MASTER DEVELOPMENT AND DISTRIBUTION AGREEMENT

Exhibit 10.3

EXECUTION COPY

MASTER DEVELOPMENT AND DISTRIBUTION AGREEMENT

dated as of August 31, 2005

among

MVL FILM FINANCE LLC,

MVL PRODUCTIONS LLC,

and

MARVEL STUDIOS, INC.

Table of Contents

Page

i

ANNEXES

SCHEDULES

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MASTER DEVELOPMENT AND DISTRIBUTION AGREEMENT

MASTER DEVELOPMENT AND DISTRIBUTION AGREEMENT dated as of August 31, 2005 (this “ Agreement ”) by and among MVL FILM FINANCE LLC, a Delaware limited liability company (“ MVL ”), MVL PRODUCTIONS LLC, a Delaware limited liability company (“ MPROD ”), and MARVEL STUDIOS, INC., a Delaware corporation (“ Marvel Studios ”).

PRELIMINARY STATEMENTS:

WHEREAS, MVL owns certain Film Rights with respect to Marvel characters which it intends to license to Production Companies, each of which will be engaged pursuant to a Production Services Agreement to produce a Motion Picture relating to the Film Rights for a Main Character, Character Title or, if applicable, a Subsidiary Character;

WHEREAS, MPROD has agreed to undertake on behalf of MVL certain responsibilities with respect to each such Motion Picture including those relating to pre-production, development, supervision of production and delivery of Completed Films (acting in such capacity, the “ Development Company ”);

WHEREAS, in order to exploit all of the Film Rights with respect to each Completed Film, MVL desires to license to MPROD such Film Rights, and MPROD desires to accept such license (acting in such capacity, the “ Master Distributor ”); and

WHEREAS, MPROD is a Subsidiary of Marvel Studios and Marvel Studios is expected to receive substantial direct and indirect benefits from the production and distribution of Motion Pictures pursuant to this Agreement (which benefits are hereby acknowledged).

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the parties hereto agree as follows:

SECTION 1. DEFINITIONS .

(a)           Defined Terms . As used in this Agreement (including the preamble and the recitals), the following terms shall have the respective meanings set forth in this Section 1 .

“ Access Letter ” means a letter agreement, from MPROD to, and agreed and accepted by, a Preprint Material Holder and agreed and accepted by the Borrower as the same may from time to time be amended, supplemented or otherwise modified pursuant to the terms thereof.

“ Additional Insureds ” has the meaning specified in Section 7(a)(vii) .

“ Adverse Claim ” means a lien, security interest or other charge or encumbrance, or other type of preferential arrangement having the practical effect of a lien or security interest, or other claim in, of or on any Person’s assets or properties in favor of any other Person.

“ Affiliate ” means, as to a Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with such Person. The term “control” (including the terms “controlling,” “controlled by” and “under common control with”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and polices of a Person, whether through the ownership of Voting Stock, by contract, or otherwise.

“ Affiliate Producer ” has the meaning specified in Section 7(a)(xii) .

“ Affiliate Producer Fee ” means, with respect to a Motion Picture, the producer fee payable to Marvel Studios (or any Affiliate of Marvel Studios designated by the Borrower) in an amount equal to $1,500,000 (the “ Fixed Producer Fee ”), which amount shall be included in the Direct Negative Costs of such Motion Picture, as an advance against five percent (5.0%) of the aggregate of the Gross Receipts and Co-Financing Amounts (the “ Back-End Producer Fee ”) for such Motion Picture; provided , however , that no Back-End Producer Fee shall be payable with respect to any Motion Picture until the 5.0% Participation payable to the related producer out of the foregoing for such Motion Picture equals the Fixed Producer Fee.

“ Ancillary Documents ” means each of the instruments, documents and agreements, other than the Transaction Documents and Completion Bonds, executed and delivered from time to time in connection with the Transaction Documents which, if breached would have a Material Adverse Effect.

“ Approvable Distribution Term Change ” means, with respect to a Studio Distribution Agreement, other than with respect to the Reserved Foreign Distribution Rights and those territories of the world where, or platforms through which, the Studio Distributor does not directly distribute its own films (e.g., where the applicable Studio Distributor engages a subdistributor), (i) any increase in the Participations Cap, (ii) any increase in the distribution fee payable to the Studio Distributor thereunder from the distribution fee described in the Paramount Agreement as in effect on the Closing Date, other than an increase to up to 12.5% with respect to foreign television distribution by Universal (to the extent Universal serves as the Studio Distributor for a Picture), (iii) any reduction in the minimum P&A Costs and Expenses required to be expended by the Studio Distributor thereunder from the minimum P&A Costs and Expenses required to be expended by Paramount under the Paramount Agreement as in effect on the Closing Date, (iv) any change in the definition of Gross Receipts from the definition set forth in the Paramount Agreement in effect on the Closing Date, which change results in a reduction in Gross Receipts when compared to the calculation of Gross Receipts before such change, (v) any change in the definition of P&A Costs and Expenses from the definition set forth in the Paramount Agreement in effect on the Closing Date, which change results in an increase in P&A Costs and Expenses, (vi) any change to the auditing rights or standards from the auditing rights or standards set forth in the Paramount Agreement in effect on the Closing Date and (vii) any change to Home Video Distribution which has the effect of allowing home videos to be distributed on a rental basis before being distributed on a sell-through basis.

“ Assignment Agreement ” means the Assignment Agreement of even date herewith between MCI and MRI, as the same may from time to time be amended, supplemented or otherwise modified pursuant to the terms thereof

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“ Back-End Producer Fee ” has the meaning set forth in the definition of “Affiliate Producer Fee”.

“ Back-End Service Fee ” has the meaning set forth in the MVL License Agreement.

