8/14/2019 Chronology of Lee-SLM- Marvel issues

http://slidepdf.com/reader/full/chronology-of-lee-slm-marvel-issues 1/3

Chronology of Events that Gave Stan Lee MediaOwnership of Stan Lee's Co-Creator's rights to Marvel Creations

The matter of Stan Lee Media, Stan Lee and Marvel arises from the way that Stan Lee and Marvel havedealt with his namesake company Stan Lee Media, founded by Stan Lee in 1998 during his three monthhiatus (August, Septemebr, October, 1998) from a succession of lifetime employment agreements withMarvel.

In 1996, the first company Stan Lee founded, Marvel Comics, filed for Chapter 11 Bankruptcy

 protection. after a long and protracted battle between American business tycoons Ron Perelman andCarl Ichan for control of Marvel. When it emerged from bankruptcy protection, a Perelman linkedcompany, Toy Biz, led by Isaac Perlmutter and Avi Arad. was successful in getting its Plan of Reorganization accepted so that it could acquire Marvel out of bankruptcy.

In August, 1998, as part of its approved reorganization plan, Toy Biz' s Isaac Perlmutter and Avi Arad

decided to use the ability of the bankruptcy court to void all executory contracts, to void Marvel's mostexpensive executory contract, and the only lifetime contract it had, a $1 million per year lifetimeexclusive contract with its founder Stan Lee. To cut costs of the financially crippled company as it wasemerging from Bankruptcy burdened with debts in the hundreds of millions of dollars, Marvel voidedStan Lee's $1 million a year contract.

In September, 1998, Mr Perlmutter offered Stan Lee a new $500,000 per year, two year Employmentcontract to replace Stan's lifetime agreement on a take it or leave it basis. Because in his entire historyof employment with Marvel and its predecessors Stan Lee had never challenged anything Marvel presented to him to compensate him for the creations that made Marvel successful, Mr Perlmutter expected that Stan would accept this take it or leave it offer. Stan always understood he was being paid

a premium by Marvel as payment for his co-creator's rights, but never demanded a royalty of more thanhe was offered because of his alleigance to the company he founded and named..

Pelmutter's crass voiding of Lee's contract resulted in an unprecedented response by Lee. Lee suddenlyunderstood that Marvel's voiding of his exclusive Employment Agreement, which was in large part based on his assignment and forebearance of any and all co-creator's rights Lee retained to his creations

for Marvel over the years, caused all of his co-creator's ownership rights in Marvel's copyrights on hiscreations to suddenly revert to him free and clear of any limitations or encumbrances.

Because Lee did not have a written contract with Marvel when he created his most valuable characters, between 1961-1968, and Stan had never executed any independent written assignments to Marvel of 

his creator's rights, and no such assignments had ever been recorded with the US Copyright office, theonly valid assignment of those rights by Lee to Marvel was made as a part of the $1 million a year Employment contract Marvel entered into in the mid-1990's. When that Employment and RightsAssignment contract was voided, Lee was re-vested with, or restored in, all of his rights, whatever theymight be, without any restrictions or limitations for the first time in his career.

Them during the only period in his business life that Stan had no contractual relationship with Marvel,

after Stan's contract was voided in August, 1998, through November 1, 1998 when he entered into anew contract with Marvel, while he was considering how to respond to Mr Perlmutter's offer of 

8/14/2019 Chronology of Lee-SLM- Marvel issues

http://slidepdf.com/reader/full/chronology-of-lee-slm-marvel-issues 2/3

$500,000 per year for two years, Lee was made aware that over the past 40 years, in over 100 countrieswhere his writings and creations for Marvel were distributed, he had turned the name he created for himself, Stan Lee into a global brand of significant value to the emerging dot com boom that was

desperate for branded content that had eluded the early stages of the internet's evolution.

Stan's closest friend in Los Angeles, who had spent 1996-1998 attempting to help Stan liberate his

 brand from Marvel to work with one of the major media conglomerates, agreed to help him deal withMarvel's new ultimatum and to find and retain on a contingency fee basis, an IP lawyer who couldnegotiate a new contract with Marvel under the threat of Stan asserting for the first time his co-creator's

rights. His friend found NY IP Lawyer Arthur Lieberman and negotiated a contingency fee agreementfor Lee.

