Unassociated Document


    Exhibit
      10.4

     

    Co-Development,
      Financing and Production Agreement

    


    


    The
      following sets forth the agreement dated as of November 3, 2006 between Platinum
      Studios, Inc. (“Platinum”) and Arclight International PTY,
      LTD.  (“Arclight”) with respect to the co-development, financing and
      production of certain motion picture projects (each a “Picture”) based on
      certain Platinum comic book properties as set forth below.  Platinum
      and Arclight are each a “Party” and collectively the “Parties.”

    


    
      	
              1)  

            	
              Properties.  Platinum
                is the owner of motion picture rights in the
                following  properties (each a “Property” and collectively the
                “Properties”):

            


    

    


    
      	
              a)  

            	
              THE
                WITCHBLADE (“Witchblade”)

            


    

    
      	
              b)  

            	
              THE
                DARKNESS (“Darkness”)

            


    

    
      	
              c)  

            	
              DYLAN
                DOG aka DEAD OF NIGHT (“Dead of
                Night”)

            


    

    
      	
              d)  

            	
              THE
                HUNTER

            


    

    
      	
              e)  

            	
              GHOSTING

            


    

    
      	
              f)  

            	
              HIVE

            


    

    
      	
              g)  

            	
              MAL
                CHANCE

            


    

    
      	
              h)  

            	
              YOUNGBLOOD

            


    

    


    
      	
              2)  

            	
              Purpose.  The
                Parties intend to develop, finance, co-produce and distribute at
                least
                eight Pictures based on said Properties over a period of Five (5)
                years,
                with per picture budgets in the range of $6,000,000 to $12,000,000
                dollars
                (“Range”).  Upon mutual agreement by the Parties, the budget for
                a Picture may be increased or decreased outside the Range on a case
                by
                case basis.

            


    

    


    
      	
              3)  

            	
              Development
                and Financing.  The Parties intend to mutually develop and
                produce each Picture based on a Property.  Platinum intends to
                provide the Properties on which the Pictures shall be based, and
                Arclight
                shall provide the financing and international distribution for such
                Pictures via its international sales arm.  In addition, Arclight
                agrees to engage Havenwood Media, LLC to shall furnish the producing
                services of Steve Squillante to assist in development, budgeting
                and
                overseeing physical production of each Picture.  Arclight agrees
                to use best efforts to finance each Picture via Arclight’s financing
                arrangement with GE Capital or alternative sources.  The Parties
                also intend to access “soft money” deals where available as part of the
                Picture financing.  A pro forma waterfall of gross receipts from
                a Picture is attached as Exhibit A
                hereto.

            


    

    


    
      	
              4)  

            	
              Domestic
                Distribution.  The Parties shall mutually determine how to
                pursue domestic distribution for each Picture, although the sales,
                fulfillment and delivery of such a sale to domestic distributor shall
                lie
                with Arclight.  It is understood that Arclight is required to
                obtain theatrical domestic distribution as a condition to accessing
                the GE
                Capital fund and is actively pursuing such
                distribution.   The titles are intended for theatrical
                release, but the Parties acknowledge that those not suited for such
                release may be licensed for direct to video or special cable premiere
                slots.  The Parties shall use test screenings, etc. to determine
                the optimal release strategy for each
                Picture.

            


    

     

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    
 

    
      	
              5)  

            	
              Development
                and Selection of Properties.

            


    

    


    
      	
              a)  

            	
              Initial
                Development Properties.  The Parties have selected the
                following Properties as the first Properties to be developed for
                production under this agreement.  Such Properties are Dead of
                Night, The Witchblade, Ghosting, and The Darkness (the “Development
                Properties”).  The Properties not identified as the Development
                Properties are the “Additional Properties.”  During the first
                three years of the “Term” (as defined below)  of this Agreement,
                each time a Development Property commences principal photography
                hereunder, the parties shall mutually select an Additional Property
                to be
                deemed a Development Property, and Platinum, in consultation with
                Arclight, shall select another Platinum property as an Additional
                Property.

