**EXHIBIT10.1**

 

**CO-FINANCE AGREEMENT BETWEEN GRAYMARKPRODUCTIONS, INC.,and JOHN SIMONELLI**

 

Agreement made May 7,2004, by and between Graymark Productions, Inc. (“Company”), and JohnSimonelli  (‘‘Co-Financier’’) regardinga fiscal contribution and contribution of services in consideration ofacquiring the right to share in the profits of a particular motion picture tobe designated by Company (the ‘‘Picture’’) to be produced, in part, by Company.

 

**1. PICTURE; SERVICES**: The Picture shallbe based upon that certain screenplay currently titled “Cloud Nine” written byBrett Hudson, Burt Kearns and Albert S. Ruddy. Co-Financier shall provide consulting services regarding the Picture.However, Company’s decision regarding all aspects of the Picture shall be final.

 

**2.  RECOUPMENT OFINVESTMENT; PROFIT PARTICIPATION**: In consideration ofCo-Financier providing above services and the “Contribution” as defined belowin to the production of Picture, Company shall pay or cause to be paid toCo-Financier the following: 

 

(a) Recoupment ofContribution: One Hundred Percent (100%) of all proceeds, commencing from thefirst dollar, received by Company from the rights sales and distribution of thePicture up to and until such time as Co-Financier is repaid the Contribution infull.

 

(b) Profit Participation:Four Percent (4%) of all Net Profits paid to and received by Company from therights sales and distribution of the Picture. “Net Profits” shall be defined asthe sum remaining after deduction of third-party distribution fees andexpenses, Company’s recoupment of all costs plus interest, production costs,distribution costs, cash deferments to cast, crew and/or producers, equipmentsuppliers, rights holders or any other party. 

 

**3. CONTRIBUTION:** Co-Financier shallprovide a Contribution of One Hundred Thousand Dollars ($100,000)(“Contribution”) to the production of Picture. Upon execution of thisagreement, Co-Financier shall pay the full sum of Contribution to Company.Company shall hold Contribution in escrow until such time as Picture beginsprincipal photography. At such time when Picture begins principal photography,Contribution shall be dispersed to the production account of Picture. Ifprincipal photography has not commenced one (1) year from the execution of thisAgreement, then Contribution shall be returned to Co-Financier and Co-Financiershall not be entitled to the compensation discussed in Paragraph 2 of thisAgreement.

 

**4. REPRESENTATIONS AND WARRANTIES**:Co-Financier hereby represents and warrants to Company that: 

 

(a) Powers andAuthority: It is duly incorporated, validly existing and in good standing. Ithas the corporate power and all necessary rights and title to enter into andperform this Agreement and the transactions contemplated hereby or referred toherein and has taken all necessary action to authorize the entry into andperformance of this Agreement and such transactions. 

 

(b) LegalValidity: This Agreement constitutes a legal, valid and binding obligation ofCo-Financier and is in proper form for enforcement against it. 

 

(c) Non-conflictwith Laws: The entry into and performance of this Agreement and thetransactions contemplated hereby do not and will not conflict with: 

 

(i) any existing law or regulation or any official or judicial order,or 

 

(ii) its articles of incorporation, or 

 

(iii) any agreement or document to which it is a party or which isbinding upon it. 

 

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(c) Consents: Allauthorizations, approvals, consents, licenses, exemptions, filings,registrations, notarizations and other matters, official or otherwise, requiredby Co-Financier or advisable in connection with the entry into, performance,validity and enforceability of this Agreement and the transactions contemplatedhereby by Co-Financier have been obtained or effected and are in full force andeffect.

 

**5. INDEMNIFICATION**:Company and Co-Financier shall, at its own respective expense, indemnify, saveand hold harmless the other party and its successors, licensees, assigns, agents,representatives and affiliates from and against any and all claims, demands,causes of action, obligations, liability, loss, damage, cost and expenses(including reasonable attorneys’ fees), incurred or sustained by reason of orarising out of any breach or alleged breach of any of the warranties,representations or agreements herein made by the respective party, or from anyreliance upon any such warranties, representations or agreements.

