Download - Statement of Facts SLM adv Lee, Marvel

8/14/2019 Statement of Facts SLM adv Lee, Marvel

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MEMORANDUM

TO: Bill Andersen, The Andersen Firm

Stan Lee Media, Inc., James Nesfield

Chris Belland,

FROM: The Andersen Firm

DATE: January 26, 2007

RE: Stan Lee Media, Inc./Statement of Facts

____________________________________________________________

I. Parties

A. Stan Lee

Stan Lee is the American pop icon writer and super hero creatorof 80% of the character franchises owned by

Marvel Entertainment, Inc., formerly Marvel Comics, Inc., which has been a publicly traded company since1994 (Marvel).

From approximately 1961 through 1971, Stan Lee wrote various comic books, introducing characters that havebecome among the largest entertainment franchises in the world today. Stan Lee wrote the comic books on a

"free-lance" basis at home when he needed extra money. He was paid separately from his salary as an EditorArt Director and Chief Writer, working in Marvel's offices. Thus, Stan Lee has reasonably asserted his co-creator's interest in the copyrights that Marvel filed as publisher have remained his and were not ever ceded toMarvel as Works For Hire, as evidenced by Marvel's conduct in dealing with him since his first contract in1968.

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During 1961-1971, Stan Lee's co-creations included Spider Man, X-Men, Fantastic Four, The Incredible Hulk,Ironman, Daredevil, Silver Surfer as well as many super-villains notably, Dr. Doom. Spider Man would be themost vulnerable to Stan Lee's claims of co-ownership because he created it over the objection of, and againstthe specific directive by his publisher and employer, not to create a teenage super hero based on a spider.The determining issue under the 1909 Copyright Act, applicable to Stan Lees activities from 1961-1971, is

whether Stan Lee's co-creator's rights are owned by him or Marvel. The primary issue has never beenadjudicated, contractually resolved, and remains the biggest question in the Entertainment business today. As

set forth below, Stan Lee's rights are now legally owned and recorded in the copyright office in the name ofStan Lee Media Inc. (SLM)

The enforceability of Stan Lee's co-creator's rights to Marvel's flagship character franchises can only beresolved by a factual determination whether Stan Lee's free lance writing at home constituted a work for hireunder the 1909 Copyright Act based on facts known to only two living witnesses, without any contemporaneous

documentary evidence surviving. The senior intellectual property partners of two multinational firms have beenunanimous that if Stan Lee's rights were litigated, they would survive summary judgment and would finally bedecided by a jury. One intellectual property expert described such jury consideration of Stan's rights as a horserace that Marvel could never afford to bet on.

There are no documents that survive the various mergers and acquisitions of the predecessor companies thatultimately became Marvel, which was so named by Stan Lee. Copyrights were filed by Marvel's predecessorTimely Comics, Inc., as publisher of the compilation of works. However, Stan Lee never signed anyindependent, formal recorded documents with the United States Copyright Office. Stan Lee's co-creator rightsto Marvel's copyrights were only assigned in connection with a succession of Employment Agreements withMarvel between 1975 and 1998.

Until SLM recorded the Assignment made by Stan Lee in October 1998, of all of Stan Lee's creations andnamed titles, including those referred to above and Stan Lee Presents, there is no prior record of anyassignment by Stan Lee, including the November 1998 assignment to Marvel, which is discussed below. A copyof an email from Peter Paul to Chris Belland, entitled, The History of Stan Lee Creative Rights, describes in

great detail what characters and images constitute the intellectual property at issue. (Exhibit A).

B. Timely Comics, Inc.

Timely Comic, Inc. employed Stan Lee from 1945 through 1960 when it became Marvel Comics, Inc. DuringStan Lees employment at Timely Comics, Inc., he was responsible for the unprecedented creation of aconsumer friendly culture that incorporated the consumer as a member of the family with the publisher and itsemployees.