“ Bankruptcy Event ” shall be deemed to have occurred with respect to a Person if either:

(a)          a case or other proceeding shall be commenced, without the application or consent of such Person, in any court, seeking the liquidation, reorganization, debt arrangement, dissolution, winding up, or composition or readjustment of debts of such Person, the appointment of a trustee, receiver, custodian, liquidator, assignee, sequestrator or the like for such Person or all or substantially all of its assets, or any similar action with respect to such Person under any law relating to bankruptcy, insolvency, reorganization, winding up or composition or adjustment of debts, and such case or proceeding shall continue undismissed, or unstayed and in effect, for a period of sixty (60) consecutive days; or an order for relief in respect of such Person shall be entered in an involuntary case under the federal bankruptcy laws or other similar laws now or hereafter in effect; or

(b)          such Person shall generally not pay its debts as such debts become due or shall admit in writing its inability to pay its debts generally or such Person shall commence a voluntary case or other proceeding under any applicable bankruptcy, insolvency, reorganization, debt arrangement, dissolution or other similar law now or hereafter in effect, or shall consent to the appointment of or taking possession by a receiver, liquidator, assignee, trustee (other than a trustee under a deed of trust, indenture or similar instrument), custodian, sequestrator (or other similar official) for, such Person or for any substantial part of its property, or shall make any general assignment for the benefit of creditors, or shall be adjudicated insolvent, or admit in writing its inability to pay its debts generally as they become due, or, if a corporation or similar entity, its board of directors shall vote to implement any of the foregoing.

“ Budget ” means, with respect to a Motion Picture, the final budget for such Motion Picture as approved in writing by the applicable Completion Guarantor on or prior to the date on which the principal photography for such Motion Picture commences (subject to later increases for Enhancements, if any), which budget has been prepared by the Development Company in accordance with standard practices in the United States motion picture industry and reflects an estimate of the Cost to Complete with respect to such Motion Picture, plus a contingency reserve of no less than ten percent (10%) which may be liquidated during production in the amount required by the applicable Completion Guarantor, and which final budget, once so approved, may be increased by MPROD or the applicable Production Company only if (i) with respect to any Enhancements, the applicable Completion Guarantor agrees in writing to cover such Enhancements under the applicable Completion Bond, and (ii) with respect to any Material Enhancements, the Control Party agrees in writing thereto; provided that, in the case of clauses (i) and (ii) above, if the amount of such final budget, as so increased, exceeds $165,000,000, the prior written consent of the Required Lenders shall also be required.

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“ Cassette ” means a Motion Picture Copy in the form of a cassette, cartridge, videogram, video disc, DVD, tape, or other similar device now known or hereafter devised and designed to be used in conjunction with a reproduction apparatus which causes a Motion Picture to be visible on the screen of a television receiver, television monitor or comparable device now known or hereafter devised for personal use.

“ Character Title ” has the meaning set forth in the Assignment Agreement.

“ Co-Financing Amount ” means, with respect to a Motion Picture, without duplication, any net amount actually received by MVL with respect to such Motion Picture on a non-refundable basis, pursuant to a Co-Financing Commitment for such Motion Picture.

“ Co-Financing Commitment ” means, with respect to a Motion Picture, each agreement executed and delivered no later than the Initial Funding with respect to such Motion Picture (a) as a fixed guaranteed amount in connection with the Reserved Foreign Distribution Rights, whether paid directly by the licensee or by a third party advancing or lending funds and taking a security interest in such rights or (b) as a fixed guaranteed amount in connection with all or a portion of the Distribution Rights (other than the Reserved Free TV Rights) not covered under the Studio Distribution Agreement, whether paid directly by the licensee or by a third party advancing or lending funds and taking a security interest in such rights or (c) from any so-called “soft money” benefits (e.g., sale/leaseback transactions, governmental subsidy/rebate programs, tax incentives or similar transactions), in each case, with respect to such Motion Picture, including any sales described in Sections 3(c)(ii) or (iii) .

“ Co-Financing Lender ” means bank or other financial institution which (i) has a long-term unsecured debt rating of at least “AA-” by S&P and “Aa2” by Moody’s and a short-term credit rating of at least “A-1” by S&P and “P-1” by Moody’s, or (ii) is otherwise acceptable to the Control Party.

“ Co-Financing Loan Agreement ” means, with respect to a Motion Picture, a loan agreement or other agreement between the Production Services Company or the Master Distributor with respect to such Motion Picture and a Co-Financing Lender, secured by all or a portion of the Reserved Foreign Distribution Rights.

“ Co-Financing Transaction ” means a transaction for a Motion Picture which results in the availability of a Co-Financing Amount for such Motion Picture.

“ Collective Bargaining Agreement ” means any agreement, contract or arrangement with any union or guild or similarly constituted or substitute organization regarding any rights and/or services and/or personnel utilized in connection with the development, production (which may include post-production), or distribution and/or exploitation of a Completed Film.

“ Competitor ” means any comic book company (such as DC Comics), toy company (such as Hasbro, Mattel or Applause) or company or firm that licenses out comic book characters and any parent company or other Affiliate thereof; provided , however , that for purposes hereof, “Competitor” shall not include any Major Studio other than any Major Studio which is an Affiliate of DC Comics.

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“ Completed Film ” means a “Picture” as defined in the MVL License Agreement, for which all Adverse Claims arising during the production of such Completed Film have been released, other than Permitted Liens, and with respect to which the Studio Distributor has received and accepted all Mandatory Delivery Items (as defined in the applicable Completion Bond) listed on the Delivery Schedule for such Picture which are required to enable the Studio Distributor to cause the initial domestic theatrical wide release thereof to occur, as acknowledged in writing by the Studio Distributor.

“ Completion Bond ” means each completion guaranty agreement (including the principal agreement and standard terms and conditions related thereto and each other agreement executed pursuant to the terms thereof) that satisfies the requirements of Section 7(a)(viii) .

“ Completion Guarantor ” means, with respect to a Motion Picture, one of the surety companies listed on Schedule 1 hereto (as such Schedule is updated from time to time by the Development Company with the consent of the Control Party) which issues a Completion Bond for such Motion Picture.

“ Constitutive Documents ” means, as to a Person, such Person’s certificate of incorporation, formation or registration (including, if relevant, certificates of change of name), memorandum of association, articles of association or incorporation, charter, by-laws, trust deed, partnership, limited liability company, joint venture or shareholders’ agreement or equivalent documents constituting the organization or forming of such Person, in each case as the same may from time to time be amended, supplemented or otherwise modified pursuant to the terms hereof.

