Confidential Non-Binding Discussion Document
Summary of Marvel / SPE Spider-Man Discussion
June 2328, 2011
Process:
· Nothing is binding until long-form is signed
· No press, general public communications, and/or communications with customers or other third parties until mutually agreed joint statement and/or communications plan is agreed.
· Stay all litigation / arbitration effective immediately
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:
· 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 (i.e., 2011 through 2021, 2021 through 2031, etc.).
· Marvel Participation: Marvel shall not participate in the Spider-Man film revenues (box office and home video), music, and SPE promotions or co-promotions or SPE’s Ancillary merchandise licensees.
· SPE Participation: SPE shall not participate in Spider-Man merchandising, Marvel movie or non movie or Marvel family promotions or co-promotions.
· Mutual Release: Mutual release for all claims or participations based on the Agreement prior to this deal.
Note: Marvel is agreeing to the above in exchange for SPE returning a positive answer on either: (a) Marvel’s consumer electronics licensing rights; and/or (b) talent likeness; and/or (c) something else to be proposed by SPE.
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.
Submission requirements would be removed. Marvel would have consultation rights only. As a general matter, SPE would agree that, to the extent that Core Elements are depicted in a film, SPE would not “materially” deviate (or would not “Materially Plus” (TBD definition) deviate on certain Core Elements, as noted later in this document) from the Core Elements listed below. If SPE materially 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 (in contract and at law) 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 (in contract and at law) 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, but Marvel’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 shall Marvel have the right to terminate, cancel, rescind, suspend or otherwise interfere with SPE's continuing exploitation of the Licensed Property and in no event SPE have the right to terminate, cancel, rescind, suspend or otherwise interfere with Marvel’s continuing exploitation of the Retained Rights and merchandising activities.
Notwithstanding the foregoing, a departure from the Core Elements marked with a double asterisk “**” (e.g., he does not use illegal drugs) shall not in any case be permitted and Marvel shall be entitled to seek injunctive relief for any such departure.
APPROVED CHARACTERS. 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:
1. 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 (even those that have “spider” in their name like the Spidercide clones) other than Spider-Man (and his alter-ego(s) such as Peter Parker).
2. SPE has exclusive: (i) motion picture rights; and (ii) live-action television rights (to the extent currently provided for in the existing agreement) 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.
3. 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 such Approved Character shall be frozen.
4. 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 as currently provided for in Section 11.c. Marvel will have merchandising and publishing rights in the SPE-created characters until the expiration of SPE’s production rights.
5. The Approved Characters shall not include Spider-Man or any other character included in the Property as combined with any Marvel character not in the Property (e.g. , a character which is a combination of Spider-Man and Hulk) (“Cross-Family Mash-Up Characters”). Theatrical and live-action television rights to Cross-Family Mash-Up Characters will be Frozen.
Agreed List of Characters:
In addition to the list of Approved Characters referenced here, a simple “rule” will be included in the long-form making it clear that SPE’s grant includes exclusive rights to all characters created by Marvel or its affiliates that are in the Spider-Man Universe such that if a certain character (e.g., Rhino) were inadvertently left off the list, he would not be unintentionally excluded from the grant.
The parties have made good progress on creating a current list of Approved Characters. The parties have agreed to split up the following major characters (and the incidental minor characters related to such major characters) as follows:
I. Kingpin and all Villains related to Kingpin (Marvel will rep and warrant to the status of Kingpin; SPE also requests more info on the Fox rights now) – SPE is granted the rights to Kingpin and all villains related to Kingpin subject to the exclusive Daredevil grant to Fox (thus SPE is frozen from using Kingpin and all villains related to Kingpin and Fox may use such characters during the term of Fox's rights). However, if the exclusive Daredevil universe grant to Fox reverts to Marvel or at anytime Kingpin is no longer subject to the Fox grant, then Kingpin shall be shared by SPE and Marvel, meaning SPE can use Kingpin in Spider-Man movies only, Marvel can use Kingpin in Daredevil movies only. [SPE would also like to discuss whether there is acceptable way of distinguishing the Kingpin character as used by SPE from the Kingpin character as used by Marvel.] In the case of reversion and shared rights, each party would provide the other reasonable advance notice before using Kingpin. The treatment of any villain related to Kingpin upon reversion from Fox is TBD (either shared as above or exclusive to SPE). [Need to discuss Kingpin-related villains. Are they subject to Fox? SPE's thought is that most of these characters would not be shared. SPE should get an immediate grant of all of these characters that are solely or mainly in the Spider-Man Universe (subject to Fox rights, if applicable) and Marvel would keep all of these characters (subject to Fox rights, if applicable) that are solely or mainly in the Daredevil Universe].
