APPENDIX F

RATING SUMMARY

MVL Film Finance LLC (MVL) was created to partially finance Marvel Studios' production of a slate of 10 live-action or animated films based on up to 10 of Marvel's comic book characters, including Captain America and Nick Fury. The securitization will own the film rights to the characters as well as the film library created featuring the characters.

The facility will fund a portion of aggregate costs associated with producing each film. It will function as a revolving credit facility whereby the issuer can borrow, pay down and re-borrow amounts on a revolving basis for seven years. Revenues from the exploitation of the film slate, net of participations, residuals, print and advertising expenses and distribution costs will provide a source of debt repayment. An additional source of repayment is the monetization of the intellectual property value of the character film rights and the library of completed films, as well as the sequel and spin-off rights to the completed films.

The film slate will be marketed and distributed by Paramount Pictures Corporation (Paramount), with the exception of certain foreign territories that MVL Productions LLC, an affiliate of Marvel Studios, expects to pre-sell to leading distributors in such territories and domestic free TV, which will be self-distributed by MVL Productions LLC. Paramount is a wholly-owned subsidiary of Viacom.

The rating on the transaction was based on the analysis of the projected slate of films and the projection of revenues and expenses for these films in conjunction with the transaction's structural features and enhancements.

Company Background

Marvel Studios, Inc. (Marvel Studios) is a subsidiary of Marvel Entertainment, Inc (Marvel). Marvel is a publicly traded character-based entertainment company with a market capitalization of approximately $1.7 billion as of September 30, 2005. Marvel owns and commercializes rights to an intellectual property library consisting of over 5,000 characters, including some of the most recognizable characters in the entertainment industry, including Spider-Man, X-Men, Hulk, Captain America, Fantastic Four and Nick Fury,

Historically, Marvel has licensed characters to major film studios (Fox, Sony, Universal) that finance the production of and distribute films based on those characters while paying Marvel a licensing fee in the form of an advance against a revenue or profit participation. Films based on Marvel characters such as Spider-Man, X-Men and Fantastic Four have experienced dramatic success in the marketplace. While Marvel has historically licensed out its characters, it has remained an integral part of the film production process and has the knowledge and experience to run its own film studio. This facility will allow Marvel to act as a stand-alone film studio producing films based on its characters, as well as to maintain control of the film properties through all windows of the film cycle.

Film Slate

The film slate will be produced by Marvel Studios and will be based on the original Marvel characters and comic book stories of “Captain America”, “Nick Fury”, “Ant-Man”, “The Avengers”, “Black Panther”, “Cloak and Dagger”, “Doctor Strange”, “Hawkeye”, “Power Pack”, and “Shang-Chi”

The films are intended to be major event films with production budgets of between $60 million and $165 million. The historical box-office performance of films Marvel has produced in partnership with the major studios has been outstanding. The inherent uncertainty of film performance is further mitigated by the ability to use existing storylines in developing films, as well as audience awareness of the Marvel characters.

Transaction Structure

The facility will fund a portion of the aggregate film production costs during the production of each film. To mitigate film completion risk, prior to the initial advance on each film, the special purpose production company formed to produce each applicable film will be required to obtain an acceptable completion guarantee. The advances under the facility will not exceed the amounts covered by the completion guarantee.

Credit enhancement for the Class A Notes is provided by $60 million in unwrapped Class B Notes. The Class B Notes will be fully funded prior to any draws on the rated portion of the facility and will be subordinated to the Class A Notes.

Cash generated in the transaction will be trapped in a Borrower Blocked Account, and no distributions to Marvel are permitted until a certain number of films have been released and specific coverage and minimum balance tests have been satisfied.

In addition, as a condition precedent to funding for any individual film, the issuer is required to pre-sell certain international distribution rights in Japan, Germany, France, Spain and Australia and may engage in other acceptable alternative financings to reduce the advances required to be funded through the facility. The target for the foreign territory pre-sales is 33% of each film's production budget. Moody's believes that this target is achievable based on analysis of current and historical data for the pre-sale of foreign territories for high-budget event films. Pre-selling territory rights has the effect of reducing the potential upside from exploitation in the applicable territories in exchange for reducing performance risk by covering a portion of production budgets with upfront cash.

Credit enhancement is also provided by a true sale of the film rights to the characters; triggers based on the performance of the films and foreign territory pre-sales; the value of the intellectual property pledged as collateral; and a cap on overhead expenses payable to Marvel. In addition, MVL Productions LLC will self-distribute domestic TV rights at no cost to the film credit facility.

The facility also benefits from a three-month interest reserve as well as a $25,000,000 Class A liquidity reserve. The liquidity reserve is available to cover insurer expenses, administrative costs up to $600,000 per annum, insurance premium and interest payments on the Class A Notes, and will provide protection against timing delays of cash flow collections from Paramount

Quantitative Analysis

Moody's reviewed historical data for the films released by some of the major studios between 2000 and 2004 that met the eligibility criteria for this transaction, including a subsample of films produced by Marvel in partnership with major studios. The data included production costs as well as different line items for revenues and expenses and overall profit for the movies. The line items for revenue included amounts received from theatrical, home video, pay TV, and network/syndication/non-theatrical channels. Line items for expenses included domestic and foreign theatrical distribution costs, home video manufacturing and shipping, participations, and residuals.

Using this historical data, a relationship was developed between production and revenues as well as production, revenues and distibution expenses. Using these relationships as well as anticipated production expenses for the upcoming slate of films which were provided to Moody's, a Monte Carlo simulation was performed. The resulting amounts were then used to derive net cash flows, which were then used to pay down the notes. After several thousand potential slates were simulated, the expected loss experienced on the Class A Notes was found to be consistent with an investment grade rating.

STRUCTURE SUMMARY

Structure

Doc ID# SF63119

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¹ The film slate will be marketed and distributed by Paramount Pictures Corporation, with the exception of (i) certain foreign territories, and (ii) domestic free TV, both of which will be self-distributed by Marvel.