD>
    <TD>
    <B>Rules&nbsp;Applicable to Awards</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(a)&nbsp;<I>All Awards</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(1)&nbsp;<I>Award Provisions.</I> The Administrator will
determine the terms of all Awards, subject to the limitations
provided herein. A Participant shall have no rights with respect
to the Plan, or any Award, contingent or otherwise, until
written evidence of the Award shall have been delivered to the
Participant and all the terms, conditions, and provisions of the
Plan and the Award applicable to such Participant have been met.
The Plan shall be binding on all successors and permitted
assigns of a Participant, including, without limitation, the
estate of such Participant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(2)&nbsp;<I>Transferability.</I> Neither ISOs, nor, except as
the Administrator otherwise expressly provides, other Awards may
be transferred other than by will or by the laws of descent and
distribution, and during a Participant&#146;s lifetime ISOs
(and, except as the Administrator otherwise expressly provides,
other non-transferable Awards requiring exercise) may be
exercised only by the Participant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(3)&nbsp;<I>Vesting, Etc.</I> The Administrator shall determine
the time or times at which an Award will vest or become
exercisable and the terms on which an Award requiring exercise
will remain exercisable, <I>provided that</I>, except in the
case of Awards made in connection with the recruitment of new
Employees (including new officers) or new directors,
(i)&nbsp;Stock Options shall vest in equal annual installments
over a period of not less than three years and
(ii)&nbsp;Restricted Stock and Deferred Stock shall vest not
earlier than three years from the grant date of the Award.
Subject to the foregoing restriction, the Administrator may at
any time accelerate the vesting or exercisability of an Award,
regardless of any adverse or potentially adverse tax
consequences resulting from such acceleration. The Administrator
may at any time accelerate the vesting or exercisability of an
Award, without being subject to the limitations set forth in the
first sentence of this Section&nbsp;7(a)(3), if
</DIV>