II. Marvel Retained (due to rights issues):
o Ben Urich
o Baache
o Ethan Edward / Virtue
o Golden Horde
o William
o World Habitual Offenders
o Randolph Winston Cheery
o Dr. Armstrong Smith
III. Marvel also retains:
o Cloak
o Dagger
o Punisher
o Jigsaw
o Speedball
o Phil Sheldon
IV. SPE gets:
o Silver Sable and associated characters
o Wild Pack
o Tinkerer
o The Rose
o Morbius and his relationsassociated characters
o Empire State University
o Empire State Hospital
o The Dentist
o The Daily Bugle
V. Jessica Drew: Jessica Drew is “shared” with constraints. Marvel cannot portray Jessica with any “Spider” elements. No Spider powers. No “Spider” in her name. Costume is not “Spider-Man-like”. [TBD] if same approach for Julia Carpenter and Arachne.
VI. Deviant Variants: Spider-ham, Zombie Spider-Man, all “What If” variants, and other deviant variations [TBD] will be frozen.
Note: If SPE gets a major character, they will also get the associated characters (henchmen, etc.).
The parties shall work through splitting up the few remaining characters at issue. To that end, Marvel will share a revised list of Approved Characters and agree to discuss in good faith any remaining characters which are in dispute.
New Characters: With respect to new characters (i.e., characters first appearing after the date on which the parties’ new amended and restated agreement becomes effective, the “Agreement Effective Date”), the exclusive rights granted to SPE in the Property shall extend to and specifically include all new characters which first appear in any New Authorized Work which has in its main title “Spider”, “Spider-Man”, “Peter Parker” or the name of another Approved Character. The exception to the preceding sentence shall be for New Authorized Works that have “Spider”, “Spider-Man”, “Peter Parker” or the name of another Approved Character and a character not exclusively granted to SPE (e.g., a team-up book and/or a television series such as Astonishing Spider-Man and Wolverine) in the main title which 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 in New Authorized Works which either: (a) shoots webs; or (b) has “Spider” in their name; or (c) has a spider on the costume; or (d) has a spider web on the costume; or (e) costume is [TBD] something between “similar to” or “virtually the same as” – let’s discuss “the general public would say the costume for the character Marvel created looks like Spider-Man.
“Existing Authorized Work” means any comic book, motion comic, animation, television series, motion picture, console videogame, or Meaningful Casual Game authorized by Marvel or any Marvel affiliate that was first published, distributed or otherwise exploited before the Agreement Effective Date. “Meaningful Casual Game” shall mean [TBD-based on multiple versions released, units sold and/or number of users].
“New Authorized Work” means any comic book, motion comic, animation, television series, motion picture, console videogame, or Meaningful Casual Game published, produced or authorized by Marvel or any Marvel company affiliate that is first published, distributed or otherwise exploited after the Agreement Effective Date. “Meaningful Casual Game” shall mean [TBD-based on multiple versions released, units sold and/or number of users]. [Clarify affiliate work so something like “Charlotte’s Spider Web” is not inadvertently capture.]
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. 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 Marvel’s 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. As a clarification, Marvel's confidentiality obligations for scripts and other film-related materials would also remain in place. With the exceptions listed on the Asset Delivery Timeline Schedule, scripts and other film-related materials cannot be made available to anyone outside Marvel (e.g., cannot be disclosed to Disney film executives). 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.