formsb2.htm

We are an entertainment company that works with independent comic book creators and small publishers to form one of the world’s largest independent libraries of comic book characters which it adapts and produces for all forms of media. Our library contains more than 3,800 characters in a full range of genre and styles. With deals in place with the largest entertainment and new media players, we are a recognized leader in the creation of new content across all media. Our Digital Publishing division is the company’s newest distribution outlet created to maximize revenue opportunities from its intellectual properties.

OUR BUSINESS

We are focused on adding titles and expanding its already substantial library with the primary goal of creating new franchise properties and characters. In addition to in-house development and further acquisitions, we are developing content with the talent and star power of professionals outside the realm of comic books. We have teamed up with top screenwriters, producers, directors, movie stars, and novelists to develop entertainment content and potential new franchise properties. Our core brand offers a broader range of storylines and genres than the traditional superhero-centric genre. Management believes this approach is maintained with Hollywood in mind, as the storylines offer the film industry fresh, high-concept brandable content as a complimentary alternative to traditional super hero storylines.

Over the next several years, we are working to become the leading independent comic book commercialization producer for the entertainment industry across all platforms including film, television, direct-to-home, publishing, and digital media, creating merchandising vehicles through all retail product lines. This will allow us to maximize the potential and value of its owned content/content creator relationships and acquisitions, story development and character/franchise brand-building capabilities while keeping required capital investment relatively low.

We were founded as a California Limited Liability Company on November 20, 1996. On September 15, 2006, we filed Articles of Incorporation with Statement of Conversion to convert to a California stock corporation. The Plan of conversion provided for the issuance of an aggregate of 135,000,000 shares to the former members of the Limited Liability Company. Our principal offices are located at 11400 W. Olympic Blvd. Suite 1400, Los Angeles, CA 90064 and our phone number is (310) 807-8100.

The Offering



Common stock offered by selling stockholders		Up to 66,255,825 shares, including the following:

		- up to 49,047,250 shares of common stock issued prior to the date of this prospectus to certain of the selling stockholders pursuant to certain Subscription Agreements in October 2006 for an aggregate purchase price of $4,904,725, and
		- 17,208,575 shares of common stock issued prior to the date of this prospectus to a selling stockholder pursuant to an agreement dated July 1, 2007 in consideration for relief of long-term debt of $1,625,000 plus interest of $95,858.

		This number represents 32.92% of our current outstanding stock.

Common stock to be outstanding after the offering		Up to 201,255,825 shares

Use of proceeds		We will not receive any proceeds from the sale
		of the common stock.

The above information regarding common stock to be outstanding after the offering is based on 201,255,825 shares of common stock outstanding as of August 27, 2007, which includes the shares being offered by the selling stockholders in this prospectus as such shares were issued to the selling stockholders by us upon completion of the private placement dated October 12, 2006, as applicable. Additionally, the amount includes 17,208,575 shares issued pursuant to a cancellation of indebtedness agreement dated July 1, 2007.

TRANSACTIONS BEING REGISTERED IN THIS PROSPECTUS

In October 2006, we entered into Subscription Agreements with various accredited investors (the “October 2006 Private Placement”) pursuant to which the investors subscribed to purchase an aggregate amount up to $4,904,725 in shares of our common stock, or a total of 49,047,250 shares, which we issued to the selling stockholders prior to the date of this prospectus. We granted registration rights to our investors in our October 2006 Private Placement.

On July 1, 2007, we entered into a Cancellation of Indebtedness Agreement with CEO Scott Mitchell Rosenberg, pursuant to which we agreed to issue 17,208,575 shares in exchange for canceling $1,625,000 in long-term debt plus $95,858 in accrued interest for said debt. Mr. Rosenberg directed the shares to be issued in the name of Charlotte Rosenberg, his mother, from whom he personally borrowed the funds, which he then loaned to the Company’s predecessor in interest, Platinum Studios LLC.

We claim an exemption from the registration requirements of the Act for the private placement of these securities pursuant to Section 4(2) of the Act and/or Regulation D promulgated thereunder since, among other things, the transaction did not involve a public offering, the investors were accredited investors and/or qualified institutional buyers, the investors had access to information about us and their investment, the investors took the securities for investment and not resale, and we took appropriate measures to restrict the transfer of the securities.

RISK FACTORS

This investment has a high degree of risk. Before you invest you should carefully consider the risks and uncertainties described below and the other information in this prospectus. If any of the following risks actually occur, our business, operating results and financial condition could be harmed and the value of our stock could go down. This means you could lose all or a part of your investment.

RISKS RELATED TO OUR BUSINESS AND INDUSTRY

WE HAVE A LIMITED OPERATING HISTORY UPON WHICH YOU CAN BASE AN INVESTMENT DECISION.

Our company was formed in November 1996 and has only recently begun to fully exploit its Intellectual Property (IP). The first ten years of our existence were spent acquiring IP and building our library. There can be no assurance at this time that we will operate profitably or that we will have adequate working capital to meet our obligations as they become due. Management believes that our success will depend in large part on the continued shift from print to digital media as well as the ability to monetize that shift. We intend to invest heavily in developing and marketing our intellectual property, primarily for the web and traditional media outlets, i.e. film and television, with print as a secondary medium. However, there can be no assurance that such investments will yield the anticipated returns.

COMPETITION FROM PROVIDERS OF SIMILAR PRODUCTS AND SERVICES COULD MATERIALLY ADVERSELY AFFECT OUR REVENUES AND FINANCIAL CONDITION

The industry in which we compete is a rapidly evolving, highly competitive and fragmented market, which is based on consumer preferences and requires substantial human and capital resources. We expect competition to intensify in the future. There can be no assurance that we will be able to compete effectively. We believe that the main competitive factors in the entertainment, media and communications industries include effective marketing and sales, brand recognition, product quality, product placement and availability, niche marketing and segmentation and value propositions. They also include benefits of one's company, product and services, features and functionality, and cost. Many of our competitors are established, profitable and have strong attributes in many, most or all of these areas. They may be able to leverage their existing relationships to offer alternative products or services at more attractive pricing or with better customer support. Other companies may also enter our markets with better products or services, greater financial and human resources and/or greater brand recognition. Competitors may continue to improve or expand current products and introduce new products. We may be perceived as relatively too small or untested to be awarded business relative to the competition. To be competitive, we will have to invest significant resources in business development, advertising and marketing. We may also have to rely on strategic partnerships for critical branding and relationship leverage, which partnerships may or may not be available or sufficient. We cannot assure you that we will have sufficient resources to make these investments or that we will be able to make the advances necessary to be competitive. Increased competition may result in price reductions, reduced gross margin and loss of market share. Failure to compete successfully against current or future competitors could have a material adverse effect on the Company’s business, operating results and financial condition.

THE SPECULATIVE NATURE OF THE ENTERTAINMENT, MEDIA AND COMMUNICATIONS INDUSTRY MAY RESULT IN OUR INABILITY TO PRODUCE PRODUCTS OR SERVICES THAT RECEIVE SUFFICIENT MARKET ACCEPTANCE FOR US TO BE SUCCESSFUL.

Certain segments of the entertainment, media and communications industry are highly speculative and historically have involved a substantial degree of risk. For example, if a property is optioned by a studio, the option may not get exercised, or if exercised, a film may still not be made, or even if a film is made, the success of a particular film, video game, program or recreational attraction depends upon unpredictable and changing factors, including the success of promotional efforts, the availability of alternative forms of entertainment and leisure time activities, general economic conditions, public acceptance and other tangible and intangible factors, many of which are beyond our control. If we are unable to produce products or services that receive sufficient market acceptance our business will be unsuccessful.

CHANGES IN TECHNOLOGY MAY REDUCE THE DEMAND FOR THE PRODUCTS OR SERVICES WE MAY OFFER FOLLOWING A BUSINESS COMBINATION.

The entertainment, media and communications industries are substantially affected by rapid and significant changes in technology. These changes may reduce the demand for certain existing services and technologies used in these industries or render them obsolete. We cannot assure you that the technologies used by or relied upon or produced by a target business with which we effect a business combination will not be subject to such occurrence. While we may attempt to adapt and apply the services provided by the target business to newer technologies, we cannot assure you that we will have sufficient resources to fund these changes or that these changes will ultimately prove successful.

THE SUCCESS OF OUR BUSINESS IS DEPENDENT ON THE ACCEPTANCE OF OUR PRODUCTS.

Certain segments of the entertainment, media and communications industries are dependent on developing and marketing new products and services that respond to technological and competitive developments and changing customer needs and tastes. We cannot assure you that our products and services will gain market acceptance. Any significant delay or failure in developing new or enhanced technology, including new product and service offerings, could result in a loss of actual or potential market share and a decrease in revenues.

WE MAY NOT BE ABLE TO SUCCESSFULLY IMPLEMENT OUR BUSINESS MODEL, WHICH IS SUBJECT TO INHERENT UNCERTAINTIES.

Our business model is predicated on our ability to control all of the rights surrounding our IP in order to properly monetize and exploit each property in the most appropriate medium. We cannot assure that there will be a large enough audience for our IP or the media projects or merchandise based on them, or that prospective customers will agree to pay the prices that we propose to charge. In the event our customers resist paying the prices we set for our products, our business, financial condition, and results of operations will be materially and adversely affected.

MANY OF OUR COMPETITORS ARE LARGER AND HAVE GREATER FINANCIAL AND OTHER RESOURCES THAN WE DO AND THOSE ADVANTAGES COULD MAKE IT DIFFICULT FOR US TO COMPETE WITH THEM.

The global media industry is competitive. There are a substantial number of traditional and established print publishers, film studios, production companies and internet media companies with which we compete directly and indirectly, many of which have significantly greater financial resources, higher revenues, and greater economies of scale than us. While we believe that we are unique in our utilization of web-based comics as our primary publishing option, new technologies may be developed in the future which will compete with our publishing plan, and such technology may already be in development. We will attempt to distinguish ourselves from our competitors, but there can be no assurance that we will be able to penetrate the market. We believe that our intellectual property is attractive to an online audience in light of the recent worldwide trend to move publishing from print to electronic media. Nevertheless, there is no assurance that we will compete successfully with existing or future competitors in the film industry.

WE MAY BE UNABLE TO ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY FROM INFRINGEMENT BY THIRD PARTIES.

Our business plan is significantly dependent upon exploiting our IP. There can be no assurance that we will be able to control all of the rights for all of our property or that some of the rights may not revert to their original owners after the expiration of their respective option periods. We may not have the resources necessary to assert infringement claims against third parties who may infringe upon our intellectual property rights. Litigation can be costly and time consuming and divert the attention and resources of management and key personnel.

IF WE ARE UNABLE TO OBTAIN ADDITIONAL FUNDING, OUR BUSINESS OPERATIONS WILL BE HARMED AND IF WE DO OBTAIN ADDITIONAL FINANCING, OUR THEN EXISTING SHAREHOLDERS MAY SUFFER SUBSTANTIAL DILUTION.

There is no assurance that we will not incur debt in the future, that we will have sufficient funds to repay any indebtedness or that we will not default on our debt obligations, jeopardizing our business viability. Furthermore, we may not be able to borrow or raise additional capital in the future to meet our needs or to otherwise provide the capital necessary to conduct our business. There can be no assurance that financing will be available in amounts or on terms acceptable to us, if at all. The inability to obtain additional capital will restrict our ability to grow and may reduce our ability to continue to conduct business operations. If we are unable to obtain additional financing, we will likely be required to curtail our marketing and development plans and possibly cease our operations. Any additional equity financing may involve substantial dilution to our then existing shareholders.

IF WE DO NOT MAINTAIN THE CONTINUED SERVICE OF OUR EXECUTIVE OFFICERS, OUR BUSINESS OPERATIONS MAY BE AFFECTED.

Our success is substantially dependent on the performance of our executive officers and key employees. Given our early stage of development, we are dependent on our ability to retain and motivate high quality personnel. Although we believe we will be able to engage qualified personnel for such purposes, an inability to do so could materially adversely affect our ability to market, sell, and enhance our products. The loss of one or more of our key employees or our inability to hire and retain other qualified employees, including but not limited to development staff, business development staff, digital publishing staff and corporate office support staff, could have a material adverse effect on our business.

CONSIDERATION PAID TO MANAGEMENT WAS NOT DETERMINED BASED ON ARMS LENGTH NEGOTIATION.

The Common Stock and cash consideration being paid to management have not been determined based on arms length negotiation. We may grant net profits interests to certain of our executive officers in addition to stock options, which may further dilute your ownership. While management believes that the consideration paid to our executive officers is fair for the work being performed, there can be no assurance that the consideration to management reflects the true market value of their services.

WE MAY INCUR UNINSURED LOSSES IN THE OPERATION OF OUR BUSINESS.

There is no assurance that we will not incur uninsured liabilities and losses as a result of the conduct of our business. We plan to maintain comprehensive liability and property insurance at customary levels. We will also evaluate the availability and cost of business interruption insurance. However, should uninsured losses occur, the Shareholders could lose their invested capital.

WE MAY INCUR LIABILITIES THAT WE MIGHT BE UNABLE TO REPAY IN THE FUTURE

We may have liabilities to affiliated or unaffiliated lenders. These liabilities would represent fixed costs which would be required to be paid regardless of the level of our business or profitability. There is no assurance that we will be able to pay all of our liabilities. Furthermore, we are always subject to the risk of litigation from customers, suppliers, employees, and others because of the nature of our business, including but not limited to consumer lawsuits. Litigation can cause us to incur substantial expenses and, if cases are lost, judgments, and awards can add to our costs.

WE MAY INCUR UNANTICIPATED COST OVERRUNS WHICH MAY SIGNIFICANTLY AFFECT OUR OPERATIONS.

We may incur substantial cost overruns in the development and enhancement of our electronic comics, printed comics, and merchandise. Management is not obligated to contribute capital to us. Unanticipated costs may force us to obtain additional capital or financing from other sources if we are unable to obtain the additional funds necessary to implement our business plan. There is no assurance that we will be able to obtain sufficient capital to implement our business plan successfully. If a greater investment is required in the business because of cost overruns, the probability of earning a profit or a return of the Shareholders’ investment will be diminished.

OUR PRINCIPAL STOCKHOLDERS, OFFICERS AND DIRECTORS WILL OWN A CONTROLLING INTEREST IN OUR VOTING STOCK AND INVESTORS WILL NOT HAVE ANY VOICE IN OUR MANAGEMENT.

Our principal stockholders, officers and directors, in the aggregate, beneficially own approximately 67.08% of our outstanding common stock. Our Chairman, Scott Rosenberg and President and Chief Operating Officer, Brian Altounian own approximately 128,250,000 and 6,750,000 shares of our outstanding common stock, respectively. As a result, our principal stockholders, officers and directors, acting together, have the ability to control substantially all matters submitted to our stockholders for approval, including:

·	election of our board of directors;

·	removal of any of our directors;

·	amendment of our certificate of incorporation or bylaws; and

·	adoption of measures that could delay or prevent a change in control or impede a merger, takeover or other business combination involving us.

As a result of their ownership and positions, our principal stockholders, directors and executive officers collectively are able to influence all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions. In addition, sales of significant amounts of shares held by our principal stockholders, directors and executive officers, or the prospect of these sales, could adversely affect the market price of our common stock. Their stock ownership may discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of us, which in turn could reduce our stock price or prevent our stockholders from realizing a premium over our stock price.

OUR ASSETS MAY BE SUBJECT TO LIENS IF WE FAIL TO TIMELY PAY FOR MATERIALS AND SERVICES.

If we fail to pay for materials and services for our business on a timely basis, our assets could be subject to materialmen’s and workmen’s liens. We may also be subject to bank liens in the event that we default on loans from banks, if any.

WE MAY NEED TO RAISE ADDITIONAL CAPITAL, WHICH MAY NOT BE AVAILABLE ON ACCEPTABLE TERMS OR AT ALL.

While we were successful in raising $4,904,725 in the recent completed financing we may be required to raise additional funds, particularly if we are unable to generate positive cash flow as a result of our operations. There can be no assurance that financing will be available in amounts or on terms acceptable to us, if at all. The inability to obtain additional capital may reduce our ability to continue to conduct business operations. If we are unable to obtain additional financing, we will likely be required to curtail our research and development plans. Any additional equity financing may involve substantial dilution to our then existing shareholders.

WE MIGHT LOSE POTENTIAL SALES BECAUSE OF PIRACY OF FILMS AND RELATED PRODUCTS.

With technological advances, the piracy of films and related products has increased. Unauthorized and pirated copies of our films will reduce the revenue generated by those films and related products.

RISKS RELATING TO OUR COMMON STOCK

THERE IS NO MARKET FOR OUR COMMON STOCK, WHICH MAY MAKE IT MORE DIFFICULT FOR YOU TO DISPOSE OF YOUR COMMON STOCK.

There is no established public trading market for our securities. Hence, there is no central place, such as a stock exchange or electronic trading system, to resell your common stock. If you want to resell your shares, you will have to locate a buyer and negotiate your own sale. It is our plan to utilize a market maker who will apply to have our common stock quoted on the Over-the-Counter Bulletin Board in the United States. Our shares are not and have not been listed or quoted on any exchange or quotation system. There can be no assurance that a market maker will agree to file the necessary documents with the National Association of Securities Dealers, which operates the Over-the-Counter Bulletin Board, nor can there be any assurance that such an application for quotation will be approved or that a regular trading market will develop or that if developed, will be sustained. In the absence of a trading market, an investor will be unable to liquidate his investment except by private sale.

SHOULD OUR STOCK BECOME LISTED ON THE OTC BULLETIN BOARD, IF WE FAIL TO REMAIN CURRENT ON OUR REPORTING REQUIREMENTS, WE COULD BE REMOVED FROM THE OTC BULLETIN BOARD WHICH WOULD LIMIT THE ABILITY OF BROKER-DEALERS TO SELL OUR SECURITIES AND THE ABILITY OF STOCKHOLDERS TO SELL THEIR SECURITIES IN THE SECONDARY MARKET.

Companies trading on the Over-The-Counter Bulletin Board, such as we are seeking to become, must be reporting issuers under Section 12 of the Securities Exchange Act of 1934, as amended, and must be current in their reports under Section 13, in order to maintain price quotation privileges on the OTC Bulletin Board. If we fail to remain current on our reporting requirements, we could be removed from the OTC Bulletin Board. As a result, the market liquidity for our securities could be severely adversely affected by limiting the ability of broker-dealers to sell our securities and the ability of stockholders to sell their securities in the secondary market. In addition, we may be unable to get re-listed on the OTC Bulletin Board, which may have an adverse material effect on our Company.

ONCE PUBLICLY TRADING, THE APPLICATION OF THE "PENNY STOCK" RULES COULD ADVERSELY AFFECT THE MARKET PRICE OF OUR COMMON SHARES AND INCREASE YOUR TRANSACTION COSTS TO SELL THOSE SHARES.

The Securities and Exchange Commission has adopted Rule 15g-9 which establishes the definition of a "penny stock," for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require:

·	that a broker or dealer approve a person's account for transactions in penny stocks; and

·	the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.

In order to approve a person's account for transactions in penny stocks, the broker or dealer must:

·	obtain financial information and investment experience objectives of the person; and

·	make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.

The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the Commission relating to the penny stock market, which, in highlight form:

·	sets forth the basis on which the broker or dealer made the suitability determination; and

·	that the broker or dealer received a signed, written agreement from the investor prior to the transaction.

Generally, brokers may be less willing to execute transactions in securities subject to the "penny stock" rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our stock.

Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.

WE DO NOT EXPECT TO PAY DIVIDENDS IN THE FUTURE; ANY RETURN ON INVESTMENT MAY BE LIMITED TO THE VALUE OF OUR COMMON STOCK.

We do not currently anticipate paying cash dividends in the foreseeable future. The payment of dividends on our Common Stock will depend on earnings, financial condition and other business and economic factors affecting it at such time as the board of directors may consider relevant. Our current intention is to apply net earnings, if any, in the foreseeable future to increasing our capital base and development and marketing efforts. There can be no assurance that the Company will ever have sufficient earnings to declare and pay dividends to the holders of our Common Stock, and in any event, a decision to declare and pay dividends is at the sole discretion of the our Board of Directors. If we do not pay dividends, our Common Stock may be less valuable because a return on your investment will only occur if its stock price appreciates.

USE OF PROCEEDS

This prospectus relates to shares of our common stock that may be offered and sold from time to time by the selling stockholders. We will not receive any proceeds from the sale of shares of common stock in this offering. We have agreed to bear the expenses relating to the registration of the shares for the selling security holders. Any transfer taxes payable on these shares and any commissions and discounts payable to underwriters, agents, brokers or dealers will be paid by the selling stockholder.

Market for Common Stock and related Stockholders Matters

Our common stock is not traded on any national securities exchange and is not quoted on any over-the-counter market. If our shares become quoted on the Over-The-Counter Bulletin Board, sales will be made at prevailing market prices or privately negotiated prices.

HOLDERS

As of August 28, 2007, our common stock were held by 311 stockholders of record and we had 201,255,825 shares of common stock issued and outstanding, which includes the shares being offered by the selling stockholders in this prospectus as such shares were issued to the selling stockholders by us upon completion of the October 2006 private placement, as applicable. The transfer agent of our common stock is Computershare Limited, 1745 Arden Avenue, Glendale, CA 91204.

Dividends

We have not declared any dividends to date. We have no present intention of paying any cash dividends on our common stock in the foreseeable future, as we intend to use earnings, if any, to generate growth. The payment by us of dividends, if any, in the future, rests within the discretion of our Board of Directors and will depend, among other things, upon our earnings, our capital requirements and our financial condition, as well as other relevant factors. There are no restrictions in our articles of incorporation or bylaws that restrict us from declaring dividends.

Securities Authorized for Issuance Under Equity Compensation Plans

EQUITY COMPENSATION PLAN INFORMATION

The following table shows information with respect to each equity compensation plan under which our common stock is authorized for issuance as from inception (November 20, 1996) through June 30, 2007.

Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)
	(a)		(b)		(c)
Equity compensation plans approved by security holders		30,000,000		-0-		30,000,000

Equity compensation plans not approved by security holders		0-		-0-		-0-

Total		30,000,000		-0-		30,000,000

Description of the Platinum Studios, Inc. 2007 Incentive Plan

The Platinum Studios, Inc. 2007 Incentive Plan (the “Plan”) has initially reserved 30,000,000 shares of common Stock for issuance. Under the Plan, options may be granted which are intended to qualify as Incentive Stock Options ("ISOs") under Section 422 of the Internal Revenue Code of 1986 (the "Code") or which are not ("Non-ISOs") intended to qualify as Incentive Stock Options thereunder. In addition, direct grants of stock or restricted stock may be awarded.

Purpose. The primary purpose of the Plan is to attract and retain the best available personnel in order to promote the success of our business and to facilitate the ownership of our stock by employees and others who provide services to us.

Administration. The Plan is administered by the compensation committee of our Board of Directors, for any period in which the Company is subject to the reporting requirements of the Exchange Act shall consist of not less than two members of the Board each of whom shall qualify as non-employee directors.

Eligibility. Under the Plan, options may be granted to employees, directors or consultants of the Company, as provided in the Plan.

Terms of Options. The term of each option granted under the Plan shall be for such period as may be determined by the Committee but not to exceed ten years. Each option grants shall be contained in a stock option agreement between the optionee and Platinum Studios and such terms shall be determined by the Board of Directors consistent with the provisions of the Plan, including the following:

(a) Purchase Price. The purchase price of the common stock subject to each stock option shall be determined by the Committee at the time the Option is granted but shall not be less than 100% fair market value on the date of grant. If any Employee to whom an option that is an incentive stock option is granted owns stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any parent corporation, within the meaning of Section 424(e) of the Internal Revenue Code of 1986 (the “Code”), or any subsidiary corporation of the Company, within the meaning of Section 424(f) of the Code, then the exercise price per share shall not be less than one hundred ten percent (110%) of the fair market value per share on the date of grant and the option term shall not exceed five (5) years measured from the date of grant.

(b) Vesting. The dates on which each option (or portion thereof) shall be exercisable and the conditions precedent to such exercise, if any, shall be fixed by the Committee, in its discretion, at the time such option is granted. All options or grants which include a vesting schedule will vest in their entirety upon a change of control transaction as described in the Plan;

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

Some of the information in this prospectus contains forward-looking statements that involve substantial risks and uncertainties. You can identify these statements by forward-looking words such as "may," "expect," "anticipate," "believe," "estimate" and "continue," or similar words. You should read statements that contain these words carefully because they:

·	discuss our future expectations;

·	contain projections of our future results of operations or of our financial condition; and

·	state other "forward-looking" information.

We believe it is important to communicate our expectations. However, there may be events in the future that we are not able to accurately predict or over which we have no control. Our actual results and the timing of certain events could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth under "Risk Factors," "Business" and elsewhere in this prospectus. See "Risk Factors."

GENERAL

We are a comics-based entertainment company that controls one of the world’s largest libraries of comic book characters, which we adapt and produce for film, television and all other media. Our continually expanding library consists of more than 3,800 characters that have appeared in hundreds of millions of comics in 25 languages and in more than 50 countries. Our extensive library of comics-based characters spans across multiple genres and multiple target audiences. Not only have we developed many of our characters in-house, but we have also aggregated content from several third-party comics publishers, acquiring the rights to use these characters via all media except print publishing. We believe that the size of our library gives us a competitive edge over other comics-based libraries, as we will be able to go to market quicker with new opportunities to exploit our characters, such as electronic comics.

We seek to be a leader in producing entertainment content for all platforms including film, television, direct-to-home, publishing, and digital media based on comic book characters providing new merchandising vehicles across all retail product lines. By combining our character commercialization strategy with our extensive storytelling, packaging, and corporate management abilities, we seek to build a strategically diversified and profitable character-based entertainment business.

Revenues are derived from a number of sources in each of our four divisions: Print Publishing, Digital Publishing, Filmed Entertainment, and Merchandise/Licensing. We began exploiting our IP in the 3^rd quarter of 2006, creating new product for distribution in each of these divisions.

Set forth below is a discussion of the financial condition and results of operations of Platinum Studios, Inc. (the “Company”, “we”, “us,” and “our”) for the twelve months ended December 31, 2006 and 2005, and the six months ended June 30, 2007 and June 30, 2006. The following discussion should be read in conjunction with the information set forth in the consolidated financial statements and the related notes thereto appearing elsewhere in this report.

RESULTS OF OPERATIONS – SIX MONTHS ENDED JUNE 30, 2007 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 2006

NET REVENUE

Total Revenue increased by $1,646,300 from $30,500 for the six months ended June 30, 2006 to $1,676,800 for the six months ended June 30, 2007. This increase is primarily due to a $1,000,000 option fee and a $450,000 first-look agreement realized in the first six months of 2007.

EXPENSES

OPERATIONS– Operating expenses increased by $1,092,535 from $1,275,419 for the six months ended June 30, 2006 to $2,367,954 for the six months ended June 30, 2007, an increase of 86%. This increase reflects the operating expense level implemented in the second half of 2006 in establishing new sales distribution channels and increased marketing activities as well as costs for management, finance and administrative, legal, and facilities costs.

RESEARCH AND DEVELOPMENT– Research and Development expenses consist primarily of salaries and related personnel costs and independent, work-for-hire fees associated with product development. Research and Development expenses increased from $310,205 for the six months ended June 30, 2006 to $457,854 for the six months ended June 30, 2007, an increase of $147,649 (48%). This increase was primarily due to the development activities associated with the delivery of new comic book titles and books on multiple platforms implemented in the second quarter of 2006.

DEPRECIATION AND AMORTIZATION EXPENSE– Depreciation and Amortization expenses increased by $69,630 for the six month period, from $11,035 for the six months ended June 30, 2006 to $80,665 for the six months ended June 30, 2007. This 631% increase consisted of $45,652 in amortization expense related to other assets which were $0 in 2006 and $23,978 in increased depreciation expense due to additional investments in computer equipment, software and furniture and fixtures.

INTEREST EXPENSE– Interest expense decreased by $51,323 (27%) from $191,710 for the six months ended June 30, 2006 to $140,387 for the six months ended June 30, 2007. This decrease is primarily due to the conversion of $5,731,057 in principal and accrued interest into equity in September, 2006..

NET LOSS BEFORE INCOME TAXES– As a result of the factors described above, we reported a net loss before income taxes of $1,757,869 for the six months ended June 30, 2006 compared to a loss of $1,484,673 for the six months ended June 30, 2007, an improvement of $273,196.

RESULTS OF OPERATIONS – YEAR ENDED DECEMBER 31, 2006 COMPARED TO THE YEAR ENDED DECEMBER 31, 2005

NET REVENUE

Total Revenue increased by $18,000 year over year, from $162,500 for the year ended December 31, 2005 to $180,500 for the year ended December 31, 2006, an increase of 11%. This increase reflects the continued success of Platinum Studios in securing option and rights fees for its properties.

EXPENSES

OPERATIONS– Operating expenses increased by $1,560,406 (97%), from $1,607,672 for the year ended December 31, 2005 to $3,168,078 for the year ended December 31, 2006. The increase was primarily due to additional investments in establishing sales distribution channels and marketing activities such as the Comic Book Challenge to promote future revenue generation. Operating costs also include expenses related to management, finance, legal, and facilities costs.

RESEARCH AND DEVELOPMENT– Research and Development expenses consist primarily of salaries and related personnel costs and independent, work-for-hire fees associated with product development. Research and Development expenses were $243,833 and $764,282 for the years ended December 31, 2005 and December 31, 2006, respectively. This 213% increase in year over year costs was due to the increased commitment in development activities associated with the delivery of new comic book titles and books on multiple platforms.

DEPRECIATION AND AMORTIZATION EXPENSE– Depreciation and Amortization expenses increased $66,050 year over year, from $7,436 for the year ended December 31, 2005 to $73,486 for the year ended December 31, 2006. This 888% increase consisted of $30,435 in amortization expense related to other assets which were $0 in 2005 and $35,615 in increased depreciation expense due to additional investments in computer equipment, software and furniture and fixtures.

GAIN/(LOSS) ON DISPOSTION OF ASSETS– In the year ended December 31, 2006, the Company took in a one-time charge of $33,260 as a result of a physical inventory taken as part of the move to its new facilities.

INTEREST EXPENSE– Interest expenses remained essentially flat year over year with $390,288 for the year ended December 31, 2005 versus $391,745 for the year ended December 31, 2006. This interest expense is primarily due to servicing the interest on debt obligations used to fund the company operations.

OTHER EXPENSE– The Company had a one-time expense of $25,000 during the year ended December 31, 2006 to write-off a deposit related to a potential acquisition target which the Company elected to not consummate.

NET LOSS BEFORE INCOME TAXES– As a result of the factors described above, we reported a net loss before income taxes of $2,080,915 for the year ended December 31, 2005 compared to a loss of $4,272,780 for the year ended December 31, 2006.

LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 2007, we had working capital of $487,905 with a cash balance of $423,256. Management believes that there will be an increase in overall expenses to expand the Company’s operations during 2007. Although revenues are expected to increase, it is anticipated that additional cash resources will be required during the next twelve months. We may undertake additional debt or equity financings if needed to better enable us to grow and meet our future operating and capital requirements. However, we cannot guarantee that any additional equity or debt financing will be available in sufficient amounts or on acceptable terms when needed. If such financing is not available in sufficient amounts or on acceptable terms, our results of operations and financial condition may be adversely affected. In addition, equity financing may result in dilution to existing stockholders and may involve securities that have rights, preferences or privileges that are senior to or common stock, and any debt financing obtained must be repaid regardless of whether or not we generate profits or cash flows from our business activities.

Net cash used in operating activities was ($2,359,870) for the six months ended June 30, 2007 compared to ($1,133,028) for the six months ended June 30, 2006, an increase of $1,226,842 or 108.3%. The increase in net cash used in operating activities is primarily the result of our increased expenses with our expanded operations.

Below is a description of significant financings we completed during the fiscal year ended December 31, 2006.

OCTOBER 2006 FINANCING

On October 12, 2006, we entered into a Private Placement Memorandum pursuant to which we sold an aggregate of 49,047,250 shares of common stock to accredited investors (the “October 2006 Financing”). The offering closed on April 30, 2007. The shares of common stock were sold at a price of $0.10 per share or an aggregate of $4,904,725.

We agreed to prepare and file a registration statement with the Securities and Exchange Commission registering the resale of the shares of common stock sold in the private placement on or prior to 180 days following the closing date.

Midtown Partners, registered broker-dealer, acted as placement agent for a portion of the sale of the common stock. In connection with the closing we paid the placement agents a cash fee of an aggregate $32,102. In addition, the Company issued to the placement agents 458,600 warrants to purchase shares of our common stock with an exercise price of $0.10 per share exercisable for a period of five years.

GOING CONCERN

The accompanying consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Since Platinum Studios, Inc.’s inception, we have incurred losses, had an accumulated deficit, and have experienced negative cash flows from operations. We expect this trend to continue. The expansion and development of our business will likely require additional capital. This condition raises substantial doubt about our ability to continue as a going concern. We expect cash flows from operating activities to improve, primarily as a result of an increase in revenues, although there can be no assurance thereof. The accompanying consolidated financial statements do not include any adjustments that might be necessary should we be unable to continue as a going concern. If we fail to generate positive cash flows or obtain additional financing when required, we may have to modify, delay or abandon some or all of our business and expansion plans.

OFF-BALANCE SHEET ARRANGEMENTS

We do not have any off-balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues, results of operations, liquidity, or capital expenditures.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The policies discussed below are considered by our management to be critical to an understanding of our financial statements because their application places the most significant demands on our management’s judgment, with financial reporting results relying on estimation about the effect of matters that are inherently uncertain. Specific risks for these critical accounting policies are described below. For these policies, our management cautions that future events rarely develop as forecast, and that best estimates may routinely require adjustment.

The SEC has issued cautionary advice to elicit more precise disclosure about accounting policies management believes are most critical in portraying our financial results and in requiring management’s most difficult subjective or complex judgments.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make judgments and estimates. On an on-going basis, we evaluate our estimates, the most significant of which include establishing allowances for doubtful accounts and determining the recoverability of our long-lived assets. The basis for our estimates are historical experience and various assumptions that are believed to be reasonable under the circumstances, given the available information at the time of the estimate, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily available from other sources. Actual results may differ from the amounts estimated and recorded in our financial statements.

We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements.

Reclassification: Certain prior year amounts have been reclassified in order to conform to the current year’s presentation. In 2006, the Company transitioned into a new accounting system that allows for a more detailed analysis of project expenses and revenues. Financials from earlier years have been reclassified to account for this transition.

Revenue Recognition: The Company derives its licensing revenue primarily from options to purchase rights, the purchase of rights to properties and first look deals. For options that contain non-refundable minimum payment obligations that are not applied to the purchase price, revenue is recognized ratably over the option period, prior to the collection of all amounts ultimately due, provided all the criteria for revenue recognition under SAB 104 have been met. Option fees that are applicable to the purchase price are deferred and recognized as revenue at the later of the expiration of the option period or in accordance with the terms of the purchase agreement. Revenue received under first look deals is recognized ratably over the first look period, which varies by contract provided all the criteria for revenue recognition under SAB 104 have been met. First look deals that have contingent components are deferred and recognized at the later of the expiration of the first look period or in accordance with the terms of the first look contract.

For licenses requiring material continuing involvement or performance based obligations, by the Company, the revenue is recognized as and when such obligations are fulfilled. The Company records as deferred revenue any licensing fees collected in advance of obligations being fulfilled or if a licensee is not sufficiently creditworthy, the Company will record deferred revenue until payments are received. License agreements typically include reversion rights which allow the Company to repurchase property rights which have not been used by the studio (the buyer) in production within a specified period of time as defined in the purchase agreement. The cost to repurchase the rights is generally based on the costs incurred by the studio to further develop the characters and story lines.

Character development costs: Character development costs consist primarily of costs to acquire properties from the creator, development of the property using internal or independent writers and artists, and the registration of a property for a trademark or copyright. These costs are capitalized in the year incurred if the Company has executed a contract or is negotiating a revenue generating opportunity for the property. If the property derives a revenue stream that is estimable, the capitalized costs associated with the property are expensed as revenue is recognized. If the Company determines there is no determinable market for a property, it is deemed impaired and is written off.

Recent accounting pronouncements: In July 2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainly in Income Taxes” (“FIN 48”). FIN 48 applies to all tax positions related to income taxes subject to SFAS 109, “Accounting for Income Taxes”. Under FIN 48 a company would recognize the benefit from a tax position only if it is more-likely-than-not that the position would be sustained upon audit based solely on the technical merits of the tax position. FIN 48 clarifies how a company would measure the income tax benefits from the tax positions that are recognized, provides guidance as to the timing of the de-recognition of previously recognized tax benefits and describes the methods for classifying and disclosing the liabilities within the financial statements for any unrecognized tax benefits. FIN 48 also addresses when a company should record interest and penalties related to tax positions and how the interest and penalties may be classified within the income statement and presented in the balance sheet. FIN 48 is effective for fiscal years beginning after December 15, 2006. For Platinum, FIN 48 will be effective for the first quarter of fiscal 2007.

In May 2005, the FASB issued SFAS No. 154, Accounting Changes and Error Corrections, which replaces APB No. 20, Accounting Changes and SFAS No. 3, Reporting Accounting Changes in Interim Financial Statements. SFAS No. 154 requires that a voluntary change in accounting principle be applied retrospectively with all prior period financial statements presented as if the new accounting principle had always been used. SFAS No. 154 also requires that a change in method of depreciating or amortizing long-lived non-financial assets be accounted for prospectively, in the period of change and in future periods, if applicable, as a change in estimate, and requires the correction of errors in previously issued financial statements be termed a “restatement”. SFAS No. 154 is effective for accounting changes and correction errors made in fiscal years beginning after December 15, 2005. The implementation of SFAS 154 is not expected to have a material impact on the Company’s financial statements.

In December 2004, the FASB issued SFAS No. 153, Exchanges of Nonmonetary Assets, which amends APB Opinion 29 (APB 29), Accounting for Nonmonetary Transactions. The guidance in APB 29 is based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged and included certain exceptions to that principle. SFAS No.153 amends APB29 to eliminate the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. This Statement will be effective for the Company for nonmonetary asset exchanges occurring on or after January 1, 2006.

BUSINESS

INTRODUCTION

Our Company was formed and operated as a California limited liability company from its inception on November 20, 1996 through September 14, 2006. On September 15, 2006, we filed with the State of California to convert Platinum Studios, LLC into Platinum Studios, Inc., a California corporation.

We believe our library has broader audience appeal than other comic character companies whose libraries comprise primarily of the traditional superhero characters. Our library includes strong characters that span all story genres, including science fiction, fantasy, horror, mystery, romance, comedy, crime, action/adventure, and family. While our library includes superhero characters, management believes this broad spectrum allows us to be protected by any unforeseen downturn in audience reaction to any single genre.

In addition to a broad universe of more than 1,000 characters developed in-house, we also acquired the rights to the characters and storylines of Italian-based, SBE Publishing’s Horror/Sci-Fi Universe and French-based, Hexagon Comics, among others. We believe that this library gives us an established international audience for our media exploitation plans. In addition to the international exploitation of these properties, there are significant other benefits to our relationships with SBE and Hexagon comics, including providing us with the advantage of owning all content created, without the burden of overhead to run extensive publishing entities, thus providing us with a constant source of new material. As our publishing partners expand their library, our character and story lists expand as well.

Our management believes that our strategy provides numerous synergies, including:

·	Development of individual character franchises by leveraging feature films, television programming, Internet/wireless, licensees, promotional partners, and advertisers.

·	Development and introduction of new characters, planted spin-offs and tie-ins with branded characters.

·	Reduced marketing and promotions costs by cross marketing the characters through different distribution media.

·	Interactive feedback from various affiliated and co-branded online destinations.

We believe that our strategy will offer the ability to communicate with audiences from around the world providing market analysis from fan, industry and creative perspectives that gauge the appeal of new Characters and stories.

Recent Developments

Print Publishing

After launching our first graphic novel in December, 2006, we have published over 30 comic books and graphic novels for distribution through traditional domestic channels. In July, 2007, we began developing an international channel for worldwide print distribution. We entered a co-production deal with KISS Catalog to produce a new line of comic material based on the 1970’s legendary rock band, KISS, that includes a 50% ownership in all material derived from this comics line for exploitation in other merchandise and licensing opportunities.

Digital Publishing

Since the 3^rd quarter of 2006, we have launched an online “e-commerce” store to sell merchandise, comic books and other products (store.platinumstudios.com), an online comics site to highlight the printed comics and graphic novels (www.platinumstudioscomics.com), a mobile storefront for distribution of digital content (www.platinumstudiosmobile.com), a web-comics site to host the digital distribution of our printed comic material and as a resource for independent comics creators to post new material (www.drunkduck.com) and we have developed multiple destination sites for individual comic properties. This digital publishing group has also created digital images that consumers can download to their mobile phones and personal computers for wallpapers and screensavers.

Filmed Entertainment

We currently have film and television development deals with several major film producers and in 2007, we successfully sold one property, Unique, to Disney Studios, with the anticipation that it will go into production in early 2008. Additionally, in June, 2007, we entered into negotiations on a 2-year option agreement with Dreamworks, Universal Studios, Paramount Pictures, and Imagine Entertainment to acquire the film production rights to our property Cowboys & Aliens, the #1-ordered graphic novel in the U.S. in 2006 (Entertainment Weekly, January, 2007) with the goal to produce a feature film. This film’s production schedule has not been officially set yet but it is anticipated to begin pre-production sometime within the next 24 months. In 2006, we entered into a co-production and distribution deal with Arclight Films to produce a slate of 8 feature films based on a number of our properties over the next 3 years. We are currently in contract negotiations with various talent on our first film from that slate, Dylan Dog: Dead of Night and we hope to begin production before the end of 2007.

Merchandise/Licensing

In addition to the KISS Comics line as mentioned above, we have created a line of apparel called Number Zero Limited that takes a unique approach to t-shirt and other clothing design, highlighting images from comics on the outside of the shirt and additional story material printed on the inside. We are negotiating with console and pc-based video game developers to create games based on our material and we are exploring a number of toys and other merchandise opportunities. We have extended our branding philosophy to include our annual “Comic Book Challenge”, a competition that allows independent creators to pitch original comic book ideas to a panel of live judges. The winning contestant gets a publishing deal with revenue sharing across all distribution outlets. In 2007, we signed a 3-year corporate sponsorship deal with AT&T and secured other sponsorship arrangements with 5 other corporations to underwrite the event and expose the Company to a wide audience.