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<DIV align="left" style="font-size: 10pt;">
such acceleration is associated with the death, disability,
retirement or other termination of Employment or service of a
Participant. For purposes of the foregoing sentence, the
Administrator will have sole and conclusive power to define the
types of disability, retirement or other termination of
Employment or service associated with such acceleration.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Administrator has full power and authority to determine, for
each Award, how long after cessation of the Participant&#146;s
Employment or service as a director an Award requiring exercise
will continue to be exercisable. Unless the Administrator
expressly provides otherwise in the applicable Award agreement
or through other means, immediately upon the cessation of the
Participant&#146;s Employment or service as a director an Award
requiring exercise will cease to be exercisable and will
terminate, and all other Awards to the extent not already vested
will be forfeited, except that these default rules further
provide, unless otherwise modified by the Administrator for a
particular Award or Awards, that:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (A)&nbsp;subject to (B)&nbsp;and (C)&nbsp;below, all Stock
    Options and SARs held by the Participant or the
    Participant&#146;s permitted transferee, if any, immediately
    prior to the cessation of the Participant&#146;s Employment or
    service as a director, to the extent then exercisable, will
    remain exercisable for the lesser of (i)&nbsp;a period of three
    months from the date of termination or (ii)&nbsp;the period
    ending on the latest date on which such Stock Option or SAR
    could have been exercised without regard to this
    Section&nbsp;7(a)(3)(A), and will thereupon terminate;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (B)&nbsp;all Stock Options and SARs held by a Participant or the
    Participant&#146;s permitted transferee, if any, immediately
    prior to the Participant&#146;s death, to the extent then
    exercisable, will remain exercisable for the lesser of
    (i)&nbsp;the one year period ending with the first anniversary
    of the Participant&#146;s death or (ii)&nbsp;the period ending
    on the latest date on which such Stock Option or SAR could have
    been exercised without regard to this Section&nbsp;7(a)(3)(B),
    and will thereupon terminate;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (C)&nbsp;all Stock Options and SARs held by a Participant or the
    Participant&#146;s permitted transferee, if any, immediately
    prior to the cessation of the Participant&#146;s Employment or
    service as a director will immediately terminate upon such
    cessation if the Administrator in its sole discretion determines
    that such cessation of Employment or service as a director has
    resulted for reasons which cast such discredit on the
    Participant as to justify immediate termination of the Award.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(4)&nbsp;<I>Taxes.</I> The Administrator will make such
provision for the withholding of all applicable taxes as it
deems necessary. The Administrator may, but need not, permit a
Participant to satisfy tax withholding requirements by
(i)&nbsp;having the Participant deliver cash or a check payable
to the order of the Company, (ii)&nbsp;holding back shares of
Stock from an Award, or (iii)&nbsp;permitting a Participant to
tender shares of Stock which have been owned by the Participant
for at least six months having a Fair Market Value equal to the
amount of the applicable withholding taxes. In no event may
withholding taxes paid by a Participant exceed the minimum
withholding required by law. Subject to the provisions of the
Plan, the Administrator may, but need not, pay all or a portion
of the tax liability incurred or to be incurred by a Participant
as a result of Awards made to or settled by such Participant
under the Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(5)&nbsp;<I>Dividend Equivalents, Deferrals, Etc.</I> The
Administrator may provide for the payment of amounts in lieu of
cash dividends or other cash distributions with respect to Stock
subject to an Award. Such dividend equivalents and other
payments may be paid currently or may be credited to an account
established under the Plan in the name of the Participant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Administrator may require or permit Participants to elect to
defer the issuance of Stock or the settlement of Awards under
such rules and procedures as it may establish under the Plan. It
may also provide that deferred settlements include the payment
or crediting of interest on the deferral amounts, or the payment
or crediting of dividend equivalents on deferred amounts
denominated in Stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(6)&nbsp;<I>Rights Limited.</I> Nothing in the Plan will be
construed as giving any person the right to continued employment
or service with the Company or its Affiliates, or any rights as
a shareholder except as to shares of Stock actually issued under
the Plan. The loss of existing or potential profit in Awards
will not constitute an element of damages in the event of
termination of employment or service for any reason, even if the
termination is in violation of an obligation of the Company or
an Affiliate to the Participant.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Unless otherwise determined by the Administrator, the Plan shall
be unfunded and shall not create, or be construed to create, a
trust or a separate fund or funds. The Plan shall not establish
any fiduciary relationship between the Company and any
Participant or other person. To the extent any person holds any
rights by virtue of an Award under the Plan, such rights, unless
otherwise determined by the Administrator, shall be no greater
than the rights of an unsecured general creditor of the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(7)&nbsp;<I>Section&nbsp;162(m).</I> This Section&nbsp;7(a)(7)
applies to any Performance Award intended to qualify as
performance-based for the purposes of Section&nbsp;162(m), other
than a Stock Option or a SAR. In the case of any Performance
Award to which this Section&nbsp;7(a)(7) applies, the Plan and
such Award will be construed to the maximum extent permitted by
law in a manner consistent with qualifying the Award for such
exception. With respect to such Performance Awards, the
Administrator will preestablish, in writing, one or more
specific Performance Criteria no later than 90&nbsp;days after
the commencement of the period of service to which the
performance relates (or at such earlier time as is required to
qualify the Award as performance-based under
Section&nbsp;162(m)). The Performance Criteria so established
shall serve as a condition to the grant, vesting or payment of
the Performance Award, as determined by the Administrator. Prior
to grant, vesting or payment of the Performance Award, as the
case may be, the Administrator will certify whether the
Performance Criteria have been attained and such determination
will be final and conclusive. If the Performance Criteria with
respect to the Award are not attained, no other Award will be
provided in substitution of the Performance Award. No
Performance Award to which this Section&nbsp;7(a)(7) applies may
be granted after the fifth anniversary of the approval of the
Plan by shareholders of the Company until the Performance
Criteria (as originally approved or as subsequently amended)
have been resubmitted to and reapproved by the shareholders of
the Company in accordance with the requirements of
Section&nbsp;162(m), unless such grant is made contingent upon
such approval.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;<I>Awards Requiring Exercise</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(1)&nbsp;<I>Time And Manner Of Exercise.</I> Unless the
Administrator expressly provides otherwise, an Award requiring
exercise by the holder will not be deemed to have been exercised
until the Administrator receives a notice of exercise (in form
acceptable to the Administrator) signed by the appropriate
person and accompanied by any payment required under the Award.
If the Award is exercised by any person other than the
Participant, the Administrator may require satisfactory evidence
that the person exercising the Award has the right to do so.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(2)&nbsp;<I>Exercise Price.</I> The exercise price of a Stock
Option will not be less than the Fair Market Value of the Stock
subject to the Stock Option, determined as of the date of grant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(3)&nbsp;<I>Payment Of Exercise Price.</I> Where the exercise of
an Award is to be accompanied by payment, the Administrator may
determine the required or permitted forms of payment, subject to
the following: (a)&nbsp;all payments will be by cash or check
acceptable to the Administrator, or, if so permitted by the
Administrator and if legally permissible, (i)&nbsp;through the
delivery of shares of Stock that have been outstanding for at
least six months (unless the Administrator approves a shorter
period) and that have a Fair Market Value equal to the exercise
price, (ii)&nbsp;by delivery to the Company of a promissory note
of the person exercising the Award, payable on such terms as are
specified by the Administrator, (iii)&nbsp;through a
broker-assisted exercise program acceptable to the
Administrator, (iv)&nbsp;by any other means acceptable to the
Administrator or (v)&nbsp;by any combination of the foregoing
permissible forms of payment; and (b)&nbsp;where shares of Stock
issued under an Award are part of an original issue of shares,
the Award will require that at least so much of the exercise
price as equals the par value of such shares be paid other than
by delivery of a promissory note or its equivalent. The delivery
of shares in payment of the exercise price under
clause&nbsp;(a)(i) above in this Section&nbsp;7(b)(3) may be
accomplished either by actual delivery or by constructive
delivery through attestation of ownership, subject to such rules
as the Administrator may prescribe.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(c)&nbsp;<I>Awards Not Requiring Exercise</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Awards of Restricted Stock, Deferred Stock and Unrestricted
Stock may be made in exchange for past services or other lawful
consideration.
</DIV>