C. Marvel Comics, Inc. (Marvel)

Marvel employed Stan Lee continuously from 1960 to August 1998. In August 1998, Marvel was in the process

of being acquired out of Chapter 11 Bankruptcy protection by Toy Biz, Inc. Stan Lees contract with Marvewas voided. When the contract was voided, Stan Lees exclusive license to use his creations, and his bar onmaking any claims to his co-creator rights, was also voided. After Stan Lees contract was voided, Stan Leesought the assistance of Peter Paul to find a lawyer to represent his interest and to possibly negotiate a new

contract with Marvel that allowed him for the first time to start his own company and compete with Marvel..

D. POW Entertainment, L.L.C. (POW)

POW is a Delaware limited liability company, incorporated by Stan Lee's lawyer, Arthur Lieberman, onNovember 8, 2001, in preparation for a step transfer of assets from SLC to POW without notice to the creditors

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and Court, and in violation of express warranties in the Court approved Sale of Assets not to transfer assetswithout approvals from the secured creditor. In 2003, there was a purported transfer of assets from SLC-(whichstill did not legally exist)-to POW, which itself went public in a reverse merger in 2004 and trades under thesymbol, POWN:PK.

E. QED Productions, L.L.C. (QED)

QED is another Delaware limited liability corporation that was incorporated by Stan Lees attorney, Mr. Arthur

Lieberman, the same day as POW, November 8, 2001, in contemplation of transferring assets from SLC. QEDhas been alleged to be a subsidiary of POW and in July, 2006 certain character creations, such as the Accuserand Drifter, developed by Stan Lee for SLM, which were sold to SLC in the Sale of Assets, were laterpurportedly assigned by SLM to QED in a transfer recorded with the copyright office and signed by Debtor inPossession Representative, Kobyashi, and QED as COO Champion, both of whom are officers in POW withStan Lee and Arthur Lieberman. The fraudulent assignment by SLM to QED in July 2006 was never ratified bythe bankruptcy court, and occurred after the same assets had purportedly been sold under the Sale of Assets. It

was done when SLM was dissolved and had no force or effect under Colorado law (Assignment ofCopyright) (Exhibit B).

F. Stan Lee Media, Inc. (SLM)

SLM of Delaware merged into a trading shell, BCOI Inc of Colorado, in July, 1999, and thereby became apublicly traded company. It is now a duly formed corporation of the State of Colorado. BCOI adopted the nameSLM through the merger. SLM was formed under Colorado law on April 22, 1996. SLM was accepted on

NASDQ in May, 2000 and was forced to close its doors when its stock ceased trading on December 19, 2000during the dot com crisis. In February, 2001, SLM filed for Chapter 11 protection as Debtor in Possession.

G. Stan Lee Media, Inc. (SLM), a Delaware Corporation

Stan Lee Entertainment, Inc. incorporated Stan Lee Media, Inc. on or about April, 1999 in anticipation ofidentifying a trading public company with which to merge.

H. Stan Lee Entertainment, Inc. (SLE)

In 1998, Stan Lee formed SLE, an internet based production and marketing company. SLE is a corporation duly

formed under the laws of the state of Delaware on or about October 7, 1998. In order to capitalize SLE, StanLee's complete equity contribution consisted of his assignment of all intellectual property rights in the creativeuniverse that he owned or controlled as of October 15, 1998 to SLE. SLE executed the original Assignmentwith Stan Lee. SLM is SLEs successor in interest.

I. SLC, L.L.C.

After SLM filed for Chapter 11 protection in February 2001, it attempted to sell all identifiable intellectualproperty assets to a holding company ostensibly created by Stan Lee and a bankruptcy remote principal-(nevernamed)-under terms and conditions first presented to the bankruptcy court for approval in November, 2001. The

holding company that Stan Lee warranted would be the Purchaser, which was to be incorporated in Californiaand be competent to enter into and perform all terms provided in the Sale of Assets Agreement as of the date ofclosing on April 22, 2002, was SLC, for which Lee signed the Sale of Assets as President. The records of theCalifornia Secretary of State do not reflect any such LLC as ever being incorporated, thereby rendering false allexpress warranties and representations by Stan Lee in the Sale of Assets regarding the existence and

competence of SLC to serve as Purchaser of the assets of SLM.