Industry Overview

The comic book market is highly sought after by the entertainment industry for the purpose of mining for new material. As proof of this appeal, two recent trade articles have pinpointed the virtues of comics publishing as a credible source of new material in Hollywood. Daily Variety and Hollywood Reporter have each reported separately that the big moneymakers are fresh concepts and comicbooks. “Among the better averages were pics based on comicbooks: There were only 13 such films, and the $2.8 billion total means that each comicbook hit averaged a $215 million gross. Which explains why Hollywood is so hot to film comicbooks.” (“How to make box-office gold”, Marc Graser, Daily Variety 7/6/07).

Additionally, IDT Internet Mobile acquired comics publisher IDW in a recent transaction as reported July 24, 2007. According to Daily Variety, the reasoning behind this acquisition was to give IDT the ability to “take IDW’s properties and sell them to traditional film and television outlets and it will develop them for new media platforms.” IDT was recently acquired by John Malone’s Liberty Media in 2007, marking an expansion of a traditional telco into the content development and media industry. (“IDT buys comics publisher IDW”, Steven Zeitchik, Daily Variety, 7/24/07).

It was also reported in July, 2007 that UK-based sales, production and finance house Intandem is embarking on a “new corporate strategy by acquiring a 5% stake in Los Angeles-based comic book publisher Radical Publishing and sister movie company Blatant Pictures, providing the company with another source of quality commercial product for studios and top distributors.” (“Intandem has Radical idea for content”, Stuart Kemp, Hollywood Reporter, 7/17/07). These major industry announcements all support our contention that comic-books and graphic novel publishing is a viable source for multiple forms of media exploitation.

Print Publishing

Every project we publish is designed for eventual adaptation to other media, including film and television. Our core business model focuses on the exploitation of our characters in all media. We license our characters and stories for domestic and/or international comics publishing. In some cases, we produce our own publications under the “Platinum Studios Comics” label, but we also have agreements with other publishers and original copyright holders whereby our agreement provides for these parties to continue publishing comic books, generating new characters and stories which are added to our ever-growing library of material. Under these agreements, the publisher retains the publishing rights and generates ongoing serial publications, maintaining large staffs within their publishing and distribution organizations to achieve these goals. We benefit tremendously from this relationship as all new characters and story lines generated from new publications are added to our library, without the burden of carrying an entire publishing and distribution staff. One such example of this arrangement is the Bonelli Publishing library from Italy, which has been producing comic books in printed form for over 50 years. Popular characters from the Bonelli library include Nathan Never, Legs Weaver and Dylan Dog. Pursuant to our agreement with Bonelli Publishing characters which they develop are added to our library.

Print Publishing Schedule

After a successful launch of our inaugural graphic novel, Cowboys & Aliens, in December, 2006, we have established a steady schedule of 23 books with an additional 20 titles to be published before the end of 2007. These titles have are all published under the Platinum Studios Comics banner and they are sold directly to comic book stores through the industry’s sole distributor, Diamond Distribution. The writers and artists of these titles are hired on a work-for-hire basis

Distribution Model

We currently have four distribution channels to sell our products: (1) direct to comic book stores, (2) online, (3) traditional book retail stores, and (4) international distributors.

All products offered directly to the thousands of comic book retailers throughout the United States must be listed through Diamond Comic Distributors. Diamond was established in 1982 to provide comic book specialty retailers with wholesale, non-returnable comic books and related merchandise. Diamond has a vast network of strategically-located Distribution Centers throughout the world.

Currently, we have a distribution agreement with Top Cow Productions to list our titles in Diamond’s wholesale catalog for retail comic book stores. By capitalizing on Top Cow Production’s long-standing relationship with Diamond, we have been able to procure better placement in this wholesale catalog. To date this has been our primary distribution chain; however, as an adjunct to our Top Cow Productions arrangement, we have also recently established a direct contractual relationship with Diamond for the listing of our properties, giving us more flexibility regarding the types and number of products we offer to this direct market.

We also distribute our products to consumers and retailers via our Web store and comic book site (www.PlatinumStudiosComics.com). The site allows the comic book fan to get a closer look at the books, the creators and sample artwork. We have also created a strategy of launching the published book online, updating one page per day, giving the readers and fans a place to preview the book and communicate with the creators one-on-one via our webcomic hosting site, DrunkDuck (www.drunkduck.com).

We also distribute our products through established distribution companies, such as our current arrangement with Ingram. Ingram has agreed to distribute our KISS 4K books to book stores and libraries. Currently, they distribute to Borders, Barnes & Noble, Hastings and newsstands. Ingram Book Company is the leading wholesale distributor of book product.

Finally, we have recently established relationships with international publishing entities to distribute translated versions of our completed series of comic books to over 100 countries throughout the world. These publishers generally pay advances against sales royalties without charging for translations and/or printing, making this distribution option a significant way to offset the costs of the domestic distribution chain.

Digital Publishing

We have established ourselves as a leader in comics-based entertainment, and continue to build our already substantial library of characters and storylines. We are currently pursuing a strategy to leverage our momentum in the entertainment space and commercialize our intellectual property through the most viable media outlets and channels, including the online content space.

Our Digital Publishing Division’s mission is to leverage our library of intellectual property across multiple online channels and distribution platforms, and create the premiere online community for fans of comic-based entertainment in all media.

We plan to aggregate several online comic properties and develop an online comics “portal,” where we can further interact with the comic-creator and -fan communities via content, reference information, community tools and other interactive features. By engaging the community through this network/portal strategy, we believe we will increase our volume of property, story and character submissions, promote our online and offline properties, track key trends in the comic entertainment space and continue to brand the company with the comic fan base. Revenues for this portal will be derived from advertising and sponsorship and intelligently monetized through tie-ins, merchandise and other long-tail strategies.

Online Comics Community / Portal

In 2006, we acquired Drunk Duck (www.drunkduck.com), an online web comic community boasting over 3,000 strips and 10 million monthly page views. Since the acquisition, we implemented several programming and feature upgrades to enhance the functionality and user-friendly interface of Drunk Duck, including a new section for print publishers to post their printed works online as well. In less than one year, we have seen increased numbers across the board for Drunk Duck, where as of June 30, 2007, the site hosts over 8,000 strips/stories and the monthly page views now exceed 30,000,000.

Our ongoing strategy is to create a network of sites dedicated to the online comic genre (which includes web based comic strips similar to the traditional newspaper format, online comic books and graphic novels, and streaming/electronic comics) anchored by Drunk Duck. The goal is to aggregate the comic fan base across the internet, monetize the traffic through subscriptions, advertising and sponsored content, embedded product placement, licensed exploitation opportunities and casual gaming, as well as provide an access point for the Company to launch and promote its properties and characters in all forms of media – print, film, television, mobile/wireless and gaming.

We have identified several additional key sites as potential acquisition targets covering specific aspects of the community – original comic content, industry news, historical comic reference material, fan sites – which will be combined to create a grassroots network that speaks directly to the comic book fan-base. By employing a technique known as a “hat”- a branded identifying navigational tool commonly found across of the top of the page (i.e. Slate.com and Fox.com are part of the MSN.com network, and MSN.com’s navigational “hat” appears across the top left of each), we believe we can combine several of these sites to form a comic content network. The focal point of this network will be Drunk Duck which will feature our streaming electronic comics, supported by daily content updates and comic strips, industry news provided by Broken Frontier, interviews, games, podcasts, fan involvement (blogs; forums; wikis; profiles of fans and comic creators), contests, etc.

Our network of online comic sites will speak directly to the fan community and strive to offer fans a sense of ownership in the properties, with editors for much of the content selected from the fan base itself. We intend to take this one step further, where the best fan writers would be welcomed onto the official staff, creating an “it can happen to you” feeling among the loyal followers, thereby deepening their attachment to a series.

Of significant value to us is the ability to monetize the traffic generated across the entire network through several avenues, including subscriptions, advertising and sponsored content, embedded product placement, and licensed exploitation opportunities. Each of these revenue streams can be active on every site within the network, as they work to drive traffic to one another, further maximizing the revenue potential of every visitor. As the characters and stories themselves begin to establish a broader audience, additional revenue streams such as licensed products, merchandising and additional media outlets become viable options.

Casual Games

Due to a renewed interest in retro arcade games like pac-man, asteroids and centipede, as well as new titles inspired by retro games, card and board games, puzzle games and the like, a new gaming sector, often collectively referred to as “casual games,” has evolved. The category is loosely defined as games with simple rules, that are easy to learn and can be played in very small increments of time – perfect for a 5-10 minute break at work. The most prevalent casual game genres today are puzzles, word games, and casual-action games, followed by tile/card and board games.

Our Drunk Duck portal includes a casual gaming section, with a variety of games featuring characters and story lines from our library. We are in discussions with leading game developers to “re-skin” an assortment of casual games with our properties (i.e. changing the cosmetic nature of the game characters without changing the underlying software of the program), and we are evaluating several ways to monetize this product. In the past few years, the dominant business model for targeting the casual games audience was offering free online games that were monetized by advertising and sponsorships. A number of business models have now emerged, including fee-based downloadable games, premium online subscription services, skill-based gaming tournaments, in-game advertising and free game play supported by video advertising and sponsorships.

Digital Studio Model

We are in the process of creating a “digital studio,” which management believes will be positioned to exploit our intellectual property across the web and expand our audience for comic-based entertainment. Content developed through the digital studio will be tailored to current and burgeoning web distribution platforms, including electronic comics, streaming video/video-on-demand, and instant messaging, and distributed through partnerships with premiere online portals such as AOL, MSN, Google, and Yahoo!, all of which are aggressively pursuing content plays via in-house development, acquisitions and joint ventures. In addition, we will exploit the rapidly growing world of wireless/mobile content.

Following the lead of our broadcast entertainment studio model, our Digital Publishing team will develop several series of “tentpole” electronic comics based on characters from our intellectual property library, which combine the best elements of animation and comics. These electronic comics will be roughly 3-5 minutes in length, merging the unique visual animated template of comics with top-flight directing, writing, editing and voicing, all created to fit with the viewing habits of online users in the target demographic.

The distribution platform for our electronic comics includes establishing relationships with the online world’s premiere entertainment content portals and search destinations such as AOL, MSN, Yahoo and Google. These portals will utilize the content within their entertainment channels, and revenues will be derived through advertising and sponsorship, managed by each individual portal. With the continuing evolution of web-based video content delivery, broadband penetration to the home and the forecasted growth in online ad spending, this will provide Platinum with a significant revenue stream. Additionally, by providing content through any of these partners to their vast audience, the Company believes it can generate significant exposure for many of its properties and characters.

Online content/streaming content models have shifted in recent years, however ad supported and subscription models are still recognized as the most lucrative and cost-effective. There has been an upswing in the downloadable content model (i.e. – iTunes, Rhapsody, Google’s Online Video Store) in late 2005 and early 2006, and we will continue to explore these and other avenues for the distribution of content created by its digital studio. One of the strongest components of the digital studio as part of the Company’s overall Digital Publishing Division initiative, is its ability to be self sustaining – expending capital and resources to produce the content, and generate revenue by licensing that content across the web through multiple destinations and partners.

Drunk Duck itself will provide us with not only a premiere online destination for fans of the comic genre, but also a distribution platform for content developed in the digital studio. Furthermore, this also provides a place where new stories and concepts can be critiqued and fine-tuned by an audience who not only knows the genre, but also begins to feel a sense of involvement and ownership as they contribute to the evolution of their favorite characters.

Mobile/Wireless Distribution

In June, 2006, we began pursuing a strategy to leverage our momentum in the entertainment space and commercialize our intellectual property through the most viable media outlets and channels, including the wireless and mobile content space. Our Wireless/Mobile Content group mission is to leverage our library of intellectual property across multiple mobile distribution platforms and further expand the audience for our characters and stories. Through affiliations and partnerships with mobile content developers, syndicators, and distributors, we intend to make available an array of downloadable content, including ring tones, wallpapers, and games, featuring characters, icons and concepts from our library of characters. We believe that utilizing the internet as a key access point to reach the mobile customer will keep production and overhead costs to a minimum and develop a very robust revenue stream. In addition to the potentially lucrative revenue stream from the sale of each phone and service contract, we will gain an additional point of contact to reach a dedicated fan base for specific properties. The subscriber base can be offered exclusive content, promotions, early access to other media properties, and other key benefits to keep them engaged with our various content offering.

As a mobile content provider, we will focus primarily on the delivery of content in various forms, including downloadable images, ringtones, voicetones, wallpapers, video, animation, games, and interactive applications (such as e-mail, web browsing, SMS and instant messaging) to a range of wireless devices. This will be achieved through partnerships with Mobile Content Syndicators, who aggregate and package content from multiple providers and distribute it through alliances with various channels or portals.

Filmed Entertainment: Feature Films

We are aggressively pursuing a multi-pronged approach to create feature films:

·	Licensing characters and stories to third-party producers and/or affiliated major studios for production

·	Secure outside financing to produce our own slates of films

Licensing Deals

Some examples of our current projects with major studios based on previously unbranded characters include:

·	Unique (Disney) - Based on a comic book series released in early 2007, Disney acquired the film rights to this project and tentative production schedule is set for sometime in 2008.

·	Cowboys & Aliens (Dreamworks/Paramount/Imagine/Universal) – In June, Dreamworks agreed to option our property for development and production for joint distribution through Paramount and Universal with Imagine Entertainment as a producing partner.

Production Slate Financing

As an alternative to licensing properties to studios, independent financing arrangements are becoming more prevalent in the entertainment industry. While there are many ways to finance films, one of the options is to create an Intellectual Property-Backed Securitization vehicle to facilitate the funding efforts. The structure is designed to (1) isolate the Intellectual Property assets needed for the production and exploitation of theatrically released films into a bankruptcy-remote vehicle, thus protecting the financial integrity of the Company from potential adverse performance of the picture slate, and (2) mitigate the performance risk across a number of films through structural credit enhancements.

The vast majority of issuance by dollar volume has occurred in the film industry because film catalogs represent large, predictable assets with clearly defined historical cash flows and relatively little variance. Similarly, future flows transactions backed by film catalogs tend to show less volatility as the film industry has followed the same pattern for many years where a few blockbusters (perhaps 5% of the total releases) finance the rest of the releases. This “all or nothing” type of economics, where the few hits pay for the many flops, works well for slates because the catalogs behave like a portfolio of assets whose diversification smoothes the volatility of revenues.

Intellectual property backed securitization is a recent phenomenon and the total market to date remains relatively small. In 1997 there were $380 million in known IP backed securitization transactions. In 2000 there were $1.13 billion. The total known transaction volume in those years was greater that $2 billion. The total asset value of patents worldwide is estimated to be many trillion dollars. (Source: Bernhard H. Fischer, “New Patent Issue: BioPharm Royalty Trust”, “From Ideas to Assets: Investing Wisely in Intellectual Property”, Bruce Berman (editor), (New York, John Wiley & Sons, Inc.) p. 484).

We are working with Havenwood Media LLC and Arclight Films to arrange a financing slate of eight low-budget (between $6 and $12 million) motion pictures intended for theatrical release. Together with Arclight, we will put together a combination of equity, tax incentives and other financing to fully fund the production of these films.

Along with our partners, Arclight and Havenwood, we have identified the following eight (8) properties for our current slate (although various circumstances may require us to substitute alternative titles for those listed):

·	Witchblade

·	The Darkness

·	Dead of Night (from Dylan Dog)

·	The Hunter

·	Ghosting

Hive

·	Mal Chance

·	Blood Nation

Our first project in this slate, Dead of Night, is in early stages of pre-production as of August 27 as we are in final negotiations with key talent. We anticipate production to begin the first quarter of 2008. The second film identified for potential 2007 production schedule is Ghosting. In addition to this current slate with Havenwood and Arclight, we are reviewing additional slate opportunities such as direct-to-home video slate and genre-specific, low-budget slates.

Filmed Entertainment: Television

In television, we intend to (1) continue our strategy of licensing our characters and stories to third-party producers for sale to broadcast and cable television networks: and (2) secure third-party financing to produce our own specials and series.

Licensing Deals

We are currently working with several well-known producing partners in order to help bring other characters to the small screen as follows:

·	Film 44

Peter Berg (Friday Night Lights) is directing and Raphael Alverez (The Wire) is writing the hour-long drama, Down, for NBC Universal/Television Studio based on the Top Cow Productions property by Warren Ellis.

·	Raimi-Donen

Sam Raimi (Spider Man 1, 2 & 3) is developing Rising Stars, by J.M.S. (Babylon 5) as a mini-series.

·	Roundtable Entertainment

Gina Matthews (13 going on 30) and Phil Stark (Dude, Where’s My Car) are working to develop Utopia, a single-camera half-hour sitcom for 20^th Century Fox.

Merchandise/Licensing

We recognize a targeted merchandising and licensing strategy can produce significant revenues from characters who build their audience / fan base through any form of media exploitation – feature film, television, home video/DVD, print, online, wireless and gaming. We will seek to develop relationships with category leaders to help secure more retail support, increase the distribution of its products, and make us a key franchise for our licensees.

Licensees recognize the potential that comic based properties afford them in diversifying their retail mix with lines for multiple characters within one story, and, in so doing, expanding the potential consumer audience interested in their merchandise. It is not uncommon for a major theatrical release in the comic to film genre to secure over 50 licensees for an array of products, from action figures, games and trading cards, to party supplies, costumes, furniture, and packaged foods.

The opportunities within the merchandising and licensing arena for us are equally as wide ranging, including toys/games, collectibles, apparel, and numerous consumer goods. We will pursue opportunities via the following channels:

·	General merchandising agreements with third parties in each major territory where films, television and new media will be released.

Collectible merchandising: cultivating the worldwide collector market by allowing licensees in other countries to break with the normal tradition of shipping only within their territory. In these agreements, we will allow such licensees to ship product to special retailers who have partnership arrangements with the Company. These items will carry a double royalty: the original royalty from the licensee and the additional royalty from the retailer allowed to carry the material.

·	The licensing of the Characters for customized advertising campaigns and/or media purchase campaigns.

·	Leveraging individual partners and licensees’ efforts together globally and locally to create critical mass, including promotions, contests, and third-party advertising on radio, television and new media.

·	The leveraging of our relationships with hundreds of comic book publishers and distributors worldwide for the distribution of the Characters in print form.

Collectibles Merchandising Strategy

Our collectible merchandising strategy will be an important area for income and branding. The collectible markets worldwide will be developed through the combination of an online and offline merchandising model. We will establish merchandise-licensing arrangements that enable individual licensees’ ability to sell merchandise outside their territories through our distribution partners. Where licensees traditionally cannot cross borders to sell products available within their own licensed territories, we will establish a global capability for individual territory merchandise licensees to make their product available worldwide over our website (including co-branded and syndicated versions of the website).

KISS Comics Group Venture

Spinning off from the successful marketing empire of the 70’s rock superstars, KISS, KISS 4K is a multi-platform comic property that follows the adventures of superheroes based off the KISS band personalities. KISS 4K is the first launch of the Kiss Comics Group, a 50/50 licensing venture with KISS. Concepts developed in KISS 4K will be spun off into separate titles, which will include appearances by the members of KISS. The comic lends itself to unique merchandising opportunities. KISS 4K merchandising will target higher-end product, including clothing, collectibles, cell phone accessories and plug-ins and electronics. Additionally, there are many opportunities for sponsors to dress/equip the characters with specific products within the comic.

Merchandise Licensing Industry

According to License Magazine, character-based licensed products – which include entertainment, television and movie characters - generated more than $39B at retail in 2003. Licensed toy lines in the character category increased by more than 5% in 2003 to just over $5.6B (NPD Group/FunWorld). Top action properties, including Spider-Man, Buffy the Vampire Slayer, The X-Men, Hercules, and Star Wars, have built lucrative licensing programs across all product categories. In fact, franchises such as Teenage Mutant Ninja Turtles, Star Wars Episode I, Toy Story, and even Barney have garnered over $1 billion sales each in the U.S. alone. We are looking to expand our merchandise lines in ways that benefit our franchises beyond current licensing agreements.

Merchandise licensing can include various products including sporting goods, apparel, home furnishings, stationery, packaged goods, books, and more, but the largest segment in this industry is toys. In the toy business, companies like Mattel and Hasbro may develop their own core brands that include characters and storylines to drive and support their toy lines. Often they look to third parties, including entertainment studios, video game companies, and book authors & publishers to bring popular storylines and characters to their products.

Through co-ventures, direct manufacturing, and merchandise licensing, we hope to expand our franchises into a tactile world that extends consumers relationships with the characters and stories that they know and love.

DESCRIPTION OF PROPERTY

Our offices are located at 11400 W. Olympic Blvd., Suite 1400, Los Angeles, CA 90064, and consist of approximately 12,400 square feet. Our lease, which expires on August 31, 2011, requires payments of $31,857 per month. On July 10, 2006, Platinum entered into a five year lease agreement which expires on August 31, 2011. The minimum annual payments under this lease are $127,429 in 2006, $387,383 in 2007, $402,878 in 2008, $418,993 in 2009, $435,753 in 2010 and $298,147 in 2011

LEGAL PROCEEDINGS

We are not currently a party to any legal proceedings. There has been no bankruptcy, receivership or similar proceedings.

There have been no material reclassifications, mergers, consolidations, or purchase or sale of a significant amount of assets not in the ordinary course of business. As of the date of this prospectus, there are no material proceedings to which any of our directors, executive officers, affiliates or stockholders is a party adverse to us.

Employees

As of the date of this prospectus, we have twenty-two (22) full-time and eight (8) part-time employees. We have not experienced any work stoppages and we consider relations with our employees to be good.

MANAGEMENT

EXECUTIVE OFFICERS, DIRECTORS AND KEY EMPLOYEES

The following table sets forth information about our executive officers, key employees and directors as of July 1, 2007.

Name	Age	Position
Scott Mitchell Rosenberg	44	Chairman & Chief Executive Officer
Brian Kenneth Altounian	43	President & Chief Operating Officer
Jill Zimmerman	44	Director
Helene Pretsky	43	Corporate Secretary and General Counsel

__________________

Scott Rosenberg has been our Chairman since inception. Mr. Rosenberg served as the Chairman of Platinum Studios, LLC, our predecessor since November 1996. Mr. Rosenberg established Platinum Studios, LLC in 1996 following a successful, high-profile career in the comic book industry. As founder and head of Malibu Comics, Rosenberg produced the Men In Black comic book, which he took to Sony to become a billion-dollar film franchise. At Malibu, Rosenberg developed an innovative grass-roots marketing approach, reaching out directly to fans, retailers, and press to allow Malibu to be distributed alongside top industry players at a fraction of what the major companies spent—notably, in the pre-Internet age, without the opportunities and advantages provided by the web. Malibu’s marketing savvy and ability to create and develop new characters and new ideas led to a fierce bidding war to acquire the company, and in 1994 Malibu was bought by Marvel Comics. Rosenberg has built Platinum Studios into Hollywood’s premier comics-to-film company. Mr. Rosenberg holds an undergraduate degree from the University of Denver.

Brian Altounian has been our Chief Operating Officer since June 2005 and was appointed to serve as President in September 2006. Mr. Altounian's background includes business development, finance, operations and administration and he has applied those skills to a variety of start-ups, Fortune 100 companies, and public and private organizations. Mr. Altounian has worked extensively in the entertainment and high-tech industries, the bread and butter of Los Angeles' commercial culture. He has held management positions including Director, Vice President, President, and CEO. He recently concluded his tenure as a Board member of Machine Talker (MTKN.OTC) and Chairman of the Board of Directors of XsunX, Inc. (XSNX.OTC) and he currently sits on the Board of Directors of Cereplast, Inc. (CERP.OTC). His expertise is in the area of developing corporate infrastructure and preparing early-stage companies to access capital through the public equity markets and he has provided marketing support to a number of technology companies such as Warp9 (WNYN.OTC), Imaging3, Inc. (IMGG.OTC) and BioSolar, Inc (BSRC.OTC).

Prior to his adventures in the high-tech arena, Mr. Altounian spent 12 years in the entertainment industry with a successful consulting practice, advising entertainment companies in the areas of finance, administration, operations and business development. His clients have included Disney Interactive, Two Oceans Entertainment Group, Papazian-Hirsch Entertainment, The Santa Barbara Grand Opera Association, International Documentary Association, In-Finn-Ity Productions and many others. He also held senior management positions in-house at Lynch Entertainment, Time Warner Interactive, National Geographic Television and WQED. Most recently, he was Consulting Producer on Random 1, a reality television series that debuted in November 2005 on the A&E Network and Executive Producer on the documentary feature film Lost in Woonsocket.

Mr. Altounian holds an MBA from Pepperdine University and an undergraduate degree from UCLA.

Jill M. Zimmerman has been a director since inception. Since May 2005, Ms. Zimmerman has served as a Vice President at the Alford Group, a consulting firm based in Evanston, Illinois. Ms. Zimmerman previously served as a Crisis Program Supervisor and Director of Development at Alternatives, Inc. a not-for profit corporation. Ms. Zimmerman holds a Bachelor of Arts from the University of California at Santa Barbara and a Masters degree from the University of Chicago.

Helene Pretsky has been our general counsel since January, 2006 and our corporate secretary and Executive Vice President since October 1. Ms. Pretsky, a securities/corporate attorney with expertise in intellectual property, has focused her twenty-year legal career on representing start-up, early-stage revenue companies in the high-tech, emerging technologies and entertainment industries. During her initial seven years of practice at Brobeck, Phleger & Harrison and, thereafter, at two prestigious Century City law firms, Ms. Pretsky provided the full range of corporate representation for private and public companies, including public offerings, private placements, mergers and acquisitions and preferred stock financings; complex patent, trade secret, copyright and trademark licensing and protection agreements; cooperative research, development and commercialization agreements; and domestic and international distribution and sales arrangements. Over the last five years, Ms. Pretsky served as General Counsel and VP of Business Affairs for a cutting edge mobile payment services hardware and software solutions company, which she also co-founded. Ms. Pretsky provided the full range of corporate and securities work for such company, including preparation and negotiation of private placements, technology development and license agreements and strategic partnership contracts with Motorola, Nextel, Sprint, SAfeNet and TNS. She was also instrumental in creating the company's overall business and intellectual property strategies.

Ms. Pretsky, a magna cum laude, Phi Beta Kappa graduate of the University of California, Los Angeles, received her J.D. from the UCLA School of Law, where she graduated in the top 15% of her class and was a member of its prestigious Law Review.

COMMITTEES OF THE BOARD

We currently have no audit committee, compensation committee, nominations and governance committee of our board of directors.

FAMILY RELATIONSHIPS

There are no family relationships among our executive officers and directors.

CODE OF ETHICS

We have not adopted a Code of Ethics within the meaning of Item 406(b) of Regulation S-B of the Securities Exchange Act of 1934.

EXECUTIVE COMPENSATION

The following table sets forth the cash compensation (including cash bonuses) paid or accrued by us to our Chief Executive Officer and our four most highly compensated officers other than the Chief Executive Officer from inception to December 31, 2006.

Name and Principal Position	Year	Salary ($)	Bonus ($)	Stock Awards ($)	Option Awards ($)	Non-Equity Incentive Plan Compensation ($)	Change in Pension Value and Non-Qualified Deferred Compensation Earnings ($)	All Other Compensation ($)	Total ($)
Scott Mitchell Rosenberg, CEO	2006	$34,616	-	-	-	-	-	-	$34,616
Brian K. Altounian, President/COO	2006	$46,154	-	-	-	-	-	-	$46,154
Helene Pretsky, EVP Bus. Affairs	2006	$30,769							$30,769

Outstanding Equity Awards at Fiscal Year-End Table.

The following table sets forth information with respect to grants of options to purchase our common stock to the named executive officers from inception to December 31, 2006.

Option Awards											Stock Awards
Name	Number of Securities Underlying Unexercised Options (#) Exercisable		Number of Securities Underlying Unexercised Options (#) Unexercisable		Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)		Option Exercise Price ($)		Option Expiration Date		Number of Shares or Units of Stock That Have Not Vested (#)		Market Value of Shares or Units of Stock That Have Not Vested ($)		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)		Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)
Scott Mitchell Rosenberg		-0-		-0-		-0-		-0-		-0-		-0-		-0-		-0-		-0-
Brian Altounian		-0-		-0-		-0-		-0-		-0-		-0-		-0-		-0-		-0-
Jill Zimmerman		-0-		-0-		-0-		-0-		-0-		-0-		-0-		-0-		-0-

Director Compensation

The following table sets forth with respect to the named directors, compensation information inclusive of equity awards and payments made from inception to December 31, 2006.

Name (a)	Fees Earned or Paid in Cash ($) (b)		Stock Awards ($) (c)		Option Awards ($) (d)		Non-Equity Incentive Plan Compensation ($) (e)		Change in Pension Value and Nonqualified Deferred Compensation Earnings (f)		All Other Compensation ($) (g)		Total ($) (h)
Scott Mitchell Rosenberg		-0-		-0-		-0-		-0-		-0-		-0-		-0-
Brian Altounian		-0-		-0-		-0-		-0-		-0-		-0-		-0-
Jill Zimmerman		-0-		-0-		-0-		-0-		-0-		-0-		-0-

EMPLOYMENT AGREEMENTS

We currently have no employment agreements with our executive officers.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of October 1, 2006, the number of and percent of our common stock beneficially owned by:

·	all directors and nominees, naming them,

·	our executive officers,

·	our directors and executive officers as a group, without naming them, and

·	persons or groups known by us to own beneficially 5% or more of our common stock:

We believe that all persons named in the table have sole voting and investment power with respect to all shares of common stock beneficially owned by them.

A person is deemed to be the beneficial owner of securities that can be acquired by him within 60 days from August 27, 2006 upon the exercise of options, warrants or convertible securities. Each beneficial owner's percentage ownership is determined by assuming that options, warrants or convertible securities that are held by him, but not those held by any other person, and which are exercisable within 60 days of August 27, 2006 have been exercised and converted.

Title of Class	Name of Beneficial Owner	Number of Shares Beneficially Owned		Percent of Total
Common Stock	Scott Rosenberg (1)		128,250,000		63.7%
Common Stock	Brian Altounian		6,750,000		3.3%
Common Stock	Jill Zimmerman		-0-		*
Common Stock	Helene Pretsky		-0-		*

Common Stock	Charlotte Rosenberg		17,208,575		8.6%

Common Stock	All Executive Officers and Directors as a Group (3 persons )		135,000,000		100.00%

*Less than one percent.

(1)	Includes 135,000 shares of common stock beneficially owned by Pamela Rosenberg, the wife of Scott Rosenberg. Mr. Rosenberg disclaims beneficial ownership of these shares. Also includes 16,875,000 shared held by the Scott Mitchell Rosenberg GRIT, of which Mr. Rosenberg is the Trustee.

Certain Relationships and Transactions

We have an exclusive option to enter licensing/acquisition of rights agreements for individual characters, subject to existing third party rights, within the RIP Awesome Library of RIP Media, Inc., a related entity in which Scott Rosenberg is a majority shareholder. The Company did not exercise this right during the years ended December 3, 2006 and 2005.

Our President, Scott Mitchell Rosenberg also provides production consulting services to our customers (production companies) through Scott Mitchell Rosenberg Productions, which is wholly owned by our President, Scott Mitchell Rosenberg. At the time we enter into a purchase agreement with a production company, a separate contract may be entered into between Scott Mitchell Rosenberg Productions and the production company. In addition, consulting services regarding development of characters and storylines may also be provided to us by Scott Mitchell Rosenberg Productions by the production company.

During 2006, we repaid in full the uncollecollateralized loans of $20,000 received from RIP Media during 2004. These loans accrued interest at 5% and 6% for the years ended December 31, 2005 and 2006, respectively.

At December 31, 2006 and 2005, we owed $243,079 to Brian Altounian for consulting services provided prior to his employment and $20,000 to RIP Media, respectively.

DESCRIPTION OF SECURITIES

Our authorized capital stock consists of 500,000,000 shares of Common Stock, $0.001 par value per share, of which 201,250,000 shares were issued and outstanding as of August 27, 2006

The holders of Common Stock are entitled to one vote for each share held of record on all matters to be voted on by the stockholders. The holders of Common Stock are entitled to receive dividends ratably, when, as and if declared by the Board of Directors, out of funds legally available therefore. In the event of a liquidation, dissolution or winding-up of our business, the holders of Common Stock are entitled to share equally and ratably in all assets remaining available for distribution after payment of liabilities.

The holders of shares of Common Stock, as such, have no conversion, preemptive, or other subscription rights and there are no redemption provisions applicable to the Common Stock. All of the outstanding shares of Common Stock are, and the Common Stock offered hereby, when issued will be, validly issued, fully paid and non-assessable.

We have never paid any cash dividends on our Common Stock and do not anticipate paying any cash dividends in the foreseeable future. We intend to retain future earnings to fund ongoing operations and future capital requirements of our business. Any future determination to pay cash dividends will be at the discretion of the Board of Directors and will be dependent upon our financial condition, results of operations, capital requirements and such other factors as the Board of Directors deems relevant.

Transfer Agent

The transfer agent of our securities is Computershare Limited, whose address is 1745 Arden Avenue, Glendale, CA 91204. The phone number of the transfer agent is (800) 962-4284.

COMMISSION'S POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES

Our By-laws, as amended, provide to the fullest extent permitted by California law, our directors or officers shall not be personally liable to us or our shareholders for damages for breach of such director's or officer's fiduciary duty. The effect of this provision of our By-laws, as amended, is to eliminate our right and our shareholders (through shareholders' derivative suits on behalf of our company) to recover damages against a director or officer for breach of the fiduciary duty of care as a director or officer (including breaches resulting from negligent or grossly negligent behavior), except under certain situations defined by statute. We believe that the indemnification provisions in our By-laws, as amended, are necessary to attract and retain qualified persons as directors and officers.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the “Act” or “Securities Act”) may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In May, 2007, the Company entered into indemnification agreements with each of the Officers and Directors of the Corporation individually.

PLAN OF DISTRIBUTION

The selling stockholders and any of their respective pledgees, donees, assignees and other successors-in-interest may, from time to time, sell any or all of their shares of common stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. These sales may be at fixed or negotiated prices. The selling stockholders may use any one or more of the following methods when selling shares:

·	ordinary brokerage transactions and transactions in which the broker-dealer solicits the purchaser;

·	block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;

·	purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

·	an exchange distribution in accordance with the rules of the applicable exchange;

·	privately-negotiated transactions;

·	broker-dealers may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share;

·	a combination of any such methods of sale; and

·	any other method permitted pursuant to applicable law.

The selling stockholders may also sell shares under Rule 144 under the Securities Act, if available, or Regulation S, rather than under this prospectus. The selling stockholders shall have the sole and absolute discretion not to accept any purchase offer or make any sale of shares if they deem the purchase price to be unsatisfactory at any particular time.

The selling stockholders or their respective pledgees, donees, transferees or other successors in interest, may also sell the shares directly to market makers acting as principals and/or broker-dealers acting as agents for themselves or their customers. Such broker-dealers may receive compensation in the form of discounts, concessions or commissions from the selling stockholders and/or the purchasers of shares for whom such broker-dealers may act as agents or to whom they sell as principal or both, which compensation as to a particular broker-dealer might be in excess of customary commissions. Market makers and block purchasers purchasing the shares will do so for their own account and at their own risk. It is possible that a selling stockholder will attempt to sell shares of common stock in block transactions to market makers or other purchasers at a price per share which may be below the then market price. The selling stockholders cannot assure that all or any of the shares offered in this prospectus will be sold by the selling stockholders. The selling stockholders and any brokers, dealers or agents, upon effecting the sale of any of the shares offered in this prospectus, may be deemed to be "underwriters" as that term is defined under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, or the rules and regulations under such acts. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act.

We are required to pay all fees and expenses incident to the registration of the shares, including fees and disbursements of counsel to the selling stockholders, but excluding brokerage commissions or underwriter discounts.

The selling stockholders, alternatively, may sell all or any part of the shares offered in this prospectus through an underwriter. No selling stockholder has entered into any agreement with a prospective underwriter and there is no assurance that any such agreement will be entered into.

The selling stockholders may pledge their shares to their brokers under the margin provisions of customer agreements. If a selling stockholders defaults on a margin loan, the broker may, from time to time, offer and sell the pledged shares. The selling stockholders and any other persons participating in the sale or distribution of the shares will be subject to applicable provisions of the Securities Exchange Act of 1934, as amended, and the rules and regulations under such act, including, without limitation, Regulation M. These provisions may restrict certain activities of, and limit the timing of purchases and sales of any of the shares by, the selling stockholders or any other such person. In the event that the selling stockholders are deemed affiliated purchasers or distribution participants within the meaning of Regulation M, then the selling stockholders will not be permitted to engage in short sales of common stock. Furthermore, under Regulation M, persons engaged in a distribution of securities are prohibited from simultaneously engaging in market making and certain other activities with respect to such securities for a specified period of time prior to the commencement of such distributions, subject to specified exceptions or exemptions.

We have agreed to indemnify the selling stockholders, or their transferees or assignees, against certain liabilities, including liabilities under the Securities Act of 1933, as amended, or to contribute to payments the selling stockholders or their respective pledgees, donees, transferees or other successors in interest, may be required to make in respect of such liabilities.

If the selling stockholders notify us that they have a material arrangement with a broker-dealer for the resale of the common stock, then we would be required to amend the registration statement of which this prospectus is a part, and file a prospectus supplement to describe the agreements between the selling stockholders and the broker-dealer.

PENNY STOCK

·	That a broker or dealer approve a person's account for transactions in penny stocks; and

·	the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.

In order to approve a person's account for transactions in penny stocks, the broker or dealer must

·	obtain financial information and investment experience objectives of the person; and

·	make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.

The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the Commission relating to the penny stock market, which, in highlight form:

·	Sets forth the basis on which the broker or dealer made the suitability determination; and

·	That the broker or dealer received a signed, written agreement from the investor prior to the transaction.

SELLING STOCKHOLDERS

The table below sets forth information concerning the resale of the shares of common stock by the selling stockholders , which we previously issued to the selling stockholders . We will not receive any proceeds from the resale of the common stock by the selling stockholders. Assuming all the shares registered below are sold by the selling stockholders, none of the selling stockholders will continue to own any shares of our common stock.

The following table also sets forth the name of each person who is offering the resale of shares of common stock by this prospectus, the number of shares of common stock beneficially owned by each person, the number of shares of common stock that may be sold in this offering and the number of shares of common stock each person will own after the offering, assuming they sell all of the shares offered.