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<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>8.</B></TD>
    <TD>
    <B>Effect of Certain Transactions</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(a)&nbsp;<I>Change in Control</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(1)&nbsp;Upon the occurrence of an event constituting a Change
in Control, all Awards outstanding on such date shall become
100% vested and shall be paid in cash to the Participant as soon
as may be practicable, less all applicable withholding taxes.
Upon such payment, such Awards shall be cancelled.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(2)&nbsp;The amount of cash to be paid with respect to Stock
Options, SARs, Restricted Stock, Deferred Stock and Unrestricted
Stock shall be determined by multiplying the number of such
Awards by (i)&nbsp;in the case of Restricted Stock, Unrestricted
Stock and Deferred Stock, the CIC Price, <I>provided,
however</I>, that in the case where the performance period, if
any, has been completed on or prior to the occurrence of a
Change in Control, the number of Awards to be multiplied shall
be the number of shares issued or vested pursuant to the Award
as determined in accordance with the Award agreement and in the
case where the performance period, if any, has not been
completed upon the occurrence of a Change in Control, the number
of Awards to be multiplied shall be the higher of the target
number of such Awards as determined by the Administrator at the
time of grant and the number of shares issuable based on actual
performance to date, in each case prorated based on the number
of fiscal years then completed during the performance period,
(ii)&nbsp;in the case of Stock Options, the difference between
the exercise price per share and the CIC Price, if the CIC price
is higher, and (iii)&nbsp;in the case of SARs, the difference
between the exercise or designated price per share and the CIC
Price, if the CIC price is higher. In addition, all accrued
dividends and dividend equivalents or interest accrued on
deferred settlements shall be paid. In the case of Cash Awards
the amount of cash to be paid shall be determined,
(i)&nbsp;where the performance period, if any, has been
completed on or prior to the occurrence of a Change in Control,
the value of such award as determined in accordance with the
Award agreement and (ii)&nbsp;where the performance period, if
any, has not been completed upon the occurrence of Change in
Control, the higher of the target value of such awards as
determined by the Administrator at the time of grant and the
value of such awards based on actual performance to date, in
each case prorated based on the number of fiscal years then
completed during the performance period.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;<I>Changes in and Distributions with Respect to the
Stock</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(1)&nbsp;<I>Basic Adjustment Provisions.</I> In the event of a
stock dividend, stock split or combination or exchange of shares
(including a reverse stock split), recapitalization or other
change in the Company&#146;s capital structure, the
Administrator will make appropriate adjustments to the maximum
numbers of shares that may be delivered under the Plan and
certain types of Awards under the Plan under Section&nbsp;5(a)
and to the maximum share limits described in Section&nbsp;5(c),
and will also make appropriate adjustments to the number and
kind of shares of stock or securities subject to Awards then
outstanding or subsequently granted, any exercise prices
relating to Awards and any other provision of Awards affected by
such change.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(2)&nbsp;<I>Certain Other Adjustments.</I> To the extent
consistent with qualification of ISOs under Section&nbsp;422 of
the Code and with the performance-based compensation rules of
Section&nbsp;162(m), where applicable, the Administrator may
also make adjustments of the type described in
paragraph&nbsp;(1)&nbsp;above to take into account distributions
to shareholders and other changes that impact the Stock or
Awards other than those provided for in Section&nbsp;8(a) and
8(b)(1), or any other event, if the Administrator determines
that adjustments are appropriate to avoid distortion in the
operation of the Plan and to preserve the value of Awards made
hereunder.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(3)&nbsp;<I>Continuing Application of Plan Terms.</I> References
in the Plan to shares of Stock will be construed to include any
stock or securities resulting from an adjustment pursuant to
this Section&nbsp;8.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>9.</B></TD>
    <TD>
    <B>Legal Conditions on Delivery of Stock</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company will not be obligated to deliver any shares of Stock
pursuant to the Plan or to remove any restriction from shares of
Stock previously delivered under the Plan until: (i)&nbsp;the
Company is satisfied that all legal matters in connection with
the issuance and delivery of such shares have been addressed and
resolved; (ii)&nbsp;if the outstanding Stock is at the time of
delivery listed on any stock exchange or national market system,
the shares to be delivered have been listed or authorized to be
listed on such exchange or system upon official
</DIV>

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<DIV align="left" style="font-size: 10pt;">
notice of issuance; and (iii)&nbsp;all conditions of the Award
have been satisfied or waived. If the sale of Stock has not been
registered under the Securities Act of 1933, as amended, the
Company may require, as a condition to exercise of the Award,
such representations or agreements as counsel for the Company
may consider appropriate to avoid violation of such Act. The
Company may require that certificates evidencing Stock issued
under the Plan bear an appropriate legend reflecting any
restriction on transfer applicable to such Stock, and the
Company may hold the certificates pending lapse of the
applicable restrictions.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>10.</B></TD>
    <TD>
    <B>Amendment and Termination</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Administrator may at any time terminate the Plan as to any
future grants of Awards and may at any time and from time to
time amend or modify the Plan or any outstanding Award for any
purpose which may at the time be permitted by law; <I>provided,
however</I>, that no material amendment to the Plan (including
an amendment to reprice Stock Options granted under the Plan)
shall become effective without shareholder approval; <I>and
further provided</I>, that except as otherwise expressly
provided in the Plan or required by law, the Administrator may
not, without the Participant&#146;s consent, alter the terms of
an Award so as to affect adversely the Participant&#146;s rights
under the Award, unless the Administrator expressly reserved the
right to do so at the time of the Award. For purposes of this
Section&nbsp;10, neither a termination of the Plan nor any
amendment or modification to an outstanding Award under the Plan
(other than to reprice Stock Options) shall be considered a
material amendment to the Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Administrator may, subject to the provisions of the Plan,
create sub-plans to the Plan that may incorporate such terms as
it considers necessary or desirable to operate the Plan in any
non-United States jurisdiction in which Participants are
situated and may implement such sub-plans in the form of
schedules to the Plan applicable to the specified jurisdiction,
provided that any Stock issued pursuant to such sub-plans shall
be counted against the limits set forth in Section&nbsp;5 of the
Plan. Any such sub-plans created by the Administrator may
provide for greater restrictions on Awards than those set forth
in the Plan, but may not provide for greater benefits to
Participants than the benefits permitted under the Plan itself.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>11.</B></TD>
    <TD>
    <B>Other Compensation Arrangements</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The existence of the Plan or the grant of any Award will not in
any way affect the Company&#146;s right to award a person
bonuses or other compensation in addition to Awards under the
Plan.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>12.</B></TD>
    <TD>
    <B>Governing Law</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The validity, construction and effect of the Plan and any action
taken or relating to the Plan shall be determined in accordance
with the laws of the State of Rhode Island and applicable
federal law.
</DIV>