            


    

    


    
      	
              b)  

            	
              Development
                Commitment.  The term of this Agreement (“Term”) shall
                commence as of the date of this Agreement and end five (5) years
                from the
                date hereof, unless earlier terminated as set forth
                herein.  During the Term Arclight agrees to engage writers
                (subject to Platinum’s approval rights in Section 5(f) below) to develop
                screenplays based on the Development Properties and provide other
                related
                development money for budgeting, location scouting,
                etc.  Arclight has already committed funds to develop Dead of
                Night and The Witchblade, and agrees to commit a similar amount to
                develop
                Ghosting and The Darkness.  At all times during the Term,
                Arclight agrees to have at least two (2) Properties in active development
                (meaning that Arclight shall have committed development funds to
                such
                Properties and shall be actively trying to get them into
                production).  If at any time Arclight does not have two (2)
                Properties in active development, then Platinum shall give written
                notice
                thereof to Arclight, and Arclight shall have 30 days to commence
                active
                development as required herein.  If Arclight does not commence
                such active development, then Platinum shall have the right to terminate
                this agreement.

            


    

    


    


    
      	
              c)  

            	
              Platinum
                Exclusivity Commitment.  In consideration for Arclight’s
                commitment of such development funds and Arclight’s other obligations
                under this Agreement, Platinum agrees to exclusively develop the
                Development Properties with Arclight during the Term.  In
                addition, during the Term, Platinum agrees not to actively “shop” any
                Additional Properties, but if any third party expresses an interest
                in
                developing, producing, licensing rights in or purchasing rights in
                any
                Additional Property, Platinum shall notify Arclight of such interest
                in
                writing.  If Arclight and Platinum are unable to come to any
                agreement with respect to such Additional Property (within 5 business
                days) Platinum shall be free to enter into an agreement with such
                third
                party and such Additional Property shall be excluded from this
                Agreement.

            


    

     

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    
 

    
      	
              d)  

            	
              Termination.  If
                at the end of the first year of the Term no Properties have commenced
                principal photography hereunder, Platinum shall have the right to
                terminate this Agreement; provided if the Parties are in “Pre-Production”
                with respect to one or more Development Properties (defined as Arclight
                backing  pay or play offers to lead actors, or in active
                “pre-production” as such term is commonly understood in the entertainment
                industry  - i.e., there is a detailed budget for the Picture and
                Arclight is actively scouting locations, identifying key crew and
                a
                director is attached) then the Term shall be extended for the length
                of
                the Pre-Production period but in no event for more than six additional
                months.  Thereafter, if during any twelve month period no
                Picture commences principal photography, Platinum shall have the
                right to
                terminate this agreement (i.e., an additional Picture must commence
                principal photography under this agreement no later than twelve months
                after the commencement of principal photography of the immediately
                preceding Picture on a rolling basis or Platinum shall have the right
                to
                terminate this agreement); provided if at the time Platinum elects
                to so
                terminate this Agreement one or more Properties are in Pre Production,
                then this Agreement shall continue only for the lesser of an additional
                six (6) months or the period of such Pre-Production, but only with
                respect to such Projects in Pre-Production, and this Agreement shall
                terminate with respect to all other
                Properties.

            


    

    


    
      	
              e)  

            	
              Reversion.  At
                such time as this Agreement is terminated for any reason, then all
                right,  title and interest of Arclight or its affiliates in the
                Properties, including all right, title and interest of Arclight or
                its
                affiliates in any screenplays, budgets, and development materials
                commissioned or owned by Arclight or its affiliates, shall automatically
                revert to Platinum, subject to a lien in favor of Arclight in an
                amount
                equal to  110% of all of Arclight’s (or it’s affiliate’s) actual
                out of pocket script development costs paid in connection with the
                development of such Property but only for scripts actually utilized
                by
                Platinum, payable on the first day of principal photography of any
                picture
                incorporating the Arclight material (provided it is understood that
                Platinum shall not be required to reimburse Arclight for use of Arclight
                material that comprises modifications to characters already found
                in the
                Property or “generic” storylines common in comic book adaptations unless
                such use incorporates detailed storylines or actual use of substantial
                portions of any script paid for by Arclight); provided further, it
                is
                understood that rights in produced Pictures shall continue per the
                terms
                for that particular Picture.

