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ATTORNEY-CLIENT PRIVILEGEDCONFIDENTIAL

Spider-Man License Agreement Update

March 3, 2010

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Spider-Man Licensing Roles and Responsibilities

Function Marvel Sony

Sales to Licensees

• Lead* -- Primary responsibility soliciting and negotiating deals with licensees

• Reviews all deal memos

Drafting License Agreements

• Lead *-- Drafts and executes agreements

• Review material changes from memo

Style Guide • Approval• Lead -- reflects film

creative and marketing

Retail Marketing and Promotions for Films

• N/A• Lead -- sets direction,

determines budget

Collections, Audits, Anti-piracy, Outside Legal

• Lead*• Consultation rights,

input on any settlements

Payment of Royalties to Talent

• N/A • Lead

• Sony receives a royalty equal to 25% of all Spider-Man merchandising revenues (both “Film” and “Classic”)

• For “Classic” merchandise, Marvel leads all functions and consults with Sony on deals

• Marvel also leads “Film” merchandise license sales activities; Sony’s Consumer Products team reviews all licensing deals (roughly 550 deals for Spider-Man 3)

• For “Film,” Sony leads retail marketing, promotional activities, and talent relations

Responsibilities for “Film” Merchandise

* Prior to March 2004, Sony led interactive games and apparel deals for film merchandising; Marvel led all other categories

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SPE Share of Worldwide Spider-Man Merchandising Revenue:Historical Performance (FY02-FY10)

$1.5

$11.6 $12.6$16.7

$20.5 $17.7

$29.6$24.4

$1.6

$17.9$11.6 $1.5

$0.2

$2.7

$4.5$20.8

$9.4

$1.0

$0.2$1.7

$6.7

$20.5

$9.2

$6.0

$3.1

$32.1$28.7

$39.0

$31.7

$25.4

$50.4$52.0

$31.2

$32.7

$0.8

$0

$10

$20

$30

$40

$50

$60

FY 02 FY 03 FY 04 FY 05 FY 06 FY 07 FY 08 FY 09 FY 10

Revenue ($M)

Re

ve

nu

e (

$M

)

Total Classic Spider-Man 1 Film Spider-Man 2 Film Spider-Man 3 Film Spider-Man 4 Film

Source: SPCP, SPE Legal and SPE CorpDev analysis.Note: 1. Historical Classic merch represents what SPE believes SPE should have received per 2004 audit, which includes what Marvel paid + SPE asserted

underpayments of $1.5 M in FY02, $5.1 M in FY03 and $8.6 M in FY04. FY05-FY06 figures include current claims from current audit totaling $27.1 M.2. Film merch for S-M1 and 2 include toy biz merch.3. FY02-FY10 avg excludes SPE claim for $9.5M in FY09 against advance Marvel received for Hasbro license renewal.

S-M 1 S-M 2 S-M 3

HISTORICAL (Includes Estimated Audit Adjustments)HISTORICAL (Includes Estimated Audit Adjustments) FCSTFCST

Average 3

$35.1 M

Indicates Release Year

$9.5 3

1 2 2

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SPE Share of Worldwide Spider-Man Merchandising Revenue:Projected Performance (FY11-FY17)

$28.0 $28.0 $28.0 $28.0 $28.0 $28.0 $28.0

$2.0$8.8

$13.5$8.0

$4.6

$10.8 $19.8

$10.3$4.5

$30.0

$36.8

$41.5

$46.8

$52.4

$38.3

$32.5

$0

$10

$20

$30

$40

$50

$60

FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FY 17

Revenue ($M)

Re

ve

nu

e (

$M

)

Total Classic Spider-Man 4 Film Spider-Man 5 Film

Source: SPCP, SPE Legal and SPE CorpDev analysis.Note: Film merch revenue represents figures net of int’l commissions/taxes/bank.