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<DIV align="right" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Exhibit&nbsp;A</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Definition of Terms</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following terms, when used in the Plan, will have the
meanings and be subject to the provisions set forth below:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>&#147;Administrator&#148;:</I> The Board or, if one or more
has been appointed, the Committee. The Administrator may
delegate ministerial tasks to such persons as it deems
appropriate. For any Awards subject to the requirements of
Section&nbsp;162(m), the composition of any Committee
functioning as the Administrator with respect to such Awards
will meet all of the requirements of Section&nbsp;162(m).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>&#147;Affiliate&#148;:</I> Any corporation or other entity
owning, directly or indirectly, 50% or more of the outstanding
Stock of the Company, or in which the Company or any such
corporation or other entity owns, directly or indirectly, 50% of
the outstanding capital stock (determined by aggregate voting
rights) or other voting interests.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>&#147;Award&#148;:</I> Any or a combination of the following:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (i)&nbsp;Stock Options.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (ii)&nbsp;SARs.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (iii)&nbsp;Restricted Stock.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (iv)&nbsp;Unrestricted Stock.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (v)&nbsp;Deferred Stock.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (vi)&nbsp;Performance Awards.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (vii)&nbsp;Cash Awards.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>&#147;Board&#148;:</I> The Board of Directors of the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>&#147;Cash Award&#148;:</I> An award denominated in cash that
would constitute a &#147;derivative security&#148; for purposes
of Rule&nbsp;16b-6 or any successor Rule under the Securities
Exchange Act of 1934 (the &#147;1934&nbsp;Act&#148;) if not
awarded pursuant to a plan satisfying the provisions of
Rule&nbsp;16b-3 under the 1934&nbsp;Act. The payment of a Cash
Award may be subject to such restrictions and conditions as may
be established by the Administrator.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>&#147;Change in Control&#148;:</I> Any of the following
events:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (i)&nbsp;The acquisition by any individual, entity or group
    (within the meaning of Section&nbsp;13(d)(3) or 14(d)(2) of the
    1934&nbsp;Act) of beneficial ownership (within the meaning of
    Rule&nbsp;13d-3 promulgated under the 1934&nbsp;Act) of 20% or
    more of either (i)&nbsp;the then outstanding shares of the Stock
    (the &#147;Outstanding Stock&#148;) or (ii)&nbsp;the combined
    voting power of the then outstanding voting securities of the
    Company entitled to vote generally in the election of directors
    (the &#147;Outstanding Voting Securities&#148;); <I>provided,
    however</I>, that the following acquisitions shall not
    constitute a Change of Control:</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (a)&nbsp;any acquisition directly from the Company or any of its
    subsidiaries;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (b)&nbsp;any acquisition by the Company or any of its
    subsidiaries;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (c)&nbsp;any acquisition by any employee benefit plan (or
    related trust) sponsored or maintained by the Company or any of
    its subsidiaries;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (d)&nbsp;any acquisition by Alan or Sylvia Hassenfeld, members
    of their respective immediate families, or heirs of Alan or
    Sylvia Hassenfeld or of any member of their respective immediate
    families, the Sylvia Hassenfeld Trust, the Merrill Hassenfeld
    Trust, the Alan Hassenfeld Trust, The Hassenfeld Foundation, any
    trust or foundation established by or for the primary benefit of
    any of the foregoing or controlled by one or more of any of the
    foregoing, or any affiliates or associates (as such terms are
    defined in Rule&nbsp;12b-2 promulgated under the 1934&nbsp;Act)
    of any of the foregoing;&nbsp;or</TD>
</TR>