            


    

    


    
      	
              f)  

            	
              Controls
                and Approvals.  During the Initial Period (as it may be
                extended pursuant to the terms of this agreement), the Parties shall
                mutually determine how to develop the Development
                Properties.  All decisions regarding development, financing, and
                distribution shall be made mutually.  Notwithstanding the
                foregoing, neither party shall submit a Development Property to any
                agencies, talent, studios, third party financiers or other entities
                without the consent of the other party.  In connection with
                Arclight’s funding of development for the Development Properties, all
                attachments, writer agreements and terms thereof shall be subject
                to the
                prior written approval of Platinum, which approval shall not be
                unreasonably withheld, and if Platinum fails to respond to any written
                request for approval within five (5) business days such approval
                is
                requested, such matter shall be deemed approved and Arclight will
                promptly
                give Platinum notice in writing of such deemed
                approval.  Arclight shall submit drafts of all agreements prior
                to execution and no attachments to any Property shall survive the
                termination of this Agreement without the written consent of
                Platinum.

            


    

     

    
 

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    


    
      	
              6)  

            	
              Licensed
                and Reserved Rights.  Platinum has advised Arclight that due
                to the interweaving of characters and storylines and other intellectual
                property elements within the Properties, the specific grant of rights
                for
                a particular Property shall be sufficient to grant the rights required
                to
                produce, distribute and exploit each Picture on a worldwide basis,
                but
                character, sequel, and other related rights shall be reserved by
                Platinum
                as Platinum determines in good faith is advisable.  Upon
                financing of a Picture based on a Property under this agreement (or
                at
                such earlier time as the Parties mutually agree is necessary or advisable,
                Platinum shall execute an assignment of rights into a special purpose
                production entity for such Picture and at such time the definition
                of
                rights to be contributed by Platinum shall be
                negotiated).  Notwithstanding the foregoing, Platinum’s reserved
                rights shall in any event include (a) all publication rights, (b)
                theme
                park rights, (c) all animation rights, (d) all interactive rights
                whether
                or not game oriented (including video games, online games, games
                and other
                non-theatrical entertainment on any device or though any delivery
                method),
                (e) live theater and radio rights, and (f) any and all Property based
                rights.  In addition,  Platinum shall have the right
                to use and exploit any new character rights in any Picture produced
                pursuant to this agreement in connection with the exercise of any
                of
                Platinum’s reserved (and/or reverted) rights with respect to any
                Picture.

            


    

    


    
      	
              7)  

            	
              Rights
                Fees To Platinum.  Because of the unique nature of each
                Property, and  because certain Properties such as WitchBlade,
                Darkness and Youngblood have  additional participants entitled
                to compensation for exploitation of such rights, Platinum and Arclight
                shall negotiate in good faith the license fee to be paid to Platinum
                for
                the rights for each Property.

            


    

    


    
      	
              8)  

            	
              Producing
                Fees and Participation.  Platinum and Arclight shall each
                take an equal producer fee out of the budget of each
                Picture.  Arclight agrees to engage Havenwood Media, LLC to
                furnish the non-exclusive services of Steve Squillante to render
                producing
                services for each Picture and Arclight and Platinum shall bear on
                a 50/50
                basis all fees and participation payable to Havenwood Media for the
                services of Steve Squillante.  Havenwood Media’s fees and
                participation are as follows: 2.5% of the budget (which is 1.25%
                from
                Platinum and 1.25% from Arclight.  Havenwood Media shall be
                entitled to receive 5% of the profits of each film, subject to the
                same
                definitions, terms and conditions applicable to Arclight and
                Platinum.  Arclight shall provide the non-exclusive services of
                Harrison Kordestani (subject to his other professional obligations)
                and in
                connection therewith the special purpose production entity for a
                Picture
                shall enter into a separate agreement with Kordestani’s loanout company
                for his producing services, with such fees and contingent compensation
                to
                be negotiated in good faith.  Platinum shall provide the
                non-exclusive services of Scott Rosenberg (subject to his other
                professional obligations) and in connection therewith the special
                purpose
                production entity for a Picture shall enter into a separate agreement
                with
                Rosenberg’s loanout company for his producing services, with such fees and
                contingent compensation to be negotiated in good faith.  It is
                anticipated that the total producing fees to be split between Arclight
                and
                Platinum (inclusive of Rosenberg and Kordestani) shall be no more
                than 8%
                of the ingoing budget of each Picture (inclusive of third party producer
                fees, if any).