 

**6. ACCOUNTING AND REPORTS BY COMPANY**:Company shall render to Co-Financier, on a quarterly basis for the first twoyears after initial distribution of the Picture, a written statement of moniesdue Investor hereunder, if any (‘‘Accounting Statement’’), and such AccountingStatement shall be accompanied by remittance of any amount shown to be due toCompany thereon. Thereafter, Accounting Statements and payments shall beprovided annually for as long as the Picture generates revenue. If any error ismade by Company in any Accounting Statement, it may be corrected by Companywithin two years thereafter by making any necessary deductions or additions onsubsequent Accounting Statements, or at Company’s option by the rendering of anAmended Accounting Statement. Each Accounting Statement shall be renderedwithin *sixty (60)days* following the end of each accounting period. Any AccountingStatement rendered by Company hereunder shall be deemed conclusively true andcorrect and binding upon Co-Financier, shall constitute an account stated andbe incontestable unless Co-Financier delivers to Company in writing specificobjections, setting forth specific transactions or items objected to and thebasis of such objections, within sixty (60) days from the date such AccountingStatement was received by Co-Financier. 

 

**7. RELATIONSHIP OF PARTIES**:Company and Co-Financier each acknowledge that they are independent contractorsand that no partnership, joint venture, agency or employment relationship hasor will be created by this Agreement. 

 

**8. NOTICES**: Allnotices hereunder shall be in writing and shall be served by personal deliveryto Company or Co-Financier, as the case may be, [or by facsimile transmission,with a copy sent by U.S. Mail] or by registered or certified mail, returnreceipt requested, or by telegram, addressed as follows: 

 

To Company: 101N.Robinson, Ste 920, Oklahoma City, OK 73102; with a courtesy copy to: Cohen & Gardner LLP, 329 NorthWetherly Dr.,  Ste 206, Beverly Hills,CA 90211 Attn: Jonathan Gardner Esq. 

 

To Co-Financier: 

 

Any party maychange its address at any time by written notice to the other parties. Noticesserved by mail shall be deemed to be served *three (3)* business days nextfollowing deposit in the U.S. mails, (in the case of facsimile on the day oftransmission).

 

**9. ASSIGNMENT**: No party hereto shallhave the right to assign all or any part of its right or obligations hereunderwithout the prior written consent of the other party, except that nothingcontained in this sentence shall prevent any party from assigning its right toreceive monies hereunder after providing written notice to the other party. 

 

**10. AMENDMENTS**: This Agreement may notbe modified except by written agreement signed by each of the parties hereto. 

 

**11. NO THIRD PARTY BENEFICIARIES**: ThisAgreement shall in no event be construed as a third party beneficiary contractand is not intended for the benefit of any person or company whomsoever exceptthe parties hereto. 

 

**12. WAIVER**: No waiver by one party of abreach or default by the other party shall be deemed to be a waiver of anypreceding, continuing or succeeding breach of the same or any other provisionof this Agreement.

 

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**13. ENTIRE AGREEMENT**:  Each party acknowledges that norepresentation or warranty not expressly set forth in this Agreement has beenmade or relied upon by the other party, it being agreed that this Agreementconstitutes the entire Agreement of the parties regarding the subject matterhereof and supersedes all prior Agreements with respect thereto. 

 

**14. GOVERNING LAW**: This Agreement hasbeen entered into in the State of Oklahoma and shall be construed and enforcedunder and subject to the laws of said state. 

 

**15. ARBITRATION**: Should there be anydispute between the parties concerning the interpretation of this Agreement orconcerning an alleged breach of this Agreement, which the parties are unable toresolve after consultation with each other, such dispute shall be decided byarbitration pursuant to the regulations and procedures of the American ArbitrationAssociation. 

 

**16. ATTORNEYS’ FEES**: In any action orproceeding between or among the parties hereto to interpret or enforce any ofthe provisions hereof, the prevailing party shall, in addition to any otheraward of damages or other remedy, be entitled to reasonable attorneys’ fees andcosts. 

 

Wherefore, the partieshave executed this agreement on the date first above written.

 
| AGREED & ACCEPTED:     |
|----------------------------|
|                       |
| GRAYMARK PRODUCTIONS  INC. |
|                       |
| By:                        | /S/HARRY GRAY  FREDERICKSON, JR. |   |
|                       |   |   |
| Its:                       | Chief Execution Officer |   |
|                       |   |   |
| /S/ JOHN SIMONELLI         |   |   |
|                            |  |  |  |

 

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