</TABLE>

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<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (e)&nbsp;any acquisition by any corporation with respect to
    which, following such acquisition, more than 60% of,
    respectively, the then outstanding shares of common stock of
    such corporation and the combined voting power of the then
    outstanding voting securities of such corporation entitled to
    vote generally in the election of directors is then beneficially
    owned, directly or indirectly, by all or substantially all of
    the individuals and entities who were the beneficial owners,
    respectively, of the Outstanding Stock and the Outstanding
    Voting Securities immediately prior to such acquisition in
    substantially the same proportions as their ownership,
    immediately prior to such acquisition, of the Outstanding Stock
    and Outstanding Voting Securities, as the case may be;&nbsp;or</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (ii)&nbsp;Individuals who, as of the effective date of the Plan
    constitute the Board (the &#147;Incumbent Board&#148;) ceasing
    for any reason to constitute at least a majority of the Board;
    <I>provided, however</I>, that any individual becoming a
    director subsequent to the effective date of the Plan whose
    election, or nomination for election by the Company&#146;s
    shareholders, was approved by a vote of at least a majority of
    the directors then comprising the Incumbent Board shall be
    considered as though such individual were a member of the
    Incumbent Board, but excluding, for this purpose, any such
    individual whose initial assumption of office occurs as a result
    of either an actual or threatened election contest (as such
    terms are used in Rule&nbsp;14a-11 of Regulation&nbsp;14A
    promulgated under the 1934&nbsp;Act) or other actual or
    threatened solicitation of proxies or consents;&nbsp;or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (iii)&nbsp;Approval by the shareholders of the Company of a
    reorganization, merger or consolidation, in each case, with
    respect to which all or substantially all of the individuals and
    entities who were the beneficial owners, respectively, of the
    Outstanding Stock and Outstanding Voting Securities immediately
    prior to such reorganization, merger or consolidation do not,
    following such reorganization, merger or consolidation,
    beneficially own, directly or indirectly, more than 60% of,
    respectively, the then outstanding shares of common stock and
    the combined voting power of the then outstanding voting
    securities entitled to vote generally in the election of
    directors, as the case may be, of the corporation resulting from
    such reorganization, merger or consolidation in substantially
    the same proportions as their ownership, immediately prior to
    such reorganization, merger or consolidation, of the Outstanding
    Stock and Outstanding Voting Securities, as the case may
    be;&nbsp;or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (iv)&nbsp;Approval by the shareholders of the Company of
    (a)&nbsp;a complete liquidation or dissolution of the Company or
    (b)&nbsp;the sale or other disposition of all or substantially
    all of the assets of the Company, other than to a corporation,
    with respect to which following such sale or other disposition,
    more than 60% of, respectively, the then outstanding shares of
    common stock of such corporation and the combined voting power
    of the then outstanding voting securities of such corporation
    entitled to vote generally in the election of directors is then
    beneficially owned, directly or indirectly, by all or
    substantially all of the individuals and entities who were the
    beneficial owners, respectively, of the Outstanding Stock and
    Outstanding Voting Securities immediately prior to such sale or
    other disposition in substantially the same proportion as their
    ownership, immediately prior to such sale or other disposition,
    of the Outstanding Stock and Outstanding Voting Securities, as
    the case may be.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>&#147;CIC Price&#148;:</I> The higher of (i)&nbsp;the highest
price paid for a share of the Stock in the transaction or series
of transactions pursuant to which a Change in Control shall have
occurred, or (ii)&nbsp;the highest reported sales price of a
share of the Stock during the 60&nbsp;day period immediately
preceding the date upon which the event constituting a Change in
Control shall have occurred. To the extent that the
consideration paid in any transaction or series of transactions
described in (i)&nbsp;above consists in whole or in part of
non-cash consideration, the value of such non-cash consideration
shall be determined in the sole discretion of the Administrator.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>&#147;Code&#148;:</I> The U.S.&nbsp;Internal Revenue Code of
1986 as from time to time amended and in effect, or any
successor statute as from time to time in effect.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>&#147;Committee&#148;:</I> One or more committees of the
Board meeting any applicable legal and other requirements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>&#147;Company&#148;:</I> Hasbro, Inc.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>&#147;Deferred Stock&#148;:</I> An unfunded and unsecured
promise to deliver Stock or other securities in the future on
specified terms.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>&#147;Employee&#148;:</I> Any person who has an Employment
relationship with the Company or an Affiliate.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>&#147;Employment&#148;:</I> A Participant&#146;s employment
or other service relationship with the Company and/or its
Affiliates. Employment will be deemed to continue, unless the
Administrator expressly provides otherwise, so long as the
Participant is employed by, or otherwise is providing services
in a capacity described in the instructions to Form&nbsp;S-8
promulgated by the Securities and Exchange Commission to the
Company or any of its Affiliates. If a Participant&#146;s
employment or other service relationship is with an Affiliate
and that entity ceases to be an Affiliate, the
Participant&#146;s Employment will be deemed to have terminated
when the entity ceases to be an Affiliate unless the Participant
transfers Employment to the Company or its remaining Affiliates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>&#147;Fair Market Value&#148;:</I> The average of the high
and low sales prices of the Stock as reported in The Wall Street
Journal for New York Stock Exchange Transactions or similar
successor consolidated transactions reports for the relevant
date (or the comparable consolidated transaction reports for any
other national securities exchange or NASDAQ National Market
Issues, if the Stock is admitted for trading or quotation on
said exchange or market), or, if no sales of the Stock were made
on said exchange or market on that date, the average of the high
and low prices of the Stock as reported in said composite
transactions report for the preceding day on which sales of the
Stock were made on said exchange or market. If the Stock is not
then trading on an exchange or quoted in NASDAQ National Market
Issues, then Fair Market Value shall be the mean between the bid
and asked prices for the relevant over-the-counter transaction
on such date or the preceding day on which sales of Stock were
made over-the-counter, or if there are not such transactions,
Fair Market Value shall be determined in good faith by the
Administrator. Notwithstanding the foregoing, for purposes of
valuing Stock delivered to the Company by a Participant in
payment of the exercise price of a Stock Option or Stock
delivered or withheld in payment of applicable tax withholding,
if the Participant sells, on a national securities exchange, or
on NASDAQ or over-the-counter, the Stock acquired on the same
day as the date of exercise, the Administrator shall have the
discretion to deem the per share Fair Market Value of the Stock
so delivered or withheld to be the actual sales price per share
of the Stock so sold. Under no circumstances shall Fair Market
Value be less than the par value of the Stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>&#147;ISO&#148;:</I> A Stock Option intended to be an
&#147;incentive stock option&#148; within the meaning of
Section&nbsp;422 of the Code. Each option granted pursuant to
the Plan will be treated as providing by its terms that it is to
be a non-incentive option unless, as of the date of grant, it is
expressly designated as an ISO.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>&#147;Participant&#148;:</I> A person who is granted an Award
under the Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>&#147;Performance Award&#148;:</I> An Award subject to
Performance Criteria. The Administrator in its discretion may
grant Performance Awards that are intended to qualify for the
performance-based compensation exception under
Section&nbsp;162(m) and Performance Awards that are not intended
so to qualify.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>&#147;Performance Criteria&#148;:</I> Specified criteria the
satisfaction of which is a condition for the grant,
exercisability, vesting or full enjoyment of an Award. For
purposes of Awards that are intended to qualify for the
performance-based compensation exception under
Section&nbsp;162(m), a Performance Criterion will mean an
objectively determinable measure of performance relating to any
one or any combination of the following criteria (determined
either (i)&nbsp;on a consolidated basis or, (ii)&nbsp;as the
context permits and as determined by the Administrator, on a
segment, divisional, sector, subsidiary, business unit, line of
business, project or geographical basis or on the basis of one
or more designated products or brands (herein collectively
&#147;business unit&#148;), or in combinations thereof, all as
selected by the Administrator in each individual case): net
earnings; earnings per share; net earnings per share; stock
price; net revenues; gross profit; operating profit; earnings
before income taxes; earnings before interest and taxes;
earnings before interest, taxes and depreciation; earnings
before interest, taxes, depreciation and amortization; cost
control; cash net earnings; return on assets; return on capital
investment; return on shareholders&#146; equity; return on net
revenues; net cash provided by operating activities; working
capital; economic value added; total shareholder return on
common stock relative to S&#38;P 500 Index; total shareholder
return on common stock relative to the Russell 1000 Consumer
</DIV>