“ Cost to Complete ” means, with respect to a Motion Picture as of any date of determination, the anticipated amount of costs and expenses of such Motion Picture required in order to deliver (a) such Motion Picture as a Completed Film, including all bond and financing fees, charges and expenses applicable directly to such Motion Picture, and (b) each item on the Delivery Schedule with respect to such Motion Picture as specified in the applicable Completion Bond, as of such date.

“ Credit Agreement ” means the Credit and Security Agreement of even date herewith among MVL, as borrower, the entities party thereto from time to time as Lenders, the Administrative Agent and the Collateral Agent, as the same may from time to time be amended, supplemented or otherwise modified.

“ Deducted At Source ” means, with respect to any amount, that a Subdistributor deducted such amount in calculating the amount payable to the Master Distributor or otherwise reduced the amount payable to the Master Distributor by such amount.

“ Delivery ” has the meaning set forth in the applicable Completion Bond.

“ Delivery Schedule ” means, with respect to a Motion Picture, the schedule agreed upon between the Studio Distributor and the Master Distributor, as specified in the related Completion Bond, containing the items to be delivered to the Master Distributor which in turn makes Delivery to the Studio Distributor with respect to such Motion Picture in order for it to be considered a Completed Film and in connection with the Studio Distributor’s exercise of

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Distribution Rights that have been granted pursuant to the applicable Studio Distribution Agreement.

“ Development Company ” has the meaning specified in the recitals to this Agreement.

“ Direct Negative Cost ” means, with respect to a Motion Picture, (i) the aggregate of all out-of-pocket costs, charges and expenses incurred by the Development Company, MSI or the applicable Production Company in connection with the development, preparation, production, post-production, completion and delivery of such Motion Picture reduced by (ii) any Co-Financing Amounts. Except as provided in the following sentence, “Direct Negative Cost” shall not include any overhead costs of MPROD or any Marvel Company. Up to two percent (2%) of the Direct Negative Cost for a Motion Picture may consist of overhead for MPROD and any Marvel Company, which amount shall include the costs and expenses, including the allocable portion of employment compensation and benefits, for incremental contracted personnel hired by MPROD or any Marvel Company to work principally on the Motion Pictures being produced for MVL and to perform the obligations of the Master Distributor hereunder; provided , that the amounts in clause (ii) above shall not constitute reductions to the Direct Negative Cost of a Motion Picture for purposes of calculating such two percent (2%) cap. The costs and expenses described in the preceding sentence shall include costs and expenses under cost-sharing agreements between MPROD and any Marvel Company under which MPROD reimburses such Marvel Company for the costs and expenses incurred by such Marvel Company in providing its employees’ services to MPROD or the applicable Production Company principally on the Motion Pictures being produced for MVL and to perform the obligations of the Master Distributor hereunder. Such cost and expenses shall be calculated based upon the portion of such employees’ employment compensation and benefits accrued by such Marvel Company for the period during which their services are required by MPROD or the applicable Production Company (as reasonably estimated by such Marvel Company on an hourly basis). The foregoing limitation on overhead shall not limit the overhead that may be charged by the applicable Production Company with respect to any Motion Picture.

“ Distribution Agreement ” means each distribution agreement, including each Studio Distribution Agreement, entered into between the Master Distributor and a Subdistributor for the purpose of licensing all or a portion of the Distribution Rights for a Completed Film.

“ Distribution Rights ” means the following rights, collectively, with respect to each Completed Film for all Geographical Territories throughout the universe, in perpetuity, whether now owned or existing or hereafter acquired or created:

(a)           General Rights : The right to release, distribute, exhibit, collect receipts with respect thereto and exploit such Completed Film from time to time in any and all media or by any process now known or hereafter developed or devised, including the right and license under copyright to exercise the rights of Theatrical Distribution, Theatrical Exhibition, Non-Theatrical Distribution, Non-Theatrical Exhibition, Free Television Distribution, Free Television Exhibition, Pay Television Distribution, Pay Television Exhibition, and Home Video Distribution and Home Video Exhibition, in each case above with respect to such Completed Film and trailers thereof and excerpts and clips therefrom, in any and all languages and versions,

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including dubbed, subtitled and narrated versions, using any form of Motion Picture Copy, and including:

(i)            Distribution and Exploitation Rights : only in connection with the distribution and exploitation of such Completed Film, the right, in each case, in accordance with the MVL License Agreement, including any approval rights of MRI set forth therein:

(A)         To use and to authorize others to use the title of such Completed Film;

(B)         To use and perform and to authorize others to use and perform, synchronized to the Completed Film, any musical material contained in such Completed Film; and

(C)         To cut, edit, dub, subtitle and alter such Completed Film or any parts thereof (including, without limitation, to change the title thereof) as any Subdistributor may deem necessary for the effective marketing, distribution and exploitation of such Completed Film, solely for the purpose of conforming to censorship, import permit and other legal requirements, conforming to time segment or exhibition standards of licensees and exhibitors or creating foreign language versions.

(ii)           Marketing, Advertising and Publicity Rights : for purposes only of marketing, advertising and publicizing such Completed Film from time to time in connection with the distribution and exploitation of such Completed Film, the right, in each case, in accordance with the MVL License Agreement:

(A)         To publish and license and authorize others to publish in any language, in any media and in such form as any Subdistributor deems advisable, synopses, summaries, adaptations, resumes and stories of and excerpts from such Completed Film, in each such case of no more than 1000 words and not offered for sale and not in comic book form;

(B)         To use and authorize others to use the name, voice and likeness (and any simulation or reproduction thereof) of any person appearing in or rendering services in connection with such Completed Film, subject to the terms of any agreement with such person;

(C)         To exhibit and authorize others to exhibit in any language by any media, including radio and television, excerpts and clips from such Completed Film and from any literary, dramatic or musical material in such Completed Film; and

(D)         To use and authorize others to use, in any media, including all print advertising, posters and billboards, all artwork, logos, photographic stills and other images from such Completed Film and of any character appearing therein.

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(b)           Commercial Tie-In Rights : The right to exercise the “Co-Promotion/Commercial Tie-In Rights”, as defined in the MVL License Agreement, with respect to such Completed Film.

(c)           Statutory Copyright Revenue Rights : The right to collect Statutory Copyright Revenues.