S-M 4

PROJECTEDPROJECTED

Average$39.7 M

S-M 5

Indicates Release Year

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Status Update on Spider-Man Audits

SPE Audit of Marvel

• SPE auditing Classic merchandise

• Total claim currently estimated at approximately $42 mil - $47 mil*

– $27.1 mil in underpayments

– $15 mil - $20 mil in accrued interest

• Targeting completion of audit report by end of February, with the deadline set at May 2010

Marvel Audit of SPE

• Marvel focused on auditing film participation in Spider-Man 1 and 2

– Domestic audit nearing completion, although Marvel continues to make additional requests

– 6 foreign territories preparing for audit to commence in March

– Deadline to submit audit report is May 2010

• Marvel may submit significant claim despite capturing only 5 cents of every dollar recovered (film participation share at only 5% of gross)

• Marvel has also noticed film participation audit of Spider-Man 3 but not currently focused on it

• Marvel launched 6 other audits (3 soundtrack, 2 co-promotions, 1 animated TV) not actively pursuing but may upon completion of current film audits

Source: SPE Legal.Note: * Estimates are approximations until the audit is finished.

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SPE Could Sell All or a Portion of its Spider-Man CP Participation to Disney/Marvel

• Recent events may create a unique opportunity to monetize our participation– Marvel has primary responsibility for the sales effort today– Following its acquisition of Marvel, Disney has an incentive to own the entire revenue stream as they

seek to drive upside– Both SPE and Disney/Marvel could benefit by quickly and favorably resolving open audit issues

• A transaction would generate significant financial benefits– A sale would provide funds for future film development– A deal would improve FY11 earnings

• Sale of entire stream could yield $300 to $350 M cash and an estimated gain of $230 to $275MM (1)

• Sale of 50% could yield $150 to $175 M cash and an estimated gain of $120 to $140MM (1)

• Key issues need to be considered in evaluating a potential sale– Depending on structure, decreases or eliminates our ability to participate in future upside– Disney has greater visibility to future revenue potential; SPE may need an outside advisor– Spider-Man 4 release timing may contribute to a lower valuation

• Delay in release puts near-term revenue forecast at below average levels• Disney /Marvel will argue there is risk in a reboot strategy

– Valuation may be lower if SPE is unwilling / unable to commit to release additional films– Decreased merchandising revenues will change economics for future Spider-Man films

(1) Assumes a sale at the beginning of the year; sale at end of year would increase the gain recognized. Assume no deferral of gain associated with requirement to release additional films

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Deal Structuring Considerations

A deal would be structured to monetize all or a portion of future merchandise revenue in FY11

– Sell as perpetuity given Disney’s likely resistance to building business that reverts to SPE

– If selling a portion of our interest, structure as a reduction to our royalty percentage (e.g., sale of half our interest would reduce our royalty percentage from 25% to 12.5%)

– Reduction in percentage should be equal across “Film” and “Classic” streams to avoid creating competing incentives for each product type

Deal could restructure other parts of the agreement to realize additional benefits

– Settle all pending arbitrations and audits with Marvel

– Amend relevant language to limit future disputes and litigation over issues that have been problems in the past

– Remove blackout windows on Classic Merchandising around film release as a potential concession to Disney in negotiations

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Next Steps

• Engage a consultant to help value merchandise rights

– Projected view of marketplace

– Projected view of Disney’s performance relative to Marvel’s performance

– Industry expertise to reduce Disney/Marvel information advantage

– Objective view as potential negotiation leverage against Disney

• Decide on financial objective and sale strategy

– Target dollar value or percentage of business to be sold

– If partial sale, confirm uniform reduction approach

• Assess impact on future Spider-Man films

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ATTORNEY-CLIENT PRIVILEGEDCONFIDENTIAL

APPENDIX

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NPV to SPE ($M) NPV of Tail as % of Total NPV

Base Case Medium Case High Case

0% Revenue Lift 10% Revenue Lift 15% Revenue Lift

0% Perpetuity Growth 3% Perpetuity Growth 5% Perpetuity Growth

No Int'l Comm. Savings Int'l Comm. Savings Int'l Comm. Savings

Value ($M) $322 $414 $496

Trailing 5-Yr Avg. Rev. Multiple*

9.6x 12.4x 14.9x

Value ($M) $255 $312 $353

Trailing 5-Yr Avg. Rev. Multiple*

7.6x 9.4x 10.6x

Value ($M) $211 $250 $275

Trailing 5-Yr Avg. Rev. Multiple*

6.3x 7.5x 8.3x

Dis

cou

nt

Rat

e (P

re-t

ax)

12%

15%

18%

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Valuation of Total Worldwide Spider-Man Merch Revenues to SPE:Excluding Current Audit Adjustments

Source: SPCP and SPE CorpDev analysis.Note: * Based on average of trailing 5-year (FY06-FY10) total merch revenue of $33.3 M before estimated current audit adjustments.