<P align="center" style="font-size: 10pt;">B-9

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<DIV align="left" style="font-size: 10pt;">
Discretionary Index; sales; core brands growth; core brands net
revenues; operating margin; and free cash flow. Performance
goals utilizing the foregoing business criteria may be based
upon the achievement of specified levels of consolidated or
other business unit performance under one or more of the
measures described above relative to internal targets, the past
performance of the Company or relevant business unit, or the
past, present or future performance of other corporations or
their relevant business units. A Performance Criterion measure
and any targets with respect thereto determined by the
Administrator need not be based upon an increase, a positive or
improved result or avoidance of loss. In setting the Performance
Criteria the Administrator intends to set goals which are
indicative of strong performance. Satisfaction of Performance
Criteria may, in the Administrator&#146;s discretion, be
determined to the extent applicable, (i)&nbsp;in accordance with
generally accepted accounting principles applied on a consistent
basis and/or (ii)&nbsp;exclusive of designated (a)&nbsp;changes
in accounting principles, (b)&nbsp;extraordinary items,
(c)&nbsp;material restructurings, (d)&nbsp;material nonrecurring
items, (e)&nbsp;material non-budgeted items and (f)&nbsp;results
of operations of acquisitions or divestitures consummated during
the fiscal year; each of the items in this
section&nbsp;(ii)&nbsp;being excluded to the extent authorized
by the Administrator.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>&#147;Plan&#148;:</I> The Hasbro, Inc. 2003 Stock Incentive
Performance Plan as from time to time amended and in effect.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>&#147;Restricted Stock&#148;:</I> An Award of Stock for so
long as the Stock remains subject to restrictions requiring that
it be redelivered or offered for sale to the Company if
specified conditions are not satisfied.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>&#147;Section&nbsp;162(m)&#148;:</I> Section&nbsp;162(m) of
the Code, or any successor provision.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>&#147;SARs&#148;:</I> Rights entitling the holder upon
exercise to receive cash or Stock, as the Administrator
determines, equal to a function (determined by the Administrator
using such factors as it deems appropriate) of the amount by
which the Stock has appreciated in value since the date of the
Award.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>&#147;Stock&#148;:</I> Common Stock of the Company, par value
$.50&nbsp;per share.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>&#147;Stock Options&#148;:</I> Options entitling the
recipient to acquire shares of Stock upon payment of the
exercise price. Stock Options can be either ISO&#146;s or
non-incentive options.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>&#147;Unrestricted Stock&#148;:</I> An Award of Stock not
subject to any restrictions under the Plan.
</DIV>

<P align="center" style="font-size: 10pt;">B-10

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<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>FIRST AMENDMENT TO</B>
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<DIV align="center" style="font-size: 10pt;">
<B>HASBRO, INC. 2003 STOCK INCENTIVE PERFORMANCE PLAN</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Hasbro, Inc. 2003 Stock Incentive Performance Plan (the
&#147;2003 Plan&#148;) is hereby amended in the manner set forth
below, such amendment to be effective as of the effective time
of approval of this First Amendment to Hasbro, Inc. 2003 Stock
Incentive Performance Plan (the &#147;First Amendment&#148;) by
the shareholders of Hasbro, Inc. (the &#147;Company&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Notwithstanding the foregoing, this First Amendment shall only
become effective if approved by the Company&#146;s shareholders
at the Company&#146;s 2005 Annual Meeting of Shareholders, or
any adjournment thereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
1.&nbsp;The first two sentences of Section&nbsp;5(a) of the 2003
Plan are deleted and replaced in their entirety with the
following:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    &#147;A maximum of 10,000,000&nbsp;shares of Stock may be
    delivered pursuant to Awards under the Plan. No more than
    3,500,000&nbsp;shares of Stock may be delivered pursuant to
    Awards other than Stock Options or SARs.&#148;</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">B-11
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<DIV align="right" style="font-size: 10pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
0537-PS-05
</DIV>
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<DIV style="font-family: Helvetica,Arial,sans-serif">


<P align="right" style="font-size: 10pt"><B>Appendix C</B>

<P align="center" style="font-size: 10pt"><B>HASBRO, INC.<BR>
1027 NEWPORT AVENUE<BR>
PAWTUCKET, Rl 02862</B>



<P align="justify" style="margin-left:5%; margin-right:5%; font-size: 9pt"><B>Dear Fellow Shareowner:</B>


<P align="justify" style="margin-left:5%; margin-right:5%; font-size: 9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>You are cordially invited to attend the 2005 Annual Meeting of
Shareholders of Hasbro, Inc. to be held at 10:00&nbsp;a.m. on Thursday, May&nbsp;19,
2005, at 1027 Newport Avenue, Pawtucket, Rhode Island. The accompanying Notice
of Annual Meeting and Proxy Statement contain detailed information as to the
formal business to be transacted at the meeting.</B>


<P align="justify" style="margin-left:5%; margin-right:5%; font-size: 9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Your Vote Matters. </I><B>Whether or not you plan to attend the 2005 Annual
Meeting, it is important that your shares be voted. Please follow the
instructions on the other side of this proxy card. You may, of course, attend
the 2005 Annual Meeting and vote in person, even if you have previously voted.
I am looking forward to seeing you there.</B>