Name (1)	Beneficial Ownership Before the Offering	Number of Shares of Common Stock Included in Prospectus	Beneficial Ownership After the Offering (2)
Nelson A. Abiva	250,000	250,000	0
Alfredo Aceituno Jr.	50,000	50,000	0
Karl Adler	100,000	100,000	0
Jonas E. Agin	50,000	50,000	0
Arthur & Kelli Altounian	50,000	50,000	0
Niki Anagnos Trust(3)	100,000	100,000	0
Ross Anderson	50,000	50,000	0
Matt Andrews & Teresa Andrews,	50,000	50,000	0
Fereshteh and Sharokh Atiabi	330,000	330,000	0
Krystianne E. Avedian	6,000	6,000	0
Fred & Sandy Ayala	10,000	10,000	0
Kathie Baker	50,000	50,000	0
Jon Bales	50,000	50,000	0
Yvonne C. Bartling	100,000	100,000	0
Eric Belusa	140,000	140,000	0
Ronald Belusa	50,000	50,000	0

Andrew Berk	110,000	110,000
The Eugene W. Berk Living Trust dtd. 6/1/90 (4)	50,000	50,000
Michael D. Berk, Trustee of the Berk Family Trust U/D/T 2/18/93 (5)	100,000	100,000
Melissa Berler	50,000	50,000
John Joseph Bial	315,000	315,000
Connie Blankenship	50,000	50,000
Christopher V. Bonbright & Lisa C. Bonbright-TTEES O/T Christopher & Lisa Bonbright Trust Dtd. 8/2/95 (6)	150,000	150,000
Sharon Bonney	70,000	70,000
TMI Partners, LLC (7)	500,000	500,000
Edward Bouryng & Ester Bouryng	200,000	200,000
William E. Boyd	100,000	100,000
Chris Boyte	15,000	15,000
Doug Bradley	20,000	20,000
Lawrence J. Brenner, Trustee of the Lawrence J. Brenner Trust Agmt. Dtd. March 24,2005 (8)	50,000	50,000
Arthur & Margaret Briggs	100,000	100,000
Howard K. Brodwin	20,000	20,000
Lynn Elizabeth Brody Living Trust (9)	250,000	250,000
Michael Brown and Linda Engelsiepen	100,000	100,000
Scott C. Bublin	50,000	50,000
Frank L. Buckley	250,000	250,000
Jason W. Callaway	100,000	100,000
Eric M. Campbell	500,000	500,000
Michael Canales	50,000	50,000
Rachel M. Capelouto	50,000	50,000
Randolph and J. Denise Capri Trust (10)	100,000	100,000
Gary R. Carlson Trust dated 5/3/91 (11)	100,000	100,000
Christopher Jamie Carr and Susan Lettween Carr	100,000	100,000
Robert J. Castillo	10,000	10,000
Robert Cavalleri	150,000	150,000
Lisa Cheek	50,000	50,000
Jeffrey Chiprin	50,000	50,000
Keith Chow & Chui Chow	50,000	50,000
Steven Chow and Alicia Chow	150,000	150,000
Robert Christian and Yerina S. Christian	50,000	50,000
John Scott Ciganko	50,000	50,000
Patricia Clipper	50,000	50,000
Brett J. Cohen	100,000	100,000
Mitchell B. Cohen and Anna Marie Cohen	50,000	50,000
Albert Andy Cohn and Vivian Cohn	90,000	90,000

Joanna and Timothy Collins	100,000	100,000
Rayann Congrove and Rebecca E.M. Williams	50,000	50,000
Kimberly E. Conlin and James P. Laware	75,000	75,000
Christopher J. Cook	50,000	50,000
Klava Cousin	50,000	50,000
Crane Family Trust of 1989 (12)	150,000	150,000
Stacia Crawford	5,000	5,000
Bradford Creger	300,000	300,000
Bradford Creger or Sheri Creger, Trustees of the Brad & Sheri Creger Living Trust dtd 10/30/04 (13)	2,125,000	2,125,000
Sheri Creger	425,000	425,000
William D. or Cheri D. Curren	50,000	50,000
Daniel S. Dagg	50,000	50,000
Erik and Merin Dahlerbruch	50,000	50,000
Randall J. Dean	300,000	300,000
Luka DeKelaita	20,000	20,000
Victor L. Delpine	400,000	400,000
Spree DeSha	100,000	100,000
Harinder Dhillon	400,000	400,000
Terry Divyak	50,000	50,000
Terry Divyak and Rosanne Balcazar	400,000	400,000
Nicholas J. Doko and Lauren A. Doko	50,000	50,000
Denny Dunlap	50,000	50,000
James H. Dupont	200,000	200,000
Scott E. Dyke	295,750	295,750
Perry Engel and Donna Engel	15,000	15,000
Paula E. Eylar Living Trust 2006 (14)	200,000	200,000
Mary E. Falso	20,000	20,000
J. Mark Ferrara and Maria A. Vachula-Ferrara	3,000,000	3,000,000
Fiorito Family Trust (15)	150,000	150,000
Robert J. Fisher	150,000	150,000
Phil Fistori and Ingrid M. Enoex-Fistori	50,000	50,000
Florence Franco	50,000	50,000
Amy L. Frazer & Franklin W. Frazer	100,000	100,000
Freedman Living Trust dated September 29, 2003 (16)	50,000	50,000
Ronald H. Friedman	250,000	250,000
Next Venture, Inc. dba: Sierra Group (17)	100,000	100,000
Taisei Fujimura	100,000	100,000
Russell L. Furie	100,000	100,000

Howard and Alice Gamse	50,000	50,000
Susan B. Garber	100,000	100,000
Stephan O. Garden	100,000	100,000
Daniel A. Garrett	30,000	30,000
Dan Gense	12,000	12,000
Laura Gerritsen	50,000	50,000
Amy E. Gibbons and Claudia J. Hoover,	50,000	50,000
Aaron L. Gilbert	150,000	150,000
Jill A. Goldner	50,000	50,000
California Quintet LLC (18)	1,000,000	1,000,000
Donald A. Goldstein	50,000	50,000
Scott Goligoski	250,000	250,000
Dawn M. Gomez	10,000	10,000
Tommy P. and Dawn M. Gomez	80,000	80,000
Mruthyunjaya Gonchigar	100,000	100,000
Steven W. and Mary G. Gordon	160,000	160,000
Matthew Gross	100,000	100,000
Jeffrey A. Grossman	300,000	300,000
William L. Guggemos, Sr. & Nancy A. Guggemos	10,000	10,000
Caryl E. Hamilton	50,000	50,000
Mildred B. Hamilton	50,000	50,000
James Hammond and Linda Strout	50,000	50,000
Greg & Carol Hampson	500,000	500,000
Larry and Jeri Hannah	100,000	100,000
Robert Hanning and Amy Welsh Hanning	50,000	50,000
Lindsay and Terry Harding	70,000	70,000
C & R Consultants, Inc. Pension Plan (19)	50,000	50,000
Joel & Wendy Hecht	125,000	125,000
Software Technologies, LLC Defined Benefit Retirement Trust (20)	125,000	125,000
Jason A. Heeney	50,000	50,000
Hein Family Trust, Ronald Lee Hein / TTEE, Andrea P. Hein, TTEE (21)	75,000	75,000
Ronald D. Hejnal & Barbara A. Hejnal,	100,000	100,000
The Held Surviving Spouse Trust (22)	500,000	500,000
Tonny K. Ho	400,000	400,000
Paul Hoen and Susan Hoen	100,000	100,000

Christopher Horton	5,000	5,000
Hosaka Revocable Trust 2006 (23)	100,000	100,000
Shannon and Richard Howard	120,000	120,000
Lynlee Bybee-Hughes	15,000	15,000
Ben & Maureen Hunter	400,000	400,000
Brian Inerfeld	50,000	50,000
Inerfeld Family Limited Partnership (24)	100,000	100,000
Dean Janes	118,500	118,500
Donn & Candace Janes	100,000	100,000
Kathryn Janes and Wendy L. Whitaker	50,000	50,000
Michael Jaramillo	80,000	80,000
Lynn Joffe & Richard Anderson	75,000	75,000
Janet A. Johnson	100,000	100,000
James Kirk Kahla	100,000	100,000
Tim Kaiser	100,000	100,000
Gregory or Diana Kalaitzian	50,000	50,000
Jamila Kanan-Cioffi	55,000	55,000
Kevin A. Karo & Stefanie Karo	100,000	100,000
Larry J. Kaufman	700,000	700,000
Stanley K. Kawanishi and Carol M. Kawanishi	500,000	500,000
Victoria Keller	50,000	50,000
Susan Kelly	250,000	250,000
Ronald Kenny and Francine Kenny	50,000	50,000
Jesse Thomas Kerns	75,000	75,000
Gregory A. Kerrebrock	150,000	150,000
Kessler Family Trust (25)	100,000	100,000
Adrian & Nazila Khaghan	1,000,000	1,000,000
Robert D. & Pamela M. King	200,000	200,000
Ken Kirshner	50,000	50,000
Morts Associates(26)	500,000	500,000
Randyl M. Kirshner, TTE and Gaby Kirshner Living Trust u/t/d 5/16/2003 (27)	100,000	100,000
KIG Inc. Retirement Trust (28)	200,000	200,000
Coral Kline	50,000	50,000

Gerald Kline and Melanie Miles	50,000	50,000
Charmaine Klohe	80,000	80,000
Richard J. and Linda Klug	100,000	100,000
Alice Kofman	60,000	60,000
Jeff F. Konecke	100,000	100,000
Israel L. Kunin Living Trust dated 3/17/00 (29)	500,000	500,000
Patrick L. and Terri A. Lamontagne	40,000	40,000
Janice Lansing	300,000	300,000
Edward C. Le Cara	50,000	50,000
David D. Lee	100,000	100,000
Jeffery K. Lee and Paula J. Lee	100,000	100,000
Dana Levy	200,000	200,000
Pamela Lindsay & Mark Lindsay	100,000	100,000
Robert W. Litter	1,100,000	1,100,000
Richard Loehr	50,000	50,000
Lawrence S. Long	50,000	50,000
Jennifer Lowe & Daniel Lowe	100,000	100,000
Jennifer Lowe & Jehanne Lowe	100,000	100,000
Monica T. Macera	50,000	50,000
Anne H. Madden	50,000	50,000
Kenneth Mantlo	50,000	50,000
Jonathan and Jacqueline Mates-Muchin	100,000	100,000
Dea McNealy	350,000	350,000
Dane F. Medley	160,000	160,000
Armen S. Megerdichian	400,000	400,000
Mark C. Mehrali	110,000	110,000
Mehrali Family Trust (30)	100,000	100,000
Jonathan C. Milrod	50,000	50,000
Yuichiro Bryan Miyamoto	50,000	50,000
Madeleine Mizrahi	125,000	125,000
Grigor Greg Mkrtchyan and Leana Mkrtchyan	100,000	100,000
Morton Family Trust (31)	250,000	250,000
Jerome & Carol Muchin Family Trust Dated 9/15/05 (32)	100,000	100,000
Michael and Emma Muchin	150,000	150,000

Andrea and Neil Muchin	50,000	50,000
Peter Murietta	50,000	50,000
Mark Myers	100,000	100,000
Brian Negri	70,000	70,000
David Negri	30,000	30,000
Kari A. Negri	200,000	200,000
Joselito Neri & Daisy Neri	5,000	5,000
Cable Neuhaus & April Neuhaus	50,000	50,000
Tue Duc Nguyen and Giao Q.T. Nguyen	300,000	300,000
Diane R. Noahr	25,000	25,000
James Odell	200,000	200,000
David and Desiree Ohman	200,000	200,000
Oliver Family Trust (33)	50,000	50,000
Clive Otsuka	30,000	30,000
Clive and Mari Otsuka	300,000	300,000
Albert R. and Virginia R. Ovadia Trustees of the Ovadia Family Trust (34)	250,000	250,000
Al and Joyce Parde	50,000	50,000
Eric Parde	200,000	200,000
Kristianna M. Parde	50,000	50,000
Anthony Peckham	250,000	250,000
J. Wade Pedrotti	50,000	50,000
Zachary & Jacqueline Pennington	100,000	100,000
Charles E. Perry Jr. & Sharon M. Eley	100,000	100,000
Daniel B. Peters & Elizabeth H. Peters Trustees of The Peters Family Trust dated April 30, 2004 (35)	200,000	200,000
Richard & Madeline Peters	100,000	100,000
Richard M. Peters and Madeline I. Peters as Trustees of the Peters Family Trust dtd. 11/2/80 (36)	300,000	300,000
Richard M. Peters, O.D., an Optometric Corporation profit sharing plan (37)	200,000	200,000
Marilyn Pipp	50,000	50,000
Daniel Pitlik	40,000	40,000
David Pitlik	30,000	30,000
Michael Pitlik	30,000	30,000

Helen R. Pomilio	50,000	50,000
Alan M. Quon	50,000	50,000
Junaid Quraishi	50,000	50,000
Danny Lee Ramsey and Barbara E. Ramsey	200,000	200,000
Kerwin & Laveta Rice	50,000	50,000
Glenn H. Rigberg	100,000	100,000
Lionel Rodriguez Jr.	100,000	100,000
Rongine Enterprises LLC (38)	50,000	50,000
Charlotte Rosenberg	17,208,575	17,208,575,
William Rude	150,000	150,000
Jon & Susan Safier	50,000	50,000
Ron Salvo	50,000	50,000
Travis F. Sanchez	100,000	100,000
John A. Sanderson	50,000	50,000
Andrew Sandler 1990 Trust (39)	150,000	150,000
Lisa Sandler	700,000	700,000
Marco Daniel Santos	150,000	150,000
Frederic Scheer & Jocelyne Scheer	100,000	100,000
The Mark Scheiner Living Trust (40)	500,000	500,000
Michael Schreibman & Michelle Schreibman,	50,000	50,000
Zoe & Barry J. Schulman	1,000,000	1,000,000
James Schwartzman & Karen Maxwell	50,000	50,000
Renaurd Avery Scott	50,000	50,000
Truman L. Scott	50,000	50,000
Sandeep Sherlekar	100,000	100,000
Royce Shimamoto	100,000	100,000
Andrea B. Simon	50,000	50,000
Zamira Kanan Singer	50,000	50,000
Eric Slaim	100,000	100,000
Danon Slinkard	75,000	75,000
Damian Smith	200,000	200,000
Karen A. Smith	110,000	110,000
Howard J. Smuckler	750,000	750,000
Herbert V. Sorell & Kim C. Sorell	200,000	200,000
Sam & Nancy Spear	100,000	100,000
Sam Spear	100,000	100,000

Russell B. Spencer	110,000	110,000	0
Warren Dale Spencer	90,000	90,000	0
Eric David Spratt	50,000	50,000	0
Donald G. Sproat	75,000	75,000	0
Scott & Heidi Steele	50,000	50,000	0
Vernon Christopher Steele	50,000	50,000	0
Anthony R. Stella	100,000	100,000	0
Gary Stephenson	50,000	50,000	0
Kevin & Vicki Stringer	50,000	50,000	0
Fenway Advisory Group	1,500,000	1,500,000	0
Jeffrey S. Swartz & Donna F. Swartz	50,000	50,000	0
Stanley & Elaine Swartz Trust est. under agmt 10/7/1982 (41)	100,000	100,000	0
Craig M. Taggart	20,000	20,000	0
Bruce H. Tashjian	100,000	100,000	0
Bryan Tashjian	50,000	50,000	0
Damyon and Pattie Tashjian	75,000	75,000	0
Edward Tashjian	50,000	50,000	0
Gregory Tashjian	50,000	50,000	0
Sona Tashjian	50,000	50,000	0
Laurie & Walter Tayenaka	30,000	30,000	0
M. Lewis Temares & Louise Temares	100,000	100,000	0
Steve Timmerman & Jeannie Melancon	70,000	70,000	0
Scott Piwonka-Totten	50,000	50,000	0
April M. Tronson	10,000	10,000	0
Trust of Charles E. & Mary Jane Tronson dated July 20, 1982 (42)	250,000	250,000	0
Daniel C. Tronson & Ellen S. Tronson	500,000	500,000	0
Dane Tronson	50,000	50,000	0
David S. Tronson	320,000	320,000	0
Jennifer N. Tronson	10,000	10,000	0
John Tronson	100,000	100,000	*
Steven Powers Tronson and Alicia Jane Tronson	100,000	100,000	0
Mauricia Valadez	50,000	50,000	0
Wilmer Valderrama	200,000	200,000	0
Marika Van Adelsberg	100,000	100,000	0

Emmanuel C. Vasilomanolakis	210,000	210,000
Aaron & Dawn Vest	100,000	100,000
Scott Wagner	20,000	20,000
Carol Warfield	50,000	50,000
Thomas L. Webb and Miriam R. Webb	200,000	200,000
Richard Weingart & Elizabeth Weingart	300,000	300,000
Randy J. Weinzoff	50,000	50,000
Tammy Weinzoff	110,000	110,000
Weinzoff Family Trust	100,000	100,000
Graham G. Weiss	250,000	250,000
Faryl E. Weisser	70,000	70,000
Troy D. Wiles	100,000	100,000
Dwane Winchester	50,000	50,000
Malissa Wise	50,000	50,000
Lisa Christine Saiki Wong Revocable Trust (43)	250,000	250,000
Russell D. Wong Revocable Trust (44)	750,000	750,000
Wyman & Isaacs Profit Sharing Plan (45)	250,000	250,000
Robert Zenner	50,000	50,000

The number and percentage of shares beneficially owned is determined in accordance with Rule 13d-3 of the Securities Exchange Act of 1934, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rule, beneficial ownership includes any shares as to which the selling stockholders has sole or shared voting power or investment power and also any shares, which the selling stockholders has the right to acquire within 60 days.

(1) All of the selling stockholders purchased our shares pursuant to our October 2006 Private Placement Subscription Agreement, described below.

(2) Assumes that all securities will be sold.

(3) In accordance with rule 13d-3 under the securities exchange act of 1934, Niki Anagnos, as trustee, may be deemed a control person of the shares owned by such entity, with final voting power and investment control over such shares.

(4) In accordance with rule 13d-3 under the securities exchange act of 1934, Eugene Berk, as trustee, may be deemed a control person of the shares owned by such entity, with final voting power and investment control over such shares.

(5) In accordance with rule 13d-3 under the securities exchange act of 1934, Michael D. Berk, as trustee, may be deemed a control person of the shares owned by such entity, with final voting power and investment control over such shares.

(6) In accordance with rule 13d-3 under the securities exchange act of 1934, Christopher Bonbright, as trustee, may be deemed a control person of the shares owned by such entity, with final voting power and investment control over such shares.

(7) In accordance with rule 13d-3 under the securities exchange act of 1934, Melissa Bordy may be deemed a control person of the shares owned by such entity, with final voting power and investment control over such shares.

(8) In accordance with rule 13d-3 under the securities exchange act of 1934, Lawrence J. Brenner, as trustee, may be deemed a control person of the shares owned by such entity, with final voting power and investment control over such shares.

(9) In accordance with rule 13d-3 under the securities exchange act of 1934, Lynn Brody, as trustee, may be deemed a control person of the shares owned by such entity, with final voting power and investment control over such shares.

(10) In accordance with rule 13d-3 under the securities exchange act of 1934, Randolph Capri, as trustee, may be deemed a control person of the shares owned by such entity, with final voting power and investment control over such shares.

(11) In accordance with rule 13d-3 under the securities exchange act of 1934, Gary Carlson, as trustee, may be deemed a control person of the shares owned by such entity, with final voting power and investment control over such shares.

(12) In accordance with rule 13d-3 under the securities exchange act of 1934, Bryan G. Crane, as trustee, may be deemed a control person of the shares owned by such entity, with final voting power and investment control over such shares.

(13) In accordance with rule 13d-3 under the securities exchange act of 1934, Sheri A. Creger, as co-trustee, may be deemed a control person of the shares owned by such entity, with final voting power and investment control over such shares.

(14) In accordance with rule 13d-3 under the securities exchange act of 1934, Paula E. Eylar, as trustee, may be deemed a control person of the shares owned by such entity, with final voting power and investment control over such shares.

(15) In accordance with rule 13d-3 under the securities exchange act of 1934, Daniel J. Fiorito, as trustee, may be deemed a control person of the shares owned by such entity, with final voting power and investment control over such shares.

(16) In accordance with rule 13d-3 under the securities exchange act of 1934, Douglas M. Freedman, as co-trustee, may be deemed a control person of the shares owned by such entity, with final voting power and investment control over such shares.

(17) In accordance with rule 13d-3 under the securities exchange act of 1934, Carl Frommer may be deemed a control person of the shares owned by such entity, with final voting power and investment control over such shares.

(18) In accordance with rule 13d-3 under the securities exchange act of 1934, Russell Goldsmith may be deemed a control person of the shares owned by such entity, with final voting power and investment control over such shares

(19) In accordance with rule 13d-3 under the securities exchange act of 1934, Carol Haskin may be deemed a control person of the shares owned by such entity, with final voting power and investment control over such shares

(20) In accordance with rule 13d-3 under the securities exchange act of 1934, Joel B. Hecht, as trustee, may be deemed a control person of the shares owned by such entity, with final voting power and investment control over such shares.

(21) In accordance with rule 13d-3 under the securities exchange act of 1934, Andrea P. Hein, as trustee, may be deemed a control person of the shares owned by such entity, with final voting power and investment control over such shares.

(22) In accordance with rule 13d-3 under the securities exchange act of 1934, Harold A. Held, as trustee, may be deemed a control person of the shares owned by such entity, with final voting power and investment control over such shares.

(23) In accordance with rule 13d-3 under the securities exchange act of 1934, Todd Hosaka, as trustee, may be deemed a control person of the shares owned by such entity, with final voting power and investment control over such shares.

(24) In accordance with rule 13d-3 under the securities exchange act of 1934, Ivan Inerfeld may be deemed a control person of the shares owned by such entity, with final voting power and investment control over such shares.

(25) In accordance with rule 13d-3 under the securities exchange act of 1934, Mort Kessler, as trustee, may be deemed a control person of the shares owned by such entity, with final voting power and investment control over such shares.

(26) In accordance with rule 13d-3 under the securities exchange act of 1934, Morton Kirshner may be deemed a control person of the shares owned by such entity, with final voting power and investment control over such shares.

(27) In accordance with rule 13d-3 under the securities exchange act of 1934, Randy Kirshner, as trustee, may be deemed a control person of the shares owned by such entity, with final voting power and investment control over such shares.

(28) In accordance with rule 13d-3 under the securities exchange act of 1934, Randy Kirshner, as co-trustee, may be deemed a control person of the shares owned by such entity, with final voting power and investment control over such shares.

(29) In accordance with rule 13d-3 under the securities exchange act of 1934, Israel L. Kunin, as trustee, may be deemed a control person of the shares owned by such entity, with final voting power and investment control over such shares.

(30) In accordance with rule 13d-3 under the securities exchange act of 1934, Lavender Mehrali & Mehdi Mehrali, as co- trustees, may be deemed a control person of the shares owned by such entity, with final voting power and investment control over such shares.

(31) In accordance with rule 13d-3 under the securities exchange act of 1934, Lon Morton, as trustee, may be deemed a control person of the shares owned by such entity, with final voting power and investment control over such shares.

(32) In accordance with rule 13d-3 under the securities exchange act of 1934, Jerome D. Muchin, as trustee, may be deemed a control person of the shares owned by such entity, with final voting power and investment control over such shares.

(33) In accordance with rule 13d-3 under the securities exchange act of 1934, Michael A. Oliver, as trustee, may be deemed a control person of the shares owned by such entity, with final voting power and investment control over such shares.

(34) In accordance with rule 13d-3 under the securities exchange act of 1934, Albert Ovadia and Virginia Ovadia, as co-trustees, may be deemed a control person of the shares owned by such entity, with final voting power and investment control over such shares.

(35) In accordance with rule 13d-3 under the securities exchange act of 1934, Daniel B. Peters may be deemed a control person of the shares owned by such entity, with final voting power and investment control over such shares.

(36) In accordance with rule 13d-3 under the securities exchange act of 1934, Richard Peters may be deemed a control person of the shares owned by such entity, with final voting power and investment control over such shares.

(37) In accordance with rule 13d-3 under the securities exchange act of 1934, Richard Peters, as trustee, may be deemed a control person of the shares owned by such entity, with final voting power and investment control over such shares.

(38) In accordance with rule 13d-3 under the securities exchange act of 1934, Rondine Volpert and Regina Modica may be deemed a control person of the shares owned by such entity, with final voting power and investment control over such shares.

(39) In accordance with rule 13d-3 under the securities exchange act of 1934, Larry Sandler, as trustee, may be deemed a control person of the shares owned by such entity, with final voting power and investment control over such shares.

(40) In accordance with rule 13d-3 under the securities exchange act of 1934, Mark Scheiner, as trustee, may be deemed a control person of the shares owned by such entity, with final voting power and investment control over such shares.

(41) In accordance with rule 13d-3 under the securities exchange act of 1934, Stanley Swartz, as trustee, may be deemed a control person of the shares owned by such entity, with final voting power and investment control over such shares.

(42) In accordance with rule 13d-3 under the securities exchange act of 1934, Charles E. Tronson, as trustee, may be deemed a control person of the shares owned by such entity, with final voting power and investment control over such shares.

(43) In accordance with rule 13d-3 under the securities exchange act of 1934, Lisa C.S. Wong, as trustee, may be deemed a control person of the shares owned by such entity, with final voting power and investment control over such shares.

(44) In accordance with rule 13d-3 under the securities exchange act of 1934, Russell D. Wong, as trustee, may be deemed a control person of the shares owned by such entity, with final voting power and investment control over such shares.

(45) In accordance with rule 13d-3 under the securities exchange act of 1934, Bruce Isaacs & Robert A. Wyman, as co-trustees, may be deemed a control person of the shares owned by such entity, with final voting power and investment control over such shares.

TRANSACTIONS WITH THE SELLING STOCKHOLDERS PURSUANT TO WHICH THEY ACQUIRED THEIR SHARES

OCTOBER 2006 PRIVATE PLACEMENT

Mr. Rosenberg directed the shares to be issued in the name of Charlotte Rosenberg, his mother, from whom he personally borrowed the funds, which he then loaned to the Company’s predecessor in interest, Platinum Studios LLC.

LEGAL MATTERS

Sichenzia Ross Friedman Ference LLP, New York, New York will issue an opinion with respect to the validity of the shares of common stock being offered hereby.

EXPERTS

Our financial statements appearing in this prospectus and registration statement have been audited by HJ Associates & Consultants, LLP, independent registered public accountants, as set forth on their report thereon appearing elsewhere in this prospectus, and are included in reliance upon such report given upon the authority of such firm as experts in accounting and auditing.

AVAILABLE INFORMATION

We have filed a registration statement on Form SB-2 under the Securities Act of 1933, as amended, relating to the shares of common stock being offered by this prospectus, and reference is made to such registration statement. This prospectus constitutes the prospectus of Platinum Studios, Inc., filed as part of the registration statement, and it does not contain all information in the registration statement, as certain portions have been omitted in accordance with the rules and regulations of the Securities and Exchange Commission.

We are subject to the informational requirements of the Securities Exchange Act of 1934 which requires us to file reports, proxy statements and other information with the Securities and Exchange Commission. Such reports, proxy statements and other information may be inspected at public reference facilities of the SEC at 100 F Street N.E. Washington, D.C. 20549. Copies of such material can be obtained from the Public Reference Section of the SEC at 100 F Street N.E. Washington, D.C. 20549 at prescribed rates. Because we file documents electronically with the SEC, you may also obtain this information by visiting the SEC's Internet website at http://www.sec.gov.

INDEX TO FINANCIAL STATEMENTS

EX-3.1 3 ex31.htm EXHIBIT 3.1 ex31.htm

FINANCIAL STATEMENTS

CONTENTS

		Page

INTERIM FINANCIAL STATEMENTS: SIX MONTHS ENDED JUNE 30, 2007
Balance Sheet as of June 30, 2007 (Unaudited)		F-1
Statements of Operations for the six months ended June 30, 2007 (Unaudited)		F-2
Statements of Stockholders' Equity as of June 30, 2007		F-3
Statements of Cash Flows for the six months ended June 30, 2007		F-4
Notes to Financial Statements		F-5

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005
Balance Sheets as of December 31, 2006 and 2005		F-13
Statements of Operations for the years ended December 31, 2006 and 2005		F-14
Statements of Stockholders' Equity as of December 31, 2006		F-15
Statements of Cash Flows for the years ended December 31, 2006 and 2005		F-16
Notes to Financial Statements		F-17

PLATINUM STUDIOS, INC. FORMERLY

PLATINUM STUDIOS, LLC

BALANCE SHEETS

	Platinum Studios, Inc.			Platinum Studios, LLC
	June 30, 2007			December 31, 2006
	(unaudited)

Current assets:
Cash	$	423,256		$	331,435
Accounts receivable, net		9,518			-
Inventories, net		55,131			-
Prepaid expenses		215,224			105,603
Other Assets		1,994			12,100
Total current assets		705,123			449,138

Property and equipment, at cost, net		295,846			268,981
Other assets
Web sites		64,000			64,000
Deposits		39,704			39,404
Library of character rights, net		273,913			319,565
Total other assets		377,617			422,969

Total assets	$	1,378,586		$	1,141,088

LIABILITIES AND STOCKHOLDERS' EQUITY/(DEFICIT)

Current liabilities:
Accounts payable	$	241,918		$	231,849
Accrued expenses		133,410			192,118
Deferred revenue		-			750,000
Short-term notes payable to shareholder		745,850			745,925
Related party payable		193,079			243,079
Capital leases payable, current		72,190			55,820
Total current liabilities		1,386,447			2,218,791

Long-term liabilities:
Long-term notes payable to shareholder		3,669,285			3,584,260
Accrued interest due to shareholder		132,271			75,031
Capital leases payable, non-current		142,459			148,721
Total long-term liabilities		3,944,015			3,808,012

Total liabilities		5,330,462			6,026,803

Stockholders' equity/(deficit):
Common stock, $.0001 par value, 500,000,000 shares authorized,
184,047,250 issued, and 158,056,000 outstanding at June 30, 2007		18,405			15,806
and December 31, 2006, respectively
Additional paid-in capital		1,787,172			(628,741	)
Retained earnings/(deficit)		(5,757,453	)		(4,272,780	)
Total stockholders' equity/(deficit)		(3,951,876	)		(4,885,715	)

Total liabilities and stockholders' equity/(deficit)	$	1,378,586		$	1,141,088

The accompanying footnotes are an integral part of these financial statements

F-1

PLATINUM STUDIOS, INC. FORMERLY

PLATINUM STUDIOS, LLC

STATEMENT OF OPERATIONS

(unaudited)

		Platinum Studios, Inc.			Platinum Studios, LLC

		Six Months Ended June 30,
		2007			2006

Net revenue	$	1,676,800		$	30,500

Costs and expenses:
Cost of revenues		114,613			-
Operating expenses (excluding depreciation expense)		2,367,954			1,275,419
Research and development		457,854			310,205
Depreciation and amortization expense		80,665			11,035
Total costs and expenses		3,021,086			1,596,659

Operating income/(loss)		(1,344,286	)		(1,566,159	)

Other income/(expense)
Interest income/(expense)		(140,387	)		(191,710	)
Total other income/(expense)		(140,387	)		(191,710	)

Net income/(loss)	$	(1,484,673	)	$	(1,757,869	)


Basic and diluted net income per share:
Weighted average shares outstanding:
Weighted average shares for basic earnings per share		172,167,375

Net income/(loss) per share:
Basic	$	(0.01	)


Diluted	$	(0.01	)

The accompanying footnotes are an integral part of these financial statements

F-2

PLATINUM STUDIOS, INC. FORMERLY

PLATINUM STUDIOS, LLC

STATEMENT OF CASH FLOWS

(unaudited)

	Platinum Studios, Inc.			Platinum Studios, LLC
	Six Months Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES	2007			2006
Net income/(loss)	$	(1,484,673	)	$	(1,757,869
Adjustments to reconcile net income/(loss) to net cash from operating activities:
Depreciation		35,013			11,035
Amortization		45,652			-
Decrease (increase) in operating assets:
Accounts receivable		(9,518	)		-
Inventories		(55,131	)		-
Prepaid expenses		(109,621	)		(12,526	)
Other assets		9,806			(35,000	)
Increase (decrease) in operating liabilities:
Accounts payable		10,070			409,623
Accounts payable related party		(50,000	)		143,079
Accrued expenses		(59,680	)		(46,283	)
Accrued interest		58,212			179,913
Deferred revenue		(750,000	)		(25,000	)

NET CASH FLOWS USED IN OPERATING ACTIVITIES		(2,359,870	)		(1,133,028	)

CASH FLOWS FROM INVESTING ACTIVITIES
Investment in property and equipment		(61,879	)		(109,524	)
Other Assets - Website Acquisition		-			(40,000	)

NET CASH FLOWS USED BY INVESTING ACTIVITIES		(61,879	)		(149,524	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from related party loans		285,000			832,525
Payments on related party loans		(200,050	)		(119,400	)
Proceeds from capital leases		44,629			84,575
Payments on capital leases		(34,521	)		(4,651	)
Issuance of common stock		2,418,512			-
Capital contributions		-			500,000

NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES		2,513,570			1,293,049

NET INCREASE/(DECREASE) IN CASH		91,821			10,497

Cash, at beginning of year		331,435			11,843

Cash, at end of period	$	423,256		$	22,340


Supplemental disclosure of cash flow information:

Cash paid for interest	$	91,385		$	3,532
Cash paid for taxes	$	-		$	-

The accompanying footnotes are an integral part of these financial statements

F-3

PLATINUM STUDIOS, INC. FORMERLY

PLATINUM STUDIOS, LLC

STATEMENTS OF STOCKHOLDERS’ EQUITY/(DEFICIT)

	Members Equity			Common Stock Shares		Common Stock Amount		Additional Paid-In Capital			Retained Earnings (Deficit)			Total

Balance at December 31, 2004	$	(7,068,677	)		-	$	-	$	-		$	-		$	(7,068,677	)

Net income/(loss)		(2,080,915	)		-		-		-			-			(2,080,915	)

Balance at December 31, 2005		(9,149,592	)		-		-		-			-			(9,149,592	)

Capital Contribution - B.Altounian		500,000			-		-		-			-			500,000

Capital Contribution - S.Rosenberg		5,731,057			-		-		-			-			5,731,057

Convert LLC interests to common stock		2,918,535			135,000,000		13,500		(2,932,035	)		-			-

Common stock issued in private placement at $0.10 per share, $0.0001 par value		-			23,056,000		2,306		2,303,294			-			2,305,600

Net income/(loss)		-			-		-		-			(4,272,780	)		(4,272,780	)

Balance at December 31, 2006		-			158,056,000		15,806		(628,741	)		(4,272,780	)		(4,885,715	)

Common stock issued in private placement at $0.10 per share, $0.0001 par value (unaudited)		-			25,991,250		2,599		2,379,214			-			2,381,813

Warrants issued for services (unaudited)		-			-		-		36,699			-			36,699

Net income/(loss) (unaudited)		-			-		-		-			(1,484,673	)		(1,484,673	)

Balance at June 30, 2007	$	-			184,047,250	$	18,405	$	1,787,172		$	(5,757,453	)	$	(3,951,876	)

The accompanying footnotes are an integral part of these financial statements

F-4

PLATINUM STUDIOS, INC. FORMERLY

PLATINUM STUDIOS, LLC

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2007 AND 2006

( 1 ) Description of business

Nature of operations– The Company controls a library consisting of more than 3,800 characters and is engaged principally as a comics-based entertainment company adapting characters and storylines for production in film, television, publishing and all other media.

Platinum Studios, LLC was formed and operated as a California limited liability company from its inception on November 20, 1996 through September 14, 2006. On September 15, 2006, Platinum Studios, LLC filed with the State of California to convert Platinum Studios, LLC into Platinum Studios, Inc., (“the Company”, “Platinum”) a California corporation.

This change to the Company structure was made in preparation of a private placement memorandum and common stock offering in October, 2006 (Note 12).

( 2 ) Basis of financial statement presentation

The accompanying unaudited condensed financial statements of Platinum Studios, Inc. have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair statement of financial position, results of operations and cash flows for the periods presented have been included. The unaudited condensed Statements of Operations for the six-month period ended June 30, 2007 and the unaudited condensed Statements of Cash Flows for the six-month period ended June 30, 2007 are not necessarily indicative of those for the full year ending December 31, 2007. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America.

( 3 )

Going concern

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred significant losses which have resulted in an accumulated deficit of $5,757,453 as of June 30, 2007. The Company plans to seek additional financing in order to execute its business plan, but there is no assurance the Company will be able to obtain such financing on terms favorable to the Company or at all. These items raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects related to recovery and classification of assets, or the amounts and classifications of liabilities that might result from the outcome of this uncertainty.

( 4 )

Summary of significant accounting policies

Reclassifications – Certain prior year amounts have been reclassified in order to conform to the current year’s presentation.

Revenue recognition - Revenue from the licensing of characters and storylines (“the properties”) owned by the Company are recognized in accordance with guidance provided in Securities and Exchange Commission Staff Accounting Bulletin No. 104 “Revenue Recognition” (an amendment of Staff Accounting Bulletin No. 101 “Revenue Recognition”) (“SAB 104”). Under the SAB 104 guidelines, revenue is recognized when the earnings process is complete. This is considered to have occurred when persuasive evidence of an agreement between the customer and the Company exists,

F-5

PLATINUM STUDIOS, INC. FORMERLY

PLATINUM STUDIOS, LLC

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2007 AND 2006

( 4 )

Summary of significant accounting policies (continued)

when the properties are made available to the licensee and the Company has satisfied its obligations under the agreement, when the fee is fixed or determinable and when collection is reasonably assured.

The Company derives its licensing revenue primarily from options to purchase rights, the purchase of rights to properties and first look deals. For options that contain non-refundable minimum payment obligations that are not applied to the purchase price, revenue is recognized ratably over the option period, prior to the collection of all amounts ultimately due, provided all the criteria for revenue recognition under SAB 104 have been met. Option fees that are applicable to the purchase price are deferred and recognized as revenue at the later of the expiration of the option period or in accordance with the terms of the purchase agreement. Revenue received under first look deals is recognized ratably over the first look period, which varies by contract provided all the criteria for revenue recognition under SAB 104 have been met. First look deals that have contingent components are deferred and recognized at the later of the expiration of the first look period or in accordance with the terms of the first look contract.

For licenses requiring material continuing involvement or performance based obligations, by the Company, the revenue is recognized as and when such obligations are fulfilled.

The Company records as deferred revenue any licensing fees collected in advance of obligations being fulfilled or if a licensee is not sufficiently creditworthy, the Company will record deferred revenue until payments are received.

License agreements typically include reversion rights which allow the Company to repurchase property rights which have not been used by the studio (the buyer) in production within a specified period of time as defined in the purchase agreement. The cost to repurchase the rights is generally based on the costs incurred by the studio to further develop the characters and story lines.

Use of estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

Cash and cash equivalents– The Company considers all highly liquid investment securities with an original maturity date of three months or less to be cash equivalents.

Concentrations of risk - Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of uninsured cash balances. The Company maintains its cash balances with what management believes to be a high credit quality financial institution. At times, balances within the company’s cash accounts may exceed the Federal Deposit Insurance Corporation (FDIC) limit of $100,000.

During the six months ended June 30, 2007 and 2006, the Company had customer revenues representing a concentration of the Company’s total revenues. In 2007, two customers represented approximately 60% and 27% of total revenues and during 2006, two customers represented approximately 82% and 18% of the Company’s total revenues.

Depreciation - Depreciation is computed on the straight-line method over the following estimated useful lives:

F-6

PLATINUM STUDIOS, INC. FORMERLY

PLATINUM STUDIOS, LLC

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2007 AND 2006

( 4 )

Summary of significant accounting policies (continued)

Fixed assets	Useful Lives

Furniture and fixtures	7 years
Computer equipment	5 years
Office equipment	5 years
Software	3 years
Leasehold improvements	Shorter of lease term or useful economic life

Character development costs - Character development costs consist primarily of costs to acquire properties from the creator, development of the property using internal or independent writers and artists, and the registration of a property for a trademark or copyright. These costs are capitalized in the year incurred if the Company has executed a contract or is negotiating a revenue generating opportunity for the property. If the property derives a revenue stream that is estimable, the capitalized costs associated with the property are expensed as revenue is recognized.

If the Company determines there is no determinable market for a property, it is deemed impaired and is written off.

Purchased intangible assets and long-lived assets – Intangible assets are capitalized at acquisition costs and intangible assets with definite lives are amortized on the straight-line basis. The Company periodically reviews the carrying amounts of intangible assets and property in conformance with the Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS 144). Under SFAS 144, long-lived assets, such as property and equipment, and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, the impairment charge to be recognized is measured by the excess of the carrying amount over the fair value of the asset.

Advertising costs - Advertising costs are expensed the later of when incurred or when the advertisement is first run. For the six months ended June 30, 2007 and 2006, advertising expenses were $68,990 and $2,462, respectively.

Research and development - Research and development costs, primarily character development costs and design not associated with an identifiable revenue opportunity, are charged to operations as incurred. For the six months ended June 30, 2007 and 2006, research and development expenses were $457,854 and $310,205, respectively.

Income taxes – From inception thru September 14, 2006 the Company operated as a limited liability company and elected to be taxed similar to a partnership. Accordingly, each member was responsible for reporting its respective share of the Company’s net income or loss for Federal and California income tax purposes and the Company did not pay Federal income tax. From September 15, 2006 forward the Company has accounted for income taxes using the liability method, whereby deferred tax assets and liability account balances are determined based on differences between financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company was subject to an annual minimum tax of $800 and a fee based on gross receipts in California from inception through September 14, 2006.

F-7

PLATINUM STUDIOS, INC. FORMERLY

PLATINUM STUDIOS, LLC

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2007 AND 2006

( 4 )

Summary of significant accounting policies (continued)

Net income/(loss) per share– In accordance with SFAS No. 128 “Earnings Per Share”, basic income per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of shares of common stock outstanding during the periods, excluding shares subject to repurchase or forfeiture. Diluted income per share increases the shares outstanding for the assumption of the vesting of restricted stock and the exercise of dilutive stock options and warrants, using the treasure stock method, unless the effect is anti-dilutive.

Recent accounting pronouncements– In July 2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainly in Income Taxes” (“FIN 48”). FIN 48 applies to all tax positions related to income taxes subject to SFAS 109, “Accounting for Income Taxes”. Under FIN 48 a company would recognize the benefit from a tax position only if it is more-likely-than-not that the position would be sustained upon audit based solely on the technical merits of the tax position. FIN 48 clarifies how a company would measure the income tax benefits from the tax positions that are recognized, provides guidance as to the timing of the de-recognition of previously recognized tax benefits and describes the methods for classifying and disclosing the liabilities within the financial statements for any unrecognized tax benefits. FIN 48 also addresses when a company should record interest and penalties related to tax positions and how the interest and penalties may be classified within the income statement and presented in the balance sheet. FIN 48 is effective for fiscal years beginning after December 15, 2006. For Platinum, FIN 48 will be effective for the first quarter of fiscal 2007.

( 5 )

Inventory


	June 30, 2007		December 31, 2006

Kiss Merchandise		53,170		-
T-Shirts		1,961		-

	$	55,131	$	-

( 6 )

Property and equipment

Property and equipment are recorded at cost. The cost of repairs and maintenance are expensed when incurred, while expenditures refurbishments and improvements that significantly add to the productive capacity or extend the useful life of an asset are capitalized. Upon asset retirement or disposal, any resulting gain or loss is included in the results of operations.

F-8

PLATINUM STUDIOS, INC. FORMERLY

PLATINUM STUDIOS, LLC

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2007 AND 2006

( 6 )

Property and equipment (continued)

	June 30, 2007			December 31, 2006
Property and equipment, cost:
Office equipment	$	10,804		$	10,804
Furniture and fixtures		118,140			107,317
Computer equipment		150,393			105,054
Software		91,292			85,576
Leasehold improvements		20,557			20,557
		391,187			329,308
Less accumulated depreciation		(95,340	)		(60,327	)

Net property and equipment	$	295,846		$	268,981

For the six months ended June 30, 2007 and year ended December 31, 2006, property and equipment at cost includes assets acquired under capital leases of $44,629 and $203,833, respectively. Depreciation expense charged to operations for the six months ended June 30, 2007 and 2006 were $35,013 and $11,035 including $25,793 and $6,487, applicable to assets acquired under capital leases, respectively.

( 7 ) Other assets

	June 30,			December 31

	2007			2006

Web Sites		64,000			40,000
Deposits		39,704			39,704
Character Library - Top Cow		350,000			350,000
Character Library Amortization - Top Cow		(76,087	)		(30,435	)
	$	377,617		$	422,969

( 8 ) Due to related party

	June 30, 2007		December 31, 2006


B.Altounian - Consulting prior to employment		193,079		243,079
	$	193,079	$	243,079

During 2006, the Company repaid in full the uncollateralized loans received from Rosenberg IP during 2004. These loans accrued interest at 5% and 6% for the years ended December 31, 2005 and 2006, respectively.