(d)           Other Rights . The right to exercise all “Rights” licensed to MVL under and as defined in the MVL License Agreement with respect to such Completed Film.

“ Dollars ” and “ $ ” each means the lawful currency of the United States.

“ Enhancement ” with respect to any Motion Picture, shall have the meaning set forth in the applicable Completion Bond for such Motion Picture.

“ Excluded Ads ” has the meaning specified in Section 10(f) .

“ Excluded Budget Items ” has the meaning set forth in the Completion Bond.

“ Film Rights ” means, with respect to a Motion Picture, all present and future rights, title and interest in and to such Motion Picture including the following:

(a)          all copyrights and applications for copyrights from time to time with respect to such Motion Picture and all Literary Material upon which such Motion Picture is based, including the original screenplay for such Motion Picture, and the right to sue for past, present and future infringements,

(b)          all Distribution Rights from time to time with respect to such Motion Picture, and

(c)          access rights to the physical materials with respect to such Motion Picture, subject to the terms of a Laboratory Pledgeholder Agreement.

“ Fixed Producer Fee ” has the meaning set forth in the definition of “Producer Fee”.

“ Force Majeure ” means and includes, with respect to any Person, any accident; fire; explosion; casualty; epidemic; act of God; earthquake; flood; torrential rain; strike; walkout; picketing; lock-out; labor controversy or disturbance; civil disturbance; embargo; riot; act of public enemy or terrorism; war or armed conflict (whether or not there has been an official declaration of war); unavailability of essential materials and supplies, equipment, transportation, power or other essential commodity; failure or delay of any transportation agency, laboratory, ratings board, including any delays resulting from making changes to a Motion Picture and resubmitting it to any ratings board as often as is necessary until the related Production Company obtains the rating, if any, required pursuant to the “Approved Picture Specifications” (as set forth in the related Completion Bond), or any other provider of essential supplies, equipment or other facilities or services; enactment of any law, any judicial or executive order or decree; the action of any legally constituted authority; the death, incapacity, unavailability or default (including

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refusal to perform) of the director or any principal member of the cast or crew; or any other event or cause of the nature of force majeure beyond the control of such Person, whether similar or dissimilar to any of the foregoing, which causes an interruption or suspension of or materially hinders, interferes with or delays the performance of such Person of its obligations under any agreement.

“ Four Wall Engagement ” means the Theatrical Exhibition of any Completed Film pursuant to an arrangement whereby a Subdistributor pays a rental fee for the right to exhibit such Completed Film in a theater and pursuant to which a Subdistributor directly controls the collection and disbursement of box office receipts.

“ Free Television Distribution ” means, with respect to a Completed Film, the lease or license of the Distribution Rights to such Completed Film to one or more Persons with the right to engage in the Free Television Exhibition of such Completed Film and/or to grant licenses to other Persons to engage in the Free Television Exhibition and/or subdistribution of Free Television Exhibition of such Completed Film.

“ Free Television Exhibition ” means Television Exhibition, other than Pay Television Exhibition, without any fee being charged to the viewer for the privilege of unimpaired reception of such exhibition. For purposes of this definition, any government imposed fees or taxes applicable to the use of television receivers generally or a regular periodic access, carriage or equipment fee (but not any optional premium subscription charge or fee paid with respect to Pay Television Exhibition) paid by a subscriber to a cable television transmission service or other transmission service or agency for the privilege of unimpaired reception shall not be deemed a fee charged to the viewer.

“ GAAP ” means generally accepted accounting principles as in effect in the United States from time to time, consistently applied.

“ Geographical Territory ” means any specific geographic area constituting a territory, nation, country, state, governmental entity or any subdivision thereof located anywhere in the universe.

“ Gross Receipts ” means, with respect to a Completed Film, the sum of (i) all “Gross Receipts” (as defined in the Studio Distribution Agreement) for such Completed Film and (ii) all non-refundable amounts derived from the exploitation of the Reserved Distribution Rights for such Completed Film received by MVL to the extent any such amount is not a Co-Financing Amount for such Completed Film (e.g., minimum guarantees with respect to the sale of the Reserved Foreign Distribution Rights or loans made by production lenders secured by the Reserved Foreign Distribution Rights). Notwithstanding the foregoing, for purposes of calculating Participations and Residuals payable to any Person, Gross Receipts shall include Co-Financing Amounts.

“ Home Video Distribution ” means, with respect to a Completed Film, the lease or license of such Completed Film to one or more Persons with the right to engage in the manufacture, distribution, rental and/or sale of Cassettes of such Completed Film to one or more Persons for Home Video Exhibition of such Completed Film and/or to engage in the further lease

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or license of such Completed Film to other Persons with the right to engage in the manufacture, distribution, rental and/or sale of Cassettes of such Completed Film for Home Video Exhibition of such Completed Film.

“ Home Video Exhibition ” means, with respect to a Motion Picture, the non-public exhibition of such Motion Picture by means of a Cassette in a private residence for viewing at the place of origin of such exhibition.

“ Indemnified Amounts ” has the meaning specified in Section 11(a) .

“ Indemnified Party ” means any of MVL, the Lenders, the Administrative Agent, the Collateral Agent, the Insurer, any replacement Master Distributor appointed pursuant to Section 3 and their respective Affiliates, officers, directors, managers, members, general partners, employees, agents and advisors, and “ Indemnified Parties ” means all of such Persons, collectively; provided that the term “Indemnified Party” shall not include any Marvel Company.

“ Laboratory Pledgeholder Agreement ” means an agreement, in substantially the form of Annex 2 , among MVL, MPROD, the Studio Distributor, one or more foreign distributors or lenders, a Preprint Material Holder and the Collateral Agent, as the same may from time to time be amended, supplemented or otherwise modified pursuant to the terms thereof.

“ Law ” means any present or future statute or ordinance, whether municipal, county, state, national or territorial; any executive, administrative or judicial regulation, order, judgment or decree; any treaty or international convention; any rule or principle of common law or equity; or any requirement with force of law, each as amended from time to time.

“ Licensed Marks ” means the trademarks, service marks, trade names, names, trade dress, logos, devices and symbols, and any combination thereof, licensed to MVL pursuant to the MVL License Agreement.