<P align="justify" style="margin-left:30%; font-size: 9pt"><B>Sincerely,</B>



<P align="justify" style="margin-left:30%; font-size: 9pt"><B>Alan G. Hassenfeld</B><br><B>
Chairman of the Board</B>



<P align="justify" style="margin-left:30%; font-size: 10pt"><B><I>YOUR VOTE IS IMPORTANT</I></B>



<DIV align="center">
<TABLE style="font-size: 7pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="30%"></TD>
    <TD width="5%"></TD>
    <TD width="30%"></TD>
    <TD width="5%"></TD>
    <TD width="30%"></TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">DETACH HERE
</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">ZHAS42</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><B>PROXY</B>


<P align="center" style="font-size: 24pt"><B>HASBRO, INC.</B>



<P align="center" style="font-size: 10pt">&nbsp;<br><B>Annual Meeting of Shareholders &#151; May&nbsp;19, 2005</B>



<P align="center" style="font-size: 10pt"><B>THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS</B>



<P align="justify" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The undersigned acknowledges receipt of the Notice of Annual Meeting of Shareholders and
Proxy Statement of Hasbro, Inc. (the &#147;Company&#148;) and hereby appoints ALAN G. HASSENFELD and ALFRED
J. VERRECCHIA and each of them, with full power of substitution to each of them, as attorneys and
proxies to appear and vote all of the shares of Common Stock standing in the name of the
undersigned at the Annual Meeting of Shareholders of the Company to be held on May&nbsp;19, 2005 at
10:00&nbsp;a.m. at 1027 Newport Avenue, Pawtucket, Rhode Island, and at any adjournment thereof.


<P align="justify" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED &#147;FOR&#148; THE NOMINEES LISTED IN PROPOSAL 1,
&#147;FOR&#148; PROPOSALS 2 AND 3; &#147;AGAINST&#148; PROPOSAL 4 AND IN SUPPORT OF MANAGEMENT ON SUCH OTHER BUSINESS
AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS THEREOF.</B>


<P align="center" style="font-size: 10pt"><B>PLEASE MARK, SIGN AND DATE ON REVERSE SIDE AND PROMPTLY MAIL<BR>
IN THE ENCLOSED ENVELOPE.</B>


<P><DIV style="position: relative; float: left; width: 20%">
<P>
<DIV style="width: 100%; border: 1px solid black; padding: 5px;">



<P align="center" style="font-size: 10pt"><B>SEE REVERSE<BR>
SIDE</B>


</DIV>


</DIV>
<DIV style="position: relative; float: left; margin-left: 2%; width: 54%">

<P align="center" style="font-size: 10pt"><B>&nbsp;<BR>
CONTINUED AND TO BE SIGNED ON REVERSE SIDE</B>


</DIV>
<DIV style="position: relative; float: right; width: 20%">
<P>
<DIV style="width: 100%; border: 1px solid black; padding: 5px;">



<P align="center" style="font-size: 10pt"><B>SEE REVERSE<BR>
SIDE</B>


</DIV>


</DIV>
<BR clear="all"><BR>

<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">




<P align="justify" style="font-size: 10pt"><B>HASBRO, INC.</B>


<P align="justify" style="font-size: 10pt"><B>C/O EQUISERVE TRUST COMPANY N.A.<BR>
P.O. BOX 8694<BR>
EDISON, NJ 08818-8694</B>


<P align="center" style="font-size: 10pt"><B>Please read the accompanying proxy statement and proxy card.</B>



<P align="center" style="font-size: 10pt">&nbsp;


<P><DIV style="width: 100%; padding: 10px; background-color: #bbbbbb; border: 1px solid #000000; margin-left: 35%; margin-right: 35%">



<P align="center" style="font-size: 10pt">&nbsp;<BR>
&nbsp;


</DIV>
<!-- nbsp -->



<P align="center" style="font-size: 9pt"><B>Your vote is important. Please vote your shares.</B>


<P><DIV style="position: relative; float: left; width: 45%">
<P>
<DIV style="width: 100%; border: 1px solid black; padding: 10px;">


<DIV align="center">
<TABLE style="font-size: 9pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom" style="font-size: 1px">
    <TD width="70%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="25%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT style="font-size:12pt"><B>Vote-by-lnternet</B></FONT><br>&nbsp;<br>
Log on to the Internet and go<br>
http://www.eproxyvote.com/has
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="middle"><IMG src="b53906hib53906p01.gif" alt="(GRAPHIC OF COMPUTER)"></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

</DIV>


</DIV>
<DIV style="position: relative; float: left; margin-left: 2%; width: 6%">

<P align="center" style="font-size: 10pt">&nbsp;



<P align="center" style="font-size: 10pt"><B>OR</B>


</DIV>
<DIV style="position: relative; float: right; width: 40%">
<P>
<DIV style="width: 100%; border: 1px solid black; padding: 10px;">


<DIV align="center">
<TABLE style="font-size: 9pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom" style="font-size: 1px">
    <TD width="70%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="25%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT style="font-size:12pt"><B>Vote-by-Telephone</B></FONT><br>&nbsp;<br>
Call toll-free<br>
1-877-PRX-VOTE (1-877-779-8683)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="middle"><IMG src="b53906hib53906p02.gif" alt="(GRAPHIC OF TELEPHONE)"></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

</DIV>


</DIV>
<BR clear="all"><BR>

<P align="center" style="font-size: 9pt"><B>If you vote over the Internet or by telephone, please do not mail your proxy card.</B>