F-9

PLATINUM STUDIOS, INC. FORMERLY

PLATINUM STUDIOS, LLC

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2007 AND 2006

( 9 ) Short-term and long-term debt


Short-term debt	June 30, 2007			December 31, 2006
Loan payable to member - uncollateralized; payable in monthly installments of interest only at variable interest rates. At June 30, 2007 and 2006, the interest rates were 7.847% and 7.257%, respectively.	$	745,850		$	745,925



Long-term debt		June 30, 2007	December 31, 2006
Loan payable to member - uncollateralized; payable in monthly installments of interest only at variable interest rates. At June 30, 2007 and 2006, the interest rates were 7.708% and 6.151%, respectively. Monthly payments of principal and interest begin on July 1, 2009; final payment due June 1, 2034.	$	1,294,260		$	1,294,260

Loan payable to member - uncollateralized; principal includes interest accrued at variable interest rates. At June 30, 2007 and 2006, the interest rates were 5.0% and 5.0%, respectively . The loans are due June 30, 2010.		750,025			665,000

Loan payable to member - uncollateralized; principal includes accrued interest. Effective January 1, 2006, interest became fixed at 3.8% for the remaining life of the loan. Monthly payments of principal and interest begin on July 1, 2007; final payment due June 30, 2010.		1,625,000			1,625,000

Total long-term debt	$	3,669,285		$	3,584,260

Total short-term and long-term debt	$	4,415,135		$	4,330,185

F-10

PLATINUM STUDIOS, INC. FORMERLY

PLATINUM STUDIOS, LLC

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2007 AND 2006

( 10 ) Operating and capital leases (continued)

Future required payments at June 30, 2007 under these leases are as follows:

Years Ending December 31,		Capital Leases
2007	$	46,547
2008		89,947
2009		57,334
2010		37,947
2011		24,705
Thereafter		-
Total minimum obligations	$	256,480
Less amounts representing interest		41,831
Present value of net minimum obligations		214,649
Less current portion		72,190
Long-term portion	$	142,459

( 11 ) Commitments

During 2004, the Company entered into an agreement with Top Cow Productions, Inc. to acquire certain rights in and to certain comic books, related characters, storylines and intellectual property (the properties). The current agreement period expires on June 30, 2010. The Company has the right to extend the agreement for an additional twelve month period for an additional $350,000 and has pre-paid $75,000 toward this extended period. If the Company enters into production on a particular property, additional fees based on a percentage of the adjusted gross revenue resulting from the production, as defined in the agreement, will be due to the owner. The agreement is collateralized by a security interest in and to all rights licensed or granted to the Company under this agreement including the right to receive revenue. The current agreement period cost of $350,000 is included in Other Assets on the balance sheet (Note 7) and is being amortized on a straight-line basis beginning in 2006 when the rights became available for exploitation.

( 12 )

Related party transactions

The Company has an exclusive option to enter licensing/acquisition of rights agreements for individual characters, subject to existing third party rights, within the RIP Awesome Library of RIP Media, Inc., a related entity in which Scott Rosenberg is a majority shareholder. The Company did not exercise this right during the six months ended June 30, 2007 or the year ended December 31, 2006. During 2006, the Company repaid uncollateralized loans of $20,000 in full (Note 8).

Scott Mitchell Rosenberg also provides production consulting services to the Company’s customers (production companies) through Scott Mitchell Rosenberg Productions (another related entity) wholly owned by Scott Mitchell Rosenberg. At the time the Company enters into a purchase agreement with a production company, a separate contract may be entered into between the related entity and the production company. In addition, consulting services regarding development of characters and storylines may also be provided to the Company by this related entity. Revenue would be paid directly to the related entity by the production company.

F-11

PLATINUM STUDIOS, INC. FORMERLY

PLATINUM STUDIOS, LLC

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2007 AND 2006

( 13 ) Stockholders equity

As of May 1, 2006, the Company issued a five percent (5.0%) ownership interest in Platinum Studios, LLC to Brian Altounian in consideration of a capital contribution in the amount of $500,000.

On September 14, 2006, Scott Mitchell Rosenberg converted $5,731,057 in outstanding principal and interest as a capital contribution in Platinum Studios, LLC in fulfillment of commitments made to the Company prior to the issuance to Brian Altounian.

Platinum Studios LLC filed Articles of Incorporation with the Secretary of the State of California on September 15, 2006, by which Platinum Studios, LLC converted from a California limited liability company into Platinum Studios, Inc., a California corporation. On September 15, 2006, 135,000,000 common shares were issued for conversion of LLC interests as all members of the limited liability company became shareholders of the corporation, maintaining their same percentage ownership, with no additional contribution required by any of the members to the corporation.

A Private Placement Memorandum was issued on October 12, 2006, offering up to 50,000,000 shares of common stock, $0.0001 par value per share, for sale to Accredited Investors (as defined in the memorandum), at a price of $0.10 per share on a “best efforts” basis, for a total offering price to investors of $5,000,000. The proceeds of the offering are expected to be used for property acquisitions, marketing and general and administrative expenses. The offering was closed on April 30, 2007 with the Company having sold 49,047,250 shares resulting in proceeds of $4,904,725.

( 14 ) Subsequent events

Effective July 1, 2007, a Cancellation of Indebtedness Agreement was executed between the Company and Scott Mitchell Rosenberg related to certain loans and interest totaling $1,720,857. Whereas the parties are amenable to the cancellation of the loans and interest through the issuance of stock and warrants, a Platinum Studios common stock certificate will be issued for the number of shares equal to the amount of the principal plus interest ($1,720,857.46) divided by $0.10 and a common stock warrant to purchase a number of shares of the Company’s common stock equal to 15% of the principal only ($1,625,000) divided by $0.10 per share.

Effective July 12, 2007, the Company obtained board approval of an incentive plan under which equity incentives would be granted to officers, employees, non-employee directors and consultants of the Company. The board further resolved for 30,000,000 shares of the Company’s common stock, $0.0001 par value, be reserved for issuance in accordance with the requirements of this plan.

F-12

PLATINUM STUDIOS, INC. FORMERLY

PLATINUM STUDIOS, LLC

BALANCE SHEETS

	Platinum Studios, Inc.			Platinum Studios, LLC
	December 31, 2006			December 31, 2005

ASSETS

Current assets:
Cash	$	331,435		$	11,843
Prepaid expenses		105,603			89,347
Stock offering costs		12,100			-
Total current assets		449,138			101,190

Property and equipment, at cost, net		268,981			61,969
Other assets
		64,000			-
Web sites		39,404			1,561
Deposits		319,565			350,000
Library of character rights
Total other assets		422,969			351,561

Total assets	$	1,141,088		$	514,720

LIABILITIES AND STOCKHOLDERS' EQUITY/(DEFICIT)

Current liabilities:
Accounts payable	$	231,849		$	131,131
Accrued expenses		192,118			64,352
Deferred revenue		750,000			175,000
Short-term notes payable to shareholder		745,925			-
Related party payable		243,079			20,000
Capital leases payable, current		55,820			6,441
Total current liabilities		2,218,791			396,924

Long-term liabilities:
Long-term notes payable to shareholder		3,584,260			7,436,332
Accrued interest due to shareholder		75,031			1,067,465
Deferred revenue, non-current		-			750,000
Capital leases payable, non-current		148,721			13,591
Total long-term liabilities		3,808,012			9,267,388

Total liabilities		6,026,803			9,664,312

Stockholders' equity/(deficit):
Common stock, $.0001 par value, 500,000,000 shares authorized,
158,056,000 issued, and outstanding at December 31, 2006		15,806			-
Additional paid-in capital		(628,741	)		-
Members equity/(deficit)		-			(9,149,592	)
Retained earnings/(deficit)		(4,272,780	)		-
Total stockholders' equity/(deficit)		(4,885,715	)		(9,149,592	)

Total liabilities and stockholders' equity/(deficit)	$	1,141,088		$	514,720

The accompanying footnotes are an integral part of these financial statements

F-13

PLATINUM STUDIOS, INC. FORMERLY

PLATINUM STUDIOS, LLC

STATEMENTS OF OPERATIONS

		Platinum Studios, Inc.			Platinum Studios, LLC

	Years Ended December 31,
		2006			2005

Net revenue	$	180,500		$	162,500

Operating expenses:
Operating expenses (excluding depreciation expense)		3,168,078			1,607,672
Research and development		764,282			243,833
Depreciation and amortization expense		73,486			7,436
Total costs and expenses		4,005,846			1,858,941

Operating income/(loss)		(3,825,346	)		(1,696,441	)

Other income/(expense)
Other income		2,571			5,814
Gain/(Loss) on disposition of assets		(33,260	)		-
Interest income/(expense)		(391,745	)		(390,288	)
Other expense		(25,000	)		-
Total other income/(expense)		(447,434	)		(384,474	)

Net income/(loss)	$	(4,272,780	)	$	(2,080,915	)


Basic and diluted net income per share:
Weighted average shares outstanding:
Weighted average shares for basic earnings per share		145,908,250

Weighted average shares for diluted earnings per share		145,908,250

Net income/(loss) per share:
Basic	$	(0.03	)

Diluted	$	(0.03	)

The accompanying footnotes are an integral part of these financial statements

F-14

PLATINUM STUDIOS, INC. FORMERLY

PLATINUM STUDIOS, LLC

STATEMENT OF CASH FLOWS

		Platinum Studios, Inc.			Platinum Studios, LLC
		Years Ended December 31,
CASH FLOWS FROM OPERATING ACTIVITIES		2006			2005
Net income/(loss)	$	(4,272,780	)	$	(2,080,915	)
Adjustments to reconcile net income/(loss) to net cash from operating activities:
Depreciation		43,051			7,436
Amortization		30,435			-
(Gain)/loss on disposal of assets		33,260			-
Decrease (increase) in operating assets:
Prepaid expenses		(7,918	)		(89,544	)
Other assets		(113,943	)		322,649
Increase (decrease) in operating liabilities:
Accounts payable		92,381			29,667
Accounts payable related party		243,079			-
Accrued expenses		118,320			51,442
Accrued interest		258,805			345,915
Deferred revenue		(175,000	)		300,000

NET CASH FLOWS USED IN OPERATING ACTIVITIES		(3,750,310	)		(1,113,350	)


Investment in property and equipment		(283,311	)		(58,997	)

NET CASH FLOWS USED BY INVESTING ACTIVITIES		(283,311	)		(58,997	)


Proceeds from related party loans		2,609,457			1,170,010
Payments on related party loans		(1,246,354	)		-
Proceeds from capital leases		203,833			21,922
Payments on capital leases		(19,323	)		(1,890	)
Issuance of common stock		2,305,600			-
Capital contributions		500,000			-
Overdraft repayment		-			(5,852	)

NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES		4,353,213			1,184,190

NET INCREASE/(DECREASE) IN CASH		319,592			11,843

Cash, at beginning of year		11,843			-

Cash, at end of year	$	331,435		$	11,843




Cash paid for interest	$	128,137		$	68,289
Cash paid for taxes	$	-		$	-
Conversion of notes payable into members' equity	$	4,521,588		$	-
Conversion of accrued interest into members' equity	$	1,209,469		$	-
Disposed fixed assets and leasehold improvements	$	79,543		$	-

The accompanying footnotes are an integral part of these financial statements

F-15

PLATINUM STUDIOS, INC. FORMERLY

PLATINUM STUDIOS, LLC

STATEMENTS OF STOCKHOLDERS’ EQUITY/(DEFICIT)

	Members Equity			Common Stock Shares		Common Stock Amount		Additional Paid-In Capital			Retained Earnings (Deficit)			Total

Balance at December 31, 2004	$	(7,068,677	)		-	$	-	$	-		$	-		$	(7,068,677	)

Net income/(loss)		(2,080,915	)		-		-		-			-			(2,080,915	)

Balance at December 31, 2005		(9,149,592	)		-		-		-			-			(9,149,592	)

Change in entity September 14, 2006		9,149,592							(9,149,592	)		-			-

Convert LLC interests to common stock		-			135,000,000		13,500		6,217,557			-			6,231,057

Common stock issued in private placement at $0.10 per share, $0.0001 par value		-			23,056,000		2,306		2,303,294			-			2,305,600

Net income/(loss)		-			-		-		-			(4,272,780	)		(4,272,780	)

Balance at December 31, 2006	$	-			158,056,000	$	15,806	$	(628,741	)	$	(4,272,780	)	$	(4,885,715	)

The accompanying footnotes are an integral part of these financial statements

F-16

PLATINUM STUDIOS, INC. FORMERLY

PLATINUM STUDIOS, LLC

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2006 AND 2005

( 1 ) Description of Business

This change to the Company structure was made in preparation of a private placement memorandum and common stock offering in October, 2006 (Note 12).

( 2 )

Going Concern

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred significant losses which have resulted in an accumulated deficit of $4,272,780 as of December 31, 2006. The Company plans to seek additional financing in order to execute its business plan, but there is no assurance the Company will be able to obtain such financing on terms favorable to the Company or at all. These items raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects related to recovery and classification of assets, or the amounts and classifications of liabilities that might result from the outcome of this uncertainty.

( 3 )

Summary of significant accounting policies

Reclassifications – Certain prior year amounts have been reclassified in order to conform to the current year’s presentation.

F-17

PLATINUM STUDIOS, INC. FORMERLY

PLATINUM STUDIOS, LLC

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2006 AND 2005

( 3 )

Summary of significant accounting policies (continued)

For licenses requiring material continuing involvement or performance based obligations, by the Company, the revenue is recognized as and when such obligations are fulfilled.

Cash and cash equivalents– The Company considers all highly liquid investment securities with an original maturity date of three months or less to be cash equivalents.

During the years ended December 31, 2006 and 2005, the Company had customer revenues representing a concentration of the Company’s total revenues. In 2006, two customers represented approximately 82% and 14% of total revenues and during 2005, three customers represented approximately 64%, 19% and 17% of the Company’s total revenues.

Depreciation - Depreciation is computed on the straight-line method over the following estimated useful lives:

Fixed Assets	Useful Lives

Furniture and fixtures	7 years
Computer equipment	5 years
Office equipment	5 years
Software	3 years
Leasehold improvements	Shorter of lease term or useful economic life

F-18

PLATINUM STUDIOS, INC. FORMERLY

PLATINUM STUDIOS, LLC

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2006 AND 2005

( 3 ) Summary of significant accounting policies (continued)

If the Company determines there is no determinable market for a property, it is deemed impaired and is written off.

Advertising costs - Advertising costs are expensed the later of when incurred or when the advertisement is first run. For the years ended December 31, 2006 and 2005, advertising expenses were $14,017 and $8,042, respectively.

Research and development - Research and development costs, primarily character development costs and design not associated with an identifiable revenue opportunity, are charged to operations as incurred. For the years ended December 31, 2006 and 2005, research and development expenses were $764,282 and $243,833, respectively.

( 4 )

Property and equipment

	December 31,

	2006			2005
Property and equipment, cost:
Office equipment	$	10,804		$	69,633
Furniture and fixtures		107,317			24,108
Computer equipment		105,054			37,974
Software		85,576			3,345
Leasehold improvements		20,557			23,728
		329,308			158,788
Less accumulated depreciation		(60,327	)		(96,819	)
Net property and equipment	$	268,981		$	61,968

F-19

PLATINUM STUDIOS, INC. FORMERLY

PLATINUM STUDIOS, LLC

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2006 AND 2005

( 4 )

Property and equipment (continued)

For the years ended December 31, 2006 and 2005, property and equipment at cost includes assets acquired under capital leases of $203,833 and $21,922, respectively. Depreciation expense charged to operations for the years ended December 31, 2006 and 2005 were $43,051 and $7,436 including $26,429 and $1,679, applicable to assets acquired under capital leases, respectively.

( 5 ) Character development costs

	December 31,

	2006		2005

Balance, beginning of year	$	-	$	248,225
Capitalized costs		-		-
Impairments		-		(248,225	)
Cost of revenue		-		-

Balance, end of year	$	-	$	-

During 2005, the Company determined the character development costs to be impaired and were written off.

( 6 ) Other assets

	December 31,

	2006			2005

Web Sites		64,000			-
Deposits		39,404			1,561
Character Library - Top Cow		350,000			350,000
Character Library Amortization - Top Cow		(30,435	)		-

	$	422,969		$	351,561

( 7 ) Due to related party

During 2006, the Company repaid in full the uncollateralized loans of $20,000 received from RIP Media during 2004. These loans accrued interest at 5% and 6% for the years ended December 31, 2005 and 2006, respectively. At December 31, 2006 and 2005, the Company owed $243,079 to Brian Altounian for consulting services provided prior to his employment and $20,000 to RIP Media, respectively.

F-20

PLATINUM STUDIOS, INC. FORMERLY

PLATINUM STUDIOS, LLC

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2006 AND 2005

( 8 ) Short-Term and Long-Term Debt

		December 31,
Short-term debt		2006		2005
Loan payable to member - uncollateralized; payable in monthly installments of interest only at variable interest rates. For the year ended December 31, 2006, the interest rate was 7.9%.	$	745,925	$	-

		December 31,
Long-term debt		2006		2005
Loan payable to member - uncollateralized; payable in monthly installments of interest only at variable interest rates. At December 31, 2006 and 2005, the interest rates were 7.708% and 6.151%, respectively. Monthly payments of principal and interest begin on July 1, 2009; final payment due June 1, 2034.	$	1,294,260	$	1,308,711

Loan payable to member - uncollateralized; principal includes interest accrued at variable interest rates. At December 31, 2006 and 2005, the interest rates were 5.0% and 6.0%, respectively . The loans are due June 30, 2010.		665,000		5,312,621

Loan payable to member - uncollateralized; principal includes accrued interest. Effective January 1, 2006, interest became fixed at 3.8% for the remaining life of the loan. At December 31, 2005, the interest rate was 6.0%. Monthly payments of principal and interest begin on July 1, 2007; final payment due June 30, 2010.		1,625,000		815,000

Total long-term debt	$	3,584,260	$	7,436,332

Total short-term and long-term debt	$	4,330,185	$	7,436,332

The following summarizes future cash payment obligations:

Years Ending December 31,	December 31, 2006

2007	$	1,004,078
2008		531,233
2009		560,475
2010		967,272
2011		19,907
Thereafter		1,247,220
Total short-term and long-term debt obligations	$	4,330,185

F-21

PLATINUM STUDIOS, INC. FORMERLY

PLATINUM STUDIOS, LLC

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2006 AND 2005

( 9 ) Operating and capital leases

The Company has entered into operating leases having expiration dates through 2011 for real estate and various equipment needs, including office facilities, computers, office equipment and a vehicle.

On July 10, 2006, the Company entered into an operating agreement for the lease of real property located in Los Angeles, California. The agreement has a five year term, commencing September 1, 2006 and ending August 31, 2011.

Rent expense under non-cancelable operating leases were $220,623 and $114,669 for the years ended December 31, 2006 and 2005, respectively.

At December 31, 2006, future minimum rental payments required under non-cancelable operating leases that have initial or remaining terms in excess of one year are as follows:

Years Ending December 31,	Operating Leases
2007	$	430,088
2008		421,416
2009		426,833
2010		442,815
2011		302,855
Thereafter		-
Total minimum obligations	$	2,024,007

The company has various non-cancelable capital leases for computer and office equipment, at cost of $203,833 and $21,922 at December 31, 2006 and 2005, respectively. The capital leases are secured by the assets which cannot be freely sold until the maturity date of the lease. Accumulated amortization for equipment under capital lease totaled $11,026 and $1,257 at December 31, 2006 and 2005, respectively. Future required payments at December 31, 2006 under these leases are as follows:

Years Ending December 31,	Capital Leases
2007	$	74,683
2008		71,535
2009		41,474
2010		32,940
2011		24,705
Thereafter		-
Total minimum obligations	$	245,337
Less amounts representing interest		40,796
Present value of net minimum obligations		204,541
Less current portion		55,820
Long-term portion	$	148,721

( 10 ) Commitments

During 2004, the Company entered into an agreement with Top Cow Productions, Inc. to acquire certain rights in and to certain comic books, related characters, storylines and intellectual property (the properties). The current agreement period expires on June 30, 2010. The Company has the right to extend the agreement for an additional twelve month period for an additional $350,000 and has pre-paid $75,000 toward this extended period. If the Company enters into production on a particular property, additional fees based on a percentage of the adjusted gross revenue resulting from the production, as defined in the agreement, will be due to the owner. The agreement is collateralized by a security interest in and to all rights licensed or granted to the Company under this agreement including the right to receive revenue. The current agreement period cost of $350,000 is included in Other Assets on the balance sheet (Note 6) and is being amortized on a straight-line basis beginning in 2006 when the rights became available for exploitation.

F-22

PLATINUM STUDIOS, INC. FORMERLY

PLATINUM STUDIOS, LLC

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2006 AND 2005

( 11 ) Related party transactions

The Company has an exclusive option to enter licensing/acquisition of rights agreements for individual characters, subject to existing third party rights, within the RIP Awesome Library of RIP Media, Inc., a related entity in which Scott Rosenberg is a majority shareholder. The Company did not exercise this right during the years ended December 31, 2006 and 2005. During 2006, the Company repaid uncollateralized loans of $20,000 in full (Note 7).

( 12 ) Stockholders equity

As of May 1, 2006, the Company issued a five percent (5.0%) ownership interest in Platinum Studios, LLC to Brian Altounian in consideration of a capital contribution in the amount of $500,000.

A Private Placement Memorandum was issued on October 12, 2006, offering up to 50,000,000 shares of common stock, $0.0001 par value per share, for sale to Accredited Investors (as defined in the memorandum), at a price of $0.10 per share on a “best efforts” basis, for a total offering price to investors of $5,000,000. The proceeds of the offering are expected to be used for property acquisitions, marketing and general and administrative expenses. As of December 31, 2006, the Company had sold 23,056,000 shares resulting in proceeds of $2,305,600.

F-23

PLATINUM STUDIOS, INC. FORMERLY

PLATINUM STUDIOS, LLC

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2006 AND 2005

( 13 ) Income taxes

As discussed in Note 3 regarding income taxes, the Company operated as a limited liability company and was taxed as a partnership prior to September 15, 2006. Effective September 15, 2006, the Company is being taxed as a corporation.

Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Net deferred tax assets and liabilities consist of the following components:

	September 15, thru December 31, 2006
Deferred tax assets:
Net operating loss	$	593,828
Reserves, allowances and accruals		142,227
Basis in acquired intangibles		12,123

		748,178
Less: deferred tax asset valuation allowance		(748,178	)

Net deferred tax asset	$	-

The income tax provision differs from the amount of income tax determined by applying the statutory U.S. federal income tax rate to the pre-tax loss as a result of the following:

		September 15, thru December 31, 2006		%
Statutory federal tax rate	$	534,925		34
Expected state tax, net of federal		91,793		6
Effect of permanent differences		(1,785	)	-
Effect of deferred tax asset		-		-
Other		41,355		3
Valuation allowance		(666,288	)	(43	)

Total provision for income taxes	$	-		-

The difference between the deferred tax asset and valuation allowance above is $81,890, which is attributable to the Related Party Payable as of September 14, 2006.

At December 31, 2006, the Company had net operating loss carryforwards of approximately $1,386,000 that may be offset against future taxable income from the year 2006 through 2026. No tax benefit has been reported in the December 31, 2006 financial statements since the potential tax benefit is offset by a valuation allowance of the same amount.

F-24

PLATINUM STUDIOS, INC. FORMERLY

PLATINUM STUDIOS, LLC

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2006 AND 2005

( 13 ) Income taxes (continued)

Due to the change in ownership provisions of the Tax reform Act of 1986, net operating loss carryforwards for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carryforwards may be limited as to use in future years.

( 14 ) Subsequent events

On January 18, 2007, the Company entered into a one-year content and license distribution agreement with Menfond Electronic Art & Computer Design Co., LTD to make certain Platinum content available for download over mobile telephony platforms and to mobile and handheld wireless devices and handsets in the People’s Republic of China.

On February 22, 2007, the Company entered into a one-year, non-exclusive, worldwide content and license distribution agreement with Mobinex, LLC to create licensed Avatars from certain Platinum content. They would be available for download to personal computers (excluding mobile and handheld wireless devices and handsets).

On March 12, 2007, Walt Disney Pictures (“WDP”) exercised their option to acquire all rights, title and interest in and to the unpublished graphic novel entitled “UNIQUE”.

On April 30, 2007, the Company closed the private placement offering, having sold an additional 25,991,250 shares of common stock to accredited investors. In total, the placement sold 49,047,250 shares of common stock and raised $4,904,725 in additional funds for acquisitions and operations.

On May 29, 2007, a licensing, services and sponsorship agreement was executed between Platinum and AT&T Operations, Inc. (“AT&T”) formalizing AT&T as the “Presenting Sponsor” of the Comic Book Challenge for the years 2007, 2008 and 2009.

F-25

UP TO 49,047,250 SHARES

OF OUR

OF COMMON STOCK

Platinum Studios, Inc.

PROSPECTUS

________, 2007

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth an itemization of all estimated expenses, all of which we will pay, in connection with the issuance and distribution of the securities being registered:

NATURE OF EXPENSE AMOUNT

SEC Registration fee	$	203.41
Accounting fees and expenses		15,000	*
Legal fees and expenses		40,000	*
Miscellaneous		4,796.59	*
TOTAL	$	60,000

Estimated

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.

*We claim an exemption from the registration requirements of the Act for the private placement of these securities pursuant to Section 4(2) of the Act and/or Regulation D promulgated thereunder since, among other things, the transaction did not involve a public offering, the investors were accredited investors and/or qualified institutional buyers, the investors had access to information about us and their investment, the investors took the securities for investment and not resale, and we took appropriate measures to restrict the transfer of the securities.

II-1

ITEM 27. EXHIBITS.

The following exhibits are included as part of this Form SB-2.

Exhibit No.		Description

3.1		Articles of Incorporation of Platinum Studios, Inc. filed with the Secretary of State of the State of California on September 15, 2006. *

3.2		Certificate of Amendment of Articles of Incorporation filed with the Secretary of State of the State of California on October 16, 2006*

3.3		Bylaws of Platinum Studios, Inc.*

4.1		Platinum Studios, Inc. 2007 Incentive Plan*

5.1		Opinion of Sichenzia Ross Friedman Ference LLP.*

10.1		Form of Subscription Agreement dated as of October 12, 2006.*

10.2		Distribution Agreement between Platinum Studios, Inc. and Top Cow Productions, Inc. effective as of January 1, 2007*

10.3		Publisher Distribution Agreement between Ingram Periodicals Inc. and Platinum Studios, Inc. dated as of 7/13/07*

10.4		Co-Development, Financing and Production Agreement dated as of December 19, 2006 between Platinum Studios, Inc. and Arclight Films International PTY, LTD. (to be filed by amendment)

10.5		Cancellation of Indebtedness Agreement dates as of July 1, 2007*

10.6		Option Agreement between Platinum Studios, LLC and Top Cow Productions dated as of August 1, 2004. (to be filed by amendment)

10.7		Publishing License Agreement between Kiss Catalog Ltd. and Platinum Studios LLC dated April 28, 2005. (to be filed by amendment)

10.8		Lease Agreement between Douglas Emmett 1995, LLC and Platinum Studios, LLC dated July 10, 2006*

10.9		Bonelli Rights Agreements dated as of July 2, 1997*

23.1		Consent of Sichenzia Ross Friedman Ference LLP (included in Exhibit 5.1).*

23.2		Consent of HJ Associates & Consultants, LLP*

*Filed herewith.

II-2

ITEM 28. UNDERTAKINGS.

The undersigned registrant hereby undertakes to:

(1) File, during any period in which offers or sales are being made, a post-effective amendment to this registration statement to:

(i) Include any prospectus required by Section 10(a)(3) of the Securities Act of 1933, as amended (the "Securities Act");

(ii) Reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of the securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) under the Securities Act if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement, and

(iii) Include any additional or changed material information on the plan of distribution.

(2) For determining liability under the Securities Act, treat each post-effective amendment as a new registration statement of the securities offered, and the offering of the securities at that time to be the initial bona fide offering.

(3) File a post-effective amendment to remove from registration any of the securities that remain unsold at the end of the offering.

(4) For determining liability of the undersigned small business issuer under the Securities Act to any purchaser in the initial distribution of the securities, the undersigned small business issuer undertakes that in a primary offering of securities of the undersigned small business issuer pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned small business issuer will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

(i) Any preliminary prospectus or prospectus of the undersigned small business issuer relating to the offering required to be filed pursuant to Rule 424;

(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned small business issuer or used or referred to by the undersigned small business issuer;

(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned small business issuer or its securities provided by or on behalf of the undersigned small business issuer; and

(iv) Any other communication that is an offer in the offering made by the undersigned small business issuer to the purchaser.

II-3

(5) For determining any liability under the Securities Act, treat each post-effective amendment that contains a form of prospectus as a new registration statement for the securities offered in the registration statement, and that offering of the securities at that time as the initial bona fide offering of those securities.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

(6) Each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A , shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

II-4

SIGNATURES

In accordance with the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form SB-2 and authorized this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Los Angeles, State of California, on September 4, 2007.

	PLATINUM STUDIOS, INC.

	By:	/s/ Scott Mitchell Rosenberg
		Name: Scott Mitchell Rosenberg
		Chief Executive Officer



	By:	/s/ Brian K. Altounian
		Name Brian K. Altounian
		President, Chief Operating Officer & Principal Accounting Officer

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Each person whose signature appears below hereby authorizes Brian Altounian as his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution for him and in his name, place and stead, in any and all capacities to sign any and all amendments (including post-effective amendments) to this registration statement, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission.

SIGNATURE	TITLE	DATE

/S/ SCOTT MITCHELL ROSENBERG	CHIEF EXECUTIVE OFFICER	September 4, 2007
SCOTT MITCHELL ROSENBERG

/S/ BRIAN K. ALTOUNIAN	PRESIDENT & CHIEF OPERATING OFFICER	September 4, 2007
BRIAN K. ALTOUNIAN

/S/ JILL ZIMMERMAN	DIRECTOR	September 4, 2007
JILL ZIMMERMAN

/s/ HELENE PRETSKY	SECRETARY	September 4, 2007
HELENE PRETSKY

II-5

EX-5.1 2 ex51.htm EXHIBIT 5.1 ex51.htm

EXHIBIT 5.1

August 31, 2007

VIA ELECTRONIC TRANSMISSION

Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

RE:

Platinum Studios, Inc.

Form SB-2 Registration Statement (File No. 333- )

Ladies and Gentlemen:

We refer to the above-captioned registration statement on Form SB-2 (the “Registration Statement”) under the Securities Act of 1933, as amended (the “Securities Act”), filed by Carbon Sciences, Inc., a Nevada corporation (the “Company”), with the Securities and Exchange Commission.

We have examined the originals, photocopies, certified copies or other evidence of such records of the Company, certificates of officers of the Company and public officials, and other documents as we have deemed relevant and necessary as a basis for the opinion hereinafter expressed. In such examination, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as certified copies or photocopies and the authenticity of the originals of such latter documents.

Based on our examination mentioned above, we are of the opinion that the outstanding shares of common stock being sold pursuant to the Registration Statement are legally and validly issued, fully paid and non-assessable.

We hereby consent to the filing of this opinion as Exhibit 5.1 to the Registration Statement and to the reference to our firm under “Legal Matters” in the related Prospectus. In giving the foregoing consent, we do not hereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act, or the rules and regulations of the Securities and Exchange Commission.

	Very truly yours,

	By:	/s/ Sichenzia Ross Friedman Ference
		Sichenzia Ross Friedman Ference LLP

ARTICLES OF INCORPORATION

WITH STATEMENT OF CONVERSION

The name of the corporation is Platinum Studios, Inc

II.

The purpose of the corporation is to engage in any lawful act or activity for which a corporation may be orgpnized under the GENERAL CORPORATION LAW of California other than the banking business, the trust company business or the practice of a profession permitted to be incorporated by the California Corporations Code.

III.

The name and address in the State of California of this corporation's initial agent for service of process is:

Name: Kimberly Vaughn

Address: 433 N. Camden Dr., Suite 400

City: Beverly HillsState CALIFORNIA Zip: 90210

IV.

This corporation is authorized to issue only one class of shares of stock; and the total number of shares which this corporation is authorized to issue is Ten Thousand (10,000).

The statement of the converting California limited liability company is Platinum Studios, LLC. The limited liability company's California Secretary of State file number is 199632510034. The principal terms of the plan of conversion were approved by a vote of the members entitled to vote or exceeded the vote required under Section 17540.3. There is one class of members entitled to vote and the percentage vote required is a majority in interest of the members. The limited liability company is converting into a California stock corporation.

It is hereby declared that I am the person who executed this instrument, which execution is my act and deed.

	Platinum Studios

	By:	/s/
		Scott M. Rosenberg
		Manager & Chairman

EX-3.2 4 ex32.htm EXHIBIT 3.2 ex32.htm

CERTIFICATE OF AMENDMENT OF

ARTICLES OF INCORPORATION

The undersigned certify that:

1.	They are the President and Secretary, respectively, of Platinum Studios, Inc., a California Corporation.

2.	Article IV of the Articles of Incorporation is amended to read as follows:

This corporation is authorized to issue only one class of shares of stock; and the total number of shares which this corporation is authorized to issue is Five Hundred Million (500,000,000).

3.	Article VI of the Articles of Incorporation is added to read as follows:

Indemnification of the directors of the corporation is authorized to the fullest extent permissible under California law. The liability of the directors of the corporation for monetary damages shall be eliminated to the fullest extent permissible under California law.

4.	The foregoing amendment to Articles of Incorporation has been duly approved by the Board of Directors.

5.	The Corporation has issued no shares.

We further declare under penalty of perjury under the laws of the State of California that the matters set forth in this Certificate are true and correct of our own knowledge.


Date	By:	/s/ Brian Altounian
		Brian Altounian
		President


Date	By:	/s/ Holene Pretsky
		Holene Pretsky
		Secretary

EX-3.3 5 ex33.htm EXHIBIT 3.3 ex33.htm

BYLAWS

Section 1. PLACE OF MEETINGS.

A CALIFORNIA CORPORATION

ARTICLE I

SHAREHOLDERS' MEETINGS

All meetings of the shareholders shall be held at the office of the corporation, in the State of California, as may be designated for that purpose from time to time by the Board of Directors.

Section 2. ANNUAL MEETINGS.

The annual meeting of the shareholders shall be held, each year, at the time and on the day as follows:

Time of Meeting:	10:00 AM
Date of Meeting:	March 3, ST

If this day shall be a legal holiday, then the meeting shall be held on the next succeeding business day, at the same hour. At the annual meeting, the shareholders shall elect a Board of Directors, consider reports of the affairs of the corporation and transact such other business as may properly be brought before the meeting.

Section 3. SPECIAL MEETINGS.

Special meetings of the shareholders for any purpose or purposes may be called at any time by the Board of Directors, the chairman of the Board, if any, the president, the secretary, or an assistant secretary or by shareholders holding not less than ten percent (10%) of the votes at the meeting. Upon request in writing to the chairman of the Board, if any, president, vice president, or secretary, or by any person (other than the Board) entitled to call a special meeting of shareholders, the officer forthwith shall cause notice to be given to the shareholders entitled to vote that a meeting will be held at a time requested by the person or persons calling the meeting, not less than thirty-five (35) nor more than sixty (60) days after receipt of the request.

Section 4. NOTICE OF MEETINGS.

Whenever shareholders are required or permitted to take any action at a meeting, a written notice of the meeting shall be given not less than ten (10) (or, if sent by third-class mail, thirty (30)) nor more than sixty (60) days before the date of the meeting to each shareholder entitled to vote thereat. Such notice shall state the place, date and hour of the meeting and (1) in the case of a special meeting, the general nature of the business to be transacted, and no other business may be transacted, or (2) in the case of the annual meeting, those matters which the Board, at the time of the mailing of the notice, intends to present for action by the shareholders, but, subject to the provisions of California Corporations Code Section 601(f), any proper matter may be presented at the meeting for such action. The notice of any meeting at which directors are to be elected shall include the names of nominees intended at the time of the notice to be presented by the Board for election.

Notice of a shareholders' meeting or any report shall be given either personally or by first-class mail, or, if the corporation has outstanding share held of record by five hundred (500) or more persons (determined as provided in Section 605 of the California Corporations Code) on the record date for the shareholders' meeting, notice may be sent by third class mail, or other means of written communication, addressed to the shareholder at the address of such shareholder appearing on the books of the corporation or given by the shareholder to the corporation for the purpose of notice; or if no such address appears or is given, at the place where the principal executive office of the corporation is located or by publication at least in a newspaper of general circulation in the county in which the principal executive office is located. The notice or report shall be deemed to have been given at the time when delivered personally or deposited in the mail or sent by other means of written communication. An affidavit of mailing of any notice or report in accordance with California Corporations Code Section 113, executed by the secretary, assistant secretary or any transfer agent, shall be prima facie evidence of the giving of the notice or report.

If any notice or report addressed to the shareholder at the address of such shareholder appearing on the books of the corporation is returned to the corporation by the United States Postal Service marked to indicate that the United States Postal Service is unable to deliver the notice or report to the shareholder at such address, all future notices or reports shall be deemed to have been duly given without further mailing if the same shall be available for the shareholder upon written demand of the shareholder at the principal executive office of the corporation for a period of one (1) year from the date of the giving of the notice or report to all other shareholders.

When a shareholders' meeting is adjourned to another time or place, except as provided in this Section 4, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the corporation may transact any business, which might have been transacted at the original meeting. If the adjournment is for more than forty-five

(45) days or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each shareholder of record entitled to vote at the meeting.

Section 5. CONSENT TO SHAREHOLDERS' MEETINGS.

The transactions of any meeting of shareholders, however called and noticed and wherever held, are as valid as though had at a meeting duly held after regular call and notice, if a quorum is present either in person or by proxy, and if, either before or after the meeting, each of the persons entitled to vote, not present in person or by proxy, signs a written waiver of notice or a consent to the holding of the meeting or an approval of the minutes thereof All such waivers, consents and approvals shall be filed with the corporate records or made a part of the minutes of the meeting. Attendance of a person at a meeting shall constitute a waiver of notice of and presence at such meeting, except when the person objects, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened and except that attendance at a meeting is not a waiver of any right to object to the consideration of matters not included in the notice if such objection is expressly made at the meeting. Neither the business to be transacted at nor the purpose of any regular or special meeting of shareholders need be specified in any written waiver of notice, consent to the holding of the meeting or approval of the minutes thereof, except as provided in California Corporations Code Section 601(f).

Section 6. SHAREHOLDERS ACTING WITHOUT A MEETING.

Any action which may be taken at any annual or special meeting of shareholders may be taken without a meeting and without prior notice, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted.

Section 7. QUORUM.

The holders of a majority of the shares entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of the shareholders.

If a quorum is present, the affirmative vote of the majority of the shares represented and voting at a duly held meeting at which a quorum is present (which shares voting affirmative also constitute at least a majority of the required quorum) shall be the act of the shareholders, unless the vote of a greater number or voting by classes is required by the California Corporations Code or as provided in this Section 7.

The shareholders present at a duly called or held meeting at which a quorum is present may continue to transact business until adjournment notwithstanding the withdrawal of enough shareholders to leave less than a quorum, if any action taken (other than adjournment) is approved by at least a majority of the shares required to constitute a quorum.

In the absence of a quorum, any meeting of shareholders may be adjourned from time to time, by the vote of a majority of the shares represented either in person or by proxy, but no other business may be transacted, except as provided in this Section 7.

Section 8. VOTING RIGHTS: CUMULATIVE VOTING.

Every shareholder complying with this Section 8 and entitled to vote at any election of directors may cumulate such shareholder's votes and give one candidate a number of votes equal to the number of directors to be elected multiplied by the number of votes to which the shareholder's shares are normally entitled, or distribute the shareholder's votes on the same principle among as many candidates as the shareholder thinks fit.

No shareholder shall be entitled to cumulate votes (i.e., cast for any candidate a number of votes greater than the number of votes which such shareholder normally is entitled to cast) unless such candidate's or candidates' names have been placed in nomination prior to the voting and the shareholder has given notice at the meeting prior to the voting of the shareholder's intention to cumulate the shareholder's votes. If any one shareholder has given such notice, all shareholders may cumulate their votes for candidates in nomination.

In any election of directors, the candidates receiving the highest number of affirmative votes of the shares entitled to be voted for them up to the number of directors to be elected by such shares are elected; votes against the director and votes withheld shall have no legal effect.

Section 9. PROXIES.

Every person entitled to vote shares may authorize another person or persons to act by proxy with respect to such shares. Any proxy purporting to be executed in accordance with the provisions of the California Corporations Code shall be presumptively valid.

No proxy shall be valid after the expiration of eleven (11) months from the date thereof unless otherwise provided in the proxy. Every proxy continues in full force and effect until revoked by the person executing it prior to the vote pursuant thereto, except as otherwise provided in this Section 9. Such revocation may be effected by a writing delivered to the corporation stating that the proxy is revoked or by a subsequent proxy executed by the person executing the prior proxy and presented to the meeting or as to any meeting, by attendance at such meeting and voting in person by, the person executing the proxy. The dates contained on the forms of proxy presumptively determine the order of execution, regardless of the postmark dates on the envelopes in which they are mailed.

Any form of proxy or written consent distributed to ten (10) or more shareholders at any such time as this corporation has outstanding shares held of record by one hundred (100) or more persons shall afford

an opportunity on the proxy or form of written consent to specify a choice between approval and disapproval of each matter or group of related matters, intended to be acted upon at the meeting for which the proxy is solicited or by such written consent, other than elections to office, and shall provide, subject to reasonable specified conditions, that where the person solicited specifies a choice with respect to any such matter the shares will be voted in accordance therewith.

Section 10. RECORD DATE OF OWNERSHIP OF SHARES.

In order that the corporation may determine the shareholders entitled to notice of any meeting or vote or entitled to receive payment of any dividend or other distribution or allotment of any rights or entitled to exercise any rights in respect of any other lawful action, the Board may fix, in advance, a record date, which shall not be more than sixty (60) nor less than ten (10) days prior to the date of such meeting nor more than sixty (60) days prior to any other action.

If no record date is fixed:

(1) The record date for determining shareholders entitled to notice of or to vote at a meeting of shareholders shall be at the close of business on the business day next preceding the day on which notice is given or, if notice is waived, at the close of business on the business day next preceding the day on which the meeting is held.

(2) The record date for determining shareholders entitled to give consent to corporate action in writing without a meeting, when no prior action by the Board is necessary, shall be the day on which the first written consent is given.

(3) The record date for determining shareholders for any other purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto, or the 60th day prior to the date of such other action, whichever is later.

A determination of shareholders of record entitled to notice of or to vote at a meeting of shareholders shall apply to any adjournment of the meeting unless the Board fixes a new record date for the adjourned meeting, but the Board shall fix a new record date if the meeting adjourned for more than forty-five (45) days from the date set for the original meeting.

' Shareholders at the close of business on the record date are entitled to notice and to vote or to receive the dividend, distribution or allotment or rights or to exercise the rights, as the case may be, notwithstanding any transfer of any shares on the books of the corporation after the record date, except as other-wise provided in the Articles or by agreement or in the California Corporations Code.

Section 11. ORGANIZATION.

The president, or in the event of the absence or disability of the president, the vice president, shall call the meeting of the shareholders to order, and shall act as chairman of the meeting. In the event of the absence or disability of the president and the vice president, the shareholders shall appoint a chairman for such meeting.

The secretary of the corporation shall act as secretary of all meetings of the shareholders, but in the absence of the secretary at any meeting of the shareholders, the presiding officer may appoint any person to act as secretary of the meeting.

Section 12. INSPECTORS OF ELECTION.