            


    

     

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    
 

    
      	
              9)  

            	
              Distribution
                Fees and Expenses for Arclight.  In consideration for
                Arclight’s services as international sales agent for a Picture produced
                under this agreement, Arclight shall earn a 20% sales fee on all
                foreign
                sales it makes, 1⁄2 of which shall be payable on a non deferred basis and
                one half shall be deferred behind the financing.  In addition,
                Arclight shall be entitled to recoup its marketing expenses in connection
                with each picture “off the top” ahead of its sales fee and the
                financier.  It is anticipated that the marketing budget for each
                Picture will be $150,000 to $250,000 including preparation of one
                sheet,
                trailer, etc. and shall include a “market charge” to Arclight of [$35,000]
                in lieu of any recoupable costs for attending film markets, general
                overhead, cost of promotion of Arclight’s slate as a whole,
                etc.

            


    

    


    
      	
              10)  

            	
              Profits.  Arclight
                and Platinum agree to split on a 50/50 basis all profits from a Picture
                (with Havenwood’s participation, when payable, off the top per Section 8
                above) and net of all third party costs, financing fees,
                etc.  Exhibit “A” sets forth a pro forma “waterfall” of picture
                receipts.  Platinum shall bear out if its share of profits the
                contingent compensation payable to
                Rosenberg.

            


    

    


    
      	
              11)  

            	
              Credit.  For
                each Picture produced under this Agreement, Each of Platinum and
                Arclight
                shall receive two (2) Executive Producer credits, two (2) Co-Executive
                Producer credits, and one (1) Produced by Credit.  In addition,
                Havenwood Media shall be entitled to one (1) Produced By credit,
                one (1)
                Executive Producer credit, and one (1) Co-Producer credit for all
                Pictures
                for which it renders services.  In addition, subject to the
                approval or Arclight and Platinum, all third party rights holders
                entitled
                to credit shall receive such credit as required by such agreements
                with
                such third parties.  All of the foregoing credits shall be in
                the main titles and in paid ads, subject to customary size and excluded
                ad
                ties, exclusions, etc. with position to be negotiated.  Platinum
                shall also be entitled to an animated company production credit in
                the
                main titles of each Picture and a logo “bug” on one
                sheets.  Each of Platinum and Arclight shall be entitled to
                presentation credits on screen and in paid ads, with position and
                other
                terms to be negotiated in good faith between the parties and the
                domestic
                distributor of the Picture.

            


    

    


    
      	
              12)  

            	
              Sequels/Remakes/Derivative
                Productions.  With respect to any Picture produced under
                this agreement, theatrical sequel, prequel and remake rights shall
                be
                frozen for a five year period from first exploitation of such rights
                (or 6
                1⁄2 years from the commencement of principal photography of such Picture,
                whichever occurs sooner.  With respect to television
                exploitation (including original programming for internet exploitation)
                Platinum shall control such rights; provided Arclight shall be entitled
                to
                a passive payment equal to [5%] of all of Platinum’s fees, rights payments
                and profits received from the exploitation of such rights (it being
                understood, however, that if a television series or other production
                is
                based on rights reserved to Platinum under Section 6 above, the provisions
                of this Section shall not apply).

            


    

    


    
      	
               

            	
              13)
                Merchandising.  For all Picture based merchandising
                rights with the exception of Platinum reserved rights  Arclight
                shall be entitled to an amount equal to twenty five  percent
                (25%) of all non-refundable, non-returnable income received by Platinum
                from the exploitation of such rights after Platinum’s deduction
                “off-the-top” from said Platinum receipts of a 20% distribution fee and
                recoupment of all of Platinum’s direct, out-of-pocket costs and expenses
                incurred in connection therewith including agents and
                legal.  “Picture based” merchandise shall be defined an
                merchandise based solely on the characters and elements that appear
                in the
                Picture, and shall terminate within a customary period of time after
                initial exploitation of the Picture;  Thereafter, all
                merchandising rights in the Picture and the characters therein shall
                be
                deemed reserved rights of Platinum.