<P align="center" style="font-size: 9pt"><B>&nbsp;</B>



<DIV align="center">
<TABLE style="font-size: 7pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="20%"></TD>
    <TD width="5%"></TD>
    <TD width="50%"></TD>
    <TD width="5%"></TD>
    <TD width="20%"></TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">DETACH HERE IF YOU ARE RETURNING YOUR PROXY CARD BY MAIL
</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">ZHAS41</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 8pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="42%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="left" valign="middle"><FONT style="font-size:20pt"><FONT face="Wingdings">&#120;</FONT></FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Please mark<br>
votes as in<br>
this example.</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><FONT style="font-size:9pt">0537</FONT></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<P align="justify" style="font-size: 8pt"><B>The Board of Directors recommends a vote &#147;FOR&#148; the nominees listed in Proposal 1, &#147;FOR&#148; Proposals 2
and 3 and &#147;AGAINST&#148; Proposal 4.</B>


<P><DIV style="position: relative; float: left; width: 48%">

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 8pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>1.</B>&nbsp;&nbsp;</TD>
    <TD><B>Election of Directors For Terms Expiring in 2006:</B><br>
(01)&nbsp;Basil&nbsp;L.&nbsp;Anderson, (02)&nbsp;Alan&nbsp;R.&nbsp;Batkin,
(03)&nbsp;Frank&nbsp;J.&nbsp;Biondi,&nbsp;Jr., (04)&nbsp;John&nbsp;M.&nbsp;Connors,&nbsp;Jr.,
(05)&nbsp;E.&nbsp;Gordon&nbsp;Gee, (06)&nbsp;Jack&nbsp;M.&nbsp;Greenberg,
(07)&nbsp;Alan&nbsp;G.&nbsp;Hassenfeld, (08)&nbsp;Claudine&nbsp;B.&nbsp;Malone,
(09)&nbsp;Edward&nbsp;M.&nbsp;Philip, (10)&nbsp;Eli&nbsp;J.&nbsp;Segal, (11)&nbsp;Paula&nbsp;Stern
and (12)&nbsp;Alfred&nbsp;J.&nbsp;Verrecchia.</TD>
</TR>

</TABLE>

<DIV align="center">
<TABLE style="font-size: 7pt" cellspacing="0" border="0" cellpadding="0" width="60%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="27%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="27%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="17%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="17%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="top"><B>FOR<br>
ALL<br>
NOMINEES</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT style="font-size:20pt"><FONT face="Wingdings">&#111;</FONT></FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><FONT style="font-size:20pt"><FONT face="Wingdings">&#111;</FONT></FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>WITHHELD<br>
FROM ALL<br>
NOMINEES</B></DIV></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 8pt" cellspacing="0" border="0" cellpadding="0" width="75%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="94%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT style="font-size:20pt"><FONT face="Wingdings">&#111;</FONT></FONT></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">For all nominee(s) except as written above</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

</DIV>
<DIV style="position: relative; float: right; width: 48%">
<DIV align="center">
<TABLE style="font-size: 8pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom" style="font-size: 1px">
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="58%">&nbsp;</TD>
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    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT style="font-size:7pt"><B>FOR</B></FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT style="font-size:7pt"><B>AGAINST</B></FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT style="font-size:7pt"><B>ABSTAIN</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2.</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Approval of Amendment to the 2003 Stock
Incentive Performance Plan.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT style="font-size:20pt"><FONT face="Wingdings">&#111;</FONT></FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT style="font-size:20pt"><FONT face="Wingdings">&#111;</FONT></FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT style="font-size:20pt"><FONT face="Wingdings">&#111;</FONT></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">3.</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Ratification of KPMG LLP as the Company&#146;s
independent auditor for the 2005 fiscal year.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT style="font-size:20pt"><FONT face="Wingdings">&#111;</FONT></FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT style="font-size:20pt"><FONT face="Wingdings">&#111;</FONT></FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT style="font-size:20pt"><FONT face="Wingdings">&#111;</FONT></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">4.</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Shareholder Proposal<br>
Hasbro, Inc. &#151; Global Human Rights Standards.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT style="font-size:20pt"><FONT face="Wingdings">&#111;</FONT></FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT style="font-size:20pt"><FONT face="Wingdings">&#111;</FONT></FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT style="font-size:20pt"><FONT face="Wingdings">&#111;</FONT></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">5.</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" valign="top" align="left">To transact such other business as may properly come before the
Annual Meeting and any adjournment or postponement thereof.</TD>
</TR>
<!-- End Table Body -->
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</DIV>


<P align="center" style="font-size: 10pt">&nbsp;


<DIV align="center">
<TABLE style="font-size: 8pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="94%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="middle"><DIV style="margin-left:0px; text-indent:-0px">MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="middle"><FONT style="font-size:20pt"><FONT face="Wingdings">&#111;</FONT></FONT></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<P align="justify" style="font-size: 8pt">If any of your shares represented by this
Proxy are held under the Hasbro Retirement
Savings Plan, you must indicate your vote on
the above proposals. If no box in Proposal 1,
2, 3 or 4 above is marked, your shares held
under the Retirement Savings Plan will not be
voted with respect to that Proposal.


<P align="justify" style="font-size: 8pt">Sign exactly as your name(s) appear(s)
hereon. When signing in a representative
capacity, please give full title as such. If
more than one name is shown, including the
case of joint tenants, each person should
sign.


</DIV>
<BR clear="all"><BR>
<DIV align="left">
<TABLE style="font-size: 8pt" cellspacing="0" border="0" cellpadding="0" width="90%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="28%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="18%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="28%">&nbsp;</TD>
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    <TD width="1%">&nbsp;</TD>
    <TD width="18%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Signature:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Date:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Signature:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Date:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
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    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;
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    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
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    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
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