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The Sale of Assets provided the New York offices of Stan Lee's lawyer and partner in other companies, ArthurLieberman, as the address for the non-existent LLC. Liebreman was Stan Lee's partner and 1/3 owner of POWand QED..

.

J. Chris Belland

Majority shareholder of SLM, he is the President and CEO of Historic Tours of America, the largest historic

tour company in the US with 1000 employees in 8 cities. He is also a major real estate investor in Key West

FL. He is the assignee and beneficial owner of approximately 5.01 million shares and proxies to voting rights inSLM..

K. James Nesfield

Current President, CEO and Chairman of the Board of SLM. Mr. Nesfield is a well known Wall Streetwhistleblower, exposing the Mutual Fund Market Timing scandal, appearing on 60 Minutes and before SenateCommittees on the subject. He acquired more than 5 million proxies to revive the company after its dismissafrom Chapter 11, which was allowed to be administratively dissolved in Colorado in March, 2002. Pursuant to aspecial shareholders meeting held on December 7, 2006, he appointed new board members and officers.

II. Statement of Facts

A. Stan Lees Employment with Marvel Comics, Inc. (1945-1998)

Employment and Freelancing

Stan Lee was employed by Marvel, and its predecessors, continuously from 1945-1998, in a variety ofcapacities, primarily as Editor, Art Director, and Publisher. He also created numerous comic book charactersthrough free lance comic book writing. Stan Lee was often paid on a per script basis, at his discretion as he washiring himself, when he needed extra income above his salary as a full time employee of Marvel.

Salary Employment

Stan Lee was also paid a salary for his work as Editor and Art Director of Marvel.

Co-Creator Rights

Stan Lee never independently assigned any of his creative rights to Marvel as publisher of said comic booksMarvel always referred to Stan Lee as co-creator of all of his creations for Marvel.

During Stan Lees work with Marvel, Stan Lee created the Spider Man character. In 1961, Stan Lee introducedthe idea of Spider Man to Marvels publisher and Stan Lee's employer, Martin Goodman. Martin Goodman notonly rejected the idea of creating a teenage super hero who derived his super powers from a spider, butGoodman specifically directed Stan Lee not to create such a character and not to publish it in any of Marvel's

books.

Stan Lee disregarded the directive of his employer with the expectation that he would be fired for suchinsubordination, and proceeded to create Spider Man at his home. Stan Lee secretly inserted the Spider Mancreation and story in the last issue of a comic book series scheduled to be discontinued, without the knowledgeof his employer. When the character became popular, the publisher agreed to formally adpt it as a Marvelcharacter.

Marvel copyrighted each character created by Stan Lee as publisher and thereby protected Stan Lee's co-creatorinterest in the joint work (between Lee as writer and the artists employed by Marvel) . Because Marvel always

paid Stan Lee a premium under his Employment Agreements- which included the only assignments of Stan's

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co-creator's rights, Marvel was in effect hiding its royalty-co-creator payments to Stan under the ruse of asuccession of Agreements denomintaed as Employment Agreements rather than Rights Assignments.