            


    

    


    
      	
              14)  

            	
              Key
                Man.  In the event Harrison Kordestanti and Steven
                Squillante are no longer rendering services on behalf of Arclight,
                then
                Platinum shall have the right to terminate this agreement.  Upon
                such termination by Platinum, all properties not greenlit shall revert
                to
                Platinum subject to Section 5(e) above.  Upon termination by
                Arclight, Arclight’s obligations with respect to financing and development
                under this agreement shall terminate.  Notwithstanding the
                foregoing, for any Pictures greenlit prior to such termination, the
                Parties’ rights and obligations with respect to such Picture shall
                continue.

            


    

     

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    
 

    
      	
              15)  

            	
              Assignment.  Neither
                party may assign its rights and obligations under this agreement
                without
                the consent of the other (except to a successor company under the
                same
                management as the current company).

            


    

    


    
      	
              16)  

            	
              Long
                Form Agreements.  The Parties agree to enter into long form
                agreements as and when reasonably necessary (including formal option
                agreements for the rights, producing agreements, financing agreements,
                etc.)

            


    

    


    
      	
              17)  

            	
              Remedies;
                Governing Law.  If either party is in material breach of
                this agreement, then upon written notice by the non breaching party
                to the
                breaching party, the breaching party shall promptly commence to cure
                such
                breach, and cure such breach within 5 business days.  If such
                breach is not cured as set forth above, or if such breach is not
                capable
                of cure, then, in addition to any other rights and remedies under
                this
                agreement, the  non-breaching party shall have the right to
                terminate this agreement.  This agreement and its validity,
                construction and effect shall be governed by the laws of the State
                of
                California applicable to contracts wholly to be performed
                therein.  Any controversy, claim or dispute arising out of or
                relating to this Agreement or the breach, termination, enforcement,
                interpretation or validity thereof, including the determination of
                the
                scope or applicability of this agreement to arbitrate shall be determined
                by confidential binding arbitration in Los Angeles,
                California.  The arbitrator shall be a member of the American
                Arbitration Association (“AAA”) Law Practice Panel of
                Neutrals.  The arbitration shall be administered by the AAA
                pursuant to its Commercial Rules and Supplementary Procedures for
                Large,
                Complex Disputes.  Judgment on the binding arbitration shall be
                final and binding and may be entered into in any court having
                jurisdiction.  As a practical matter, by agreeing to arbitrate,
                all Parties are waiving jury trial. The Arbitrator will render a
                detailed
                written decision. The loser of such arbitration hearing will pay
                the
                associated fees and costs to arbitrate (including, without limitation,
                attorneys’ fees and costs) of the winner. The arbitration process will
                include a customary appeal procedure. In the event of termination
                of this
                agreement by Platinum with or without cause, Arclight shall be entitled
                to
                an action at law for damages (excluding lost profits or consequential
                damages) but in no event shall Arclight be entitled to seek equitable
                relief.  Notwithstanding the foregoing, upon the greenlighting
                of any Picture based on a Property, the remedies of the Parties shall
                be
                as set forth in the agreements regarding the financing and production
                of
                such Picture.

            


    

    


    
      	
              18)  

            	
              Arclight
                shall execute and deliver any further and additional documents which
                Platinum may reasonably deem necessary to carry out and effectuate
                the
                purpose and intent of this Agreement with respect to the reversion
                of
                rights to Platinum hereunder.  If Arclight fails to execute and
                deliver to Platinum any such further documents required of them under
                this
                Agreement within five (5) business days after Platinum's request
                therefor,
                or if Arclight fails to take any action reasonably necessary or reasonably
                desirable to effectuate the purposes of this Agreement (including,
                without
                limitation timely exercise of any rights of Arclight under any agreement
                between Arclight and a third party that pertains to any Property),
                and
                Arclight fails to respond within five (5) business days of Platinum's
                notice or request therefor, then Arclight hereby irrevocably appoints
                Platinum as its attorney-in-fact to execute such documents and take
                any
                such actions.  Said appointment is coupled with an interest and
                shall be irrevocable. Platinum shall furnish copies of all documents
                executed as Arclight’s attorney in
                fact.

