Confidential Non-Binding Discussion Document

Summary of Marvel / SPE Spider-Man Discussion

June 8, 2011

Overall:

  • We are seeking an equitable and simple solution and a clean delineation and definition of roles and economics.
  • SPE will have the freedom and flexibility to produce and market and distribute films. Marvel will cease to receive film license fees or any participation on film related revenues.
  • Marvel will have the freedom and flexibility to manage and maximize the merchandise programs. SPE will cease to receive merchandise fees or any participation on merchandise related revenues.

Economics and Terms:

[Discussing impact of audit]

  • Upfront: Marvel shall pay SPE $175MM.
  • Backend: Marvel shall pay SPE a straight proration up to (and not to exceed) $35MM based on a sliding scale on WWBO of up to $1B on each future initial Spider-Man film release (excludes re-releases). (E.g. WWBO divided by $1B multiplied by $35MM = payment). Specific WWBO language to be discussed in long-form to address potential of in-home viewing during theatrical window and include those revenues in determining WWBO -TBD
  • Backend Cap: The backend payments shall be capped at $130MM per 10 year period.
  • Marvel Participation: Marvel shall not participate in the Spider-Man film revenues (box office and home video), music, and SPE promotions or co-promotions
  • SPE Participation: SPE shall not participate in Spider-Man merchandising and Marvel promotions or co-promotions

Merchandise Approvals and Controls: Marvel shall be autonomous and have full control over the Classic and Film merchandise program. SPE will have a good faith consultation right to review film merchandise.

Film Approvals and Controls -- General: SPE is seeking a relaxation on the current approval and controls and move towards the concept of consultation.

Marvel Proposal: Conceptually the current language would be revised to be more collaborative and proactive and time sensitive. Marvel’s rights would be limited to only departures/deviations from clear and unambiguous guidelines related to core powers, costume elements, origin story and basic setting elements. Marvel is willing to accept that to the extent a Core Element has been depicted: (a) in a prior Spider-Man movie; or (b) in Marvel made-for-television animation in a manner that departs from the Core Elements, then SPE shall be permitted to use such depiction that departs. In addition, to the extent that SPE determines to utilize an alternative version of Spider-Man (e.g., Spider-Man 2099) in a Picture or TV, any departure from the Core Elements that is part of the story of such alternate version in the comic books shall be permitted. Notwithstanding the foregoing, a departure from the Spider-Man Character Traits marked with an asterisk “**” (e.g., he does not use illegal drugs) shall not be permitted.

SPE Proposal: Submission requirements would be removed. Marvel would have consultation rights only. SPE's specific proposal is spelled out below, but as a general matter, SPE would agree that, to the extent that Core Elements are depicted in a film, SPE would not “fundamentally” deviate from the Core Elements listed below as those Core Elements are depicted in any works approved by Marvel at any time (so that anything authorized or approved by Marvel at any time in any films, comic books, handbooks, animated series, web sites, etc would be fair game). If SPE fundamentally deviates from Core Elements, and Marvel puts SPE on notice of the deviation promptly after Marvel is provided with the relevant materials, Marvel’s sole remedy shall be limited to claims for money damages to the Spider-Man brand. Marvel would have no right to obtain injunctive or other equitable relief of any kind for SPE’s allegedly wrongful exploitation of Spider-Man (e.g., an alleged failure to conform to Core Elements). Marvel would not be able to enjoin SPE’s production, distribution, or advertising of Spider-Man Pictures or Television Programs and SPE would not be able to enjoin Marvel’s merchandising activities. For the avoidance of doubt, SPE would retain the right to seek to enjoin Marvel from producing or authorizing a non-SPE film that includes Spider-Man (or any other element(s) of the Licensed Property) and Marvel would retain the right to seek to enjoin SPE from producing a film that includes Marvel IP (e.g., Iron-Man) that is not part of the Licensed Property, butMarvel’s sole remedy for SPE’s exploitation of the Licensed Property in a way that fails to conform to Spider-Man’s Core Elements (powers, costumes, etc.) would be money damages. In no event would Marvel have the right to terminate, cancel, rescind, suspend or otherwise interfere with SPE's continuing exploitation of the rights.