Bankruptcy of Marvel

On August 12, 1998, during the course of its reorganization proceedings in Chapter 11 bankruptcy (1997-1998),Marvel rejected Stan Lees lifetime exclusive $1,000,000.00 per year employment and the appurtenant rightsassignment agreement that was the last of a succession of employment agreements with Stan Lee since the late

1980's contract. Marvel's new owners, Toy Biz, Inc., then offered Stan Lee a new two year $500,000.00 peryear contract on a take it or leave it basis in September 1998. Stan Lee rejected Marvels $500,000.00 peryear offer and retained, for the first time in his career, an intellectual property lawyer, Arthur Lieberman, whoadvised Stan Lee that he could claim his co-creators interest in Marvel's copyrights and survive a summaryjudgment. Based on the threat of Stan Lee's litigation for his rights, Marvel negotiated an exponentially superiorcontract to the one it voided in August 1998 and executed it with Stan Lee on November 17, 1998.

During the intervening period from the voiding of Stan Lee's exclusive Marvel contract in August 1998 and the

execution of a new non-exclusive employment agreement in November 1998, all intellectual property rightsStan Lee ever owned throughout the creative universe reverted to him. While Stan did not know definitivelywhat those rights were, they vested in him by operation of the copyright law, and his creation of those rightswas never and has never been denied by Marvel.

B. SLM/Stan Lee

Stan Lees Assignment to SLM

On October 15, 1998, Stan Lee entered into an employment agreement and rights assignment with SLM (theAssignment)(Exhibit E). The Assignment is part of a hybrid Employment and Rights AssignmentAgreement which was identical in form as the agreements Stan Lee had with Marvel through August 1998.Sections 1 through 3 set forth terms for a semi-exclusive employment services agreement, including but notlimited to, consideration in the amount of $250,000 per year, bonus payments, stock options plans, andinsurance benefits. Sections 4 through 7 set forth the assignment of Stan Lees intellectual property rights

forever including but not limited to, all right title and interest [Stan Lee] has or control[s], now and in the

future.Stan Lee served as Chairman and Chief Creative Officer of SLM. Stan Lee received the agreed upon

compensation for his performance as an employee of SLM. In addition, he was issued and received 3.6 million"founders" shares in SLM in consideration for his rights assignment. The stock was worth more than $10million based on the trading value of the stock in Sep 1999. The stock was worth $100 million based on thetrading price of $29 share in Feb 2000. In early 2000 Paul transferred $510,000 in free trading shares to Leethrough his daughter and paid Lieberman on lee's behalf more than $250,000 on behalf of the company.1

Except for a Modification and Ratification letter enhancing the terms of the agreement for the company's

benefit, Stan Lee has never made any effort to challenge the continued validity and vitality of the AssignmentIn fact, in references made and assets transferred under the Sale of Assets Agreement, Stan Lee ratified the

uninterrupted validity of the Agreement through relying on it to attempt to regain his name and likeness, and toexcuse his exclusivity of services which by his actions confirmed his acceptance of its application to him.

Ratification of the Assignment

On October 19, 1999, the SLM Assignment was modified and re-ratified by Stan Lee acting with advice offinancial and legal counsel. The Assignment was incorporated into SLMs March 30, 2000, 10K Annual Reportas filed with the S.E.C. In addition to incorporating the Assignment into SLEs 10K Annual Report, anAmendment to Employment Agreement/Rights Agreement was also included (the Amendment). A copy of

1 See Demand Letter from Peter Paul to Stan Lee.

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the Amendment is attached hereto as Exhibit F. The Amendment references that SLM is SLEs successor ininterest to the original Assignment from Stan Lee to SLM.

C. Marvel/Stan Lee Contract

In November 17, 1998, Marvel and Stan Lee entered into a non-exclusive Employment Agreement for whichStan Lee received a ramped up compensation restoring his $1 million a year salary for his life, $500,000 for thelife of his wife should she survive him, and $100,000 a year for five years thereafter for his only daughter. Stan

Lee was allowed to spend 90% of his time working in any competitive endeavor and use references to hisMarvel creations to compete with Marvel. Stan Lee was uniquely-(over any other marvel employee)-granted a10% profit participation in the profits derived from all TV and movie exploitation of his characters and he was

allowed to continue to independently write and syndicate a newspaper comic strip of Spider Man and receivedirectly from the publisher $175,000 a year in addition to his million dollar a year salary (the MarveContract). A copy of the Marvel Contract is attached hereto as Exhibit G.