Lee agreed with his friend that he could best capitalize on his "name brand" during the dot com boom by establishing for the first time in his career his own global entertainment company which would have

as a global base of support three generations of fans around the world easily accessed for the first timeusing the internet. Lee could now build his own Disney like studio of creative writers and artists whogrew up idolizing Stan and who could create a new genre of Super Hero characters and stories born on

the internet for deployment on all other media.

Just as Walt Disney began with a motion picture animation company to create character franchises that

were exploited in all other media once they were popularized on the big screen, Stan decided to buildhis own Hollywood internet animation studio to create a new millenium stable of super heroes based onthe unparalleled success he had with his Marvel creations. And Stan's company achieved criticalsuccess immediately as the premier Entertainment Portal on the internet in November, 2000.

In order to capitalize his company, Stan agreed to give it everything he owned in the way of 

Intellectual Property he had created during his entire career, anything he had any legal or moral

interest in or claim to, including any and all rights that reverted to him from Marvel- as of the

day he signed the agreement on October 15, 1998..

Stan Lee Entertainment was born on October 13, 1998 when it was incorporated by Lee with his friendand as of October 15, 1998 . Stan Lee entered into a semi-exclusive lifetime employment agreementwith his new company that included an assignment of everything he possibly owned as of October 15,1998. This Employment and Rights Assignment Agreement was intended to provide Stan with his

independent legacy from Marvel and riches that would support his Estate for some time to come.This Rights Assignment, signed a month before Stan entered into a new, non-exclusive lifetimeemployment agreement with Marvel on November 17, 1998, with an almost identical rights assignment provision that was warranted by Stan Lee to be the only such assignment he had ever made, is the basisof the allegation of the first fraud lee committed against Stan Lee Media..

This Rights Assignment entered into on October 17, 1998, and modified and re-ratified in October,1999, became the Primary Asset of Stan Lee Media when it went public in July, 1999, and was referredto in that way in the SEC 10K 1999 Annual Report, filed on March 30, 2000. On page three of thatSEC filing required of all NASDQ companies, the Rights Assignment was referred to under theheading, UNIQUE COMPANY ASSETS which were then described to include as the " primary asset 

of the company" this Agreement and the Re-Ratification of that agreement, which were both published

as attachments 10.41 and 10.42. that public filing.

8/14/2019 Chronology of Lee-SLM- Marvel issues

http://slidepdf.com/reader/full/chronology-of-lee-slm-marvel-issues 3/3

In a Time Magazine cover banner story Pow! Cybercomics, February 14, 2000 on Stan Lee Media,

Stan was quoted as saying, "I know it sounds silly," he says, "But I hope to make Stan Lee Media so

big and prosperous that we can eventually buy Marvel". Last week his company's stock hit an all 

time high, its market capitalization of $311.7 eclipsing Marvel's of $197 million.

Stan Lee Media closed its doors in December, 2000, along with more than 250 other dot com public

companies, during the NASDQ and dot com bubble collapse. The primary asset of the company, whichwas the basis for its raising more than $25 million from investors while it was publicly traded,suddenly was lost in all subsequent filings, contracts etc.

On February 7, 2001, SLM filed for Chapter 11 Reorganization with the SLM management serving asDebtor in Possession. Stan Lee remained with the company until June, 2001, when he prepared to begin a new enterprise with his lawyer partner Arthur Lieberman.

In November, 2002, Stan Lee sued Marvel to enforce the November 17, 1998 Agreement that hadnever been disclosed or published to anyone.

In January, 2005, the court in Lee v Marvel entered a Summary Judgment awarding Stan 10% of all profits derived by Marvel on its TV and Movie productions.

In April, 2005 Marvel entered into a confidential settlement with Stan which paid him approximately$15 million to settle his claims under the November, 1998 contract.

The day after Marvel announced the settlement with Lee it announced a $500 million credit facilitywith Merrill Lynch to enable Marvel to establish its own production studio to produce its own movies.

The credit facility included warranties by Marvel that they knew of no claims that existed inconnection with any of the collatera- character franchises-

Throughout this period Defendants knew or should have known that the rights upon which the Nov1998 contract with Lee were based were owned by SLM, and when it was in bankruptcy Marvel knewit should have negotiated with the Estate and not Stan Lee to resolve the claims it knew existed, that

were no longer owned by Lee, that had been hidden by defendants from shareholders and lenders.