In advance of any meeting of shareholders the Board may appoint inspectors of election to act at the meeting and any adjournment thereof. If inspectors of election are not so appointed, or if any persons so appointed fail to appear or refuse to act, the chairman of any meeting of shareholders may, and on the request of any shareholder or a shareholder's proxy shall, appoint inspectors of election (or persons to replace those who so fail or refuse) at the meeting. The number of inspectors shall be either one (1) or three (3). If appointed at a meeting on the request of one (1) or more shareholders or proxies, the majority of shares represented in person or by proxy shall determine whether one (1) or three (3) inspectors are to be appointed.

The inspectors of election shall determine the number of shares outstanding and the voting power of each, the shares represented at the meeting, the existence of a quorum and the authenticity, validity and effect of proxies, receive votes, ballots or consents, hear and determine all challenges and questions in any way arising in connection with the right to vote, count and tabulate all votes or consents, determine when the polls shall close, determine the result and do such acts as may be proper to conduct the election or vote with fairness to all shareholders.

The inspectors of election shall perform their duties impartially, in good faith, to the best of their ability and as expeditiously as is practical. If there are three (3) inspectors of election, the decision, act or certificate of a majority is effective in all respects as the decision, act or certificate of all. Any report or certificate made by the inspectors of election is prima facie evidence of the facts stated therein.

ARTICLE 11

DIRECTORS; MANAGEMENT

Section 1. POWERS.

Subject to the limitation of the Articles of Incorporation and the California Corporations Code relating to action required to be approved by the shareholders (California Corporations Code Section 153), or by the outstanding shares (California Corporations Code Section 152), the business and affairs of the corporation shall be managed and all corporate powers shall be exercised by or under the direction of the Board. The Board may delegate the management of the day-to-day operation of the business of the corporation to a management company or other person provided that the business and affairs of the corporation shall be managed and all corporate powers shall be exercised under the ultimate direction of the Board.

Section 2. NUMBER AND QUALIFICATION.

The authorized Number of Directors of the corporation shall be as follows: three (3) persons, none of whom need to be a shareholder of the corporation.

After the issuance of shares, a Bylaw specifying or changing the fixed Number of Directors or the maximum or minimum number or changing from a fixed to a variable board or vice versa may only be adopted by approval of the outstanding shares (California Corporations Code Section 152); provided, however, that a Bylaw or amendment of the Articles reducing the fixed number or the minimum Number of Directors to a number less than five (5) cannot be adopted if the votes cast against its adoption at a meeting or the shares not consenting in the case of action by written consent are equal to more than sixteen and two-thirds percent (16-2/3 %) of the outstanding shares entitled to vote.

Section 3. ELECTION AND TENURE OF OFFICE.

At each annual meeting of shareholders, directors shall be elected to hold office until the next annual meeting.

Each director, including a director elected to fill a vacancy, shall hold office until the expiration of the term for which elected and until a successor has been elected and qualified.

Section 4. VACANCIES.

Unless otherwise provided in the Articles and except for a vacancy created by the removal of a director, vacancies on the Board of Directors may be filled by a majority of the directors then in office, whether or not less than a quorum, or by a sole remaining director.

Any director may resign effective upon giving written notice to the chairman of the Board, if any, the president, the secretary, or the Board of Directors of the corporation, unless the notice specifies a later time for the effectiveness of such resignation. If the resignation is effective at a future time, a successor may be elected to take office when the resignation becomes effective.

No reduction of the authorized number of directors shall have the effect of removing any director prior to the expiration of such director's term of office.

Section 5. REMOVAL OF DIRECTORS.

The entire Board of Directors or any individual director may be removed from office as provided by California Corporations Code Sections 303 and 304.

Section 6. PLACE OF MEETINGS.

Meetings of the Board may be held at any place within or without the state, which has been designated in the notice of the meeting or, if not stated in the notice or there is no notice, as designated by resolution of the Board.

Section 7. ANNUAL MEETINGS.

The annual meeting of the Board of Directors shall be held immediately following the adjournment of the annual meeting of the shareholders. Notice of this meeting shall not be required.

Section 8. SPECIAL MEETINGS, NOTICES.

Special meetings of Board of Directors for any purpose or purposes may be called by the chairman of the Board, if any, or the president or vice president or the secretary or any two (2) directors.

Special meetings of the Board shall be held upon four (4) days' notice by mail or forty-eight (48) hours' notice delivered personally or by telephone or telegraph. Neither the Articles nor these Bylaws may dispense with notice of a special meeting but a lack of notice will not invalidate actions taken at a special meeting so long as the provisions of Section 10 hereof are met. A notice, or waiver of notice, need not specify the purpose of any regular or special meeting of the Board.

Section 9. WAVER OF NOTICE.

Notice of a meeting need not be given to any director who signs a waiver of notice or a consent to holding the meeting or an approval of the minutes thereof, whether before or after the meeting, or who attends the meeting without protesting, prior thereto or at its commencement, the lack of notice to such director. All such waivers, consents and approvals shall be filed with the corporate records or made a part of the minutes of the meeting.

Section 10. DIRECTORS ACTING WITHOUT A MEETING BY UNANIMOUS WRITTEN CONSENT.

Any action required or permitted to be taken by the Board may be taken without a meeting, if all members of the Board shall individually or collectively consent in writing to such action. Such written consent or consents shall be filed with the minutes of the proceedings of the Board. Such action by written consent shall have the same force and effect as a unanimous vote of such directors.

Section 11. NOTICE OF ADJOURNMENT.

A majority of the directors present, whether or not a quorum is present, may adjourn any meeting to another time and place. If the meeting is adjourned for more than twenty-four (24) hours, notice of the adjournment to another time or place shall be given prior to the time of the adjourned meeting to the directors who were not present at the time of the adjournment.

Section 12. QUORUM.

A majority of the authorized number of directors constitutes a quorum of the Board for the transaction of business.

Every act or decision done or made by a majority of the directors present at a meeting duly held at which a quorum is present is the act of the Board, subject to California Corporations Code Sections 310 and

317(c). A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approved by at least a majority of the required quorum for such meeting.

The provisions of this Section 12 apply also to committees of the Board and incorporators and action by such committees and incorporators, mutatis mutandis.

Section 13. USE OF CONFERENCE TELEPHONE.

Members of the Board may participate in a meeting through use of conference telephone or similar communications equipment, so long as all members participating in such meeting can hear one another.

Section 14. COMPENSATION OF DIRECTORS.

Directors, as such, shall not receive any stated salary for their services, but by resolution of the Board a fixed sum and expense of attendance, if any, may be allowed for attendance at each annual, regular, and/or special meeting of the Board; provided that nothing herein contained shall be construed to preclude any director from serving the company in any other capacity and receiving compensation therefore.

Section 15. EXECUTIVE COMMITTEE.

An executive committee may be appointed by resolution passed by a majority of the whole Board. The executive committee shall be composed of members of the Board, and shall have such powers as may be expressly delegated to it by resolution of the Board of Directors. It shall act only in the intervals between meetings of the Board and shall be subject at all times to the control of the Board of Directors.

ARTICLE III

OFFICERS

Section 1. OFFICERS.

The officers of the corporation shall be a chief executive officer, president, a secretary and a chief financial officer (treasurer). The corporation may also have, at the discretion of the Board of Directors, a chairman of the Board, one or more additional vice presidents, one or more assistant secretaries, one or more assistant treasurers, and such other officers as may be appointed in accordance with the provisions of Section 3 of this Article III. Any number of offices may be held by the same person.

Section 2. ELECTION.

The officers of the corporation, except such officers as may be appointed in accordance with the provisions of Section 3 or Section 5 of this Article 111, shall be chosen annually by the Board of Directors, and each shall hold office until he shall resign or shall be

removed or otherwise disqualified to serve, or his successor shall be elected and qualified.

Section 3. SUBORDINATE OFFICERS.

The Board of Directors may appoint such other officers as the business of the corporation may require, each of whom shall hold office for such period, have such authority and perform such duties as are provided 111 these Bylaws or as the Board of Directors may from time to time determine.

Section 4. REMOVAL AND RESIGNATION.

Any officer may be removed, either with or without cause, by a majority of the directors at the time in office, at any regular or special meeting of the Board, or, except in case of an officer chosen by the Board of Directors, by any officer upon whom such power of removal may be conferred by the Board of Directors.

Any officer may resign at any time by giving written notice to the corporation. Any such resignation shall take effect at the date of the receipt of such notice or at any later time specified therein; and, unless other-wise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

Section 5. VACANCIES.

A vacancy in any office because of death, resignation, removal, disqualification or any other cause shall be filled in the manner prescribed in these Bylaws for regular appointments to such office.

Section 6. CHAIRMAN OF THE BOARD.

The Chairman of the Board, if there shall be such an officer, shall, if present, preside at all meetings of the Board of Directors, and exercise and perform such other powers and duties as may be from time to time assigned to such officer by the Board of Directors or prescribed by these Bylaws.

Section 7. PRESIDENT.

^ISubject to such supervisory powers, if any, as may be given by the Board of Directors to the Chairman of the Board, if there be such an officer, the president shall be the chief executive officer of the corporation, shall be subject to the control of the Board of Directors, and shall have general supervision, direction and control of the business and officers of the corporation. The president shall preside at all meetings of the Board of Directors. The president shall be ex officio a member of all the standing committees, including the executive committee, if any, and shall have the general powers and duties of management usually vested in the office of president of a corporation, and shall have such other powers and duties as may be prescribed by the Board of Directors or by the Bylaws.

Section 8. VICE PRESIDENT.

In the absence or disability of the president, the vice presidents, in order of their rank as fixed by the Board of Directors, or if not ranked, the vice president designated by the Board of Directors, shall perform all the duties of the president, and when so acting shall have all the powers of, and be subject to all the restrictions upon, the president. The vice-presidents shall have such other powers and perform such other duties as from time to time may be prescribed for them respectively by the Board of Directors or the Bylaws.

Section 9. SECRETARY.

The secretary shall keep, or cause to be kept, a book of minutes at the principal office or such other place as the Board of Directors may order, of all meetings of directors and shareholders, with the time and place of holding, whether regular or special, and if special, how authorized, the notice thereof given, the names of those present at directors' meetings, the number of shares present or represented at shareholders' meetings and the proceedings thereof.

The secretary shall keep, or cause to be kept, at the principal office or at the office of the corporation's transfer agent, a share register, or duplicate share register, showing the names of the shareholders and their addresses; the number and classes of shares held by each; the number and date of certificates issued for the same; and the number and date of cancellation of every certificate surrendered for cancellation.

The secretary shall give, or cause to be given, notice of all the meetings of the shareholders and of the Board of Directors required by the Bylaws or by law to be given, and shall keep the seal of the corporation in safe custody, and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or by the Bylaws.

Section 10. CHIEF FINANCIAL OFFICER.

The chief financial officer shall keep and maintain, or cause to be kept and maintained, adequate and correct accounts of the properties and business transactions of the corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital, surplus and shares. Any surplus, including earned surplus, paid-in surplus and surplus arising from a reduction of stated capital, shall be classified according to source and shown in a separate account. The books of account shall at all reasonable times be open to inspection by a director.

The chief financial officer shall deposit all moneys and other valuables in the name and to the credit of the corporation with such depositories as may be designated by the Board of Directors. He shall disburse the funds of the corporation as may be ordered by the Board of Directors, shall render to the president and directors, whenever they request it, an account of all of his transactions as chief financial officer and of the financial condition of the corporation, and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or the Bylaws. .

ARTICLE IV

INDEMNIFICATION OF DIRECTORS OFFICERS, EMPLOYEES AND AGENT

The corporation shall, to the maximum extent permitted by the California Corporations Code, indemnify each of its agents against expenses, judgments, fines, settlements and other amounts actually and reasonably incurred in connection with any proceeding arising by reason of the fact any such person is or was an agent of the corporation. For purposes of this Article IV, an "agent" of the corporation includes any person who is or was a director, officer, employee or other agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, or was a director, officer, employee or agent of a corporation which was a predecessor corporation of the corporation or of another enterprise at the request of such predecessor corporation.

ARTICLE V

CORPORATE RECORDS AND REPORTS INSPECTION

Section 1. RECORDS.

The corporation shall keep adequate and correct books and records of account and shall keep minutes of the proceedings of its shareholders, Board and committees of the Board and shall keep at its principal executive office, or at the office of its transfer agent or registrar, a record of its shareholders, giving the names and addresses of all shareholders and the number and class of shares held by each.

Such minutes shall be kept in written form. Such other books and records shall be kept either in written form or in any other form capable of being converted into written form.

Section 2. WAIVER OF CALIFORNIA CORPORATIONS CODE SECTION 1501.

The requirement that the Board cause an annual report to be sent to the shareholders not later than one hundred twenty (120) days after the close of the fiscal year is hereby expressly waived so long as this corporation has less than one hundred (100) holders of record of its shares; provided, however, nothing contained herein shall be interpreted as prohibiting the Board of Directors from issuing annual or other periodic reports to the shareholders of the corporation as it deems appropriate.

Section 3. INSPECTION OF BYLAWS, LISTS, BOOKS, RECORDS.

The shareholders and other persons described in California Corporations Code Sections 213, 1600, and 1601 shall and do have the rights accorded to them in said Sections regarding these Bylaws, as the same may be amended from time to time, a record and list of the shareholder's names

and addresses and shareholdings, and the accounting books, records, and minutes of proceedings of the shareholders, the Board, and committees of the Board. The directors and other persons described in California Corporations Code Section 1602 shall and do have the rights accorded them in said Section regarding all books, records, and documents of every kind and regarding inspection of the physical properties of the corporation as well as any subsidiary corporations, domestic or foreign.

Section 4. CHECKS, DRAFTS, INDEBTEDNESS.

All checks, drafts or other orders for payment of money, notes or other evidences of indebtedness, issued in the name of or payable to the corporation, shall be signed or endorsed by such person or persons and in such manner as shall be determined from time to time by resolution of the Board of Directors.

Section 5. CONTRACTS, OTHER INSTRUMENTS; HOW EXECUTED.

The Board of Directors, except as in these Bylaws otherwise provided, may authorize any officer or officers, or agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the corporation. Such authority may be general or confined to specific instances. Unless so authorized by the Board of Directors, no officer, agent or employee shall have any power or authority to bind the corporation by any contract or engagement, or to pledge its credit or to render it liable for any purpose or for any amount.

Section 6. ANNUAL STATEMENT.

This corporation shall, within ninety (90) days after the filing of its original Articles of Incorporation and annually thereafter during the applicable filing period (as defined in California Corporations Code Section 1502(c) ineach year, file, on a form prescribed by the California Secretary of State, a statement containing:

(1) The names and complete business or residence addresses of its incumbent directors;

(2) The number of vacancies on the Board, if any;

(3) The names and complete business or residence addresses of its chief executive officer, Secretary and chief financial officer;

(4) The street address of its principal executive office;

(5) If the address of its principal executive office is not in this state, the street address of its principal business office in this state, if any; and

(6) A statement of the general type of business, which constitutes the principal business activity of the corporation.

The statement shall also designate, as the agent of such corporation for the purpose of service of process, a natural person residing in this state or a corporation which has complied with California Corporations Code Section 1505 and whose capacity to act as such agent

has not terminated. If a natural person is designated, the statement shall set forth such person's complete business or residence address, If a corporate agent is designated, no address for it shall be set forth.

If there has been no change in the information in the last filed statement of the corporation on file in the Secretary of State's office, the corporation may, in lieu of filing the statement described above, advise the Secretary of State, on a form prescribed by the Secretary of State, that no changes in the required information have occurred during the applicable filing period.

ARTICLE VI

CERTIFICATES AND TRANSFER OF SHARES

Section 1. CERTIFICATES FOR SHARES.

Every holder of shares in this corporation shall be entitled to have a certificate signed in the name of the corporation by the chairman or vice chairman of the Board or the president or a vice president and by the chief financial officer or an assistant treasurer or the secretary or any assistant secretary, certifying the number of shares and the class or series of shares owned by the shareholder. Any or all of the signatures on the certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if such person were an officer, transfer agent or registrar at the date of issue.

Section 2. TRANSFER ON THE BOOKS.

Upon surrender to the secretary or transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment, or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate, and record the transaction upon its books.

Section 3. LOST OR DESTROYED CERTIFICATES.

This corporation may issue a new share certificate or a new certificate for any other security in the place of any certificate theretofore issued by it, alleged to have been lost, stolen, or destroyed, and the corporation may require the owner of the lost, stolen or destroyed certificate or the owner's legal representative to give the corporation a bond (or other adequate security) sufficient to indemnify it against any claim that may be made against it (including any expense or liability) on account of the alleged loss, theft, or destruction of any such certificate or the issuance of such new certificate.

Section 4. TRANSFER AGENTS AND REGISTRARS.

The Board of Directors may appoint one or more transfer agents or transfer clerks, and one or more registrars, which may be an incorporated bank or trust company, either domestic or foreign, who shall be appointed at such times and places as the requirements of the corporation may necessitate and the Board of Directors may designate.

Section 5. CLOSING STOCK TRANSFER BOOKS.

The Board of Directors may close the transfer books in their discretion for a period not exceeding thirty (30) days preceding any meeting, annual or special, of the shareholders, or the day appointed for the payment of a dividend.

Section 6. LEGEND CONDITION.

In the event any shares of this corporation are issued pursuant to a consent, permit or exemption there from requiring the imposition of a legend condition, the person or persons issuing or transferring said shares shall cause said legend to appear "on the certificate" (as defined in California Corporations Code Section 174) and on the stub relating thereto in the stock record book and shall not be required to transfer any shares unless an exemption regarding such transfer exists or until an amendment to such consent or permit, or a new consent or permit, be first issued authorizing such transfer. To the extent applicable, the statements set forth in California Corporations Code Section 418(a) shall also appear "on the certificate" (as defined in California Corporations Code Section 174) and on the stub relating thereto.

Section 7. REPRESENTATION OF SHARES OF OTHER CORPORATIONS.

The chairman of the Board, if any, the president, or any vice president, or any other person authorized by resolution of the Board of Directors by any of the foregoing designated officers, is authorized to vote on behalf of the corporation any and all shares of any other corporation or corporations, foreign or domestic, standing in the name of this corporation. The authority herein granted to said officers to vote or represent on behalf of this corporation any and all shares held by this corporation in any other corporation or corporations may be exercised by any such officer in person or by any person authorized to do so by proxy duly executed by said officer.

ARTICLE VII

CORPORATE SEAL

The corporate seal shall be circular in form, and shall have inscribed thereon the name of the corporation, the date of its incorporation, and the word "California."

ARTICLE VIII

EXCESSIVE COMPENSATION

If, on audit or other examination of their income tax returns, any compensation or expense reimbursement paid to any officer, director, or employee shall be determined to be a nondeductible expense of the corporation, and this determination shall be acceded to by the corporation or made final by the appropriate state or federal taxing authority or by a final judgment of a. court of competent jurisdiction, and no appeal shall be taken there from or the applicable period for filing notice of appeal shall have expired, the officer, director, or employee shall repay the corporation the amount of this disallowed compensation. This repayment may not be waived by the corporation.

ARTICLE IX

AMENDMENTS TO BYLAW

Section 1. BY SHAREHOLDERS.

New Bylaws may be adopted or these Bylaws may be repealed or amended by approval of the outstanding shares (California Corporations Code Section 152).

Section 2. POWERS OF DIRECTORS.

Subject to the right of the shareholders to adopt, amend or repeal Bylaws, as provided in Section I of this Article IX, the Board of Directors may adopt, amend or repeal any of these Bylaws other than a Bylaw or amendment thereof changing the authorized number of directors as provided in California Corporations Code Section 212(a).

Section 3. RECORD OF AMENDMENTS.

Whenever an amendment or new Bylaw is adopted, it shall be copied in the book of Bylaws with the original Bylaws, in the appropriate place. If any Bylaw is repealed, the fact of repeal with the date of the meeting at which the repeal was enacted or written assent was filed shall be stated in said book.

ARTICLE X

AMENDMENTS TO ARTICLES OF INCORPORATION

The Articles of Incorporation of this corporation may only be amended in accordance with Chapter 9, Division I of Title I of the California Corporations Code commencing with Section 900.

CERTIFICATE OF ADOPTION OF BYLAWS

ADOPTION BY BOARD OF DIRECTORS

A CALIFORNIA CORPORATION

The undersigned, being all of the persons elected to the Board of Directors of this corporation, hereby assent to the foregoing Bylaws, and adopt the same as the Bylaws of this corporation.

Executed at: Los Angeles, California, as of September 16, 2006.

Directors:

/s/ Scott Mitchell Rosenberg

Scott Mitchell Rosenberg

CERTIFICATE BY SECRETARY OF ADOPTION BY DIRECTORS.

THIS IS TO CERTIFY that I am the duly elected, qualified and acting Secretary of the above named corporation and that the foregoing Bylaws were adopted as the Bylaws of said corporation on the date set forth above by the persons elected as the first Board of Directors of said corporation.

Executed at: Los Angeles, California, as of September 16, 2006.



		/s/ Helene Pretsky
		Helene Pretsky
		Secretary

EX-10.1 6 ex101.htm EXHIBIT 10.1 ex101.htm

SUBSCRIPTION AGREEMENT

SUBSCRIPTION AGREEMENT (this “Agreement”) made as of the last date set forth on the signature page hereof between Platinum Studios, Inc., a California corporation (the “Company”), and the undersigned (the “Subscriber”).

W I T N E S S E T H:

WHEREAS, the Company is conducting a private offering (the “Offering”) consisting of up to 50,000,000 shares (the “Shares”) of common stock, $.0001 par value per share (“Common Stock”), pursuant to Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”) and Rule 506 promulgated thereunder; and

WHEREAS, the Subscriber desires to purchase that number of Shares set forth on the signature page hereof on the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the premises and the mutual representations and covenants hereinafter set forth, the parties hereto do hereby agree as follows:

I.	SUBSCRIPTION FOR SHARES AND REPRESENTATIONS BY SUBSCRIBER

1.1 Subject to the terms and conditions hereinafter set forth and in the Confidential Private Placement Memorandum dated October 12, 2006 (such memorandum, together with all amendments thereof and supplements and exhibits thereto, the “Memorandum”), the Subscriber hereby irrevocably subscribes for and agrees to purchase from the Company such number of Shares, and the Company agrees to sell to the Subscriber as is set forth on the signature page hereof, at a per share price equal to $0.10 per Share. The purchase price is payable by wire transfer of immediately available funds to:

Wire instructions:

Account Name: Platinum Studios, Inc.

Account # 112642196

Routing # 122016066

Bank: City National Bank

Address: 400 N. Roxbury Dr.

Beverly Hills, CA 90210

1.2 The Subscriber recognizes that the purchase of the Shares involves a high degree of risk including, but not limited to, the following: (a) the Company remains a development stage business with limited operating history and requires substantial funds in addition to the proceeds of the Offering; (b) an investment in the Company is highly speculative, and only investors who can afford the loss of their entire investment should consider investing in the Company and the Shares; (c) the Subscriber may not be able to liquidate its investment; (d) transferability of the Shares is extremely limited; (e) in the event of a disposition, the Subscriber could sustain the loss of its entire investment; (f) the Company has not paid any dividends since its inception and does not anticipate paying any dividends in the foreseeable future; and (g) the Company may issue additional securities in the future which have rights and preferences that are senior to those of the Common Stock. Without limiting the generality of the representations set forth in Section 1.5 below, the Subscriber represents that the Subscriber has carefully reviewed the section of the Memorandum captioned “Risk Factors.”

1.3 The Subscriber represents that the Subscriber is an “accredited investor” as such term is defined in Rule 501 of Regulation D (“Regulation D”) promulgated under the Securities Act, as indicated by the Subscriber’s responses to the questions contained in Article VII hereof, and that the Subscriber is able to bear the economic risk of an investment in the Shares.

1.4 The Subscriber hereby acknowledges and represents that (a) the Subscriber has knowledge and experience in business and financial matters, prior investment experience, including investment in securities that are non-listed, unregistered and/or not traded on a national securities exchange nor on the National Association of Securities Dealers, Inc. (the “NASD”) automated quotation system (“NASDAQ”), or the Subscriber has employed the services of a “purchaser representative” (as defined in Rule 501 of Regulation D), attorney and/or accountant to read all of the documents furnished or made available by the Company both to the Subscriber and to all other prospective investors in the Shares to evaluate the merits and risks of such an investment on the Subscriber’s behalf; (b) the Subscriber recognizes the highly speculative nature of this investment; and (c) the Subscriber is able to bear the economic risk that the Subscriber hereby assumes.

1.5 The Subscriber hereby acknowledges receipt and careful review of this Agreement, the Memorandum (which includes the Risk Factors), including all exhibits thereto, and any documents which may have been made available upon request as reflected therein (collectively referred to as the “Offering Materials”) and hereby represents that the Subscriber has been furnished by the Company during the course of the Offering with all information regarding the Company, the terms and conditions of the Offering and any additional information that the Subscriber has requested or desired to know, and has been afforded the opportunity to ask questions of and receive answers from duly authorized officers or other representatives of the Company concerning the Company and the terms and conditions of the Offering.

1.6 (a) In making the decision to invest in the Shares the Subscriber has relied solely upon the information provided by the Company in the Offering Materials. To the extent necessary, the Subscriber has retained, at its own expense, and relied upon appropriate professional advice regarding the investment, tax and legal merits and consequences of this Agreement and the purchase of the Shares hereunder. The Subscriber disclaims reliance on any statements made or information provided by any person or entity in the course of Subscriber’s consideration of an investment in the Shares other than the Offering Materials.

(b) The Subscriber represents that (i) the Subscriber was contacted regarding the sale of the Shares by the Company (or an authorized agent or representative thereof) with whom the Subscriber had a prior substantial pre-existing relationship and (ii) no Shares were offered or sold to it by means of any form of general solicitation or general advertising, and in connection therewith, the Subscriber did not (A) receive or review any advertisement, article, notice or other communication published in a newspaper or magazine or similar media or broadcast over television or radio, whether closed circuit, or generally available; or (B) attend any seminar meeting or industry investor conference whose attendees were invited by any general solicitation or general advertising.

1.7 The Subscriber hereby represents that the Subscriber, either by reason of the Subscriber’s business or financial experience or the business or financial experience of the Subscriber’s professional advisors (who are unaffiliated with and not compensated by the Company or any affiliate or selling agent of the Company, directly or indirectly), has the capacity to protect the Subscriber’s own interests in connection with the transaction contemplated hereby.

1.8 The Subscriber hereby acknowledges that the Offering has not been reviewed by the United States Securities and Exchange Commission (the “SEC”) nor any state regulatory authority since the Offering is intended to be exempt from the registration requirements of Section 5 of the Securities Act, pursuant to Regulation D. The Subscriber understands that the Shares have not been registered under the Securities Act or under any state securities or “blue sky” laws and agrees not to sell, pledge, assign or otherwise transfer or dispose of the Shares unless they are registered under the Securities Act and under any applicable state securities or “blue sky” laws or unless an exemption from such registration is available.

1.9 The Subscriber understands that the Shares have not been registered under the Securities Act by reason of a claimed exemption under the provisions of the Securities Act that depends, in part, upon the Subscriber’s investment intention. In this connection, the Subscriber hereby represents that the Subscriber is purchasing the Shares for the Subscriber’s own account for investment and not with a view toward the resale or distribution to others. The Subscriber, if an entity, further represents that it was not formed for the purpose of purchasing the Shares.

1.10 The Subscriber understands that the Common Stock is not currently traded or quoted on any market and that there is no market for the Common Stock. The Subscriber understands that even if a public market develops for the Common Stock, Rule 144 (“Rule 144”) promulgated under the Securities Act requires for non-affiliates, among other conditions, a one-year holding period prior to the resale (in limited amounts) of securities acquired in a non-public offering without having to satisfy the registration requirements under the Securities Act. The Subscriber understands and hereby acknowledges that the Company is under no obligation to register any of the Shares under the Securities Act or any state securities or “blue sky” laws other than as set forth in Article V.

1.11 The Subscriber consents to the placement of a legend on any certificate or other document evidencing the Shares that such Shares have not been registered under the Securities Act or any state securities or “blue sky” laws and setting forth or referring to the restrictions on transferability and sale thereof contained in this Agreement. The Subscriber is aware that the Company will make a notation in its appropriate records with respect to the restrictions on the transferability of such Shares. The legend to be placed on each certificate shall be in form substantially similar to the following:

“The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended and may not be sold, transferred, pledged, hypothecated or otherwise disposed of in the absence of (i) an effective registration statement for such securities under said act or (ii) an opinion of company counsel that such registration is not required.”

1.12 The Subscriber understands that the Company will review this Agreement and is hereby given authority by the Subscriber to call Subscriber’s bank or place of employment or otherwise review the financial standing of the Subscriber; and it is further agreed that the Company, at its sole discretion, reserves the unrestricted right, without further documentation or agreement on the part of the Subscriber, to reject or limit any subscription, to accept subscriptions for fractional Shares and to close the Offering to the Subscriber at any time and that the Company will issue stop transfer instructions to its transfer agent with respect to such Shares.

1.13 The Subscriber hereby represents that the address of the Subscriber furnished by Subscriber on the signature page hereof is the Subscriber’s principal residence if Subscriber is an individual or its principal business address if it is a corporation or other entity.

1.14 The Subscriber represents that the Subscriber has full power and authority (corporate, statutory and otherwise) to execute and deliver this Agreement and to purchase the Shares. This Agreement constitutes the legal, valid and binding obligation of the Subscriber, enforceable against the Subscriber in accordance with its terms.

1.15 If the Subscriber is a corporation, partnership, limited liability company, trust, employee benefit plan, individual retirement account, Keogh Plan, or other tax-exempt entity, it is authorized and qualified to invest in the Company and the person signing this Agreement on behalf of such entity has been duly authorized by such entity to do so.

1.16 The Subscriber acknowledges that if he or she is a Registered Representative of an NASD member firm, he or she must give such firm the notice required by the NASD’s Rules of Fair Practice, receipt of which must be acknowledged by such firm in Section 7.4 below.

1.17 The Subscriber acknowledges that at such time, if ever, as the Shares are registered (as such term is defined in Article V hereof), sales of the Shares will be subject to state securities laws.

1.18 (a) The Subscriber agrees not to issue any public statement with respect to the Subscriber’s investment or proposed investment in the Company or the terms of any agreement or covenant between them and the Company without the Company’s prior written consent, except such disclosures as may be required under applicable law or under any applicable order, rule or regulation.

(b) The Company agrees not to disclose the names, addresses or any other information about the Subscribers, except as required by law; provided, that the Company may use the name of the Subscriber for any offering or in any registration statement filed pursuant to Article V in which the Subscriber’s shares are included.

1.19 The Subscriber agrees to hold the Company and its directors, officers, employees, affiliates, controlling persons and agents and their respective heirs, representatives, successors and assigns harmless and to indemnify them against all liabilities, costs and expenses incurred by them as a result of (a) any sale or distribution of the Shares by the Subscriber in violation of the Securities Act or any applicable state securities or “blue sky” laws; or (b) any false representation or warranty or any breach or failure by the Subscriber to comply with any covenant made by the Subscriber in this Agreement (including the Confidential Investor Questionnaire contained in Article VII herein) or any other document furnished by the Subscriber to any of the foregoing in connection with this transaction.

II.	REPRESENTATIONS BY AND COVENANTS OF THE COMPANY

The Company hereby represents and warrants to the Subscriber that:

2.1 Organization, Good Standing and Qualification. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of California and has full corporate power and authority to conduct its business.

2.2 Capitalization and Voting Rights. The authorized, issued and outstanding capital stock of the Company is as set forth in the Confidential Private Placement Memorandum and all issued and outstanding shares of the Company are validly issued, fully paid and nonassessable. Except as set forth in the Offering Materials, there are no outstanding options, warrants, agreements, convertible securities, preemptive rights or other rights to subscribe for or to purchase any shares of capital stock of the Company. Except as set forth in the Offering Materials and as otherwise required by law, there are no restrictions upon the voting or transfer of any of the shares of capital stock of the Company pursuant to the Company’s Articles of Incorporation (the “Articles of Incorporation”), Bylaws or other governing documents or any agreement or other instruments to which the Company is a party or by which the Company is bound.

2.3 Authorization; Enforceability. The Company has all corporate right, power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. All corporate action on the part of the Company, its directors and stockholders necessary for the (a) authorization execution, delivery and performance of this Agreement by the Company; and (b) authorization, sale, issuance and delivery of the Shares contemplated hereby and the performance of the Company’s obligations hereunder has been taken. This Agreement has been duly executed and delivered by the Company and constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to laws of general application relating to bankruptcy, insolvency and the relief of debtors and rules of law governing specific performance, injunctive relief or other equitable remedies, and to limitations of public policy. The Shares, when issued and fully paid for in accordance with the terms of this Agreement, will be validly issued, fully paid and nonassessable. The issuance and sale of the Shares contemplated hereby will not give rise to any preemptive rights or rights of first refusal on behalf of any person which have not been waived in connection with this offering.

2.4 No Conflict; Governmental Consents.

(a) The execution and delivery by the Company of this Agreement and the consummation of the transactions contemplated hereby will not result in the violation of any material law, statute, rule, regulation, order, writ, injunction, judgment or decree of any court or governmental authority to or by which the Company is bound, or of any provision of the Articles of Incorporation or Bylaws of the Company, and will not conflict with, or result in a material breach or violation of, any of the terms or provisions of, or constitute (with due notice or lapse of time or both) a default under, any lease, loan agreement, mortgage, security agreement, trust indenture or other agreement or instrument to which the Company is a party or by which it is bound or to which any of its properties or assets is subject, nor result in the creation or imposition of any lien upon any of the properties or assets of the Company.

(b) No consent, approval, authorization or other order of any governmental authority is required to be obtained by the Company in connection with the authorization, execution and delivery of this Agreement or with the authorization, issue and sale of the Shares, except such filings as may be required to be made with the SEC, NASD, NASDAQ and with any state or foreign blue sky or securities regulatory authority.

2.5 Licenses. Except as otherwise set forth in the Memorandum, the Company has sufficient licenses, permits and other governmental authorizations currently required for the conduct of its business or ownership of properties and is in all material respects in compliance therewith.

2.6 Litigation. The Company knows of no pending or threatened legal or governmental proceedings against the Company which could materially adversely affect the business, property, financial condition or operations of the Company or which materially and adversely questions the validity of this Agreement or any agreements related to the transactions contemplated hereby or the right of the Company to enter into any of such agreements, or to consummate the transactions contemplated hereby or thereby. The Company is not a party or subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality which could materially adversely affect the business, property, financial condition or operations of the Company. There is no action, suit, proceeding or investigation by the Company currently pending in any court or before any arbitrator or that the Company intends to initiate.

2.7 Disclosure. The information set forth in the Offering Materials as of the date hereof contains no untrue statement of a material fact nor omits to state a material fact necessary in order to make the statements contained therein, in light of the circumstances under which they were made, not misleading.

2.8 Investment Company. The Company is not an “investment company” within the meaning of such term under the Investment Company Act of 1940, as amended, and the rules and regulations of the SEC thereunder.

2.9 Brokers. Neither the Company nor any of the Company's officers, directors, employees or stockholders has employed or engaged any broker or finder in connection with the transactions contemplated by this Agreement and no fee or other compensation is or will be due and owing to any broker, finder, underwriter, placement agent or similar person in connection with the transactions contemplated by this Agreement. The Company is not party to any agreement, arrangement or understanding whereby any person has an exclusive right to raise funds and/or place or purchase any debt or equity securities for or on behalf of the Company.

III.	TERMS OF SUBSCRIPTION

3.1 All funds paid hereunder shall be deposited with the Company in the account identified in Section 1.1 hereof.

3.2 Certificates representing the Common Stock purchased by the Subscriber pursuant to this Agreement will be prepared for delivery to the Subscriber within 15 business days following the closing at which such purchase takes place. The Subscriber hereby authorizes and directs the Company to deliver the certificates representing the Common Stock purchased by the Subscriber pursuant to this Agreement directly to the Subscriber’s residential or business address indicated on the signature page hereto.

IV.	CONDITIONS TO OBLIGATIONS OF THE SUBSCRIBERS

4.1 The Subscriber’s obligation to purchase the Shares at the closing at which such purchase is to be consummated is subject to the fulfillment on or prior to such closing of the following conditions, which conditions may be waived at the option of each Subscriber to the extent permitted by law:

(a) Covenants. All covenants, agreements and conditions contained in this Agreement to be performed by the Company on or prior to the date of such closing shall have been performed or complied with in all material respects.

(b) No Legal Order Pending. There shall not then be in effect any legal or other order enjoining or restraining the transactions contemplated by this Agreement.

(c) No Law Prohibiting or Restricting Such Sale. There shall not be in effect any law, rule or regulation prohibiting or restricting such sale or requiring any consent or approval of any person, which shall not have been obtained, to issue the Shares (except as otherwise provided in this Agreement).

V.	REGISTRATION RIGHTS

5.1 Definitions. As used in this Agreement, the following terms shall have the following meanings.

(a) The term “Holder” shall mean any person owning or having the right to acquire Registrable Securities or any permitted transferee of a Holder.

(b) The terms “register,” “registered” and “registration” refer to a registration effected by preparing and filing a registration statement or similar document in compliance with the Securities Act, and the declaration or order of effectiveness of such registration statement or document.

(c) The term “Registrable Securities” shall mean the Shares; provided, however, that securities shall only be treated as Registrable Securities if and only for so long as they (A) have not been disposed of pursuant to a registration statement declared effective by the SEC; (B) have not been sold in a transaction exempt from the registration and prospectus delivery requirements of the Securities Act so that all transfer restrictions and restrictive legends with respect thereto are removed upon the consummation of such sale; (C) are held by a Holder or a permitted transferee of a Holder pursuant to Section 5.10; and (D) may not be disposed of under Rule 144(k) under the Securities Act without restriction.

5.2 Mandatory Registration. The Company will use reasonable best efforts to file a registration statement with the Securities and Exchange Commission within one hundred and eighty (180) days after the closing, covering the resale of the Registrable Securities.

5.3 Registration Procedures. Whenever required under this Article V to include Registrable Securities in a Company registration statement, the Company shall, as expeditiously as reasonably possible:

(a) Use best efforts to (i) cause such registration statement to become effective, and (ii) cause such registration statement to remain effective until the earliest to occur of (A) such date as the sellers of Registrable Securities (the “Selling Holders”) have completed the distribution described in the registration statement and (B) such time that all of such Registrable Securities are no longer, by reason of Rule 144(k) under the Securities Act, required to be registered for the sale thereof by such Holders. The Company will also use its best efforts to, during the period that such registration statement is required to be maintained hereunder, file such post-effective amendments and supplements thereto as may be required by the Securities Act and the rules and regulations thereunder or otherwise to ensure that the registration statement does not contain any untrue statement of material fact or omit to state a fact required to be stated therein or necessary to make the statements contained therein, in light of the circumstances under which they are made, not misleading; provided, however, that if applicable rules under the Securities Act governing the obligation to file a post-effective amendment permits, in lieu of filing a post-effective amendment that (i) includes any prospectus required by Section 10(a)(3) of the Securities Act or (ii) reflects facts or events representing a material or fundamental change in the information set forth in the registration statement, the Company may incorporate by reference information required to be included in (i) and (ii) above to the extent such information is contained in periodic reports filed pursuant to Section 13 or 15(d) of the Exchange Act in the registration statement.

(b) Prepare and file with the SEC such amendments and supplements to such registration statement, and the prospectus used in connection with such registration statement, as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement.

(c) Make available for inspection upon reasonable notice during the Company’s regular business hours by each Selling Holder, any underwriter participating in any distribution pursuant to such registration statement, and any attorney, accountant or other agent retained by such Selling Holder or underwriter, all financial and other records, pertinent corporate documents and properties of the Company, and cause the Company’s officers, directors and employees to supply all information reasonably requested by any such Selling Holder, underwriter, attorney, accountant or agent in connection with such registration statement.

(d) Furnish to the Selling Holders such numbers of copies of a final prospectus, in conformity with the requirements of the Securities Act, and such other documents as they may reasonably request in order to facilitate the disposition of Registrable Securities owned by them.

(e) Use best efforts to register and qualify the securities covered by such registration statement under such other federal or state securities laws of such jurisdictions as shall be reasonably requested by the Selling Holders; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions, unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act.

(f) In the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter of such offering. Each Selling Holder participating in such underwriting shall also enter into and perform its obligations under such an agreement.

(g) Notify each Holder of Registrable Securities covered by such registration statement, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, (i) when the registration statement or any post-effective amendment and supplement thereto has become effective; (ii) of the issuance by the SEC of any stop order or the initiation of proceedings for that purpose (in which event the Company shall make every effort to obtain the withdrawal of any order suspending effectiveness of the registration statement at the earliest possible time or prevent the entry thereof); (iii) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Registrable Securities for sale in any jurisdiction or the initiation of any proceeding for such purpose; and (iv) of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing.

(h) Cause all such Registrable Securities registered hereunder to be listed on each securities exchange or quotation service on which similar securities issued by the Company are then listed or quoted or, if no such similar securities are listed or quoted on a securities exchange or quotation service, apply for qualification and use best efforts to qualify such Registrable Securities for inclusion on the New York Stock Exchange, American Stock Exchange or listing on a quotation system of the National Association of Securities Dealers, Inc.

(i) Cooperate with the Selling Holders and the managing underwriters, if any, to facilitate the timely preparation and delivery of certificates representing the Registrable Securities to be sold, which certificates will not bear any restrictive legends; and enable such Registrable Securities to be in such denominations and registered in such names as the managing underwriters, if any, shall request at least five business days prior to any sale of the Registrable Securities to the underwriters.

(j) In connection with an underwritten offering, cause the officers of the Company to provide reasonable assistance in the preparation of, any “road show” presentation to potential investors as the managing underwriter may determine.

(k) Comply with all applicable rules and regulations of the SEC and make generally available to its security holders earning statements satisfying the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or any similar rule promulgated under the Securities Act) no later than 50 calendar days after the end of any 3-month period (or 105 calendar days after the end of any 12-month period if such period is a fiscal year) (i) commencing at the end of any fiscal quarter in which Registrable Securities are sold to underwriters in a firm commitment or best efforts underwritten offering, and (ii) if not sold to underwriters in such an offering, commencing on the first day of the first fiscal quarter of the Company, after the effective date of a registration statement, which statements shall cover said period.