SLM did not ratify or have any knowledge of the terms of the Marvel Contract, which was at all times hiddenfrom the world by Stan Lee and Marvel.

The Marvel Contract was expressly conditioned upon and relied on Stan Lee's assignment of all creative rightsStan Lee ever owned, and continued to own as of November 1, 1998, and his forbearance to ever sue upon thoserights, whatever they were. Such assignment was never disclosed to SLM, or Marvels shareholders and

creditors, during its pre-bankruptcy existence.

A material provision of the Marvel Contract was the following: Stan Lee warranted that he had all his creativerights and that he never made any previous assignment of those rights.

For example, in paragraph 5(a) of the Marvel Contract, Stan Lee agreed to assign, convey, and grants (withoutrepresentations or warranties of any kind except as set forth herein) to Marvel forever throughout the universe

all right, title, and interest solely and exclusively which you may have or control [] to any of the following.The Marvel Contract then defines various intellectual property rights. In addition, paragraph 5(b) of the MarvelContract adds: you hereby warrant that you have not assigned, licensed, pledged or otherwise hypothecated[] any of the Property and Rights to anyone other than Marvel, its affiliates, predecessors or their designees

and will not do so in the future.Between November 1998 and November 2002, Marvel failed to disclose the Marvel Contract to its shareholdersor the S.E.C., or lenders of half a billion dollars to whom Marvel warranted that it knew of no claims

whatsoever against any of its collateral. In addition, Stan Lee failed to provide SLM shareholders with a copyof the Marvel Contract, thereby failing to disclose the second rights assignment to Marvel made in the MarvelContract.

Marvel's first disclosure of the Stan Lee Employment Agreement occurred in its 10Q filed in November 2002with the S.E.C., as a result of Lee's threatened litigation under the 10% profit for TV and Movie clause in thatagreement.

D. SLM Chapter 11

On December 19, 2000, SLM was forced to close operations for lack of operating funds.

On February 7, 2001, SLM filed for Chapter 11 protection as Debtor in Possession (DIP). Junko Kobyashi

served as the DIP representative. While DIP representative, Kobyashi, became the CFO and Treasurer of POWin 2002 with Lieberman and Lee serving as directors and officers. In 2002, Kobyashi permitted SLM to beadministratively dissolved by the State of Colorado for failure to maintain a resident agent in the state. From2002 though 2006, Kobyashi, without notifying the secured creditor DIP lender, WildBrain, which retained asecurity interest in all assets of SLM including those purportedly sold to SLC, continued to transfer assets to

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POW and its subsidiary QED while avoiding efforts by other asset purchasers to purchase the remainingpersonal property in the SLM Estate. As stated in more detail below, during November 2006, after the courtdismissed the bankruptcy protection for cause and pursuant to the non-objection of the DIP, SLM shareholdersrevived the company in Colorado, called the first ever meeting of shareholders in December 7, 2006, andappointed new officers and directors.2

The Schedule of Assets, Personal Property Schedule B, filed by the DIP in the bankruptcy proceedingsintentionally hid the Stan Lee October 15, 1998 Assignment even though such Assignment was referred to as

the company's primary asset included within SLMs 10K Annual Report (the Schedule)(Exhibit H). Duringsuch time, Ken Williams, who remained President and CEO of the DIP, attempted to reorganize SLM andobtain all SLMs hidden intangible property assets free of creditors and shareholders. Ken Williams hid theprimary asset of SLM-(the Assignment)-during the bankruptcy proceedings. Peter Paul foils Ken Williamsattempt to buy the assets out of bankruptcy by issuing a press release in May, 2001, to expose his actions. Theassets were labeled under the term Intangible Property, Copyrights, and Trademarks with the value stated as

undetermined and effectively 0. Peter Paul ensures that the fraud is brought to light.