“ Literary Material ” means written material other than Source Material, whether published or unpublished, in any form, including a theatrical motion picture treatment, outline, screenplay, teleplay, story, manuscript, play or otherwise, upon which a Motion Picture may be based (including any and all drafts thereof), which has been acquired by MVL either (i) with the proceeds of the Initial Funding (and on the same financial terms as the Literary Material Option) with respect to such Motion Picture or (ii) through the exercise of the Literary Material Option, and which, in each case, may be used solely in connection with the production of a Motion Picture.

“ Literary Material Option ” means MVL’s exclusive option commencing on the date hereof and continuing until the first anniversary of the date on which the Collateral Agent or the Insurer forecloses on the Collateral to acquire all written material other than Source Material, whether published or unpublished, in any form, including a theatrical motion picture treatment, outline, screenplay, teleplay, story, manuscript, play or otherwise, upon which a Motion Picture may be based (including any and all drafts thereof) prepared by or for MPROD prior to the date of foreclosure in connection with any Main Character, Subsidiary Character, if applicable pursuant to Section 3.2.2 of the MVL License Agreement, or Character Title that has also been foreclosed upon. The purchase price for the written material covered by the Literary Material

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Option with respect to each Main Character, Subsidiary Character, if applicable, or Character Title shall be equal to MPROD’s direct development costs associated with the creation of such written material as evidenced by written invoices or other equivalent documentation (the “ Base Price ”) plus an overhead amount equal to five percent (5%) of the Base Price and accrued interest on the Base Price at the Prime Rate, accruing from the date such direct development costs were incurred through the date that the Literary Material Option is exercised. The Literary Material Option may only be exercised with respect to all written material with respect to each Main Character, Subsidiary Character, if applicable, or Character Title (e.g., all screenplay drafts not only one draft) but may be exercised on a Main Character-by-Main Character, Subsidiary Character-by- Subsidiary Character, if applicable, or Character Title-by-Character Title basis.

“ Main Characters ” has the meaning ascribed thereto in the Assignment Agreement.

“ Major Studio ” means any of the following companies and any of their respective Affiliates and Subsidiaries: Disney, Universal, Paramount, Sony, Twentieth Century Fox, Warner Bros., and any other Person approved as such in writing by MVL and the Control Party.

“ Marvel Company ” means any of MPROD, Marvel Studios, MEI, MCI, MRI and any Affiliate or Subsidiary of any of the foregoing, other than MVL.

“ Marvel Studios ” means Marvel Studios, Inc., a Delaware corporation.

“ Master Distributor ” has the meaning specified in the preliminary statements to this Agreement.

“ Master Distributor Advances ” has the meaning specified in Section 3(f) hereof.

“ Master Distributor Default ” has the meaning specified in Section 3(h) hereof.

“ Master Distributor Security Agreement ” means the grant of a security interest by the Master Distributor in favor of MVL, in substantially the form of Annex 3 , as the same may from time to time be amended, supplemented or otherwise modified pursuant to the terms thereof.

“ Master Distributor Security Agreement Supplement ” has the meaning specified in the Master Distributor Security Agreement.

“ Material Adverse Effect ” means any changes, effects or conditions that, in the aggregate, are materially adverse to (a) the benefits, interests, rights or remedies, respectively and individually, of MVL, MPROD, the Administrative Agent, the Collateral Agent, the Insurer or any Lender under this Agreement or the Master Distributor Security Agreement, (b) the business, condition (financial or otherwise), operations, performance or properties of MVL, or MPROD (other than as may result solely from the performance of the Completed Films), (c) the ability of MVL, MPROD or Marvel Studios to perform its obligations under this Agreement, the Master Distributor Security Agreement or the Studio Distribution Agreement, or (d) the legality, validity or enforceability of this Agreement, the Master Distributor Security Agreement, the Studio Distribution Agreement or any Production Services Agreement.

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“ Material Enhancement ” has the meaning specified in Section 3(k) .

“ MCI ” means Marvel Characters, Inc., a Delaware corporation.

“ MEI ” means Marvel Enterprises, Inc., a Delaware corporation.

“ Merchandising Rights ” has the meaning specified in the MVL License Agreement.

“ Moody’s ” means Moody’s Investors Service, Inc. or any successor thereof.

“ Motion Picture ” means pictures of every kind and character whatsoever, including all present and future technological developments, whether produced by means of any photographic, electrical, electronic, optical, mechanical or other processes or devices now known or hereafter devised, and their accompanying devices and processes whereby pictures, images, visual and aural representations are recorded or otherwise preserved for projection, reproduction, exhibition, or transmission by any means or media now known or hereafter devised in such manner as to appear to be in motion or sequence, including computer generated pictures and graphics other than video games, in each case, the screenplay for which is primarily based on one or more Main Characters (including those included within each Character Title) or Subsidiary Characters pursuant to Section 3.2.2 of the MVL License Agreement and which when completed will be a Completed Film.

“ Motion Picture Copy ” means any negative or positive Motion Picture film in any gauge, video or electronic tape recording, cassette, disc or other physical material or substance of any kind produced by means of any photographic, electrical, electronic, optical, mechanical or other process or device now known or hereafter devised, on or with respect to which a Motion Picture or any part thereof is printed, imprinted, recorded, reproduced, duplicated or otherwise preserved.

“ MPAA ” means the Motion Picture Association of America.

“ MPROD ” has the meaning specified in the recitation of parties to this Agreement.

“ MRI ” means MVL Rights LLC, a Delaware limited liability company.

“ Music Royalties ” has the meaning specified in the MVL License Agreement.

“ MVL License Agreement ” means the Exclusive Cross License Agreement of even date herewith between MRI, as licensor of the Rights (as defined therein), and MVL, as licensee of the Rights (as defined therein).

“ Non-Theatrical Distribution ” means, with respect to a Completed Film, the lease or license of such Completed Film to one or more Persons with the right to engage in the Non-Theatrical Exhibition of such Completed Film and/or to grant licenses to other Persons to engage in the Non-Theatrical Exhibition of such Completed Film.