            


    

    


    
      	
              19)  

            	
               Each
                party ("Indemnifying Party") hereby indemnifies, defends and holds
                harmless the other party and its successors, licensees, assigns,
                and
                employees, officers and directors (collectively for the purposes
                of this
                Paragraph "Indemnified Party") from and against any and all liability,
                loss, damage, cost and expense, including, without limitation, reasonable
                attorney's fees (but excluding lost profits or consequential damages)
                arising out of any breach or alleged breach, or claim by a third
                party
                with respect to any warranty, representation or agreement made by
                the
                Indemnifying Party herein.  The Indemnified Party shall promptly
                notify the Indemnifying Party of any claim to which the foregoing
                indemnification applies and the Indemnifying Party shall undertake,
                at its
                own cost and expense, the defense thereof.  The Indemnified
                Party may, at its option and expense, engage its own
                counsel.  If the Indemnifying Party fails to promptly appoint
                competent and experienced counsel, the Indemnified Party may engage
                its
                own counsel and the reasonable charges in connection therewith shall
                promptly be paid by the Indemnifying Party.  If the Indemnified
                Party settles or compromises any such suit, claim or proceeding,
                the
                amount thereof shall be charged to the Indemnifying Party, provided
                that
                the Indemnifying Party's reasonable prior approval has been
                secured.

            


    

     

     

    
      
        
        

      

      
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    20.           Marketing
      Plan:  Arclight shall use good faith efforts to carve out a
      percentage of the marketing budget to utilize Platinum’s unique marketing
      strategy and channels.

    


    


    


    


    AGREED
      AND ACCEPTED

    


    PLATINUM
      STUDIOS, INC.

    


    


    BY
      /s/
      Scott Rosenberg

    
      
        

      

    

    ITS
      CEO

    


    ARCLIGHT
      INTERNATIONAL PTY, LTD.

    


    


    BY:
      Harrison Kordestani

    
      
 ITS:
      Principal and its Authorized Signatory


    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    


    


    Exhibit
      A

    


    The
      following is a pro-forma waterfall of Picture receipts.  The
      recoupment position of the equity financier is based on arrangement contemplated
      by Arclight’s agreement with GE Capital.

     

    EXHIBIT
      A

    


    RECOUPMENT
      SCHEDULE

    


    Subject
      to the repayment of any production lender, gap or super-gap financing, and
      collection fee payable to Fintage, all Gross Receipts received into the Fintage
      collection account shall be payable on a continuing and rolling basis as
      follows:

    


    
      	
              (i)  

            	
              First,
                to debt and equity financing (such as GE Capital) until Equity recoups
                its
                negotiated rate (which all parties will be privy
                to.

            


    

    


    
      	
              (ii)  

            	
              If
                necessary, a corridor of recoupement during the equity recoupement,
                to
                Platinum, Top Cow, and/or Awesome Comics of the underlying properties
                for
                the payment of the deferred Rights Fee, if any.  If this payment
                or obligation exists, it shall be recoupable prior or simultaneously
                to
                any fees or commissions to
                Arclight;

            


    

    


    
      	
              (iii)  

            	
              Next,
                to Arclight for payment of the Marketing
                fee;

            


    

    


    
      	
              (iv)  

            	
              Then,
                to Arclight for payment of the 10% non-deferred Sales Agency Fee
                as a
                corridor;

            


    

    
      	
              (v)  

            	
              Then,
                to recoup any other distribution expenses and residual
                payments;

            


    

    


    
      	
              (vi)  

            	
              Then,
                to Arclight, to recoup the 10% deferred Sales Agency Fee (accrued
                from
                first dollar)

            


    

    


    
      	
              (vii)  

            	
              Lastly,
                the balance of all monies payable pari passu as
                follows:

            


    

    
      	
              a.  

            	
              Equity
                investors based on the proportion of the budget that they financed
                (to be
                negotiated);

            


    

    
      	
              b.  

            	
              Profit
                participants on the pictures (i.e., cast, director,
                etc.);

            


    

    
      	
              c.  

            	
              The
                remainder of all monies to be split 50% to Platinum and 50% to
                Arclight

            


    

    


    


    


    


    
      
        
        

      

      
        8