Asset Purchase Agreement

On November 19, 2002, SLM and SLC (the phantom corporation), entered into an Asset Purchase Agreementfor the sale acquisition of certain assets as described therein (the Asset Purchase Agreement). A copy of the

Asset Purchase Agreement is attached hereto as Exhibit I.The sale of assets was structured by the DIP while in bankruptcy. The sale originally intended to close on

November 19, 2001 by and between SLM and SLC. The Sale of Assets Agreement was amended on January20, 2002. Prior to the execution of the Sale of Assets Agreement, WildBrain demanded an Amendment be madeto include a re-conveyance right for both SLM and WildBrain should minimal benchmarks in performance andpayment under the agreement not be made (the Re-conveyance)(Exhibit J). This re-conveyance constitutedvaluable rights after default by SLC as purchaser which was also hidden from the SLM Estate.

The assets transferred to SLC under Asset Purchase Agreement include Stan Lee's name, Stan Lee's releasefrom the exclusivity under the Assignment of October 1998 and the Accuser and Drifter character franchises

Benchmarks agreed by SLC in performance of Asset Purchase Agreement required three "deals in production"

by September 2003 or SLM has right to demand re-conveyance of all assets from SLC by written demand forre-conveyance at no cost within 30 days from notice. Such benchmarks were never achieved, yet DIP neverexercised re-conveyance rights under Asset Purchase Agreement to recover the assets as provided in theagreement. WildBrain automatically retained these re-conveyance rights if SLM abandoned them. WildBrainalso had the right to consent to any transfer of these assets, and retained a priority security interest in all assets

sold under the Sale of Assets, which has never been released.

The Accuser and Drifter were transferred to POW by SLC in 2004, then inexplicably transferred again fromSLM to QED in July, 2006, without any notice to the creditors the Court or WildBrain, a month before POWannounced deal with Sprint Mobil, on September 2006, to launch Mobil animation network with the Accuserand Drifter.

2 Secondary Transfer of Asset: The only other direct transfer of assets attempted by SLM was a secret transfer of theassets that have now become the subject of the copyright infringement suit brought by Stan Lee and QED and POW. Thattransfer was made by the DIP for Stan Lee Media of Delaware on July 31, 2006, for which no Bankruptcy court approvalwas apparently obtained. There is no reference to any action on the docket sheet based on date of the Assignment recordedwith copyright office. No notice of this transfer was given to the priority secured creditor DIP lender who retained asecurity interest in the assets. The transfer from SLM to QED was executed by DIP representative Kobyashi as "agent" for

SLM, the Delaware Company while she was also Treasurer and CFO for QED's parent. The conflict of interest was neverdisclosed either. The other problem with this is that SLM Delaware was merged into SLM Colorado in July, 1999, and its

assets were acquired by SLM of Colorado so it could not on its own transfer clear title all other things being equal.

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POW, which Stan Lee took public in 2004 and QED, a subsidiary of POW, were both formed in Delaware onNovember 8, 2001. Such information was never disclosed to creditors.

Order Granting Sale of Assets

On April 9, 2001, the United States Bankruptcy Court entered an order authorizing DIP financing (the Order

of Financing). The Order of Financing is attached hereto as Exhibit K.

On April 11, 2002, the bankruptcy court approved the Sale of Assets to Stan Lees phantom holding company,SLC, subject to the WildBrain re-conveyance clause and a retained first lien by SLM and WildBrain in allassets until fully paid along with a right to approve any transfers of assets from SLC. However, SLC secretlyconveyed all rights to Stan Lees new public company, POW. The conveyance from SLC to POW violated theOrder Granting Sale of Assets (the Order Granting Sale of Assets). A copy of the Order Granting Sale ofAssets is attached hereto as Exhibit L.On April 11, 2002, Stan Lee signs a Sale of Assets Agreement with

Stan Lees new holding company, SLC. SLC warrants that it is a limited liability company duly formed underthe laws of the State of California. Stan Lee signs the agreement as president of the SLC.