(l) If the offering is underwritten and at the request of any Selling Holder, use its best efforts to furnish on the date that Registrable Securities are delivered to the underwriters for sale pursuant to such registration: (i) opinions dated such date of counsel representing the Company for the purposes of such registration, addressed to the underwriters and the transfer agent for the Registrable Securities so delivered, respectively, to the effect that such registration statement has become effective under the Securities Act and such Registrable Securities are freely tradable, and covering such other matters as are customarily covered in opinions of issuer’s counsel delivered to underwriters and transfer agents in underwritten public offerings and (ii) a letter dated such date from the independent public accountants who have certified the financial statements of the Company included in the registration statement or the prospectus, covering such matters as are customarily covered in accountants’ letters delivered to underwriters in underwritten public offerings.

5.4 Furnish Information. It shall be a condition precedent to the obligation of the Company to take any action pursuant to this Article V with respect to the Registrable Securities of any Selling Holder that such Holder shall furnish to the Company such information regarding the Holder, the Registrable Securities held by the Holder, and the intended method of disposition of such securities as shall be reasonably required by the Company to effect the registration of such Holder’s Registrable Securities.

5.5 Registration Expenses. The Company shall bear and pay all registration expenses incurred in connection with any registration, filing or qualification of Registrable Securities with respect to registrations pursuant to Section 5.2 for each Holder, but excluding underwriting discounts and commissions relating to Registrable Securities and excluding any professional fees or costs of accounting, financial or legal advisors to any of the Holders.

5.6 Underwriting Requirements. In connection with any offering involving an underwriting of shares of the Company’s capital stock, the Company shall not be required under Section 5.3 to include any of the Holders’ Registrable Securities in such underwriting unless they accept the terms of the underwriting as agreed upon between the Company and the underwriters selected by it (or by other persons entitled to select the underwriters), and then only in such quantity as the underwriters determine in their sole discretion will not jeopardize the success of the offering by the Company. If the total amount of securities, including Registrable Securities, requested by stockholders to be included in such offering exceeds the amount of securities sold other than by the Company that the underwriters determine in their sole discretion is compatible with the success of the offering, then the Company shall be required to include in the offering only that number of such securities, including Registrable Securities, which the underwriters determine in their sole discretion will not jeopardize the success of the offering (the securities so included to be apportioned pro rata among the selling stockholders according to the total amount of securities entitled to be included therein owned by each selling stockholder or in such other proportions as shall mutually be agreed to by such selling stockholders). For purposes of the preceding parenthetical concerning apportionment, for any selling stockholder who is a holder of Registrable Securities and is a partnership or corporation, the partners, retired partners and stockholders of such holder, or the estates and family members of any such partners and retired partners and any trusts for the benefit of any of the foregoing persons shall be deemed to be a single “selling stockholder,” and any pro-rata reduction with respect to such “selling stockholder” shall be based upon the aggregate amount of shares carrying registration rights owned by all entities and individuals included in such “selling stockholder,” as defined in this sentence.

5.7 Delay of Registration. No Holder shall have any right to obtain or seek an injunction restraining or otherwise delaying any such registration as the result of any controversy that might arise with respect to the interpretation or implementation of this Article.

5.8 Indemnification. In the event that any Registrable Securities are included in a registration statement under this Article V:

(a) To the extent permitted by law, the Company will indemnify and hold harmless each Holder, any underwriter (as defined in the Securities Act) for such Holder and each person, if any, who controls such Holder or underwriter within the meaning of the Securities Act or the Exchange Act, against any losses, claims, damages, or liabilities (joint or several) to which they may become subject under the Securities Act, or the Exchange Act, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements, omissions or violations (collectively a “Violation”): (i) any untrue statement of a material fact contained in such registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, (ii) the omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading, or (iii) any violation by the Company of the Securities Act, the Exchange Act, or any rule or regulation promulgated under the Securities Act, or the Exchange Act, and the Company will pay to each such Holder, underwriter or controlling person, as incurred, any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability, or action; provided, however, that the indemnity agreement contained in this Section 5.9(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability, or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld), nor shall the Company be liable in any such case for any such loss, claim, damage, liability, or action to the extent that it arises out of or is based upon a Violation which occurs in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by any such Holder, underwriter or controlling person.

(b) To the extent permitted by law, each Selling Holder will indemnify and hold harmless the Company, each of its directors, each of its officers, each person, if any, who controls the Company within the meaning of the Securities Act, any underwriter, any other Holder selling securities in such registration statement and any controlling person of any such underwriter or other Holder, against any losses, claims, damages, or liabilities (joint or several) to which any of the foregoing persons may become subject, under the Securities Act, or the Exchange Act, insofar as such losses, claims, damages, or liabilities (or actions in respect thereto) arise out of or are based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished by such Holder expressly for use in connection with such registration; and each such Holder will pay, as incurred, any legal or other expenses reasonably incurred by any person intended to be indemnified pursuant to this Section 5.9(b), in connection with investigating or defending any such loss, claim, damage, liability, or action; provided, however, that the indemnity agreement contained in this Section 5.9(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Holder, which consent shall not be unreasonably withheld; provided, further, that, in no event shall any indemnity under this Section 5.8(b) exceed the greater of the cash value of the (i) gross proceeds from the Offering received by such Holder or (ii) such Holder’s investment pursuant to this Agreement as set forth on the signature page attached hereto.

(d) If the indemnification provided for in this Section 5.9 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, liability, claim, damage, or expense referred to therein, then the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such loss, liability, claim, damage, or expense in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or omissions that resulted in such loss, liability, claim, damage, or expense as well as any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the alleged omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission.

(e) Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in an underwriting agreement entered into in connection with an underwritten public offering are in conflict with the foregoing provisions, the provisions in such underwriting agreement shall control.

(f) The obligations of the Company and Holders under this Section 5.9 shall survive the completion or termination of the Offering.

5.9 Reports Under Securities Exchange Act of 1934. With a view to making available to the Holders the benefits of Rule 144 and any other rule or regulation of the SEC that may at any time permit a Holder to sell securities of the Company to the public without registration or pursuant to a registration on Form S-3 (or other applicable form), the Company agrees to:

(a) make and keep public information available, as those terms are understood and defined in Rule 144, at all times after 90 days after the effective date of the registration statement;

(b) file with the SEC all reports and other documents required of the Company under the Securities Act and the Exchange Act; and

(c) furnish to any Holder, so long as the Holder owns any Registrable Securities, forthwith upon request (i) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (ii) such other information as may be reasonably requested in availing any Holder of any rule or regulation of the SEC which permits the selling of any such securities without registration or pursuant to such form.

5.10 Permitted Transferees. The rights to cause the Company to register Registrable Securities granted to the Holders by the Company under this Article V may be assigned in full by a Holder in connection with a transfer by such Holder of its Registrable Securities if: (a) such Holder gives prior written notice to the Company; (b) such transferee agrees to comply with the terms and provisions of this Agreement; (c) such transfer is otherwise in compliance with this Agreement; and (d) such transfer is otherwise effected in accordance with applicable securities laws. Except as specifically permitted by this Section 5.11, the rights of a Holder with respect to Registrable Securities as set out herein shall not be transferable to any other Person, and any attempted transfer shall cause all rights of such Holder therein to be forfeited.

VI.	MISCELLANEOUS

6.1 Any notice or other communication given hereunder shall be deemed sufficient if in writing and sent by registered or certified mail, return receipt requested, or delivered by hand against written receipt therefor, addressed as follows:

if to the Company, to it at:

Platinum Studios, Inc.

11400 W. Olympic Blvd., Suite 1400

Los Angeles, CA 90064

Attn: Brian Altounian

With a copy to (which shall not constitute notice):

Sichenzia Ross Friedman Ference LLP

1065 Avenue of the Americas

New York, NY 10018

Attn: Gregory Sichenzia, Esq.

if to the Subscriber, to the Subscriber’s address indicated on the signature page of this Agreement.

Notices shall be deemed to have been given or delivered on the date of mailing, except notices of change of address, which shall be deemed to have been given or delivered when received.

6.2 Except as otherwise provided herein, this Agreement shall not be changed, modified or amended except by a writing signed by the parties to be charged, and this Agreement may not be discharged except by performance in accordance with its terms or by a writing signed by the party to be charged.

6.3 Subject to the provisions of Section 5.11, this Agreement shall be binding upon and inure to the benefit of the parties hereto and to their respective heirs, legal representatives, successors and assigns. This Agreement sets forth the entire agreement and understanding between the parties as to the subject matter hereof and merges and supersedes all prior discussions, agreements and understandings of any and every nature among them.

6.4 Upon the execution and delivery of this Agreement by the Subscriber, this Agreement shall become a binding obligation of the Subscriber with respect to the purchase of Shares as herein provided, subject, however, to the right hereby reserved by the Company to enter into the same agreements with other subscribers and to add and/or delete other persons as subscribers.

6.5 NOTWITHSTANDING THE PLACE WHERE THIS AGREEMENT MAY BE EXECUTED BY ANY OF THE PARTIES HERETO, THE PARTIES EXPRESSLY AGREE THAT ALL THE TERMS AND PROVISIONS HEREOF SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD TO SUCH STATE’S PRINCIPLES OF CONFLICTS OF LAW. IN THE EVENT THAT A JUDICIAL PROCEEDING IS NECESSARY, THE SOLE FORUM FOR RESOLVING DISPUTES ARISING OUT OF OR RELATING TO THIS AGREEMENT IS THE COURTS STATE OF CALIFORNIA IN AND FOR THE COUNTY OF LOS ANGELES OR THE FEDERAL COURTS FOR SUCH STATE AND COUNTY, AND ALL RELATED APPELLATE COURTS, THE PARTIES HEREBY IRREVOCABLY CONSENT TO THE JURISDICTION OF SUCH COURTS AND AGREE TO SAID VENUE.

6.6 In order to discourage frivolous claims the parties agree that unless a claimant in any proceeding arising out of this Agreement succeeds in establishing his claim and recovering a judgment against another party (regardless of whether such claimant succeeds against one of the other parties to the action), then the other party shall be entitled to recover from such claimant all of its/their reasonable legal costs and expenses relating to such proceeding and/or incurred in preparation therefor.

6.7 The holding of any provision of this Agreement to be invalid or unenforceable by a court of competent jurisdiction shall not affect any other provision of this Agreement, which shall remain in full force and effect. If any provision of this Agreement shall be declared by a court of competent jurisdiction to be invalid, illegal or incapable of being enforced in whole or in part, such provision shall be interpreted so as to remain enforceable to the maximum extent permissible consistent with applicable law and the remaining conditions and provisions or portions thereof shall nevertheless remain in full force and effect and enforceable to the extent they are valid, legal and enforceable, and no provisions shall be deemed dependent upon any other covenant or provision unless so expressed herein.

6.8 It is agreed that a waiver by either party of a breach of any provision of this Agreement shall not operate, or be construed, as a waiver of any subsequent breach by that same party.

6.9 The parties agree to execute and deliver all such further documents, agreements and instruments and take such other and further action as may be necessary or appropriate to carry out the purposes and intent of this Agreement.

6.10 This Agreement may be executed in two or more counterparts each of which shall be deemed an original, but all of which shall together constitute one and the same instrument.

6.11 Nothing in this Agreement shall create or be deemed to create any rights in any person or entity not a party to this Agreement, except for the holders of Registrable Securities.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

VII.	CONFIDENTIAL INVESTOR QUESTIONNAIRE

7.1 The Subscriber represents and warrants that he, she or it comes within one category marked below, and that for any category marked, he, she or it has truthfully set forth, where applicable, the factual basis or reason the Subscriber comes within that category. ALL INFORMATION IN RESPONSE TO THIS SECTION WILL BE KEPT STRICTLY CONFIDENTIAL. The undersigned agrees to furnish any additional information which the Company deems necessary in order to verify the answers set forth below.

Category A

The undersigned is an individual (not a partnership, corporation, etc.) whose individual net worth, or joint net worth with his or her spouse, presently exceeds $1,000,000.

Explanation. In calculating net worth you may include equity in personal property and real estate, including your principal residence, cash, short-term investments, stock and securities. Equity in personal property and real estate should be based on the fair market value of such property less debt secured by such property.

Category B

The undersigned is an individual (not a partnership, corporation, etc.) who had an income in excess of $200,000 in each of the two most recent years, or joint income with his or her spouse in excess of $300,000 in each of those years (in each case including foreign income, tax exempt income and full amount of capital gains and losses but excluding any income of other family members and any unrealized capital appreciation) and has a reasonable expectation of reaching the same income level in the current year.

Category C

The undersigned is a director or executive officer of the Company which is issuing and selling the Shares.

Category D

The undersigned is a bank; a savings and loan association; insurance company; registered investment company; registered business development company; licensed small business investment company (“SBIC”); or employee benefit plan within the meaning of Title 1 of ERISA and (a) the investment decision is made by a plan fiduciary which is either a bank, savings and loan association, insurance company or registered investment advisor, or (b) the plan has total assets in excess of $5,000,000 or (c) is a self directed plan with investment decisions made solely by persons that are accredited investors. (describe entity)

Category E

The undersigned is a private business development company as defined in section 202(a)(22) of the Investment Advisors Act of 1940. (describe entity)

Category F

The undersigned is either a corporation, partnership, Massachusetts business trust, or non-profit organization within the meaning of Section 501(c)(3) of the Internal Revenue Code, in each case not formed for the specific purpose of acquiring the Shares and with total assets in excess of $5,000,000. (describe entity)

Category G

The undersigned is a trust with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Shares, where the purchase is directed by a “sophisticated investor” as defined in Regulation 506(b)(2)(ii) under the Act.

Category H

The undersigned is an entity (other than a trust) in which all of the equity owners are “accredited investors” within one or more of the above categories. If relying upon this Category alone, each equity owner must complete a separate copy of this Agreement. (describe entity)

Category I

The undersigned is not within any of the categories above and is therefore not an accredited investor.

The undersigned agrees that the undersigned will notify the Company at any time on or prior to the closing in the event that the representations and warranties in this Agreement shall cease to be true, accurate and complete.

7.2 SUITABILITY (please answer each question)

(a) For an individual Subscriber, please describe your current employment, including the company by which you are employed and its principal business:

(b) For an individual Subscriber, please describe any college or graduate degrees held by you:

(d) For all Subscribers, please state whether you have participated in other private placements before:

(e) If your answer to question (d) above was “YES”, please indicate frequency of such prior participation in private placements of:

	Public Companies	Private Companies	Public or Private Companies with no, or insignificant, assets and operations
Frequently
Occasionally
Never

(f) For individual Subscribers, do you expect your current level of income to significantly decrease in the foreseeable future:

(g) For trust, corporate, partnership and other institutional Subscribers, do you expect your total assets to significantly decrease in the foreseeable future:

(h) For all Subscribers, do you have any other investments or contingent liabilities which you reasonably anticipate could cause you to need sudden cash requirements in excess of cash readily available to you:

(i) For all Subscribers, are you familiar with the risk aspects and the non-liquidity of investments such as the securities for which you seek to subscribe?

(j) For all Subscribers, do you understand that there is no guarantee of financial return on this investment and that you run the risk of losing your entire investment?

7.3 MANNER IN WHICH TITLE IS TO BE HELD. (circle one)

(a) Individual Ownership

(b) Community Property

Survivorship (both parties

must sign)

(d) Partnership*

(e) Tenants in Common

(f) Company*

(g) Trust*

(h) Other*

*If Securities are being subscribed for by an entity, the attached Certificate of Signatory must also be completed.

7.4 NASD AFFILIATION.

Are you affiliated or associated with an NASD member firm (please check one):

Yes _________ No __________

If Yes, please describe:

_____________________________________________________________________________________

*If Subscriber is a Registered Representative with an NASD member firm, have the following acknowledgment signed by the appropriate party:

The undersigned NASD member firm acknowledges receipt of the notice required by Article 3, Sections 28(a) and (b) of the Rules of Fair Practice.

_________________________________

Name of NASD Member Firm

By: ______________________________

Authorized Officer

Date: ____________________________

7.5 The undersigned is informed of the significance to the Company of the foregoing representations and answers contained in the Confidential Investor Questionnaire contained in this Article VII and such answers have been provided under the assumption that the Company will rely on them.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

NUMBER OF SHARES _________ X $0.10 = $_________ (the “Purchase Price”)


/s/			/s/
Name			Name
Title			Title
Entity Name (if applicable)			Entity Name (if applicable)
Address			Address
City, State and Zip Code			City, State and Zip Code
Telephone-Business			Telephone-Business
Telephone-Residence			Telephone-Residence
Facsimile-Business			Facsimile-Business
Facsimile-Residence			Facsimile-Business
Tax ID # or Social Security #			Tax ID # or Social Security #
Name in which securities should be issued:

This Subscription Agreement is agreed to and accepted as of ________________, 2006

	GLOBAL AUTHENTICATION HOLDINGS, INC.

Dated: , 2006	By:	/s/
		Kevin Hammond
		Chief Executive Officer

(To be completed if Shares are

being subscribed for by an entity)

I, ____________________________, am the ____________________________ of __________________________________________ (the “Entity”).

I certify that I am empowered and duly authorized by the Entity to execute and carry out the terms of the Subscription Agreement and to purchase and hold the Shares, and certify further that the Subscription Agreement has been duly and validly executed on behalf of the Entity and constitutes a legal and binding obligation of the Entity.

IN WITNESS WHEREOF, I have set my hand this ________ day of _________________, 2006

_______________________________________

(Signature)

EX-10.2 7 ex102.htm EXHIBIT 10.2 ex102.htm

DISTRIBUTION AGREEMENT

The Distribution Agreement (the "Agreement") is entered into as of March 2007 (the "Execution Date") but effective as or January 1, 2007 (the Effective Date") between Platinum Studios, Inc. ("Platinum") and Top Cow Productions, Inc. ("Top Cow"), with reference to the following:

WHEREAS, Top Cow is party to a print-publishing distribution agreement with Image Comics, Inc. ("Image"), which is a party to a Sales Agent Agreement with Diamond Comic Distributors, Inc. ("Diamond");

WHEREAS. Platinum and Top Cow desire to enter into an agreement pursuant to which Top Cow will cause the distribution of certain of Platinum's comics and graphic novels through Diamond's agreement with Image, all under the terms and conditions set forth below;

1. (a) Top Cow shall distribute printed copies of Platinum's comic-hook and graphic-novel properties that have been designated by Platinum and approved by Top Cow ("Comic Properties") through Diamond (via the Image's agreement with Diamond) during the Term (defined below), which approval shall not be unreasonably withheld; provided that, if at anytime during the Term, the majority of Top Cow's own titles arc solicited in a section of previews other than the Image section, then Top Cow shall provide Platinum with the similar placement through Diamond (but subordinate to Top Cow's own titles) that Top Cow receives for its own titles. Comic Properties shall include, without limitation, Platinum's "Kiss" Comic Properties ("Kiss Tides"). As part of its services hereunder, Top Cow shall provide the services listed in Exhibit ''A" attached hereto. Platinum grants to Top Cow all rights necessary (whether under copyright, trademark, or otherwise) to perform all of Top Cow's obligations hereunder.

(b) If, at any time during the 'Fenn, Top Cow enters into an agreement to distribute all or substantially all of its printed comics to the "direct market" through channels other than Diamond ("Other Distribution Channels"), Platinum shall have the option to have the Comic Properties distributed through such Other Distribution Channels, as well, on terms to be negotiated in good faith.

2. Top Cow shall not be obligated to distribute hereunder more than 60 Comic Properties per year ("Comics Titles Maximum"), excluding variant-cover and limited editions of Comic Properties ("Variant Covers"). Notwithstanding the foregoing, Top Cow shall also distribute hereunder up to 24 Kiss Titles ("Kiss 'Titles Maximum") per year.

(b) Subject to timely delivery, Top Cow's approval as set forth in Section

(a) above, and no more than one full-page per item, and provided Platinum shall solicitat least two titles for the month in question, Top Cow shall provide two full pages in Diamond's "Previews" catalogue (the "Diamond Catalogue") each month of the Term for Comic Properties solicitations.

3.	During the Term:

^(a) ^.1^-op Cow shall he responsible for arranging the printing of all Comic Properties listed with Diamond pursuant hereto at prices at least equal to the prices charged by the same printer for Top Cow's own regular titles, but Top Caw's obligations extend only to standard printing, and do not include enhanced versions (such as, without limitation, 3D effects, foils, or other special effects);

(b) Top Cow shall provide to Platinum at no additional charge forty-four (44) standard-sized pages of standard comic-book lettering (no obligation to hand letter) per month of the Term for Comic Properties.

all monies payable to Platinum by Diamond for sales of Comic Properties and Ancillary Products hereunder; but Top Cow shall have no obligation to litigate, w arbitrate, or to use third-party collectors:, provided, however, that Top Cow covenants and agrees to employ the general level of efforts to collect monies payable to Platinum hereunder as it uses to collect monies payable directly to Top Cow for Top Cow's own properties from Image and/or Diamond.

4. Top Cow shall be entitled to receive the following:

(a) $3,000.00 for each Comic Property listed with Diamond (the "Listing

Fee"), provided that no Listing Fee shall be payable for variant covers of a Comic Property listed with Diamond. The Listing lee for a Comic Property shall he due and payable to Top Cow as of the date that Diamond publishes its preview book listing such Comic Property.

(b) ten percent (10%) of Net Revenues, defined below ("Top Cow Receipts"); "Net Revenues" shall mean the gross revenues paid or credited by Diamond to Image or Top Cow for sales of Comic Properties and Variant Covers ("Gross Revenues") less only

(A) the actual, documented, out-of-pocket printing eosts,

(B) Diamond's direct marketing set-vices costs which are incurred at the request of Platinum; (C) audit and other documented collection costs (pro-rated); (D) the Listing Fee, but only if not previously paid by Platinum as set forth in Section 4 (a) above; (E) other directly related costs incurred by Top Cow or Image in connection with the Comic Properties that have been approved by Platinum (the "Costs"). Top Cow does not represent or warrant that there will he any Net Revenues; and

(c) a nonrefundable fee of Fifty Thousand US Dollars (US $50,000) (the "Distribution Fee") payable on the execution hereoll The timely receipt of portion of this fee shall be a condition precedent to the continuing effectiveness of any of Top Cow's obligations hereunder.

(d) Not more frequently than once per calendar month, Top Cow shall provide Platinum with an invoice for Costs not recouped from Gross Revenues, if any, together with any appropriate documentation. Platinum shall remit payment to Top Cow for such recouped Costs within thirty days following receipt of such invoice. Any disputes shall be resolved via arbitration as set forth in Section 11(c) below.

5. (a) Within thirty days of receipt by Top Cow of Gross Revenues (either

directly from Diamond or from Image), Top Cow shall remit to Platinum 90% of Net Revenues (the "Platinum Receipts") derived from those Gross Revenues hereunder.

(b) Within thirty (30) days of the end of each calendar month during the Term and, to the extent applicable, following any expiration or termination of this Agreement, Top Cow shall provide to Platinum a written report of all Net Revenues received by image and/or 'Fop Cow during said calendar month, together with a. calculation of the Platinum Book Receipts and Platinum Product Receipts due thereon, including all deductions made for Costs broken out on a title-by-title and product-byproduct basis (each, a "Monthly Fee Report"). Simultaneously with the delivery of the Monthly Fee Report to Platinum. Top Cow shall remit to Platinum the Platinum Book Receipts and the Platinum Product Receipts shown on such Monthly lee Report to he due and owing to Platinum, less any Platinum Book Receipts and/or Platinum Product Receipts already paid by Top Cow in respect of such Monthly Fee Report pursuant to Section 5(a) above. All amounts payable hereunder are to be in United States Dollars.

(c) Audit Rights. Platinum shall have the right during the Term and, to the extent applicable, following any expiration or termination of this Agreement, at its own expense and during reasonable business hours, to have an independent certified public accounting firm examine the relevant books and records of account of Top Cow regarding Net Revenues, Platinum Receipts, Top Cow Receipts, listing Fees and Costs, to determine whether appropriate accounting and payment of Platinum Receipts has been made under the Monthly Fee Reports; provided that Platinum shall be prohibited from exercising such inspection rights (i) with respect to Platinum Receipts payable under any Monthly Fee Report more than eighteen months following delivery of such Monthly Fee Report to Platinum; and (ii) more often than once each twelve-month period. If any such audit accurately discloses that Top Cow underpaid Platinum Receipts due hereunder, then absent any dispute by Top Cow, Top Cow covenants and agrees to pay Platinum, within five (5) business days of such disclosure, an amount equal to the deficient amount disclosed by such audit. If the amount of additional Platinum Receipts shown by such audit to be owed by Top Cow for such time period shall be in amount in excess of ten percent (10%) of the aggregate amount of Platinum Receipts actually paid by Top Cow during the same time period (and also not less than $5,000), then Top Cow shall reimburse Platinum for all costs and expense incurred in conducting such audit within ten days of submission to Top Cow of a written invoice for all such costs and expense. In the event of any dispute under this Section, the parties shall submit to binding arbitration as sct forth in Section I 1(d) hereof within sixty days of such dispute arising.

6. (a) The term of this Agreement (the "Term") will commence on the Effective Date and will continue for one year, unless earlier terminated pursuant to the provisions of Section 6(h) below. For purposes of clarification, Platinum shall be prohibited from submitting solicitations to Top Cow hereunder if such solicitations would appear in the Diamond previews catalogue after December 31, 2007.

(b) The Temi may be terminated by either party hereto in accordance with the following;

(i) upon thirty days prior written notice detailing a material breach of this Agreement that remains uncured for said thirty-day period;

(ii) immediately upon

(A) Image or any party hereto filing a voluntary petition in bankruptcy or insolvency or petitions for reorganization under any bankruptcy law;

(B) Image or any party hereto consenting or being subject to an involuntary petition in bankruptcy or if a receiving order is made against it under applicable bankruptcy legislation;

(C) an order, judgment or decree by a court of competent jurisdiction, upon the application of a creditor, being entered approving a petition seeking reorganization or appointing a receiver, trustee or liquidator of all or a substantial part of the assets of Image or any party hereto and such order, judgment, or decree continues in effect for a period of thirty (30) consecutive days;

(iii) upon at least ninety (90) days prior written notice to the other party here, without cause; or

(iv) if either party ceases to conduct business.

7. The provisions of Section 8, 9 and 11 shall survive any termination or expiration of this Agreement.

8. (a) Top Cow hereby represents and warrants to Platinum that

(i) it is fully authorized to execute this Agreement and perform its obligations hereunder in accordance with its terms,

(ii) the execution and performance of this Agreement by Top Cow does not and will not conflict with or violate the terms of any other agreements by which lop Cow is or may he hound; and

(iii) 'l'op Cow has the power, ability and authority to cause the listing of Comic Properties through Image's agreement with Diamond and the collection of Net Revenues form Diamond directly or through Image and the remittance of the Net Revenues as required hereunder.

(b) By Platinum. Platinum hereby represents and warrants to Top Cow that

(i) it is fully authorized to execute this Agreement and perform its obligations hereunder in accordance with its terms,

(ii) the execution and performance of this Agreement by Platinum does not and will not conflict with or violate the terms of any other agreements by which Platinum is or may be bound and Platinum's execution and performance hereof shall not violate any law, rule, or governmental regulation; (iii) neither the distribution of Platinum's Comic Properties as contemplated hereunder nor the performance by Platinum of its obligations hereunder, will violate or infringe any third party rights or interest; (iv) all the rights herein licensed to 'fop Cow are clear and unencumbered, and that there are no actions or claims pending or threatened in connection therewith; and (v) Top Cow shall have no obligation or liability whatsoever (e.g. to pay, to report, or otherwise) to any third party, whether artists, writers, other contributors, licensors, or owners as a result of its actions hereunder. In connection herewith, Platinum covenants and agrees to add Top Cow as an additional named insured under it Errors and Omissions Policy.

9. Subject to the terms and conditions of this Agreement, (I) each party ("Inticmnitor") agrees to defend, hold harmless, and indemnify the other party, its employees, directors, officers and agents ("Indemnitee(s)") from and against all claims, actions, damages, and/or liabilities, together with any and all losses, lines, penabies, costs, and expenses, including, without limitation, attorneys' fees and expenses or penalties imposed by governmental entities (collectively, the "Liabilities") by reason of or resulting from any breach by Indemnitor of any of the provisions of this Agreement or any action or inaction of Indemnitor or its directors, officers, employees and agents that is illegal or constitutes gross negligence or intentional misconduct in the performance of Indemnitor's obligations under this Agreement; provided, however, that Inderrmitor's liability to an Indemnitee under this Section shall be reduced to the extent, and in the proportion, that such I ,iahilities have been proximately caused by any Indemnitee's negligence, recklessness, or intentional misconduct provided that Top Cow shall have no duty to investigate, review, or inquire about any Comic Property.

10. The relationship of the parties established by this Agreement is that of independent contractors, and nothing contained in this Agreement should he construed to give either party the power to

(i) act as an agent or

(ii) direct or control the day-to-day activities of the other All financial and other obligations associated with each party's business are the sole responsibility of that party.

I I. (a) Any notice required or permitted to be given under this Agreement will be effective if it is in writing and sent by prepaid certified or Express mail, or insured or overnight courier (i.e., FedEx, UPS, or DILL), return receipt requested, to the appropriate party at. the address set ihrth below and with the appropriate postage affixed or costs prepaid. Either party may change its address for receipt ornotice by notice to the other party in accordance with this Section. Notices are deemed given two business days following the date of mailing or one business day following delivery to a courier.

To Platnum:

Platinum Studios, Inc.

Attention: Brian Altounian, President 11400 W. Olympic Blvd., leFloor Los Angeles. CA 90064

Fax: (310) 887-3943

With a copy to:

Tide% Pretsky, Executive VP, Business Affairs & (ieneral Counsel Platinum Studios, Inc.

11400 W. Olympic Blvd., 14¹' Floor Los Angeles, CA 90064

Fax: (310) 887-3943

To Top Cow:

Top Cow Productions, Inc.

Attention: Mutt Hawkins

10350 Santa Monica Rlvd,, Suite 100 Los Angeles_; CA 90025

Fax: (866) 221-3759

With a copy sent concurrently to:

Law Offices of Harris M. Miller II, P.C. 8424A Santa Monica Boulevard, #127 West Hollywood, CA 90069

Fax: (323) 656-0384

(a) Other than payment of the Distribution Fee, nonperformance of either party will be excused to the extent that performance is rendered impossible by strike, Fire, flood, governmental acts, orders, restrictions, or any other reason where failure to perlbrrn is beyond the control and not caused by the negligence of the non-performing party.

(b) This Agreement shall be governed by and construed in accordance with the laws of the Stale ot^.California, without giving effect to provisions related to choice of laws or conflict or laws.

(c) Any dispute regarding any aspect of this Agreement or any act which allegedly has or would violate any provision of this Agreement or any law (hereinafter "Arhitral Dispute") shall be submitted to arbitration in Los Angeles County, California, and selected in accordance with the Commercial Arbitration Rules of the American Arbitration Association, as the exclusive remedy for any such claim or Arbitral Dispute. The decision of the arbitrator shall be final, conclusive and binding upon the parties. Should any party to this Agreement pursue any Arbitral Dispute by any method other than said arbitration (except as required by law), the responding party shall be entitled to recover from the initiating party all damages, costs, expenses and attorneys' fees incurred as a result of such action.

(d) The prevailing party in any action or Arhitral Dispute arising from or relating to this Agreement or a dispute between the parties is entitled to recover its costs, including reasonable attorney foes, in addition to any other relief to which it may be entitled. Any party in whose favor a judgment ur d;1,eeis.on has been entered shall also he entitled to recovery of its attorney's lees and costs in enforcing such judgment or decision.

(f) The waiver by either party of any breach of this Agreement does not waive any other breach. The failure of any party to insist on strict performance of any covenant or obligation under this Agreement will not be a waiver of such party's right to demand strict compliance in the future, nor will the same be construed as a novation of this Agreement. If any part of this Agreement is unenforceable, the remaining portions of this Agreement will remain in full force and effect. The parties have had an equal opportunity to participate in the negotiation and drafting of this Agreement and the attached schedules and exhibits. No ambiguity will be construed against any party based upon a claim that that party drafted the ambiguous language. Whenever required by context, a singular number will include the plural, the plural number will include the singular, and the gender of any pronoun will include all genders

(g) This Agreement, including any exhibits and schedules referred to herein, is the final and complete expression of all agreements between these parties and supersedes all previous oral and written agreements regarding these matters. It may be changed only by a written instrument signed by the party against whom en liffcemeni is sought.

(h) The Agreement may be executed in counterparts, each of which will be deemed an original, but all of which taken together will constitute but one and the same instrument. The Agreement may be executed and delivered by facsimile or PDF and the parties agree that such execution and delivery will have the same force and effect as delivery of an original document with original signatures, and that each party may use such electronic signatures as evidence of the execution and delivery of this Agreement by all parties to the same extent that an original signature could he used.

(i) Neither party may assign its rights and obligations under this Agreement without the written consent of the other, except pursuant to a merger, acquisition, or sale of all or substantially all of its assets, Subject to the foregoing, this Agreement will be binding upon and inure to the benefit of the parties and their successors and assigns. Any Assignee shall execute a counterpart of this Agreement and deliver it to the other party within Fifteen days of the assignment.

TOP COW P1 S 1NU.

President: IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above

	PLATINUM STUDIOS, INC.

Date	By:	/s/
		Brian Altounian
		President

EXHIBIT A

ADDITIONAL SUPPORT SERVICES

*Trafficking of print quotes from Quebecor and other printers

* Coordination of files and press time with Quebecor and other printers

* Coordination of marketing services as they apply directly to Diamond Comic Distributors

* Access to al] Diamond Comic Distributors marketing and other services at Image's preferred rates

*	Coordination of marketing services as they apply to direct-market retailers Facilitation or Diamond order codes for all product

*	Facilitation of UPC codes for all product

*	Coordination olPRIs (Print Run, Instructions) between Image and Diamond

EX-10.3 8 ex103.htm EXHIBIT 10.3 ex103.htm

Ingram Periodicals Inc.

Publisher Distribution Agreement

Publisher:Platinum Studios Inc.

Address

11400 W Olympic Blvd 14th Floor

Los Angeles, CA 90064

Title(s): KISS 4K

Ingram Periodicals Inc. (IPI) and Platinum Studios inc. (Publisher) hereby agree to the following:

IPI shall have the distribution rights to KISS 4K of Publisher's titles, to service any Barnes & Noble, Inc., Gander Mountain, Hastings, Jo-Ann's, or any Canadian or U.S. account who wishes to order above title(s) through IPI.Publisher shall provide IPI with written notification of any new or acquired title and IPI will have ten (10) business days to notify Publisher in writing whether or not IPI will distribute the title.

TERMS OF PURCHASE:

Discount:

A fifty five percent (55%) discount from the United States cover price for product distributed to all locations except Canada. For product distributed into Canada, the Canadian cover price will be converted to U.S. dollars, and a discount of fifty five percent (55%) will be applied. Purchases for Canadian distribution will be converted to U.S. dollars at the exchange rate in effect on the first business day of the month and that rate will apply for the full transaction term for each issue.

Payments:

Payment for all copies sold, net of distribution charges (which includes all returns received by payment date), shall be paid sixty (60) days after IPI invoices a subsequent issue. If, for any reason, IPI makes an over-advance or overpayment to Publisher, such over-advance or overpayment shall be immediately deducted by IPI from any subsequent advances or payments due on any issue of any publication which IPI purchased from Publisher.

Returns:

One hundred percent (100%) of copies are fully returnable by affidavit.

Term:

Three (3) years, automatically renewable without notice to Publisher. This Agreement is binding for three (3) years and is initiated with the IPI invoice date for the first issue distributed by IPI after the date this Agreement is signed by both parties. Either party must notify of their intention not to automatically renew this Agreement with written notice a minimum of one hundred twenty (120) days prior to the end of the term of this Agreement. Either party may terminate this Agreement, by written notice effective immediately, in the event that a voluntary or involuntary petition shall be filed by or against the other party under any bankruptcy or insolvency law, or if a receiver of the other party or of the other party's property is appointed, or if the other party makes an assignment for the benefit of its creditors.

MISCELLANEOUS:

·	All titles will have a scanable UPC code on the front cover of all magazines. Titles not coded are subject to a title set up fee and stickering charge of twenty-five cents ($.25) per copy.

·	Publisher will accept pass-through shrink charges.

o	Publisher will supply IPI with a print order schedule each year. IPI will only distribute product quantities indicated by the print order for each issue.

·	Publisher will provide complete shipping documentation with each delivery to the IPI warehouse(s).

Publisher is responsible for ensuring that all IPI Warehouse locations receive delivery of product according to the instructions on the print order(s). If product is not delivered to the proper warehouse location, any routing of shipments between IPI warehouses will be at the expense of the Publisher and will be credited against any amounts due now, or in the future, to Publisher.

·	Publisher will pay IPI for a one time initial set up fee of two hundred fifty dollars ($250.00) per title.

·	All price changes will be received in writing sixty (60) days in advance of receipt of affected issue or payment will be made based on previously recorded price.

An invoice must be sent to IPI's Accounts Payable department for each shipment sent to IPI in order to receive payment

Send invoices to: Ingram Periodicals Inc.

Accounts Payable Department

P.O. Box 7000

LaVergne, TN 37086-7000

0	All shipments sent COD will be charged a one hundred dollar ($100.00) fee, and the actual freight charges will be deducted from IPI liability to Publisher.

·	A one hundred fifty dollar ($150.00) annual catalog fee applies to each title.

·	IPI reserves the right to refuse distribution based on content and reserves the right to edit fliers.

Shipments arriving by 9:00 am Monday at our LaVergne, TN or Chambersburg, PA warehouses and by noon Monday at our Ontario, CA warehouse will be in the stores by the following Friday. Any deliveries arriving after that time will go out the following week. The delivery schedule is open to change during holiday periods or for special issues.

·	The terms of this Agreement and all proprietary business information are to be kept strictly confidential by the parties.

INDEMNIFICATION:

Publisher represents and warrants the following regarding all product presented by Publisher to IPI for purchase:

1.	That Publisher is the owner of the product and all copyrights related thereto, and for has the authority to sell and distribute the product in accordance with the terms hereof;

2.	That the product or its sale and distribution does not infringe on any copyright or violate any privacy or other right of any person;

3.	That Publisher will promptly notify IPI in writing if it receives or otherwise becomes aware of a claim that alleges facts, which, if true, would be a breach of any of the foregoing representations or warranties.

Publisher agrees to defend, indemnify and hold IPI harmless, at Publisher's expense, for all loss, cost, expenses and damages incurred by IPI in connection with any suit, claim, or proceeding brought against IPI that alleges facts which, if true, would be a breach of any of the foregoing representations or warranties.

DISTRIBUTION CHARGES:

"Service Fee" a comprehensive service fee of $ .45 per lb of publication received for receiving, handling, packaging and shipping of publications

These rates are subject to change with thirty (30) days written notice.

Service Fee per Pound

$ .45

SIGNATURES:

Please sign and return this Agreement to^. Publisher Relations

Ingram Periodicals Inc Attn:

18 Ingram Blvd.

LaVergne, TN 37086-7000

IPI shall have the right, during the Term of this Agreement, to use Publisher's trademarks and logos in connection with its services hereunder. All uses of Publisher's trademarks and logos shall comply with such guidelines as Publisher may from time to time establish. IPI shall acquire no rights in any such trademarks or logos and all uses thereof by IPI shall be for Publisher's benefit. Upon the termination of this Agreement for any reason, IPI shall immediately discontinue use of any such trademarks. IPI acknowledges that the trademarks of Publisher are unique and irreplaceable and that any breach or violation of the provisions of this paragraph by lPI shall cause immediate and irreparable injury to Publisher.

This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof, supersedes all previous and contemporaneous agreements, oral or written, and may be amended only by a written agreement signed by both parties hereto.

Nothing contained in this Agreement shall be deemed to create any partnership, joint venture or employment relationship between the parties. Neither party has any authority to incur any obligation or liability on behalf of the other party without the other party's express prior written consent.

Neither party shall be liable to the other for lost profits, or any incidental, consequential, punitive or special damages.

Neither party shall be liable for delays or failure in performance that are the result of causes beyond its reasonable control, including but not limited to acts of God, acts of governmental or military authority, fires, floods, war, or terrorist acts. In the event that any such force majeure condition continues for a period of thirty (30) days, the other party may terminate this Agreement without any further obligation or liability.

This Agreement shall be governed by and construed in accordance with the laws of the State of Tennessee.

By signing this Publisher Agreement you accept its terms and conditions and warrant that this Agreement does not breach any existing agreements you have in force with any other companies.

	Publisher

Date	By:	/s/

	Ingram Periodicals Inc.

Date: 03/15/2007	By:	/s/Bruce Jones
		Bruce Jones
		VP Publisher Relations

EX-10.5 9 ex105.htm EXHIBIT 10.5 ex105.htm

CANCELLATION OF INDEBTEDNESS AGREEMENT

This Cancellation of Indebtedness Agreement is entered into and effective as of July 1, 2007 (the "Effective Date-). by and between Scott Mitchell Rosenberg ("SMR^-), and Platinum Studios, Inc., a California corporation (the "Company"), with reference to the following:

WHEREAS, the Company was formed in September 2006 as a successor-in-interest to Platinum Studios, LLC, a California limited liability company (the "LLC") and SMR serve as and executive officer and director of the Company and holds a majority of its outstanding capital stock;

WHEREAS, throughout the existence of the LLC, SMR was either the sole member of the LLC or the member who held a super majority of the membership interests in the LLC;

WHEREAS, during the existence of the LLC, in addition to capital contributions, SMR also made personal loans to the LLC, which loans were assumed by the Company when the LLC converted into a corporation, the dates, amounts and applicable interests rates of which loans are set forth on Schedule A attached hereto (collectively, the "SMR LLC Loans");

WHEREAS, since the inception of the Company through the Effective Date, SMR has made personal loans to the Company, the dates, amounts and applicable interest rates of which are set forth on Schedule B attached hereto (the "SMR Company Loans");

WHEREAS, the SMR I,LC Loans and the SMR Company Loans are collectively referred to as the SMR Loans;

WHEREAS, the Board of Directors of the Company has determined it to be in its best interests of the Company and its shareholders to conserve working capital of the Company and to pay off the SMR Loans through the issuance of stock and warrants;

WIIEREAS, SMR is amendable to the cancellation of the SMR Loans through the issuance of stock and warrants;

NOW, THEREFORE, the parties agree as follows:

1. Cancellation of Indebtedness. Simultaneous with the execution of this Agreement by the parties hereto and the delivery to SMR of the Stock Certificate and the Warrant as defined in Section 2 below (the "Cancellation Date"), SMR hereby irrevocably cancels all indebtedness owed to SMR under the SMR Loans, including all principal and interest accrued and owing thereon through the Cancellation Date, and releases the Company from any liability or obligation with respect to the SMR Loans.