• Based on perpetuity of FY13-FY17 average merch revenues of $42.3 M for the base case

• Trailing multiples based on FY06-FY10 average of $33.3 M before estimated current audit adjustments

• Based on perpetuity of FY13-FY17 average merch revenues of $42.3 M for the base case

• Trailing multiples based on FY06-FY10 average of $33.3 M before estimated current audit adjustments

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Actuals Fcst Projected

(in $M) FY 02 FY 03 FY 04 FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 Total

FILM MERCH

Spider-Man 1 $1.6 $17.9 $11.6 $1.5 $0.2 $0.0 $0.0 $32.7

Spider-Man 2 $2.7 $4.5 $20.8 $9.4 $1.0 $0.2 $38.6

Spider-Man 3 $1.7 $6.7 $20.5 $9.2 $0.8 $38.9

Spider-Man 4 $0.7 $6.0 $2.0 $8.8 $13.5 $8.0 $4.6 $43.6

Spider-Man 5 $10.8 $19.8 $10.3 $4.5 $45.4

Total Film Merch $1.6 $20.6 $16.1 $22.3 $11.3 $7.7 $20.7 $9.8 $6.8 $2.0 $8.8 $13.5 $18.8 $24.4 $10.3 $4.5 $199.1

CLASSIC MERCH

Classic - Paid 1 -- -- $10.5 $13.7 $17.8 $16.3 $24.1 $27.7 $24.4 $28.0 $28.0 $28.0 $28.0 $28.0 $28.0 $28.0 $330.4

Classic - Underpaid:

FY04 Audit $1.5 $11.6 $2.2 $15.2

Current Audit 2,3 $3.0 $2.7 $1.4 $5.6 $14.4 $27.1

Total Class. Merch $1.5 $11.6 $12.6 $16.7 $20.5 $17.7 $29.6 $42.1 $24.4 $28.0 $28.0 $28.0 $28.0 $28.0 $28.0 $28.0 $372.7

TOTAL MERCH $3.1 $32.1 $28.7 $39.0 $31.7 $25.4 $50.4 $52.0 $31.2 $30.0 $36.8 $41.5 $46.8 $52.4 $38.3 $32.5 $571.8

Indicates release year

SPE Share of Worldwide Spider-Man Merchandising Revenue

Source: SPCP, SPE Legal and SPE CorpDev analysis.Notes: 1. Marvel paid on Nov. to Nov. qtr. calendar schedule; these calendar pmts. were shifted back by 1-mo. to estimate qtr. allocations to the traditional and fiscal

calendars.2. Current audit includes multi-character advance claim of $27 M + other claims of $550 K from FY05-FY09.3. FY09 spike is due to Marvel having received a large advance for its renewal of the Hasbro license.

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(in $000s) Spider-Man 1 Spider-Man 2 Spider-Man 3 Spider-Man 4 Spider-Man 5Release Year FY 2003 FY 2005 FY 2008 FY 2013 FY 2015

Release Year - 4 $678

Release Year - 3 $6,010

Release Year - 2 $2,693 $1,669 $2,000

Release Year - 1 $1,582 $4,518 $6,707 $8,800 $10,800

Release Year $17,859 $20,794 $20,544 $13,500 $19,800

Release Year + 1 $11,554 $9,429 $9,160 $8,000 $10,250

Release Year + 2 $1,472 $964 $838 $4,572 $4,500

Release Year + 3 $184 $185

Release Year + 4 $33

Release Year + 5 $5

Total $32,688 $38,582 $38,918 $43,560 $45,350

% Growth from Prior Release -- 18.0% 0.9% 11.9% 4.1%

Total Film merch typically grows significantly from the previous release, and cycle length varies by release timing

Source: SPCP.

SPE Share of Worldwide Spider-Man Film Merch RevenueSPE Share of Worldwide Spider-Man Film Merch Revenue