Paragraph 11 of the Sale of Assets states that a security interest is retained by SLM and WildBrain (ExhibitM). This security interest was never released, nor were the re-conveyance rights.

Emergence of SLM from Bankruptcy

In January 2006-a private group backed by Chris Belland, SMASH LLC, offers $100,000 for remaining assets

of the SLM Estate. DIP lawyer Golubchik refuses to submit offer to creditor's committee and refuses to allowinspection of remaining property so purchasers can confirm value of remaining assets and modify upward itsoffer. Immediately thereafter Golubchik and Kobyashi stop communicating with purchaser group's attorneybankruptcy counsel Steven Schwaber in Los Angeles. In March, 2006, Golubchik secretly structures a deal withthe creditor-warehouse that housed the remaining property and books and records were suddenly removed.

March, 2006- Marvel attorney notifies James Nesfield, who was soliciting investment in a fund to acquireWildBrain's DIP loan, to cease and desist from disparaging Marvel's rights to its character properties byslanderous statements that Marvel defrauded lenders and the estate of SLM with rights assigned by Stan Lee.Marvel never follows up demands and threats and has remained silent ever since.

November 15, 2006- Shareholders grant 5 million plus voting proxies (of 11,150,000 issued, outstanding andeligible to vote) to Nesfield President who is thereby appointed interim director and President of SLM to takeall actions necessary and reasonable protect it from malfeasance by DIP Kobayashi and attorney Golubchikafter a motion is filed in bankruptcy October 7, 2006, to authorize destruction of all books, records andremaining property of the company. Company is revived in Colorado by Nesfield on behalf of shareholders

after DIP allowed it to be dissolved by Secretary of State in Colorado. Shareholder meeting called pursuant toBylaws for December 7, 2006.

Shareholder meeting called December 7, 2006. A copy of the resolution passed at the Shareholders meeting is

attached hereto as Exhibit N.

November 20, 2006-SLM is revived from administrative dissolution in Colorado. Nesfield takes control ofSLM. He has never transferred any assets or the Assignment. Ownership of the Assignment is perfected inCopyright Recordation on November 28, 2006.

November 28, 2006-SLM records the October 15, 1998 Assignment with the U.S. Copyright Office to perfectits priority interest in Stan Lees co-creator rights to Spider Man, X-Men, etc. SLM obtains a Certificate of

Recordation from the United States Copyright Office for the Assignment and other characters created by Stan

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Lee. (Exhibit O).

December 7, 2006- Shareholder's meeting appoints new directors and officers, recapitalizes company withreverse stock split. Shareholders decide to recover and assert all assets and claims. The company ratifies allactions taken by shareholders and interim officers and directors on behalf of all shareholders.

SLM: Final Bankruptcy Dismissal

In Case No. SV-01-11329-KT, Notice of Non-Opposition to Dismissal of Chapter 11 Bankruptcy Cases, SLMwas dismissed from bankruptcy with the court stating that there are no assets brought into the estate [] whichmay benefit creditors. (Exhibit P). Schedule B-Personal Property in Case No. SV-01-11329-KT, states that

there is an unknown value as to the patents, trademarks, copyrights, licensing rights and other intangibles ofSLM.

E. Stan Lees Suit with Marvel

In November 2002, Stan Lee sued Marvel under the November, 1998, Marvel Contract for 10% of profits from

television and movie revenues (the Marvel Suit). Estate of SLM in Chapter 11 is not advised of such suit orthat Stan Lee transferred intellectual property rights to Marvel. Marvel never defends against Stan Lee's claims

or refuses the $15 million secret settlement based on the obvious defense that the Marvel Contract was voidbecause of the previous October, 1998 Assignment from Stan Lee to SLM.