2. Stock Certificate and Warrant. In exchange for the cancellation of indebtedness as set forth in Section 1, above, and the Company's release from any liability and obligation under the SMR Loans, the Company agrees to issue as of the Cancellation Date:

(a) a stock certificate for the number of shares of the Company's common stock equal to the amount of the SMR Loans (outstanding principal and interest through the Cancellation Date) divided by $0.10 (the "Stock Certificate"); and

(b) a common stock purchase warrant to purchase a number of shares of the Company's common stock equal to 15% of the SMR Loans (principal only) divided by $0.10 per share, at an exercise price of $0.10 per share, substantially in the form of Exhibit "A" attached hereto (the "Warrant").

In connection herewith, SMR directs the Company to issue the Stock Certificate and the Warrant in the name of Charlotte Rosenberg.

3. Governing Law; Attorneys' Fees. This Agreement shall be governed by and construed in accordance with the laws of the State of California, without regard to principles of conflicts of law. If any suit, action, or proceeding is brought to enforce any term or provision of this Agreement, the prevailing party shall be entitled to recover reasonable attorneys' fees, costs, and expenses incurred, in addition to any other relief to which such party may be legally entitled.

4. Entire Agreement. This Agreement constitutes the only agreement or understanding between the parties with respect to the subject mater hereof, and supersedes and is controlling over any and all prior existing agreements or communications between the parties. All negotiations, commitments, and understandings acceptable to both parties have been incorporated in this Agreement and the accompanying termination letter.

5. Amendment. This Agreement may not be amended except as mutually agreed to in writing by the parties.

IN WITNESS WHEREOF, the parties to this Agreement have executed the same as of the date first above written.

Platinum Studios, Inc.

By : /s/ Brian Altounian

Brian Altounian, President

/s/ Scott Mitchell Rosenberg

Scott Mitchell Rosenberg

EX-10.8 10 ex108.htm EXHIBIT 10.8 Unassociated Document

OFFICE LEASE

Between

as Landlord

and

BASIC LEASE INFORMATION

Date: Landlord:

Tenant:

July 10, 2006

Except as noted hereinbelow, the foregoing Basic Lease Infirmation is hereby incorporated into and made a pail of the Lease. The Section referemce in the led? margin of the Basic Lease litfotwunion exists solely to indicate u^,here such reference initialb^, appeinw in the Lease elocument, Except as specified hereinbelow, each such reference in the Lease document shall incorporate the applicable Basic Lease In [Munition.

SECTION
1.1	Premisses:	11400 West Olympic Boulevard, Suite 1400 Los Angeles, California 90064

1.4	Rentable Area of Premises:	Approximately 12,493 square feet
1.4	Usable Area of Premises:	Approximately 11,357 square feet
2.1	Delivery Date	One (1) business day after the full execution of the Lease

	Beneficial Occupancy Period	Delivery Date until August 31, 2006
	Term:	Five (5) Years
	Commencement Date:	September 1, 2006
	Expiration Date:	August 31, 2011
3.1	Fixed Monthly Rent:	$31,857.15 per month for the first twelve (12) calendar months of the Term.
3.3	Date of First Increase:	September 1, 2007, and then annually thereafter
	Fixed Monthly Rent Increase on	Four percent (4%) percent per annum
	September 1, 2007:
3.7	Security Deposit:	$37,268.36
4.1	Tenant's Share	5.50%
4.2	Base Eyar for Operating Expenses:	2007
6.1	Use of Premises:	General office use consistent with the operation of
		a first-class office building on the Olympic Corridor
		in the West Los Angeles area
16.1	Tenant's Address for Notices:
	Before the Commencement Date:	9744 Wilshire Boulevard, Suite 210
		Beverly HIlls, California 90212
	After the Commencement Date:	114400 West Olympic Boulevard,
		Suites 1100 and 1400
		Los Angeles, California 90064
	Contact:	Mr. Scott Mitchell Rosenberg
	Landlord's Addres for Notices:	DOUGLASS EMMETT 1995, LLC
		Director of Property Management
		c/o Douglas, Emmett and Company
		808 Wilshire Boulevard, Suite 200
		Santa Monica, California 90401
20.5	Brokers:	Douglas, Emmett and Company
		808 Wilshire Boulevard, Suite 200
		Santa Monica, California 90401 and
		Bietler Commercial Realty Services
		825 South Barrington Avenue
		Lost Angeles, California 90049
20.25	Guarantors:	Scott Mitchell Rosenberg, and individual, and
		Brian K. Altounian, an individual, jointly and
		severally
21.1	Parking Permits:	Tenant shall have the right, but not the obligation to
		purchase thirty-four (34) permits for unreserved
		spaces
23.	Letter of Credit	$336,000.00
Exhibit G

iii

OFFICE LEASE

TABLE OF CONTENTS

ARTICLE		PAGE
ARTICLE 1	DEMISE OF PREMISES	1
ARTICLE 2	COMMENCEMENT DATE AND TERM	2
ARTICLE 3	PAYMENT OF RENT, LATE CHARGE	2
ARTICLE 4	ADDITIONAL RENT	4
ARTICLE 5	ETHICS	8
ARTICLE 6	USE OF PREMISES	8
ARTICLE 7	CONDITION UPON VACATING & REMOVAL OF PROPERTIES	9
ARTICLE 8	UTILITIES AND SERVICES	10
ARTICLE 9	TENNANT'S IDEMNIFICATION AND LIMITATION ON LANDLORD'S LIABILITY	12
ARTICLE 10	COMPLIANCE WITH LAWS	13
ARTICLE 11	ASSIGNIMENT AND SUBLETING	13
ARTICLE 12	MAINTENACE, REPAIRS, DAMAGE, DESTRUCTION, RENOVATION AND OR ALTERATION	17
ARTICLE 13	CONDEMNATION	21
ARTICLE 14	MORTGAGE SUBORDINATION; ATTORNMENT AND MODIFICATION OF LEASE	22
ARTICLE 15	ESTOPPEL CERTIFICATES	23
ARTICLE 16	NOTICES	23
ARTICLE 17	DEFAULT AND LANDLORD'S OPTION TO CURE	23
ARTICLE 18	DAMAGES; REMEDIES; RE-ENTRY BY LANDLORD; ETC	25
ARTICLE 19	INSURANCE	26
ARTICLE 20	MISCELLANEOUS	28
ARTICLE 21	PARKING	31
ARTICLE 22	CONCIERGE SERVICES	31
ARTICLE 23	LETTER OF CREDIT	32
Exhibits
A --	Premises Plan
B --	Improvement Construction Agreement - Tennant Build
B -1--	Construction by Tenant During Term
C --	Rules and Regulations
D --	~~First Amendment Memorandum of Lease Term Dates and Rent~~ INTENTIONALLY DELETED
E --	Guaranty of Lease
F --	~~Asbestos Rider~~ INTENTIONALLY DELETED
G --	Form of Letter of Credit
H --	Subordination, Non-Disturbance and Attornment Agreement

OFFICE LEASE

This Office Lease, dated July 10, 2006, is by and between DOUGLAS EMMETT 1995, LLC, a Delaware limited liability company ("Landlord"), with an office at 508 Wilshire Boulevard, Suite 200, Sant'a Monica, California 90401, and PLATINUM STUDIOS, LLC, a California limited liability company ("Tenant"), with an office at 9744 Wilshire Boulevard, Suite 210, Beverly Hills, California 90212.

ARTICLE 1

DEMISE OF PREMISES

Section 1.1. Demise. Subject to the covenants and agreements contained in this Lease, Landlord leases to Tenant and Tenant hires from Landlord, Suite Number 1400 (the "Premises") on the fourteenth (14^th) (Moil, in the building located at 11400 West Olympic Boulevard, Los Angeles, Cali lomia 90064 (the "Building"). The configuration of the Premises is shown on Exhibit A, attached hereto and made a part hereof by reference.

Tenant acknowledges that it, has made its own inspection of and inquiries regarding the Premises, whidh are already improved. Therefore„ Tenant accepts the Premises in their "as-is" condition. Tenant further acknowledges that Landlord has made no representation or warranty, express or implied, except as are contained in this Lease and its Exhibits, regarding the condition, suitability or usability of the Preniises or the Building for the purposes intended by Tenant.

The Building, the Building's parking facilhies, any outside plaza areas, land and other improvements surrounding the Building which are designated from time to time by Landlord as common areas appurtenant to or servicing the Building, and the land upon which any of the foregoing are situated, are herein sometimes collectively referred to as the "Real Property."

Section 12. Tenant's Non-Exclusive Use Tenant is granted the nonexclusive use of the common corridors and hallways, stairwells, elevators, restrooms, parking facilities, lobbies and other public or common areas located on the Real Property. However, the manner in which such public and common areas are maintained and operated shall be at the reasonable discretion of Landlord, and Tenant's use thereof shall be subject to such reasonable and non-discriminatory rules, regulations and restrictions as Landlord may make from time to time.

Section 1.3. Landlord's Reservation of Rights. Landlord specifically reserves to itself use control and repair of the structural portions of all perimeter walls of the Premises, any balconies, terraces or roofs adjacent to the Premises (including any flagpoles or other installations on said walls, balconies, terraces or roofs) and any space in and/or adjacent to the Premises used for shafts, stairways, pipes, conduits, ducts, mail chutes, conveyors, pneumatic tubes, electric or other utilities, sinks, fan rooms or other Building facilities, and the use thereof, as well as access thereto through the Premises. Landlord also Specifically reserves to itself the following rights:

a)	To designate all sources furnishing sign painting or lettering

b)	To Consistantly have pass to the Premises

c)	To grant to anyone the exclusive right to conduct any, particular business or undertaking in the Building, so long as Landlord's granting of the same does, not prohibit Tenant's use of the Premises for Tenant's Specified Use, as defined in Article 6

d)	To enter the Premises at reasonable times with reasonable prior notice (except for emergencies) to inspect, repair, alter, improve, update or make additions to the Premises or the Building, so long as Tenant's access to and use of the Premises is not materially impaired thereby;

e)	During the last six (6) months of the Term, to exhibit the Premises to prospective future tenants upon not less than 24 hours prior notice and accompanied by a representative of Tenant;

Subject to the provisions of Article 12, to at any time and from time to time whether at Tenant's request or pursuant to governmental requirement, repair, alter, make additions to improve, or decorate all or any portion of the Real Property, or the Building at any reasonable time with prior reasonable notice (except for emergencies), so long as Tenant's access to and use of the Premises is not materially impaired thereby. In connection therewith, and without limiting the generality of the foregoing rights, Landlord shall specifically have the right to remove, alter, improve or rebuild all or any part of the lobby of the Building as the same is presently or shall hereafter be constituted;

Subject to the provisions of Article 12, Landlord reserves the right to make alterations or additions to dr change the location of elements of the Real Property and any common areas appurtenant thereto at any reasonable time with prior reasonable notice (except for emergencies), so long as Tenant's access to and use of the Premises is not materially impaired thereby; and/or

h)	To take such other actions as may reasonably be necessary when the same are required to preserve. protect or improve the Premises, the Building, or Landlord's interest therein at any reasonable time with prior reasonable notice (except for emergencies).

Section 1.4. Area.Landlord and Tenant agree that the usable area (the "Usable Area") of the Premises has been measured using the June, 1996 standards published by the Building Owners' and Managers' AssoCiation ("BOMA"), as a guideline, and that Landlord is utilizing a deemed add-on factor of 10.00% to compute the rentable area (the "Rentable Area") of the Premises. Rentable Area herein is calculated as 1.1000 times the estimated Usable Area regardless of what the actual square footage of the common areas; of the Building may be, and whether or not they are more or less than 10.00% of the total estimated

Usable Area of the Building. The purpose of this calculation is solely to provide a general basis for comparison and pricing of this space in relation to other spaces in the market area.

Landlord and Tenant further agree that even if the Rentable or Usable Area of the Premises and/or the total Building Area are later determined to be more or less than the figures stated herein, for all purposes of the Lease, the figures stated herein shall be conclusively deemed to be the actual Rentable or Usable Area of the Premises, as the case may be.

Section 1.5. Quiet Enjoyment. Subject to all of the covenants, agreements, terms, provisions and conditions of this Lease Tenant shall lawfully and quietly hold, occupy and enjoy the Premises during the Term.

Section 1.6. No Light, Air or View Easement. Any diminution or shutting off of light, air or view by any structure which is now or may hereafter be erected on lands adjacent to the Building shall in no way affect this Lease or impose any liability on Landlord, provided Landlord shall not (i) construct any signhge or other appendage to the Building that materially affect the view from the Premises, or (ii) permit any tenant to construct any signage or other appendage to the Building that materially affect the view from the Premises. Noise, dust or vibration or other ordinary incidents to new construction of improvements on lands adjacent to the Building, whether or not by Landlord, shall in no way affect this Lease or impose any liability on Landlord.

Section 1.7. Relocation. INTENTIONALLY OMITTED.

ARTICLE 2

DELIVERY DATE, COMMENCEMENT DATE AND TERM

Section 2.1. Delivery Date, Commencement Date and Term.

Subject to Tenant's prior delivery to Landlord and Landlord's receipt of the written evidence of insurance coverage required under Lease Section 19.2 herein, Tenant may enter and take possession of the Premises on the date that is one (1) business day following the full execution of the Lease (the "Delivery Date") for among other things, Tenant's Contractor performing Tenant's Improvements contemplated under Exhibit B attached hereto and incorporated herein. Tenant's occupancy of the Premises as of the Delivery Date until August 31, 2006 (the "Beneficial Occupancy Period") shall be subject to Tenant complying with all of the provisions and covenants contained herein, except that Tenant shall not be obligated to pay Fixed Monthly Rent or Additional Rent from the Delivery Date until the expiration of the Beneficial Occupancy Period. Landlord and Tenant shall confirm the finalized Deliiery Date, and Beneficial Occupancy Period, if any as soon as they are determined.

This Lease shall commence on September 1, 2006 (the "Commencement Date"), and shall end, unless sooner terminated as otherwise provided herein, at midni^ght on August 31, 2011 (the "Termination Date").

Section 2.2. Holding Over If Tenant fails to deliver possession of the Premises on the Termination Datd., but holds over after the expiration or earlier termination of this Lease without the express prior written consent of Landlord, such tenancy shall be construed as a tenancy from month-to-month (terminable by either Landlord or Tenant upon 30 days' prior written notice to the other) on the same terns and conditions as are contained herein, except that the Fixed Monthly Rent payable by Tenant durinu such period of holding over shall automatically increase as of the Termination Date to an amount equaf to one hundred and fifty percent (150%) of the Fixed Monthly Rent payable by Tenant the calendar month immediately prior to the date when Tenant commences such holding over (the "Holdover Rent

Tenant's payment of such Holdover Rent, and Landlord's acceptance thereof, shall not constitute a waiver by Landlord of any of Landlord's rights or remedies with respect to such holding over, nor shall it be deemed to be a consent by Landlord to Tenant's continued occupancy or possession of the Premises past the time period covered by Tenant's payment of the Holdover Rent.

Furtlaerrnore, if Tenant fails to deliver possession of the Premises to Landlord within forty-five (45) days following the expiration or earlier termination of this Lease, and Landlord has theretofore notified Tenant in writing, at least sixty (60) days prior to the expiration or earlier termination of this Lease, that Landlord requires possession of the Premises for a succeeding tenant, then, in addition to my other liabilities to Landlord accruing therefrom, Tenant shall protect, defend, indemnify and hold Landlord harmless from all loss, costs (including reasonable attorneys' fees and expenses) and liability resulting from such failure, including without limiting the foregoing, any claims made by any succeeding tenant arising out of Tenant's failure to so surrender, and any lost profits to Landlord resulting therefrom.

Notwithstanding the provisions contained hereinabove regarding Tenant's liability for a continuing holdover, Landlord agrees to use commercially reasonable efforts to insert into any future lease of another tenant proposing to occupy the Premises provisions, permitting mitigation of Tenant's damages arising out of Tenant's temporary holdover.

ARTICLE 3

PAYMENT OF RENT, LATE CHARGE

SectiOn 3.1. Payment of Fixed Monthly Rent and Additional Rent. "Rent" shall mean: all payments of monies in any form whatsoever required under the terms and provisions of this Lease, and shall consist of:

a)	"Fixed Monthly Rent," which shall be payable in equal monthly installments of 531,857.15; plus
b)	Additional Rent as provided in Article 4 and elsewhere in this Lease.

Section 3.2. Manner of Payment. Tenant shall pay Fixed Monthly Rent and Additional Rent immediately upon the same becoming due and payable, without demand therefor, and without any abatiment except as set forth in this Lease, set off or deduction whatsoever, except as may be expressly provided in this Lease. Landlord's failure to submit statements to Tenant stating the amount of Fixed Monthly Rent or Additional Rent then due, including Landlord's failure to provide to Tenant a calcdlation of the adjustment as required in Section 3.3 or the Escalation Statement referred to in Artiqle 4, shall not constitute Landlord's waiver of Tenant's requirement to pay the Rent called for herein, unless Landlord fails to provide an Escalation Statement described in Article 4 within three (3) years after the calendar year to which such Escalation Statement is applicable, in which event Landlord shalllbe deemed to have waived its right to collect any Additional Rent for such calendar year for which Tenant had not theretofore been billed. Tenant's failure to pay Additional Rent as, provided herein shall constitute a material default equal to Tenant's failure to pay Fixed Monthly Rent when due.

Rent shall be payable in advance on the first day of each and every calendar month throughout the Term, in lawful money of the United States of America, to Landlord at 11400 West Olympic Boulevard, Suite 150, Los Angeles, California 90064, or at such other place(s) as Landlord designates in writing to Tenant. Tenant's obligation to pay Rent shall begin on the Commencement Date and continue throtighout the Tenn, without abatement, setoff or deduction, except as otherwise specified hcreinbelow.

Concurrent with Tenant's execution and delivery to Landlord of this Lease, Tenant shall pay to Landlord the Fixed Monthly Rent due for the first month of the Term.

Section 3.3. Fixed Monthly Rent Increase (Suite 1100 and 1400). Commencing on September I, 2007, and continuing through August 31, 2008, the Fixed Monthly Rent payable by Tenant shall Mcrease froml $31,857.15 per month to $33,131.44 per month.

Commencing on September 1, 2008, and continuing through August 31, 2009, the Fixed Monthly Rentpayable by Tenant shall increase from $33_' 131.44 per month to $34,456.69 per month.

Commencing on September 1, 2009, and continuing through August 31, 2010, the Fixed Monthly Rentlpayable by Tenant shall increase from $34,456.69 per month to $35,834.96 per month.

Commencing on. September I, 2010; and continuing throughout the remainder of the initial Tenn, the Fixed Monthly Rent payable by Tenant shall increase from $35,834.96 per month to S37,268.36 per month.

Section 3.4. Tenant's Payment of Certain Taxes. Tenant shall, within thirty (30) days following Tendnt's receipt of substantiating documentation from Landlord, reimburse Landlord, as Additional Rent; for any and all taxes, surcharges, levies, assessments, fees and charges payable by Landlord when:

a)	assessed on measured by or reasonably attributable to the cost or value of Tenant's equipment, furniture, fixtures and other personal property located in the Premises;

assessed on or measured by any rent payable hereunder, including, without limitation, any gross income tax, gross receipts tax, or excise tax levied by the City or County of Los Angeles or any other governmental body with respect to the receipt of such rent (computed as if such rent were the only income of Landlord), but solely when levied by the appropriate City or County agency in lieu of or as an adjunct to, such business license(s), fees or taxes as would otherwise have been payable by Tenant directly to such taxing authority; or

c)	upon or with respect to the possession, leasing, operating, management, maintenance, alteration, repair, use or occupancy by Tenant of the Premises or any portion thereof.

Said taxes shall be due and payable whether or not now customary or within the contemplation of Landlord and Tenant. Notwithstanding the above, in no event shall the provisions of this Section 3.4 serve to entitle Landlord to reimbursement from Tenant for any federal, state, county or city income tax payable by Landlord or the managing agent of Landlord, or any gift, estate, transfer or inheritance taxes assessed against Landlord or any of its partners, shareholders or members.

Section 3.5. Certain Adjustments. If

a)	the Commencement Date occurs on other than January 1st of a calendar year or the Lease expires or terminates on other than December 31st of a calendar year; or

any abatement of Fixed Monthly Rent or Additional Rent occurs during a calendar year, then_Ithe amount payable by Tenant or reimbursable by Landlord during such year shall be adjusted proportionately on a daily basis, and the obligation to pay such amount shall survive the expiration or earlier termination of this Lease.

If the Commencement Date occurs on other than the first day of a calendar month, or the Lease expires on a day other than the last day of a calendar month, then the Fixed Monthly Rent and Additional Rent payable by Tenant shall be appropriately apportioned on a prorata basis for the number of days remaining in the month of the Term for which such proration is calculated.

If the amount of Fixed Monthly Rent or Additional Rent due is modified pursuant to the terms of this Lease, such modification shall take effect the first day of the calendar month immediately following the date such modification would have been scheduled.

Section 3.6. Late Charge and Interest. Tenant acknowledges that late payment by Tenant to Landlord of Fixed Monthly Rent or Additional Rent will cause Landlord to incur costs not contemplated by this Lease, the exact amount of which are extremely difficult and impracticable to fix. Such costs include, withOut limitation, processing and, accounting charges and late charges that may be imposed on Landlord by the terms of any encumbrance and note secured by any encumbrance covering the Premises.

Therefore, if any installment of Fixed Monthly Rent or Additional Rent and other payment due from Tenant hereunder is not received by Landlord within five (5) business days of the date it becomes due, Tentint shall pay to Landlord on demand an additional sum equal to five percent (5%) of the overdue amount as a late charge. The parties agree that this late, charge represents a fair and reasonable settlement against the costs that Landlord will incur by reason of Tenant's late payment. Acceptance of any late charge shall not constitute a waiver of Tenant's default with respect to the overdue amount, or prevent Landlord from exercising any of the other rights and remedies available to Landlord.

Every installment of Fixed Monthly Rent and Additional Rent and any other payment due hereunder from Tenant to Landlord which is not paid within twelve (12) days after the same becomes due and payable shall, in addition to any Late Charge already paid by Tenant, bear interest at the rate of ten percent (10%) per annum from the date that the same originally became due and, payable until the date it is paid. Landlord shall bill. Tenant for said interest, and Tenant shall pay the same within five (5) business days of receipt of Landlord's billing.

Notwithstanding the foregoing, Tenant shall not be assessed any late charge for the first two (2) late payMents in each twelve (12) month period of the Term so long as Tenant pays such amount within five (5) husiness days of Tenant's receipt of written notice that such amount has not been paid.

Section 3.7. Security Deposit Concurrent with Tenant's execution and tendering of this Lease to Landlord, Tenant shall deposit the sum of $37,268.36 (the "Security Deposit"), which amount Tenant shall; thereafter at all times maintain on deposit with Landlord as security for Tenant's full and faithful observance and performance of its obligations under this Lease (expressly including, without limitation, the payment as and when due of the Fixed Monthly Rent, Additional Rent and any other sums or damages payable by Tenant hereunder and the payment of any and all other damages for which Tenant shall; be liable by reason of any act or omission contrary to any of said covenants or agreements). Landlord shall have the right to commingle the Security Deposit with its general assets and shall not be obligated to pay Tenant interest thereon.

If at any time Tenant defaults in the performance of any of its obligations under this Lease, after the expiration of any applicable notice and cure period, then, Landlord may

a)	apply as much of the Security Deposit as may be reasonably necessary to cure Tenant's non-payment of the Fixed Monthly Rent, Additional Rent and/or other sums or damages due from Tenant; and/or;

h)	if an Event of Default (as hereinafter defined) has occurred; apply so much of the Security Deposit as May be reasonably necessary to reimburse all expenses incurred by Landlord in curing such default; or

c)	if the Security Deposit is insufficient to pay the sums specified in Section 3.7 (a) or (h), elect to apply the entire Security Deposit in partial payment thereof, and proceed against Tenant pursuant to the provisions of Article 17 and Article 18 herein.

If as a result of Landlord's application of any portion or all of the Security Deposit, the amount held by Landlord declines to less than $37,268.36, Tenant shall, within ten (10) days after demand therefor, deposit with Landlord additional cash sufficient to bring the then-existing balance held as the Security Deposit to the amount specified hereinabove. Tenant's failure to deposit said amount shall constitute a material breach of this Lease.

At the expiration or earlier termination of this Lease, Landlord shad deduct from the Security DepOsit being held on behalf of Tenant any unpaid sums, costs, expenses or damages payable by Tenant pursuant to the provisions of this Lease; and/or any costs required to cure Tenant's default or performance of any other covenant or agreement of this Lease, and shall, within thirty (30) days after the expiration or earlier termination of this Lease, return to Tenant, without interest, all or such part of the Security Deposit as then remains on deposit with Landlord.

ARTICLE 4

ADDITIONAL RENT

Section 4.1. Certain Definitions. As used in this Lease:

a)	''Escalation Statement" means a statement by Landlord, setting forth the amount payable by Tenant Or by Landlord, as the case may be, for a specified calendar year pursuant to this Article 4.

b)	"Operating Expenses" means the followinu in a referenced calendar year including the Base Year as hereinafter defined, calculated assuming the Building is at least ninety-five percent (95%) occupied: all costs of management, operation, maintenance, and repair of the Building.

By way of illustration only Operating Expenses shall include, but not be limited to management fees paid by Landlord to any third-party, which shall not exceed those reasonable and customary in the geographic area in which the Building is located; water and sewer charges; any and all insurance premiums not otherwise directly payable by Tenant; license, permit and inspection fees; air conditioning (including repair of same); heat; light; power and other utilities; steam; labor; cleaning and janitorial services; guard services; supplies; materials; equipment and tools.

Operating Expenses shall also include the cost or portion thereof of those capital improvements made to the Building by Landlord during the Term:

i)	to the extent that such capital improvements reduce other direct expenses, when the same were made to the Building by Landlord after the Delivery Date, or

ii)	that are required under any governmental law or regulation that was not applicable to the Building as of the Delivery Date.

Said capital improvement costs, or the allocable portion thereof (as referred to in clauses (i) and 6i) above), shall be amortized over the useful life of any such capital improvement pursuant to generally-accepted accounting principles, together with interest on the unamortized balance at the rate of ten percent (10%) per, annum.

Operating Expenses shall also include all general and special real estate taxes, increases in assessments or special assessments and any other ad valorem taxes, rates, levies and assessments Paid during a calendar year (or portion thereof) upon or with respect to the Building and the personal Property used by Landlord to operate the Building, whether paid to any governmental or quasi-governmental authority, and all taxes specifically imposed in lieu of any such taxes (but excluding taxes referred to in Section 3.4 for which Tenant or other tenants in the Building are liable) including fees of counsel and experts, reasonably incurred by or reimbursable by Landlord in connection with any application for a reduction in the assessed valuation of the Building and/or the land thereunder or for a judicial review thereof, (collectively "Appeal Fees"), but solely to the extent that the Appeal Fees result directly in a reduction of taxes otherwise payable by Tenant. However, in no event shall the portion of Operating Expenses used to calculate any billing to Tenant attributable to real estate taxes and assessments for any expense year be less than the billing for real estate taxes and assessments during the Base Year.

Operating Expenses shall also include, but not be limited to the premiums for the following insurance coverage: all-risk, structural, fire, boiler and machinery, liability, earthquake and for replacement of tenant improvements to a maximum of $35.00 per usable square foot, and for such other coverage(s), and at such policy limit(s) as Landlord deems reasonably prudent and/or are rcquired by any lender or ground lessor, which coverage and limits Landlord may, in Landlord's reasonable discretion, change from time to time, subject to the following paragraph

If, in any calendar year following the Base Year, as defined hereinbelow (a "Subsequent Year"), a new expense item (e.g. earthquake insurance, concierge services; entry card systems), is included in Operating Expenses which was not included in the Base Year Operating Expenses, then the cost of such new item shall be added to the Base Year Operating Expenses for purposes of determining the Additional Rent payable under this Article 4 for such Subsequent Year During each Subsequent Year the same amount shall continue to be included in the computation of Operating Expenses for the Base Year resulting in each, such Subsequent Year Operating Expenses only including the increase in the cost of such new item over the Base Year, as so adjusted.

Conversely, as reasonably determined by Landlord, when an expense item that was originally included in the Base Year Operating Expenses is in any Subsequent Year no longer included in Operating Expenses, then the cost of such item shall be deleted from the Base Year Operatino Expenses for purposes of determining the Additional Rent payable under this Article 4 for such Subsequent Year. The same amount shall continue to be deleted from the Base Year Operating Expenses for each Subsequent Year thereafter that the item is not included. However, if such expense item is again included in the Operating Expenses for any Subsequent Year, then the amount Of said expense item originally included in the Base Year Operating Expenses shall again be added back to the Base Year Operating Expenses.

i)	Any ground lease rental;

ii)	The costs of repairs to the Building and the Real Property, to the extent the costs of such repairs is reimbursed by the insurance carried by Landlord or subject to award under any eminent domain porceeing

iii)	Costs, including permit, license and inspection costs, incurred with respect to the installation of Tenant's or other occupant's improvements or incurred in renovating or otherwise imporving, decorating, painting or redecorating vacant space for Tenant or other occupants of the Building.

iv)

Depreciation, amortization and interest payments, except as specifically permitted herein or except on materials, tools supplies and vendor-type equipment purchased by Landlord to enable Landlord to supply services Landlord might otherwise contract for with a third party where such depreciation, amortization and interest payments would otherwise have been included in the charge for such third party's services. In such a circumstance, the inclusion of all depreciation, amortization and interest payments shall be determined pursuant to generally accepted accounting principles, consistently applied, amortized over the reasonably anticipated useful life of the capital item for which such amortization, depreciation or interest allocation was calculated;

Marketing costs, including leasing commissions, attorneys' fees incurred in connection with the ne^ootiation and preparation of letters, deal memos, letters of intent, leases subleases and/or assignments, space planning costs, and other costs and expenses incurred in connection with lease, sublease and/or assignment negotiations and transactions with present or prospective tenants or other occupants of the Building;

vi)	Expenses for services not offered to Tenant or for which Tenant is charged directly, whether or not such services or other benefits are provided to another tenant or occupant of the Building;

vii)	Costs incurred due to Landlord's or any tenant of the Building's violation, other than Tenant, of the terms and conditions of any lease or rental agreement in the Building;

viii)

That portion of any billing by Landlord, its subsidiaries or affiliates for goods and/or services in the Building, to the extent that such billing exceeds the costs of such goods and/or services if rendered by an unaffiliated third parties on a competitive basis;

ix)	Costs incurred by Landlord for structural earthquake repairs or any seismic retrofit requirements necessitated by the January 17, 1994 earthquake that occurred in the vicinity of the Building;

x)	Interest, principal, points and fees on debts or amortization on any mortgage or mortgages or any other debt instrument encumbering the Building or the land thereunder;

xi)

Costs associated with operating the entity which constitutes Landlord, as the same are distinguished from the costs of operation of the Building, including partnership accounting and legal matters, costs of defending any lawsuits with any mortgagee (except as the actions of Tenant may be in issue), costs of selling, syndicating, financing, mortgaging or hypothecating any of Landlord's interest in the Building, costs (including attorneys' fees and costs of, settlement judgments and payments in lieu thereof) arising from claims, disputes or potential disputes in connection with potential or actual claims, litigation or arbitration pertaining to Landlord's ownership of the Building;

xii)	Advertising and promotional expenditures, and costs of signs in or on the Building identifying the owner of the Building or other tenants of the Building;

xiii)

Electric, gas or other power costs for with Landlord has been directly reimbursed by another tenant or occupant of the Building, or for which any tenant directly contracts with the local public service company;

xiv)	Tax penalties and interest incurred as a result of Landlord's negligent or willful failure to make payments and/or to file any income tax or informational return(s) when due, unless such non-payment is due to Tenant's nonpayment of rent;

xv)	Costs incurred by Landlord to comply with notices of violation of any applicable laws or ordinances including the Americans With Disabilities Act, as amended, when such notices are for conditions existing prior to the Delivery Date;

xvi)	Any charitable or political contributions;

xvii)

The purchase or rental price of any sculpture, paintings or other object of art, whether or not installed in, on or upon the Building;

xviii)

Any compensation paid or expenses reimbursed to clerks, attendants or other persons working in any commercial concession(s) operated by Landlord, and any services provided, taxes attributable to and costs incurred in connection with the operation of any retail, parking or restaurant operations in the Building;

xix)

Any accelerated payment(s) made at Landlord's election on obligations undertaken by Landlord which would not otherwise become due, to the extent that such accelerated payment(s) exceed the amount otherwise payable had Landlord not elected to accelerate payment thereof. Notwithstanding such exclusion, the balance of such accelerated payment shall be included by Landlord in operating expense calculations for succeeding years, as if the payment had been made when originally due prior to such acceleration.

xx)	Costs, including attorneys' fees`and settlement judgments and/or payments in lieu thereof, arising from actual or potential claims, disputes, litigation or arbitration pertaining to Landlord and/or the Building;

xxi)	Insurance deductibles in excess of reasonable and customary deductible amounts;

xxii)

Costs of repairs that would have been covered by casualty insurance but for Landlord's failure to maintain casualty insurance to cover the replacement value of the Building as required by this Lease;

xxiii)

Capital expenditures not otherwise permitted hereunder;

xxiv)

The assessment or billing of operating expenses that results in Landlord being reimbursed more than one hundred percent (100%) of the total expenses for the calendar year in question;

xxv)	Any cost or expenditure for which Landlord may be reimbursed, whether by insurance proceeds, warranties, service contracts or otherwise, except through rent adjustment or other tax or operating expense pass-through provisions;

xxvi)

Salaries, fringe benefits and other compensation of employees above the grade of building manager;

xxvii)

Expenses for painting, redecorating or other work which Landlord, at its expense, performs for Tenant or for any other tenant in leased areas of the Building other than painting, redecorating or other work for common areas of the Building;

xxviii)

The cost of alterations, additions, changes or decorations (including leasehold improvements, construction allowances and work letters) made for or paid to any tenant of the Building or made in order to prepare space in the Building for occupancy by a tenant;

xxix)

The cost of repairs in or to a tenant's premises incurred by reason of breach by a tenant of its lease for the space in the Building;

xxx)	Payments for rented equipment the cost of which would constitute a capital expenditure if the equipment was purchased;

xxxi)

Professional fees, not allocated to the operation of the Building and professional fees allocable to disputes with or preparation of leases for other tenants and prospective tenants of the Building;

xxxii)

The costs of services or other benefits provided to other tenants of the Building without charge, but which are only provided to Tenant by payment of a seperate charge;

xxxiii)

Cost, expenses, fines and penalties incurred by the Lanlord due to a violation by Landlord of any lease or of any laws or legal requirements;

xxxiv)

Any bad debt loss, rent loss or reserves for bad debts or rent loss;

xxxv)

The cost and expense incurred by Landlord in furnishing any service to any retail or non-office portions of the Building which is not furnished to the office space portions of the Building;

xxxvi)

The cost of any judgment resulting from any tort liability of Landlord and any attorneys' fees incurred in connection with the same;

xxxvii)

The cost of correcting defects in building construction for the Building including noncompliance with governmental codes and laws, and repairs or replacements caused by Landlord's negligence or the negligence, of its agents, employees or contractors;

xxxviii)

Any expenses, costs and disbursements relating to or arising in any way, directly or indirectly from handling, removal, treatment, disposal or replacement of asbestos, asbestos containing materials or other Hazardous Materials in the Building;

xxxix)

Costs reimbursed to Landlord by governmental authorities; and

xxxx)

All other items which under generally accepted accounting principles, as consistently applied in the real estate industry for first-class office buildings are properly classified as capital expenditures except, however, as specifically permitted by this Lease.

d)	"Tenant's Share means 5.50%, which is calculated by dividing the Usable Area of the Premises (11,357 square feet) by the Usable Area of the Building (206,488 square feet) multiplied by 100.

Section 4.2. Calculationof Tenant's Share of Increases in Operating Expenses. If commencing withrthe calendar year 2008, the Operating Expenses for any calendar year during the Term, or portion thereof, (including the last calendar year of the Term), have increased over the Operating Expenses for the Calendar year 2007 (the "Base Year"), then within thirty (30) days after Tenant's receipt of Landlord's computation of such increase (an "Escalation Statement"), Tenant shall pay to Landlord, as Additional Rent, an amount equal to the product obtained by multiplying such increase by Tenant's Share. if Landlord fails to provide an Escalation Statement within three (3) years after the calendar year to which suchⁱEscalation Statement is applicable, Landlord shalt be deemed to have waived its right to collect any Additional Rent for such calendar year for which Tenant had not theretofore been billed.

Landlord may at or after the start of any calendar year subsequent to the Base Year notify Tenant or the amount which Landlord estimates will be Tenant's monthly share of any such increase in Operating Expenses for such calendar year over the Base Year and the amount thereof shall be added to the Fixed Monthly Rent payments required to be made by Tenant in such year If Tenant's Share of any such increase in rent payable hereunder as shown on the Escalation Statement is greater or less than the total amounts actually billed to and paid by Tenant during the year covered by such statement, then within thirty (30) days thereafter, Tenant shall pay in cash any sums owed Landlord or if applicable, Tenant shall either receive a credit against any Fixed Monthly Rent and/or Additional Rent next accruing for any sum I owed Tenant, or if Landlord's Escalation Statement is rendered after the expiration or earlier termination of this Lease and indicates that Tenant's estimated payments have exceeded the total amount to which Tenant was obligated, then provided that Landlord is not owed any other sum by Tenant, Landlord shall issue a cash refund to Tenant within thirty (30) days after Landlord's completion of such Escalation Statement.

Section 4.2.1 Audit Right. Within one (1) year after receipt, of a statement by Tenant, if Tenant disputes the amount of Additional Rent set forth in the statement, an accountant (which accountant is not working on a contingency fee basis and which shall be hereinafter referred to as "Tenant's Accountant"), designated and paid for by Tenant, may after reasonable notice to Landlord and at reasonable times, inspect and copy Landlord's records with respect to such statement at Landlord's offices, provided that Tenant is not then in default under this Lease beyond any applicable notice and cure period and Tenant has paid all amounts required to be paid under the applicable statement. In connection with such inspection, Tenant and Tenant's agents must agree in advance to follow Landlord's reasonable rules and procedures regarding inspections of Landlord's records, and shall execute a mutually acceptable confidentiality agreement regarding such inspection. Tenant's failure to dispute the amount of Additional Rent set forth in any Statement within one (1) year of Tenant's receipt of such statement shall be deemed to be Tenant's approval of such statement and Tenant, thereafter, waives the right or ability to dispute the amounts set forth in such statement. If after such inspection, Tenant still disputes such Additional Rent, a determination as to the proper amount shall be made, at Tenant's expense, by an independent certified public accountant selected by Landlord (which accountant has not previously been retained by Landlord and which shall he hereinafter referred to as "Landlord's Accountant") and subject to Tenant's reasonable approval; provided that if such determination by Landlord's Accountant proves that Operating Expenses were overstated by more than five percent (5%), then the overstated amount shall be repaid to Tenant and the cost of Landlord's Accountant and the costs of Tenant's Accountant shall be paid for by Landlord. Tenant hereby acknowledges that Tenant's sole right to inspect and copy Landlord's books and records and io contest the amount of Operating Expenses payable by Tenant shall be as set forth in this Section 4.2 and Tenant hereby waives any and all other rights pursuant to applicable law to inspect such books and records and/or to contest the amount of Operating Expenses payable by Tenant. In the event Tenant does not agree as to the determination made by Landlord's accountant, Tenant may notify Landlord that Tenant desires to have such disagreement determined by an arbiter, and within fifteen (15) days thereafter Landlord and Tenant shall designate a certified public accountant (the ?Arbiter") whose determination made in accordance with this Section 4.2 shall be binding upon the arties. If Tenant fails to notify Landlord of Tenant's desire to have such disagreement determined by an Arbiter within 60 days after the determination of Landlord's Accountant, then the determination of Landlord's Accountant shall be conclusive and binding on Tenant. IT the Arbiter Shall substantially confirm the determination of Landlord's Accountant, then Tenant shall pay the cost of the Arbiter. If the Arbiter shall substantially confirm the determination of Tenant, then Landlord shall pay the cost of the Arbiter. In all other events, the cost of the Arbiter shall be borne equally by Landlord and Tenant, The Arbiter shall be a member of a national independent certified public accounting firm, which has not been previously employed by Landlord or Tenant and with not less than ten (10) years experience in commercial leasing. If Landlord and Tenant shall be unable to agree upon the designation of the Arbiter within fifteen (15) days after receipt of written notice from Tenant requesting agreement as to the designation of the Arbiter, which notice shall contain the names and addresses of two or more certified public accountants meeting the requirements set forth above who are acceptable to Tenant, then either party shall have the right to request, the American Arbitration Association, Jams/endispute (or any organization which is the successor thereto) (the ^qA.A.A")to designate as the Arbiter a member of a national certified public accounting firm whose written determination shall be conclusive and binding upon the parties, and the cost of such certified public accountant shall be borne as provided above in the case of the Arbiter designated by Landlord and Tenant. The Arbiter's written determination shall be made within thirty (30) days of the Ai, -biter's appointment and shall only apply to the additional rent in dispute. In rendering such written determination such Arbiter shall not add to, subtract from or otherwise modify the provisions of this Lease. If Tenant shall prevail in such contest, Landlord shall make an appropriate refund to Tenant Within thirty (30) days of the written determination of the Arbiter.

Section 4.3. Tenant's Payment of Direct Charges, as AdditionalRent. Tenant shall promptly and duly; pay all costs and expenses incurred for or in connection with any Tenant Change (as such term is defined in Section 12.12 of this Lease) or Tenant Service (as such term is defined in Section 8.10 of this Lease), and discharge any mechanic's or other lien created against the Premises, Building or the Real Property arising as a result of or in connection with any Tenant Change or Tenant Service as Additional Rent by paying the same, bonding or manner otherwise provided by law.

Any other cost, expense, charge, amount or sum (other than Fixed Monthly Rent) payable by Tenant as provided in this Lease shall also be considered Additional Rent.