APPROVED CHARACTERS. Clarify that SPE holds exclusive film rights to all characters in the Spider-Man universe. In an effort to avoid ambiguity the parties will agree on a list of Marvel characters that already exist and are in the Spider-Man Universe. "Approved Characters" that are being licensed by Marvel to SPE means all characters appearing on the agreed list plus "New Characters," as described below. The following applies with respect to the depiction of Approved Characters:

  • SPE has no creative obligations or limitations, and Marvel has no approval rights, of any kind with respect to character traits, origin story, powers, costume or any other matters with respect to any Approved Character other than Spider-Man (and his alter-ego(s) such as Peter Parker).
  • SPE has exclusive motion picture (and live action television) rights with respect to all Approved Characters. Approved Characters cannot appear in any other motion picture produced or authorized by Marvel.For example, SPE has the right to include Spider-Girl, Venom, etc. in its films and Spider-Girl, Venom, etc. cannot appear in non-SPE films.
  • If Marvel does not have all rights in an Approved Character (e.g., Spider-Boy, which is a mash-up of Spider-Man and Superboy, which is controlled by DC Comics), then Marvel will grant to SPE whatever rights Marvel has and SPE will have the right to use the character if it gets the necessary rights from the third party (and indemnifies Marvel).
  • For the avoidance of doubt, there is no limitation on SPE's right to include in Spider-Man motion pictures new characters created by SPE, including characters with super-human powers and abilities. SPE has the right to create new characters with Spider-Man-like name, powers, and costumes. For example, SPE would have the right to create Spider-Boy and/or Spider-Woman characters that are distinct from the Marvel/DC mash-up character “Spider-Boy” or the Avengers-related Spider-Woman. As provided in Section 11.c the existing agreement, SPE will own all rights in all such SPE-Created Characters, subject to the following: (i) SPE will assign to Marvel all new characters that are first or second degree blood relations of Peter Parker, and (ii) Marvel will have merchandising rights in the SPE-created characters until the expiration of SPE's production rights.

Agreed List of Characters: SPE is in the process of reviewing Marvels’ most recent mark-up to the proposed character list and expects to have additional comments. But as a starting point, the following guidelines would apply:

  1. As a general principle, rights to all characters with Spider-Man-like powers, with “Spider” in their name (e.g., Spider-Woman), or with Spider-Man-like costumes (e.g., a spider logo or insignia, webbing, etc.) would be granted exclusively to SPE for Film and Live Action TV. SPE will consider allowing Marvel to exclude from the grant to SPE specified characters that are primarily associated with other parts of the Marvel Universe (e.g., both parties may agree that one or two of the “Spider-Woman” characters are primarily associated with the Avengers), but those characters must be frozen. As a result, during SPE’s Production Term, there won’t be any “Spider” characters in any non-SPE movies or live-action TV shows that are produced or authorized by Marvel.
  1. For “Spider” characters that are “mash-ups” or cross-overs with other rights holders (e.g., the “Spider-Boy” character that is a mashup between Spider-Man and Superboy, which is controlled by DC Comics), Marvel would license to SPE Marvel’s share of rights in these characters for Film and Live Action TV. SPE would have the right to exploit these characters if it secures the necessary third party rights (e.g., from DC) and indemnifies Marvel.
  1. For “mash-ups” or cross-overs with other rights holders that relate to important Spider-Man Universe villains (e.g., Scavulture relates to The Vulture), Marvel would license to SPE Marvel’s share of rights in these characters for Film and Live Action TV. SPE would have the rights to exploit these characters if it secures the necessary third party rights (e.g., from DC) and indemnifies Marvel.
  1. SPE would be granted Film and Live Action TV rights to any character that is a blood relative of Spider-Man, Spider-Man’s alter egos (e.g., Peter Parker, Miguel O’Hara), major protagonists (e.g., Mary Jane), major villains (e.g., The Green Goblin), and major villains alter egos (e.g., Norman Virgil Osborn).
  1. Under the existing agreement, SPE gets all characters primarily associated with the Spider-Man Universe except for so-called “traveling characters” that had their own comic book series prior to the execution of the agreement in 1999 (see Section 2.b of the current agreement). So characters such as Silver Sable, which are primarily associated with the Spider-Man Universe and are not really “traveling characters,” should come to SPE, even if they have had limited comic book series of their own.
  2. In addition, so-called traveling characters (e.g., Tinkerer) which did not have their own line of comic books prior to 1999 and which appear primarily in Spider-Man comic books, come to SPE even if they appear non-exclusively in other publications (see Section 2.b of the current agreement).
  3. SPE’s grant of rights includes characters that are primarily associated with Spider-Man (e.g., Jack-o-Lantern), even if those characters are also associated with or initially appeared in another comic book series.
  4. The Amended agreement would clarify that SPE’s grant of rights would include Kingpin (and related characters such as The Rose), and Morbius.
  5. SPE gets all the minor characters that are associated with or related to major characters that come to SPE (e.g., henchmen of major villains such as Kingpin).