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“ Non-Theatrical Exhibition ” means, with respect to a Completed Film, the exhibition of such Completed Film using any form of Motion Picture Copy in any manner (i) in private residences (other than Television Exhibition and Home Video Exhibition), (ii) on airplanes, trains, ships and other common carriers, (iii) in schools, colleges and other educational institutions, libraries, governmental agencies, business and service organizations and clubs, churches and other religious oriented groups, museums, and film societies (including transmission of the exhibition by closed circuit within the immediate area of the origin of such exhibition), and (iv) in permanent or temporary military installations, shut-in institutions, prisons, retirement centers, offshore drilling rigs, logging camps, and remote forestry and construction camps (including transmission of the exhibition by closed circuit within the immediate area of the origin of such exhibition).

“ Obligation ” means, with respect to a Person, any obligation of such Person of any kind, including any liability of such Person on any claim, fixed, contingent or otherwise, whether or not such claim is discharged, stayed or otherwise affected by any proceeding of the type referred to in the term “Bankruptcy Event”.

“ Open to the General Public ” means, in the case of a Completed Film, being exhibited on at least one screen in a walk-in or drive-in theater and open for at least one week to the general public on a regularly scheduled basis where a fee is charged for admission to view such Completed Film (excluding previews, premiers, charitable screenings, test-market screenings, screenings for Academy Award consideration, Theatrical Exhibition for Academy Award qualification, and other similar special exhibitions of such Completed Film).

“ P&A Costs and Expenses ” means, with respect to a Completed Film, all “P&A Costs and Expenses” or “Distribution Costs and Expenses” (as such terms are defined in each applicable Distribution Agreement) for such Completed Film.

“ Paid Ads ” has the meaning specified in Section 7(a)(xii)(C) .

“ Paramount ” means Paramount Pictures Corporation, a Delaware corporation.

“ Paramount Agreement ” means that certain fully executed term sheet between Paramount and MVL dated as of March 25, 2005, as amended and restated on August 31, 2005, as the same may from time to time be further amended, supplemented or otherwise modified pursuant to the terms thereof with the written consent of the Control Party, such consent to be withheld (i) in the case of any Approvable Distribution Term Change, at the sole discretion of the Control Party, and (ii) in the case of any proposed modification or waiver to any other provisions, only in the event the Control Party determines, in its reasonable judgment, that such amendment, supplement, modification or waiver will have a material adverse effect on the rights of the Secured Parties or the Control Party under the Credit Agreement, or on the Control Party under the Transaction Documents taken as a whole and as in effect as of the Closing Date and only after the Control Party has advised MPROD in writing of the specific terms causing it to withhold its consent.

“ Participations ” means all Back-End Producer Fees, Back-End Service Fees and Third Party Participations.

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“ Participations Cap ” means, on any date of determination with respect to a Completed Film, the lesser of (i) 15% of the cumulative Gross Receipts and Co-Financing Amounts for such Completed Film and (ii) an amount which, when added to the aggregate amount of the Participations paid through such date of determination with respect to all Completed Films, equals 12.5% of the cumulative Gross Receipts for all Completed Films through such date of determination; provided , however , that the Participations Cap shall be 15% with respect to the first Completed Film.

“ Payment Date ” means, with respect to a Completed Film, each monthly, quarterly, annual or other date (as set forth in the applicable Studio Distribution Agreement) on which the Studio Distributor is required to remit amounts owing to the Master Distributor with respect to such Completed Film.

“ Pay Television Distribution ” means, with respect to a Completed Film, the lease or license of such Completed Film to one or more Persons with the right to engage in the Pay Television Exhibition of such Completed Film and/or to grant licenses to other Persons to engage in the Pay Television Exhibition and/or subdistribution of Pay Television Exhibition of such Completed Film.

“ Pay Television Exhibition ” means Television Exhibition which is available on the basis of the payment of a premium, subscription charge or fee (as distinguished from an access, carriage or equipment fee) for the privilege of unimpaired reception of a transmission for viewing in a private residence or in a hotel, motel, hospital or other living accommodation or other non-public area, whether (i) such transmission is on a pay-per-view, pay-per-show, pay-per-channel or pay-per-time period basis, or (ii) such premium, subscription charge or fee is charged to the operator of a hotel, motel, hospital or other living accommodation.

“ Permitted Liens ” means:

(b)          Adverse Claims arising from and pursuant to the Transaction Documents (subject to the limitations set forth in clause (d) hereof with respect to Distribution Agreements);

(c)          Adverse Claims arising in the ordinary course of production of a Motion Picture, provided , that any such Adverse Claim be released within a reasonable period of time following “delivery” of the applicable Completed Film to the Studio Distributor or the applicable Subdistributor (if such Adverse Claim was created as a result of any agreement entered into with or in connection with the Reserved Distribution Rights); provided , further , that any such Adverse Claims created with respect to or pursuant to any Collective Bargaining Agreement shall (i) with respect to any obligations created thereby be released within a reasonable period of time following “delivery” of the Completed Film to the Studio Distributor and (ii) be continuing solely with respect to the payment of Residuals and other amounts arising out of the distribution of such Completed Film;

(d)          Adverse Claims created under any Distribution Agreement entered into with a Subdistributor in the ordinary course of business in connection with the distribution or exploitation of a Motion Picture, provided such Adverse Claim shall either (i) be subject to an

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interparty agreement in form and substance reasonably satisfactory to the Control Party after giving due consideration to customary film industry practices, (ii) be granted in favor of a Subdistributor in support of the license to it of all or a part of the Reserved Foreign Distribution Rights, and which shall encumber no assets other than the Reserved Foreign Distribution Rights so licensed and any “Delivery Items” set forth on the related Delivery Schedule or (iii) by the terms of such Distribution Agreement (or the documents prepared in connection with any Co-Financing Loan Agreement) provide for such Adverse Claim to be released upon “delivery” of the related Completed Film to such Subdistributor;

(e)          Adverse Claims created pursuant to the terms of any government tax incentive agreement or similar co-financing, in each case, which provides for the release of such lien upon delivery of the Completed Film to the Master Distributor;

(f)           Adverse Claims with respect to the MVL Granted Rights and any works or derivative works created thereunder; and

(g)          Adverse Claims created under any Completion Bond entered into in connection with the production of a Motion Picture; provided such Adverse Claim shall be (i) subordinate to the security interest granted under the Credit Agreement in favor of the Collateral Agent or (ii) subject to an interparty agreement in form and substance satisfactory to the Control Party after giving due consideration to customary film industry practices.