In April 2005, Marvel settles the Marvel Suit with Stan Lee for a secret amount, approximately $15,000,000.00.A day later, Marvel announces a contract with HSBS for $500,000,000.00 secured credit line for Marvel toproduce its own movies. Stan Lees character franchises are principal assets used as collateral for the loan from

HSBC to Marvel. Marvel warrants as part of loan agreement that it knows of no claims against collateral.

On January 17, 2005, the United States District Court for the Southern District of Virginia, issued an Opinion inStan Lee v. Marcel Enterprises, Inc., and Marvel Characters, Inc. 02 Civ. 8945 (RWS) (the Opinion)(ExhibitQ).

F. Deposition of Stan Lee

In a deposition of Stan Lee, dated February 23, 2005, Stan Lee claims that he intended to convey all rights he

owned at the time to SLM (the Deposition). A copy of the Deposition is attached hereto as Exhibit R. PeterPaul had a lawyer depose Stan Lee in reference to the Marvel Contract. The Deposition was taken 2 monthsbefore Stan Lee announced his $15 million secret settlement with Marvel.

III. SLMs Principal Assets as of January 2007

The newly reorganized Stan Lee Media Inc of Colorado was dismissed from bankruptcy in December, 2006

and presently owns various assets and causes of action, including:

A. The Assignment, dated October 15, 1998, which was never published ordescribed in SLMs bankruptcy filings. This includes rights to Stan Lee's name,signature slogans and Stan Lee Presents. The rights to Stan Lee's name and StanLee Presents are currently being used by Marvel and by Starz Channel of Liberty

Media based on fraudulent transfers out of the Estate.

B. A claim for conversion of Stan Lee's IP rights, owned by SLM. Stan Lee obtaineda settlement of $15 million from Marvel in April, 2005 based on a fraudulentlyobtained "secret" contract with Marvel in November, 1998 that attempted to re-

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convey Stan Lees IP rights, which Stan Lee previously conveyed to SLM in theAssignment, dated October, 1998.

C. Claim to all of Stan Lee's co-creator's interests in the principal characterfranchises owned by Marvel, including Spider Man and X-Men. Other claimsregarding fraudulent conveyances from the bankruptcy estate from 2001-2006

also exist in which Stan Lee has personal liability.

D. 7th Portal- produced in 22 "webisodes" used on internet and by FOX Kidschannel in South America. Most successful new super hero team to be created byStan Lee in 30 years, copyrights and Trademarks owned by SLM challenged by

two writers who let Stan lee read their script in 1995, when SLM went intoChapter 11. Such suit settled by Stan lee and never defended in court. Paramounttheme parks paid settlement of $500k to these writers for use of 7th Portal as a 3Dride attraction in five of their theme parks. Such characters and names are ownedby SLM and were excluded from estate inventories and reports.

E. The Accuser and The Drifter. Such characters were produced in 16 "webisodes"of 3-5 minutes each. The characters were sold under the Sale of Assets

Agreement to SLC. Such assets were then transferred to Stan Lee's new publiccompany, POW Entertainment in 2005. The assets were then transferred by SLMto QED in July 2006 and licensed to POW for a deal with Sprint Mobil.

F. Excelsior!, which is a Biography of Stan Lee and published by Simon andSchuster in 2002. SLM is entitled to 50% of all royalties of the book.

G. DC Comics deal with Stan Lee reinventing all major DC super heroes for a seriesof DC comics entitled, What If Stan Lee created...." Revenues never disclosed toSLM and may be owned by SLM.

H. Warner Bros. movie contract for Conan the Barbarian to be produced by theWarchovsky Brothers. A $2 million pay or play option contract with SLM inOctober 2000 was never disclosed. Conan rights were "settled" by SLM in bankruptcy through Arthur Lieberman who was a control party in Conanoriginally and refused money that would resolve dispute over Conan purchase by

SLM.

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