New Characters: The parties will also agree on a mechanism to capture for SPE any such characters that appear in the future in any works authorized by Marvel. A proposed mechanism is as follows:

With respect to new characters (i.e., characters first appearing after the Amendment Effective Date), the exclusive rights granted to SPE in the Property shall extend to and specifically include all new characters which first appear in: (a) the comic books listed below; and (b) any comic book, television series or other work published, produced or authorized by Marvel or its affiliates which has in its main title “Spider”, “Spider-Man” or “Peter Parker” except for works that have “Spider”, “Spider-Man” or “Peter Parker” and a character not exclusively granted to SPE (a team-up book) as of the amendment effective date (such as Astonishing Spider-Man and Wolverine) in the main title shall not be included in the Property. Notwithstanding the foregoing, the property entitled Immortal Weapons - Bride of the Nine Spiders is not considered part of the Property. In addition, the exclusive rights granted to SPE in the Property shall extend to and specifically include all new characters created by Marvel which either: (a) shoot spider-webs; (b) sticks to walls; (c) have “Spider” in their name or (d) have a costume that is not fundamentally different from an Approved Costume.

Comic Books (collectively “Publications”)

Amazing Spider-Man

Black Cat

Carnage

Deadly Foes of Spider-Man

Friendly Neighborhood Spider-Man

Giant-Size Spider-Man

Lethal Foes of Spider-Man

Marvel Adventures: Spider-Man

Marvel Age Spider-Man

Peter Parker: Spider-Man

Peter Parker: The Spectacular Spider-Man

Sensational Spider-Man

Spectacular Spider-Man

Spider-Man Loves Mary Jane

Spider-Man

Spider-Man/Black Cat

Spider-Man’s Tangled Web

Ultimate Spider-Man

Untold Tales of Spider-Man

Venom

Venom vs. Carnage

Web of Spider-Man

[Spider-Girl]

[Spider-Man 2099]

[Scarlet Spider]

Merchandise:

  • Blackouts: All merchandising Blackout/restrictions will be eliminated and replaced with a loose commitment for Marvel to develop and execute a Spider-Man film merchandising program in the time period around the initial release of each Picture.
  • Retail: Marvel shall have the sole right to manage the retail relationships for the film merchandise and shall structure programs to benefit the licensees and the film. Marvel and SPE agree that in order to maximize the retail opportunities for the merchandise and the film, the parties need to collaborate and partner when and where appropriate. SPE’s consumer products (or similar) marketing team shall, where appropriate and reasonable, make themselves available for retail meetings upon Marvel’s reasonable request. Marvel’s consumer products team shall, where appropriate and reasonable, make themselves available for retail meetings upon SPE’s reasonable request. Solely for consultation and not approval, SPE and Marvel each agree to regularly and in advance share information related to Marvel’s general retail plans for movie merchandise and general plans for SPE’s movie co-promotions. SPE agrees to regularly and in advance share with Marvel the following information when available: strategy and target lists and general terms (media and marketing support/spends, territories, pack-outs, exclusivity, marketing plans, etc,…). Marvel agrees to regularly and in advance share information related to how/when/where the Spider-Man movie CMF spends are intended to be spent and provide specifics of actual CMF expenditures once spent.
  • Access to Materials: SPE shall continue to provide Marvel access to film materials, assets, scripts, marketing materials, clips, sizzles, updates, and the like based on the list and timeline attached to this document. Those materials cannot be included by Marvel or its licensees in merchandise (or in any marketing, advertising or promotional materials) available to the public prior to the dates set forth on attached schedule regarding Public Availability of Assets. Marvel shall create the style guides for use in the Spider-Man merchandising program and SPE shall have the right to consult, but not approve the style guide. If SPE fails to produce assets by the defined timeline, Marvel would have the right to seek damages.
  • Line Reviews: Marvel shall provide SPE bi-annual line reviews of the movie license products for SPE’s consultation, but not approval.

Product Categories - Licensing and Co-Promotions:

  • 5 Categories:
  1. Consumer Electronics:

SPE proposes: shall have the right without restriction to conduct Spider-Man movie marketing and promotional executions in connection with all other Sony businesses. Sony’s right to utilize Spider-Man film assets for Corporate Use would be broadened. SPE is seeking a perpetual right to use Spider-Man in its co-promotions with other Sony businesses with no windows.

Marvel proposes: Sony shall have the right without restriction to conduct Spider-Man movie marketing and promotional executions in connection with Sony Electronics, limited to Sony Electronics and Playstation or other Sony console video game hardware. Marvel shall have the right to license all consumer electronics including those provided in Category A-2 provided each licensed product a) targets children and young adults and b) includes aesthetic elements which target children and young adults, e.g. a laptop with a molded Spider-Man on the cover or DJ style headphones with retro Spider-Man artwork. Marvel agrees to modify the current promotion window for the SPE Consumer Electronics to a period beginning 9 months prior to the release of each picture until 9 months after.

  1. SPE Exclusive: SPE shall have exclusive rights to execute co-promotions for the following categories and Marvel shall be prohibited from licensing merchandising or entering into promotions or sponsorship deals (Including Marvel Family co-promotions outside of SPE’s window) in these categories at any time. Current promotional window for the SPE Exclusive categories (12 months prior/7 post) would be modified to a period beginning (SPE proposes this remain 12; Marvel proposes decreasing this to 9) months prior to the release of each picture until (SPE proposes increasing this to 12; Marvel proposes increasing this to 9) months after
  • Carbonated Soft Drinks (e.g. Pepsi)
  • Quick Serve Restaurants (e.g. McDonalds)
  • Airlines (e.g. Virgin)
  • Telephone service providers (e.g., Verizon) We need clarify that this does not prohibit Marvel from licensing or structuring content distribution agreements with operators who act as “retailers” or aggregators of the content.[Note: SPE is open to clarifying, need to sort specific language]
  • Auto (e.g. Audi) (excluding accessories)
  • Gum and Mints
  • Branded Sugar Confectionary and Branded Chocolate, e.g. Wrigley’s Starburst and Hershey’s Twizzlers (including but not limited to liquorice, lollipops, hard candy, candy bars, jelly candies, etc.) Marvel shall be permitted to license non-branded confectionary and non-branded chocolate.
  • Additional categories previously included on Schedule 7 and listed below as “SPE Exclusive Categories Previously Included on Schedule 7”

Note: Action figure premiums with QSRs would be no more than 5 inches tall and would have no more than 3 points of articulation.