“ Person ” means any individual, partnership, corporation (including a business trust), joint stock company, trust, unincorporated association, joint venture, limited liability company, or other entity, or a government or any political subdivision or agency thereof.

“ Preprint Materials ” means all kinds and types of film picture and sound materials produced prior to the making of release prints, including camera-original image-bearing positive and negative black and white and color films, positive and negative intermediates, original sound to full-mixed tracks, edited A&B rolls, internegatives, interpositives, negatives, fine grains and archival master prints, duplicate negatives, color reversals, intermediates, lavenders, fine grain matrices, and all other forms of pre-print elements which may be necessary or useful to produce prints or other copies or additional pre-print elements, whether now known or hereafter devised, and/or (i) such other materials as are necessary for the representations and warranties in Section 5 of the Master Distributor Security Agreement to be true and correct in all material respects and/or (ii) such other materials as the Development Company, the Master Distributor, MVL and the Control Party may agree in writing are, due to technological developments occurring hereafter, necessary for the Master Distributor or respective Subdistributors fully to exercise and exploit all Distribution Rights with respect to the Completed Films from time to time.

“ Preprint Material Holder ” means any film laboratory, video duplication facility, special effects studio, sound studio or other processing or storage entity or bailee to which any Preprint Materials have been delivered.

“ Producer Credit ” has the meaning specified in Section 7(a)(xii)(C) .

“ Production Company ” means a wholly-owned, special-purpose subsidiary of MPROD formed for the purpose of producing no more than one Motion Picture at any time, the

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Constitutive Documents of which are substantially in the form of Annex 4 or are otherwise in form and substance reasonably satisfactory to the Control Party, and the “Independent Director” (as defined in such Constitutive Documents) which is a Person reasonably satisfactory to the Control Party.

“ Production Services Agreement ” means an agreement in substantially the form of Annex 5 between MVL, the Development Company and a Production Company.

“ Rating Agency ” means either Moody’s or S&P, and “ Rating Agencies ” means both Moody’s and S&P.

“ Release Date ” means, for a Completed Film, the date on which such Completed Film is initially commercially exhibited on at least one screen in a walk-in or drive-in theater and Open to the General Public.

“ Reserved Distribution Rights ” means the Reserved Foreign Distribution Rights and the Reserved Free TV Rights.

“ Reserved Foreign Distribution Rights ” means all Distribution Rights in the Geographic Territories of Australia and New Zealand, Japan, Germany and German speaking Switzerland and Austria, France and French speaking Belgium, and Spain.

“ Reserved Free TV Rights ” means all rights with respect to Free Television Distribution in the United States and Canada and their respective territories and possessions.

“ Residuals ” means all amounts payable with respect to obligations (including employer fringe benefits and Taxes payable with respect thereto) under applicable Collective Bargaining Agreements by reason of or as a condition to any exhibition of a Completed Film, or any part thereof, from time to time, or any use or reuse thereof for any purpose or in any media whatsoever.

“ Responsible Officer ” means, with respect to a Marvel Company, any vice president or the President or Chief Financial Officer thereof.

“ S&P ” means Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. or any successor thereof.

“ Settlement Report ” means a report, in substantially the form of Annex 6 furnished by the Master Distributor to MVL, the Collateral Agent and the Insurer pursuant to Section 7(a)(ix)(A)(2) .

“ Source Material ” means any comic book, trade paperback, other publication, or other written or visual material with respect to the Property (as defined in the Assignment Agreement), whether in electronic or physical form and whether published or unpublished, including images, words or images and words together, that was not created by or specially commissioned for MVL or MPROD as a “work-made-for-hire” for the purpose of producing a Completed Film.

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“ Special Ads ” has the meaning specified in Section 10(g) .

“ Statutory Copyright Revenues ” has the meaning set forth in the MVL License Agreement.

“ Studio Distribution Agreement ” means the Paramount Agreement or such other distribution agreement with any other Studio Distributor other than with respect to the Reserved Distribution Rights in form and substance satisfactory to MVL and the Control Party, in each case, as amended, restated, supplemented or otherwise modified from time to time with the prior written consent of MVL and the Control Party; provided , however , that the Control Party’s consent with respect to any such other distribution agreement or amendment, restatement, supplement or modification may be withheld (i) with respect to any terms referenced in the definition of Approvable Distribution Term Change, at the sole discretion of the Control Party, and (ii) in the case of any other provisions, only in the event the Control Party determines, in its reasonable judgment, that such agreement or modification will have a material adverse effect on the rights of the Secured Parties under the Credit Agreement or of the Control Party under the Transaction Documents taken as a whole and as in effect as of the Closing Date and only after the Control Party has advised MPROD in writing of the specific terms causing it to withhold its consent.

“ Studio Distribution Fee Cap ” means, with respect to a Completed Film, ten percent (10%) of the cumulative Gross Receipts for such Completed Film (excluding Gross Receipts derived from the exploitation of the Reserved Distribution Rights) in those countries in the Geographical Territories, other than in connection with the Reserved Distribution Rights, where the applicable Studio Distributor distributes directly without the services of a subdistributor, subject to an increase to up to 12.5% with respect to foreign television distribution by Universal (to the extent Universal serves as the Studio Distributor for a Picture). Notwithstanding the foregoing, the Studio Distribution Fee Cap shall not apply to platforms (e.g., theatrical distribution, home video or television) for which, in a specific Geographical Territory, the Studio Distributor does not directly distribute (i.e., uses a subdistributor).

“ Studio Distributor ” means Paramount (other than with respect to the Reserved Distribution Rights unless the same are sold to a Major Studio), or, with respect to a Completed Film which is not distributed by Paramount, another Major Studio.

“ Subdistributor ” means a Person, including the Studio Distributor, licensed by the Master Distributor to distribute or license a Completed Film for exhibition in any one or more Geographical Territories, or otherwise exploit any of the Film Rights with respect to the Completed Films.

“ Subsidiary ” means, as to a Person, a corporation, partnership, limited liability company, or other entity of which shares of Voting Stock of such corporation, partnership, limited liability company or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person.

“ Subsidiary Character ” has the meaning set forth in the Assignment Agreement.

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“ Tax ” means any tax, levy, impost, duty, withholding, assessment, fee or other charge which is assessed, levied, imposed or collected by any government, or any governmental, administrative, fiscal or judicial body, department, commission, authority, tribunal, agency or entity (including any penalty or interest payable in connection with any failure to pay or any delay in paying any of the same).

“ Television Distribution ” means, with respect to a Completed Film, to engage in the Television Exhibition of such Completed Film and/or to grant licenses to other Persons to engage in the Television Exhibition or subdistribution of Television Exhibition of such Completed Film.

“ Television Exhibition ” means, with respect to a Completed Film, the exhibition of such Completed Film using any form of Motion Picture Copy for transmission by any means now known or hereafter devised (including over-the-air, cable, wire, fiber, master antennae, satellite, microwave, closed circuit, laser, multi-point distribution services or direct broadcast systems) which transmission is received, directly or indirectly by retransmission or otherwise, impaired or unimpaired, for viewing such Completed Film on the screen of a television receiver or comparable device now known or hereafter devised (including high definition television), including, without limitation, Pay Television Exhibition, but excluding Home Video Exhibition, Theatrical Exhibition and Non-Theatrical Exhibition.

“ Theatrical Distribution ” means, with respect to a Completed Film, to engage in Theatrical Exhibition of such Completed Film and/or to grant licenses to other Persons to engage in the Theatrical Exhibition of such Completed Film.

“ Theatrical Exhibition ” means, with respect to a Completed Film, the exhibition of such Completed Film using any form of Motion Picture Copy by any process now known or hereafter devised in walk-in or drive-in theaters Open to the General Public.

“ Third Party Participations ” means amounts payable to a Person (other than a Marvel Company or any Affiliate or employee thereof), whether as a fixed sum (the payment of which is conditioned upon the attainment of a specified level of receipts or profits of a Completed Film) or as a percentage of the receipts (however denominated) of a Completed Film remaining after giving effect to specified exclusions and deductions, if any.

“ Transaction Documents ” means this Agreement, the Production Services Agreements, the MVL License Agreement, the Distribution Agreements, the Master Distributor Security Agreement, the Master Distributor Security Agreement Supplements, the Access Letters, the Viacom Guaranty, the Laboratory Pledgeholder Agreements, the Credit Agreement, and the Insurance Agreement.

“ UCC ” means the Uniform Commercial Code as from time to time in effect in the specified jurisdiction.

“ United States ” or “ U.S. ” each means the United States of America.

“ Viacom Guaranty ” means the guaranty issued by Viacom Inc. dated September 1, 2005 for the benefit of MPROD and MVL.

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“ Video Items ” has the meaning specified in Section 10(f) .

“ Voting Stock ” means capital stock or shares issued by a corporation, or equivalent interests in any other Person, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or Persons performing similar functions) of such Person, even if the right so to vote has been suspended by the happening of such a contingency.

(b)          As used in this Agreement (including the preamble and the recitals), the following terms shall have the respective meanings ascribed to such terms in the Credit Agreement:

(c)           Accounting Terms . Except as otherwise expressly provided herein, all accounting terms relating to financial statements required to be provided hereunder and not defined in the Credit Agreement shall be construed in accordance with GAAP.

(d)           Computation of Time Periods . Unless otherwise stated in this Agreement, in the computation of a period of time from a specified date to a later specified date, the word “from” means “from and including”, the word “through” means “to and including”, and the words “to” and “until” each mean “to but excluding”.

(i)           whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms;

(ii)          the words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation”

(iii)        the word “will” shall be construed to have the same meaning and effect as the word “shall”

(iv)         any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modification set forth herein);

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(v)          any reference herein to any Person, or to any Person in a specified capacity, shall be construed to include such Person’s successors and assigns or such Person’s successors in such capacity, as the case may be;

(vi)         the words “herein,” “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Section, clause or other subdivision; and

(vii)       the word “sell” when used in connection with the Distribution Rights shall be construed to mean “license” in order to prevent the application of the “first sale doctrine” (as embodied in 17 U.S.C., Section 109 of the United States Copyright Act of 1976, as amended, or the equivalent law or statute of any other country in the Geographical Territories) to such rights.

SECTION 2. OBLIGATIONS OF THE DEVELOPMENT COMPANY .

MPROD hereby agrees to act as the “Development Company” hereunder and to perform the obligations of the Development Company set forth herein. The Development Company shall perform all of its obligations under this Agreement and otherwise with respect to each Motion Picture to the same extent as if the Film Rights with respect to such Motion Picture were owned by the Development Company, and conforming to the same high quality control standards that the Marvel Companies have used in connection with motion pictures based on Marvel characters prior to the date hereof and not less than those exercised by the Major Studios with respect to their own motion pictures. The parties acknowledge and agree that under no circumstances shall the performance of any Completed Film be evidence of MPROD’s adherence (or failure to adhere) to any production or quality control standard. MVL and the Development Company agree as follows:

(a)           Pre-Production Services . With respect to each Motion Picture, the Development Company shall perform or cause the performance of all development and pre-production services on behalf of MVL, with the object of creating a Motion Picture that will be a Completed Film, including the following:

(i)           developing a film concept for such Motion Picture based on one or more of the Main Characters, Character Titles or, if applicable, one or more of the Subsidiary Characters in accordance with Section 3.2.2 of the MVL License Agreement;

(ii)          identifying, recruiting and negotiating contracts with screenwriters, a director, the cast and the production staff for such Motion Picture;

(iii)         preparing a Budget for such Motion Picture consistent with all Participation Caps as set forth herein;

(v)          preparing a production schedule and a Delivery Schedule for such Motion Picture;

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(vi)         obtaining production insurance for such Motion Picture which satisfies the requirements of Section 7(a)(vii) hereof;

(vii)       obtaining a Completion Bond for such Motion Picture which satisfies the requirements of Section 7(a)(viii) hereof;

(viii)      forming a Production Company and arranging for a Production Services Agreement with such Production Company pursuant to which such Motion Picture will be produced as a “work-made-for-hire” for MVL;

(ix)         obtaining the screenplay for such Motion Pictur