Certain individual items of cost or expense may, in the reasonable determination of Landlord, be separately charged and billed to Tenant by Landlord, either alone or in conjunction with another party or parties, if they are deemed in good faith by Landlord to apply solely to Tenant and/or such other party or parties and are not otherwise normally recaptured by Landlord as part of normal operating expenses. Insofar as is reasonable, Landlord shall attempt to give Tenant prior notice and the opportunity to cure any circumstance that would give rise to such separate and direct, billing.

Said separate billing shall be paid as Additional Rent, regardless of Tenant's Share. Such allocations by Landlord shall be binding on Tenant unless patently unreasonable, and shall be payable within ten (10) days after receipt of Landlord's billing therefor.

ARTICLE`5

ETHICS

Section 5.1. Ethics. Landlord and Tenant agree to conduct their business or practice in compliance with any appropriate and applicable codes of professional or business practice.

ARTICLE 6

USE OF PREMISES

Section 6.1. Use. The Premises shall only be used for general office use consistent with the operation of a first-class office building on the;Olympic Corridor in the West Los Angeles area (the "Specified Use") and for no other purposes, without Landlord's prior written consent, which consent shall be in Landlord's sole discretion. Any proposed revision of the Specified Use by Tenant shall be for a use consistent with those customarily found in first-class office buildings. Reasonable grounds for Landlord withholding its consent shall include. but not be limited to:

a)	the proposed use will place a disproportionate burden on the Building systems;

b)	the proposed user is for governmental or medical purposes or for a company whose primary business is that of conducting boiler-room type transactions or sales;

c)	the proposed use would generate excessive foot traffic to the Premises and/or Building.

So long as Tenant is in control of the Premises, Tenant covenants and agrees that it shall not use, suffer or permit any person(s) to use all or any portion of the Premises for any purpose in violation of the laws of the United States of America, the State of California, or the ordinances, regulations or requirements of the City or County of Los Angeles, or other lawful authorities having jurisdiction over the Building,

Tenant shall not do or permit anything to be done in or about the Premises which will materially obstriict or unreasonably interfere with the rights of other tenants or occupants of the Building, or injure them; Tenant shall not use or allow the Premises to be used for any pornographic or violent purposes, nor shall Tenant cause, commit, maintain or permit the continuance of any nuisance or waste in, on or aboui the Premises. Tenant shall not use the Premises in any manner that in Landlord's reasonable judgrhent would adversely affect or interfere with any services Landlord is required to furnish to Tenant or to any other tenant or occupant of the Building, or that would interfere with or obstruct the proper and economical rendition of any such service.

Section 6.2. Exclusive Use Landlord represents that Tenant's Specified Use of the Premises does not conflict with exclusive use provisions granted by Landlord in other leases for the Building. Landlord further agrees that it shall, in the future, not grant an exclusive use privilege to any other tenant in the Building that will prevent Tenant from continuing to use the Premises for its Specified Use.

Tenant acknowledges and agrees that it shall not engage in any of the uses specified hereinbelow, for NvItich Landlord has already granted exclusive rights:

As a primary business, an Italian-style restaurant.

Provided that Tenant has received written notice of the same from Landlord, and further provided that Landlord does not grant a future exclusive use right that'prohibits Tenant from engaging in the Specified Use then Tenant agrees that it shall not violate any exclusive use provision(s) granted by Landlord to other tenants in the Building.

Section 6.3.Rules and Regulations. Tenant shall observe and comply with the rules and regulations set forth in Exhibit C and such other and further reasonable and non-discriminatory rules and regulations as Landlord may make or adopt and communicate to Tenant at any time or from time to time, when said rules, in the reasonable judgment of Landlord, may be necessary or desirable to ensure the first-class operation, maintenance, reputation or appearance of the Building. However, if any conflict arises between the provisions of this Lease and any such rule or regulation, the, provisions of this Lease shall 'control.

Provided Landlord makes commercially reasonable efforts to seek compliance by all occupants of the building with the rules and regulations adopted by Landlord, Landlord shall not be responsible to Tenant for the failure of any other tenants or occupants of the Building to comply with said rules and regulations.

ARTICLE 7

CONDITION UPON VACATING & REMOVAL OF PROPERTY

Section 7.1. Condition upon Vacating. At the expiration or earlier termination of this Lease, Tenant shall;

a)	terminate its occupancy of quit and surrender to Landlord, all or such portion of the Premises upon Which this Lease has so terminated, broom-clean and in substantially similar condition as received except for:

i)	ordinary wear and tear, or

ii)	loss or damage by fire or other casualty which shall not have been caused by the gross negligence or willful misconduct of Tenant or its agents, clients, contractors, employees, invitees, licensees, officers, partners or shareholders; and

b)	surrender the Premises free of any and all debris and trash and any of Tenant's personal property, furniture, fixtures and equipment that do not otherwise become a part of the Real Property, pursuant td the provisions contained in Section 7.2 hereinbelow; and,

at Tenant's sole expense, forthwith and with all due diligence remove any Specialty Alteration (as liereinafter defined) made by Tenant, provided Landlord has previously notified Tenant of its obligation to remove such Specialty Alteration at the time Landlord approved Tenant's request for such Specialty Alteration. If Tenant fails to complete such removal and/or to repair any damage caused by the removal of any Specialty Alterations, Landlord may do so and may charge the reasonable cost thereof to Tenant. For purposes of this Lease, "Specialty Alterations" shall mean any Tenant Change, work, alteration or installation that are not typical or standard office alterations. Tenant shall have no obligation to remove any Tenant Change or other work, alteration or installation that is not a Specialty Alteration. Tenant shall not be obligated to remove any of the IMprovements (as such term is defined in Exhibit B).

Section 7.2.Tenant's Property. All fixtures, equipment, improvements and installations attached or built^linto the Premises at any time during the Term shall, at the expiration or earlier termination of this Lease, be deemed the properly of Landlord; become a permanent part of the Premises and remain therein. However, if said equipment, improvements and/or installations can be removed without causing any structural damage to the Premises, then, provided after such removal Tenant restores the Premises to the condition existing prior to installation of Tenant's trade fixtures or equipment Tenant shall be permitted, at Tenant's sole expense, to remove said trade fixtures and equipment.

ARTICLE 8

UTILITIES AND SERVICES

Section 8.1. Normal Building Hours / Holidays. The "Normal Business Hours" of the Building, during which Landlord shall furnish the services specified in this Article 8 are defined as 8:00 A.M. to 6:001 P.M., Monday through Friday, and 9:00 A.M. to 1:00 P.M. on Saturday, any one or more Holiday(s) excepted.

The ‘`Holidays" which shall be observed by Landlord in the Building are defined as any federally-recognized holiday and any other holiday specified herein, which are New Years Day, Presidents' Day, Mentorial Day, the 4th of July, Labor Day, Thanksgiving Day, the day after Thanksgiving, and Christmas Day (each individually a '`Holiday"). Tenant acknowledges that the Building shall be closed on etich and every such Holiday, and Tenant shall not be guaranteed access to Landlord or Landlord's manging agent(s) on each such Holiday.

Section 8.2. Access to the Building and General Services. Subject to Force Majeure and any power outage(s) which may occur in the Building when the same are out of Landlord's reasonable control, Landlord shall furnish the following services to the Premises twenty-four (24) hours per day, seven days per Week:

a)	during Normal Business Hours, bulb replacement for building standard lights;
b)	access to and use of the parking facilities for persons holding valid parking permits;
c)	access to and use of the elevators and Premises;
d)	use of electrical lighting on an as-needed basis within the Premises; and
e)	use of a reasonable level of water for kitchen and toilet facilities in the Premises and common area bathrooms.

Section 8.3. Janitorial Services. Landlord shall furnish the Premises with reasonable and customary janiterial services five (5) days per business week, except when the Building is closed on any Holiday. Landlord shall retain the sole discretion to choose and/or revise the janitorial company providing said services to the Premises and/or Building.

Section 8.4. Security Services. Tenant acknowledges that Landlord currently provides uniformed guard service to the Building twenty-four (24) hours per day, seven (7) days per week, solely for the purposes of providing surveillance of, and information and directional assistance to persons entering the Building.

Tenant acknowledges that such guard service shall not provide any measure of security or safety to the Building or the Premises, and that Tenant shall take such actions as it may deem necessary and reasonable to ensure the safety and security of Tenant's property or person or the property or persons of Tenant's agents, clients, contractors, directors, employees, invitees, licensees, officers, partners or shareholders. Tenant agrees and acknowledges that except in the case of the gross negligence or willful misconduct of Landlord or its directors, employees, officers, partners or shareholders, Landlord shall not be liable to Tenant in any manner whatsoever arising out of the failure of Landlord's guard service to secure any person or property from harm.

Tenant agrees and acknowledges that Landlord, in Landlord's sole discretion, shall have the option, but not the obligation to add, decrease, revise the hours of and/or change the level of services being provided by any guard company serving the Building, so long as such services are in keeping with the standards of Comparable Buildings. Tenant further agrees that Tenant shall not engage or hire any outside guard or security company without Landlord's prior written consent, which shall be in Landlord's sole discretion.

Section 8.5. Utilities. During Normal Business Hours Landlord shall furnish a reasonable level of water, heat, ventilation and air conditioning ("HVAC") to the Premises consistent with that provided by landlords of comparable first-class office buildings in the West Los Angeles area and a sufficient amount of electric current to provide customary business lighting and to operate ordinary office business machines, such as a single personal computer and ancillary printer per one hundred tmd twenty (120) rentable square feet contained in the Premises, facsimile machines, small copiers customarily used for general office purposes, and such other equipment and office machines as do not result in above standard use of the existing electrical system. So long as the same remain reasonably cost competitive, Landlord shall retain the sole discretion to choose the utility vendor(s) to supply such services to the Premises and the Building.

Except with the prior written consent of Landlord, which shall not be unreasonably withheld, conditioned and/or delayed, Tenant shall not install or use any equipment, apparatus or device in the Premises that requires the installation of a 220 voltage circuit; consumes more than five (5) kilowatts per hour per, item; or the aggregate use ofwhich will in any way increase the connected load to more than 5 Watt's per square foot, or cause the amount of electricity to be furnished or supplied for use in the PreMises to more than 1.2 kWh per usable square foot, per month.

Except with the prior written consent of Landlord, Tenant shall not connect any electrical equipment to the electrical system, of the Building, except through electrical outlets already existing in the Premises, nor shall Tenant pierce, revise, delete or add to the electrical, plumbing, mechanical or HVAC systems in the Premises.

Section 8.6. After Hours HVAC and/or Excess Utility Usage. If Tenant requires HVAC service during other than Normal Business Hours ("Excess HVAC"), Tenant shall make its request in writing at least three (3) hours before the close of the normal business day. Otherwise, Landlord shall have no obligation to provide Excess HVAC. Tenant's request shall be deemed conclusive evidence of its willingness to pay Landlord's actual costs specified herein, As of the date of the Lease, the prevailing afterThours HVAC charge in the Building is $65.00 per hour.

If Tenant requires electric current in excess of the amounts specified hereinabove, water or gas in excess of that customarily furnished to the Premises as office space ("Excess Utility Use"), Tenant shall first (procure Landlord's prior written consent to such Excess Utility Use, which Landlord may reasonably refuse.

In lieu of Landlord's refusal, Landlord may cause a meter or sub-meter to be installed to measure the amount of water, gas and/or electric current consumed by Tenant in the Premises. The cost of any such meter(s), and the installation, maintenance, and repair thereof; shall be paid by Tenant as Additional Rent

After completing installation of said meter(s), and/or if Tenant requests Excess HVAC, then Tenant shallipay, as Additional Rent, within thirty (30) calendar days after Tenant's receipt of Landlord's billing, for the actual amounts of all water, steam, compressed air, electric current and/or Excess HVAC consumed beyond the normal levels Landlord is required herein to provide. Said billing shall he calcUlated on the usage indicated by such meter(s), sub-meter(s), or Tenant's written request_, therefor, and shall be issued by Landlord at the rates charged for such services by the local public utility lumiShing the same, plus any additional expense reasonably incurred by Landlord in providing said Excess Utility Use and/or in keeping account of the water, steam, compressed air and electric current so consumed.

Section 8.7. Changes affecting HVAC. Tenant shall also pay as Additional Rent for any additional costs) Landlord incurs to repair any failure of the HVAC equipment and systems to perform their function when said failure arises out of or in connection with any change in, or alterations to, the arrangement of partitioning in the Premises after the Delivery Date, or from occupancy by, on average, more than one person for every two hundred and fifty (250) usable square feet of the Premises, or from Tenant's failure to keep all HVAC vents within the Premises free of obstruction.

Section 8.8. Damaged or Defective Systems. Tenant shall give written notice to Landlord within twenty-four (24) business hours of any alleged damage to, or defective condition in any part or appurtenance of the Building's sanitary, electrical, HVAC or other systems serving, located in, or passing throtigh, the Premises. Provided that the repair or remedy of said damage or defective condition is within the reasonable control of Landlord, it shall be remedied by Landlord with reasonable diligence. Otherwise, Landlord shall make such commercially reasonable efforts as may be available to Landlord to effect such remedy or repair, but except in the case of Landlord's gross negligence and/or willful misconduct or the gross negligence and/or willful misconduct of Landlord's agents, contractors, direetors, employees, officers, partners, and/or shareholders, Landlord shall not be liable to Tenant for any failure thereof.

Tenant shall not be entitled to claim any damages arising from any such damage or defective condition nor shall Tenant be entitled to claim any eviction by reason of any such damage or defective condition unless:

a)	the same was caused by Landlord's gross negligence or willful misconduct while operating or maintaining the Premises or the Building;

b)	the damage or defective condition has substantially prevented Tenant from conducting its normal business operations; and

Landlord shall have failed to commence the remedy thereof and proceeded with reasonable diligence to complete the same after Landlord's receipt of notice thereof from Tenant.furthermore, if such damage or defective condition was caused by, or is attributed to, a Tenant Change or the gross negligence or willful misconduct of Tenant or its employees, licensees or invitees:

d)	the cost of the remedy thereof shall be paid by Tenant as Additional Rent pursuant to the provisions of Section 4.3;

e)	in no event shall Tenant be entitled to any abatement of rent as specified below: and

f)	Tenant shall be estopped from making any claim for damages arising out of Landlord's repair thereof

Section 8.9. Limitationon Landlord's Liability for Failure to Provide Utilities and/or Services. Except in the case of Landlord's gross negligence or willful misconduct or the;gross negligence or willful misconduct of Landlord's agents, contractors, directors, employees, licensees, officers, partners or shareholders, Tenant hereby releases Landlord from any liability for damages, by abatement of rent or otherwise, for any failure or delay in furnishing any of the services or utilities specified in this Article 8 (incliKling, but not limited to telephone and telecommunication services), or for any diminution in the quality or quantity thereof.

Tenant's release of Landlord's liability shall be applicable when such failure, delay or diminution is occasioned, in whole or in part, by repairs, replacements, or improvements, by any strike, lockout or other labor trouble, by Landlord's inability to secure electricity, gas, water or other fuel at the Building after( Landlord's reasonable effort to do so, by accident or casualty whatsoever, by act or default of Tenant or parties other than Landlord, or by any other cause beyond Landlord's reasonable control. Such failures, delays or diminution shall never be deemed to constitute a constructive eviction or disturbance of Tenant's use and possession of the Premises, or serve to relieve Tenant from paying Rent or performing any of its obligations under the Lease.

Furthermore, Landlord shall not be liable under any circumstances for a loss of injury to, or interference with Tenant's business, including, without limitation, any loss of profits occurring or arising through or in connection with or incidental to Landlord's failure to furnish any of the services or utilities required by this Article 8.

Notwithstanding the above, Landlord shall use commercially reasonable efforts to remedy any delay, defect or insufficiency in providing the services_, and or utilities required hereunder.

Notwithstanding the foregoing, if Tenant is prevented from using and does not use the Premises or any portion thereof, as a result of (i) Landlord's failure to provide services or utilities as required by this Lease, or (ii) Landlord's exercise of its rights under Section 12,11 below (an "Abatement Event"), then five 15) consecutive business days after Landlord's receipt of any such Notice (the "Eligibility Period"), Tena t shall give Landlord Notice of such Abatement Event and if such Abatement Event continues for and such failure is in no way attributable to or caused by the negligence or willful misconduct of

Tenant, then the Fixed Monthly Rent and Additional Rent shall be abated or reduced, as the case may be„after expiration of the Eligibility Period for such time that Tenant continues to be so prevented from using, and does not use the Premises, or a portion thereof, in the proportion that the rentable area of the portion of the Premises that Tenant is prevented from using, and does not use ("Unusable Area"), bears to the total rentable area of tile Premises; provided, however, in the event that Tenant is prevented from using, and does not use the Unusable Area for a period of time in excess of the Eligibility Period and the remaining portion of the Premises is not sufficient to allow Tenant to effectively conduct its business therein and if Tenant does not conduct its business from such remaining portion, then for such time after expiration of the Eligibility Period during which Tenant is so prevented from effectively conducting its business therein, the Fixed Monthly Rent and Additional Rent for the entire Premises shall be abated for such 1 time as Tenant continues to be so prevented from usMg, and does not use the Premises, If however, Tenant reoccupies any portion of the Premises during such period, the Rent allocable to such reoccupied portion, based on the pmportion that the rentable area of such reoccupied portion of the Premises bears to the total rentable area of the Premises, shall be payable by Tenant from the date Tenant reoccupies such portion of the Premises. Such right to abate Fixed Monthly Rent and Additional Rent shall be Tenant's sole and exclusive remedy at law or in equity for an Abatement Event.

Section 8.10. Tenant Provided Services. Tenant shall make no contract or employ any labor in connection with the maintenance, cleaning or other servicing of the physical structures of the Premises or for installation of any computer, telephone or other cabling, equipment or materials provided in or to the Premises (collectively and individually a "Tenant Service") without the prior consent of Landlord, which consent shall not be unreasonably withheld. Tenant shall not permit the use of any labor, material or equipment in the performance of any Tenant Service if the use thereof, in Landlord's reasonable judgment, would violate the provisions of any agreement between Landlord and any union providing work, labor or services in or about the Premises, Building and/or create labor disharmony in the Building.

ARTICLE 9

TENANT'S INDEMNIFICATION AND LIMITATION ON LANDLORD'S LIABILITY

Section 9.1. Tenant'sIndemnification and Hold Harmless. For the purposes of this Section 9.1, "Indemnitee(s)" shall jointly and severally refer to Landlord and Landlord's agents, clients, contractors, directors, employees, officers, partners, and/or shareholders.

Tenant shall indemnify and hold Indemnitees harmless from and against all claims, suits, demands, damages, judgments, costs, interest and expenses (including reasonable attorneys fees and costs incurred in th;defense thereof) to which any Indemnitee may be subject or suffer to the extent arising out of the negligence or willful misconduct of Tenant or the negligence or willful misconduct of Tenant's a^gents, contractors, directors, employees, licensees, officers, partners or shareholders in connection with the use of work in construction to or actions in on upon or about the Premises, including any actions relating to the installation, placement, or removal of any Tenant Chang; improvements, fixtures and/or equipment in, on, upon or about the Premises.

Tenant's indemnification shall extend to any and all claims and occurrences, whether for injury to or death of any person or persons, or for damage to property (including any loss of use thereof), or otheliwise, occurring during the Term or prior to the Commencement Date (if Tenant has been given early access to the Premises for whatever pin-pose), and to all claims arising from any condition of the Premises due to or resulting from any default by Tenant in the keeping, observance or performance of any covenant or provision of this Lease, or from the negligence or willful misconduct of Tenant or the negligence or willful misconduct of Tenant's agents, contractors, directors, employees, licensees, officers, partners or shareholders.

Section 9.2. Nullityof Tenant's Indemnification in Event of Negligence. Notwithstanding anything to the contrary contained in this Lease, Tenant's indemnification shall not extend to the negligence or willful misconduct of Landlord or the negligence or willful misconduct of Landlord's agents, contractors, directors, employees, officers, partners or shareholders, nor to such events and occurrences for which Landlord otherwise carries insurance coverage.

Section 9.3. Tenant's Waiver of Liability. Provided and to the extent that any injury or damage suffered by Tenant or Tenant's agents, clients, contractors, directors, employees, invitees, officers, partners, and/or shareholders did not arise out of the negligence or willful misconduct of Landlord or the negligence or willful misconduct of Landlord's agents, contractors, employees, officers, partners or sharehOlders, Tenant shall make no claim against Landlord and Landlord shall not be liable or responsible in any way for and Tenant hereby waives all claims against Landlord with respect to or arisiniout of injury or damage to any person or property in or about the Premises by or from any cause whatsoever under the reasonable control or management of Tenant.

Section 9.4. Limitation of Landlord's Liability. Tenant expressly agrees that notwithstanding anything in this Lease and/or any applicable law to the contrary, the liability of Landlord and Landlord's agents,: contractors, directors, employees, licensees, officers, partners or shareholders, including any succesSor in interest thereto (collectively and individually the "Landlord Parties"), and any recourse by Tenant! against Landlord or the Landlord Parties shall be limited solely and exclusively to an amount i which is equal to the interest of Landlord in the Building and any insurance or sale proceeds or profits received by Landlord.

Tenant specifically agrees that neither Landlord nor any of the Landlord Parties shall have any personal liability therefor. Further, Tenant hereby expressly waives and releases such personal liability on behalf of itself and all persons claiming by through or under Tenant.

Section 9.5. Transfer of Landlord's Liability. Tenant expressly agrees that to the extent that any transferee assumes the obligations of Landlord hereunder, and provided Landlord has either transferred the coinpletc Security Deposit held pursuant to this Lease or refimded the same to Tenant as of the dine of such transfer, then the covenants and agreements on the part of Landlord to be performed under this Lease which arise and/or accrue after the date of such transfer shall not be binding upon Landlord herein named from and after the date of transfer of its interest in the Building.

Section 9.6. Landlord's Indemnification. Notwithstanding any contrary provision of this Lease, Landlord shall indemnify, and hold Tenant and Tenant's agents, clients, directors, officers, partners, emploYees, shareholders and contractors harmless from and against, any and all claims, causes of action, liabilities, losses, costs and expenses, including reasonable attorney's fees and court costs, arising from or in connection with:

Any activity occurring, or condition existing, at or in the Building and/or the Real Property (other than in the Premises) when such activity or condition is under the reasonable control of Landlord, except and to the extent the same is caused by the negligence or willful misconduct of Tenant or Tenant's employees, agents, licensee, invitees, or contractors, or by Tenant's breach or default in the performance of any obligation under this Lease;

b)	Any activity occurring, or condition existing in the Premises when, and to the extent caused by the negligence or willful misconduct of Landlord or Landlord's employees, agents or contractors; or

c)	Any breach by Landlord of any of Landlord's obligations under this Lease.

ARTICLE 10

COMPLIANCE WITH LAWS

SectiOn 10.1.Tenant's Compliance with Laws. Tenant shall not use permit to be used or permit anything to be done in or about all or any portion of the Premises which will in any way violate any laws, statutes, ordinances, rules, orders or regulations duly issued by any governmental authority having jurisdiction over the Premises or the provisions of this Lease, or by the Board of Fire Undenvriters (or any successor thereto) (collectively "Codes" or "Applicable Laws").

Section 10.2. TenanttoComply at SoleExpense. Tenant shall, at its sole expense, promptly remedy any violation of such Codes, provided, however, that nothing contained in this Section 102 shall require Tenant to make any structural changes to the Premises, unless such changes are required due to either Tenant or Tenant's agents, clients, contractors, directors, employees, invitees, licensees, officers, partners or shareholders use of the Premises for purposes other than general office purposes consistent with ;.J. Class A office building.

Section 10.3.Conclusive Evidence of Violation.Intentionally Omitted.

Section 10.4. Landlord'sOperation of Building. Landlord shall operate, lease, manage and maintain the Bnilding, common areas, parking facilities and Real Property at all times during the Term in a first class Manner similar to other Class A office buildings located in along the Olympic Corridor in the West Los Angeles area of the Building.

ARTICLE 11

ASSIGNMENT AND SUBLETTING

Section 11.1.Permission Required for Assignment or Sublet. Unless Landlord's prior written consent has been given, which consent shall not be unreasonably withheld, conditioned and/or delayed (subject to the express provisions of this Article 11), this Lease shall not nor shall any interest herein, be assignable as to the interest of Tenant by operation of law; nor shall Tenant:

a)	assign Tenant's interest in this Lease; or

b)	sublet the Premises or any part thereof or permit the Premises or any part thereof to be utilized by anyone other than Tenant, whether as by a concessionaire, franchisee, licensee, permittee or otherwise (collectively, a "sublease")

In addition, except for Transfers under clauses (a) or (b), Tenant shall not mortgage, pledge, encumber or otherwise transfer this Lease, the Term, and/or estate hereby granted or any interest herein withOut Landlord's prior written consent, which consent may be granted or withheld in Landlord's sole and absolute discretion.

Any assignment, mortgage, pledge, encumbrance, transfer,or sublease (collectively, any `Transfer") without Landlord's prior written consent shall be voidable, and, in Landlord's sole election, shall constitute a material default under this Lease.

Seetion 11.2. Voluntary Assignment due to Changes in Structure of Tenant. Any dissolution, merger, consolidation, or other reorganization of Tenant, or the single sale or other transfer of a controlling percentage of the capital stock of Tenant (other than the sale of such stock pursuant to a nubile offering that results in a majority of the same members of the Board and executive officers remaining in control of said corporation) and or the single sale of fifty percent (50%) or more of the value of the assets of Tenant, shall be deemed a voluntary assignment. The phrase "controlling percentage" means the ownership of, and the right to vote stock possessing fifty percent (50%) or more of the total combined voting power of all classes of Tenant's capital stock issued, outstanding, and entitled to vote for the election of directors. Notwithstanding anything to the contrary contained herein, the preceding paragraph shall not apply to corporations whose stock is traded through a recognized United States exchange or over the counter.

Any withdrawal or change (whether voluntary, involuntary, or by operation of law) in the partnership by one or more partners who own, in the aggregate fifty percent (50%) or more of the partnership, or the dissolution of the partnership, shall be deemed a voluntary assignment.

If Tenant is comprised of more than one individual, a purported assignment (whether voluntary, involuntary, or by operation of law), by any one of the persons executing this Lease shall be deemed a voluntary assignment.

Secion 11.2.1. Tenant Affiliated Companies/Restructuring of Business Organization. Any contrary provision of this Article 11, notwithstanding and provided Tenant is not in Default, the assignment or subletting by Tenant of all or any portion of this Lease or the Premises to (i) a parent or subsidary of (x) Tenant or (y) any person or entity which controls Tenant, or (ii) any person or entity which controls, is controlled by or under common control with Tenant or a person or entity which controls tenant, or (iii) any entity which purchases all or substantially all the assets or stock of Tenant, or (iv) any entity into which Tenant or a person or entity which controls Tenant is merged or consolidated (all such persons or entities described in (i), (ii), (iii) and (iv) being sometimes hereinafter referred to as "Tenant Affiliates") shall not be deemed a Transfer under this Article 11 and thus shall not be subject to Landlord's prior consent, and Landlord shall not be entitled to any Net Rental Profit resulting therefrom, provided that:

a)	any such Tenant Affiliate was not formed as a subterfuge to avoide the obligations of this Article11;

b)	Tenant gives Landlord written notice of any such assignment or sublease to a Tenant Affiliate;

if said transfer of Tenant's interest is accomplised through an assignment, assignee shall assume, in a written document reasonably satisfactory to Landlord and delivered to Landlord upon or prior to the effective date of such assignment, all the obligations of Tenant under this Lease will respect to that portion of the Premises which is the subject of such Transfer; and

e)	Tenant and any Guarantor shall remain fully liable for all obligations to be performed by Tenant under this Lease.

If Tenant fails to comply with the requirements of Section 11.2.1 (a) through (e), then any purported assignement or sublease which was made shall at the sole option of Landlord be made null, void and of no effect whatsoever.

Section 11.3. Request to. Assign or Sublease. If at any time during the Term, Tenant wishes to assign this Lease or any interest therein, or'to sublet all or any portion of the Premises, then at least twenty (20) days prior to the date when Tenant desires the assignment or sublease to be effective, Tenant shall give written notice to Landlord setting forth the name, address, and business of the proposed assignee or sublessee, business and personal credit applications completed on Landlord's standard application forms, and information (including references and such financial documentation as Landlord shall reasonably prescribe) 'concerning the character and financial condition of the proposed assignee or sublessee, the effective date of the assignment or sublease, and all the material terms and conditions of the proposed assignment, and with reference solely to a sublease: a detailed description of the space proposed to be sublet together with any rights of the proposed sublessee to use Tenant's improvements and/or ancillary services with the Premises.

Section 11.4.Landlord's Consent. Landlord shall have thirty (30) days after Tenant's notice of assi^gnment and/or sublease is received with the financial information reasonably requested by Landlord (the ('Section 11.3 Notice") to advise Tenant of Landlord's (i) consent to such proposed assigrunent or sublease, or (ii) withholding of consent for reasonable reasons to such proposed assignment or sublease, in which event Landlord's notice shall be accompanied by an explanation of the reason for such disapproval, or (iii) election to terminate this Lease as to all of the space proposed to be sublet or as to the entire premises in the event of an assignment , such termination to be effective as of the date of the commencement of the proposed assignment or subletting (the "Effective Date"). If Landlord shall exercise its termination right hereunder, Landlord shall have the right to enter into a lease or other occupancy agreement directly with the proposed assignee or subtenant, and Tenant shall have no right to any of the rents or other consideration payable by such proposed assignee or subtenant under such other leasel or occupancy agreement, even if such rents and other consideration exceed the rent payable under this Lease by Tenant. Landlord shall have the right to lease the Premises to any other tenant, or not lease the Premises, in its sole and absolute discretion. Landlord and Tenant specifically agree that Landlord's right to terminate this Lease under clause (iii) above is a material consideration for Landlord's agreement to enter into this Lease and such right may be exercised in Landlord's sole and absolute discretion and no test of reasonableness shall be applicable thereto.

11.4.1. Recapture Right Notice. In as much as Landlord has the right per Section 11.4(i6) above to elect to terminate the Lease as to all of the space proposed to be sublet or as to the entire premises in the event of an assignment, prior to giving Landlord a Section 11.3 Notice, Tenant may, give Landlord an advance written notice prior to Tenant actually selecting a broker to go to the marketplace to procure any specific transferee (in which case such advance notice from Tenant shall specify, with particularity whether Tenant intends to assign this Lease or sublease all or a specified portion of the Premises, and if a sublease, such advance notice shall also specify the term of the intended sublease (the "Recapture Right Notice").

11.4.2 Retractionof Transfer Notice or Recapture Right Notice. Tenant shall have the right to retract Tenant's Section 11.3 Notice, or Recapture Right Notice upon written notification given to Landlord within five (5) business days of the date of Landlord's notice to Tenant electing to terminate the Lease. If Tenant does not timely provide Landlord with Tenant's notice retracting Tenant's Section 11.3 Notice or Recapture Right Notice and

(1)

Landlord terminates the Lease in whole, in the case of an assignment or a sublease of all of the Premises for a portion of the then Lease Term, then neither Landlord nor Tenant shall be liable to the other under the Lease from and after the Effective Date, except for matters, which shall have arisen prior to such date; or

(2)

Landlord terminates the Lease in part in the case of a sublease of a portion of the Premises, then neither Landlord nor Tenant shall be liable to the other under the Lease with respect to said proposed subleased portion from and after the Effective Date, except for matters, which shall have arisen prior to such date.

11.4.3 Consent Criteria. Tenant acknowledges that Landlord's consent shall be based upon the criteria listed in Sections 11.4 (a) through (e) below, and subject to Landlord's right to unilaterally disapprove of any proposed assignment and/or sublease, based on the existence of any condition contained within Section 11.5 hereinbelow. If Landlord provides its consent within the time period specified, Tenant shall be free to complete the assignment and/or sublet such space to the party contained in Tenant's notice, subject to the following conditions:

a)	The assignment and/or sublease shall be on the same terms as were set forth in the notice given to Landlord;

b)	The assignment and/or sublease shall be documented in a written format that is reasonably acceptable to Landlord, which form shall specifically include the assignee's and/or sublessee's acknowledgement and acceptance of the obligation contained in this Lease, in so far as applicable;

c)	The assignment and/or sublease shall not be valid, nor shall the assignee or sublessee take possession of the Premises, or subleased portion thereof, until an executed duplicate original of such sublease and/or assignment has been delivered to Landlord;

d)	Theassignee and/or sublessee shall have no further right to assign this Lease and/or sublease the Premises, except as permitted herein;

In the event of any Transfer, Landlord shall receive as Additional Rent hereunder (and without affecting or reducing any other obligation of Tenant under this Lease) fifty percent (50%) of Tenant's "Net Rental Profit" derived from such Transfer. In the event of a Transfer which is a sublease, "Net Rental Profit" shall mean all rent, Additional Rent or other consideration actually received by Tenant during the term of such sublease from such subtenant and/or actually paid by such subtenant to Tenant in connection with the space covered by the sublease ("Transferred Space") less: (1) the gross revenue paid to Landlord by Tenant durinu the sublease term with respect to the Transferred Space; (2) any improvement allowance or other economic concession (planning allowance, moving expenses, etc.), paid by Tenant to sublessee; (3) reasonable brokers' commissions; (4) reasonable attorneys' fees; (5) costs of advertising the space for sublease; and (6) unamortized cost of initial improvements to the Premises by Tenant (items (1) through (6) referred to' collectively as the "Subleasing Costs"). In the event of a Transfer other than a. sublease, "Net Rental Profit" shall mean key money, bonus money or other consideration paid by the Transferee to Tenant in connection with such Transfer, and any payment in excess of fair market value for services rendered by Tenant to the Transferee for assets, fixtures, inventory, equipment, or furniture transferred by Tenant to the Transferee in connection with such Transfer. If part of the'Net Rental Profit shall be payable by the Transferee other than in cash, then Landlord's share of such non-cash consideration shall be in such form as is reasonably satisfactory to Landlord exist and sends Tenant a notice requesting such information, Tenant shall deliver to Landlord

If Landlord so requests because it reasonably believes a Net Rental Profit may a statement within thirty (30) days after the end of each calendar year and/or within thirty (30) days after the expiration or earlier termination of the Term of this Lease in which any such Transfer has occurred, specifying for each such Transfer:

i) the date of its execution and delivery, the number of square feet of the Rentable Area demised thereby, and the Term thereof, and

ii) a computation in reasonable detail showing the amounts (if any) paid and payable by Tenant to Landlord pursuant to this Section 11.4.3 with respect to such Transfer for the period covered by such statement, and the amounts (if any) paid and payable by Tenant to Landlord pursuant to this Section 11.4 with respect to any payments received from a Transferee during such period but, which relate to an earlier period.

Section 11.5. Reasonable Grounds for Denial of Assignment and/or Sublease. Landlord and Tenant agree that, in addition to such other reasonable grounds as Landlord may assert for withholding its consent, it shall be reasonable under this Lease and any applicable law for Landlord to withhold its consent to any proposed Transfer, where any one or more of the following conditions exists:

The proposed sublessee or assignee (a "Transferee") is, in Landlord's reasonable judgment, of a character or reputation which is not consistent with those businesses customarily found in a Class A office building owned or operated by Landlord or "Landlord Affiliate" [meaning (A) an entity which is controlled by, controls or is under common control with Landlord, or (B) an entity which merges with or acquires or is acquired by Landlord or a parent, subsidiary or member of Landlord, or (C) a transferee of substantially all of the assets or stock of Landlord], in a comparable location, or by comparable landlords of comparable buildings along the Olympic Corridor in the West Los Angeles area of the Building (the "Comparable Buildings");

The Transferee is engaged in a business or intends to use all or any portion of the Premises for purposes which are not consistent with those generally found in the Building or other Comparable Buildings, provided, however, that in no event shall Landlord be permitted to decline Tenant's request for a Transfer solely on the basis of said Transferee's intent to change the Specified Use from that of Tenant, unless such proposed change shall violate any Exclusive Use provision already granted by Landlord;

c)	The Transferee is either a governmental agency or instrumentality thereof;

d)	The Transfer will result in more than a reasonable and safe number of occupants within the Premises;

The Transferee is not a party of reasonable financial worth and;or financial stability in light of the responsibilities involved under the sublease, if a sublessee, or the Lease, if an assignee, on the date consent is requested, or has demonstrated a prior history of credit instability or unworthiness, but in making such determination, consideration shall be given to credit enhancements in the form of letters of credit, security deposits and guarantees;

f)	The Transfer will cause Landlord to be in violation of another lease or agreement to which Landlord is a party, or would give another occupant of the Building a rid.t to cancel its lease;

g)	The Transferee will retain any right originally granted to Tenant to exercise a right of renewal, right of expansion, right of first offer or other similar right held by Tenant, except as permitted under this Lease;

Either the proposed Transferee, or any person or entity which directly or indirectly, controls, is controlled by, or is under common control with, the proposed Transferee is (I) a tenant in the Building at the time Tenant requests approval of the proposed Transfer and Landlord is able to provide comparable space in the Building to such tenant, or (2) is engaged in on-going negotiations with Landlord to lease space in the Building at the time Tenant requests approval of the proposed Transfer;

i)	The Transferee intends to use all or a portion of the Premises for medical procedures or for a primary btisiness which is as a boiler-room type sales or marketing organization.

If Landlord withholds or conditions its consent and Tenant believes that Landlord did so contrary to the terms of this Lease, Tenant may, prosecute an action for declaratory relief and/or damages to determine if Landlord properly withheld or conditioned its consent.

Section 11.6. Tenant's Continued Obligation. Any consent by Landlord to an assignment of this Lease and/or sublease of the Premises shall not release Tenant from any of Tenant's obligations hereunder or be deemed to be a consent by Landlord to any subsequent hypothecation, assignment, subletting, occupation or use by another person, and Tenant shall remain liable to pay the Rent and/or perfOrm all other obligations to be performed by Tenant hereunder. Landlord's acceptance of Rent or Additional Rent from any other person shall not be deemed to be a waiver by Landlord of any provision of this Lease. Landlord's consent to one assignment or subletting shall not be, deemed consent to any subsequent assignment or subletting.

If any assignee or sublessee of Tenant or any successor of Tenant defaults in the performance of any of the provisions of this Lease, whether or not Landlord has collected Rent directly from said assignee or sublessee, Landlord may proceed directly against Tenant without the necessity of exhausting remedies against such assignee, sublessee or other successor-in-interest'.

Provided that in no event shall any further assignment, sublease, amendment or modification to this Lease serve to either increase Tenant's liability or expand Tenant's duties or obligations hereunder, or relieve Tenant of its liability under this Lease, then Landlord may consent to subsequent assignments or subletting of this Lease or amendments or modifications to this Lease with any assignee, without notifying Tenant or any successor of Tenant, and without obtaining their consent thereto.

Section 11.7.Tenant To Pay Landlord's Costs. If Tenant assigns or sublets the Premises or requests the consent of Landlord to any assipment, subletting or other modification of this Lease, or if Tenant reqUests the consent of Landlord for any act that Tenant proposes to do, whether or not Landlord shall arant consent thereto, then Tenant shall, concurrent with Tenant's submission of any written request therefor, pay to Landlord as reasonable consideration for Landlord's considering and processing the applicable request, plus the amount reasonably estimated by`Landlord as its anticipated legal fees to be incurred by Landlord in connection therewith not to exceed $2,000.00.

Section 11.8. Successors and Assigns. Subject to the provisions contained herein, the covenants and agreements contained in this Lease shall bind and inure to the benefit of Landlord and Tenant, their respective successors and assigns and all persons claiming by, through or under them.

Section 11.9. Occupancy by Others. Notwithstanding anything to the contrary in this Article 11, Tenant may allow any person or company which is a bona fide client or customer of Tenant or which is providing service to Tenant or one of Tenant's clients (a "Permitted Occupant") to occupy certain portions of the Premises without such permitted occupancy being deemed a Transfer as long as: (i) such portions of the Premises occupied by any Permitted Occupants do not exceed more than ten percent (10°)p) in the aggregate of the Premises and for, a period not to exceed more than nine (9) consecutive months^. (ii) no new demising walls are constructed to accomplish such occupancy; and (iii) such relationship was not created as a subterfuge to avoid the obligations set forth in this Article 11.

ARTICLE 12

MAINTENANCE, REPAIRS, DAMAGE, DESTRUCTION, RENOVATION AND/OR

ALTERATION

Section 12.1. Tenant's andLandlord's Obligation to Maintain. Tenant shall, at Tenant's sole expense, maintain the non-Building Structure and non-Building Systems (both as defined below) portion of the Premises in good order and repair, and shall also keep clean any portion of the Premises which Landlord is not obligated to clean. Such obligation shall include the clean-out; repair and/or replacement of Tenant's garbage disposal(s), Instant-Heat or other hot water producing equipment, if any, and the cleaning and removal of any dishes and/or food prior to the same becoming unsanitary. If Tentint becomes obligated to repair anything within the Premises, Tenant shall advise Landlord's managing agent of such need.

Further, Tenant shall pay the cost of any injury, damage or breakage in, upon or to the Premises created by Tenant's gross negligence or willful misconduct or the gross negligence or willful misconduct of Tenant's agents, clients, contractors, directors, employees, invitees, licensees, officers, partners or shareholders, but only to the extent such damage is not (i) covered by insurance carried by Landlord as part of Operating Expenses and (ii) is not covered by the waiver of subrogation.

Subject to Tenant's obligation for reimbursement to Landlord, as specified herein, Landlord shall operate the Building in a first-class manner, repair, maintain in good and tenable condition the Premises and the structural portions of the Building (including the exterior walls, foundation, roof, floor/ceiling slabs, columns, and beams), curtain walls, exterior glass and mullions, shafts (including elevator shafts), stairs, parking gara^pe, stairwells, escalators, elevator cabs, plazas, artwork, sculptures, washrooms, mechanical, electric;I and telephone closets and all Common Areas and public areas (collectively, the "Building Structure") and the mechanical, electrical, life safety, plumbing, sprinkler systems (connected to the core), HVAC systems (including primary and secondary loops connected to the core), and all meters, pipes, conduits, equipment, components and facilities that supply the Premises with utilities on a nonexclusive basis (except as the appropriate utility company has assumed these duties) (collectively. the "Building Systems").

Subject to Tenant's obligation for reimbursement to Landlord, as specified herein, Landlord shall make all repairs to the Premises and the exterior walls, foundation and roof of the Buildim^r, the structural portions of the floors of the Building, the systems and equipment of the Building and the Tenant Improvements installed in the Premises. However, if such repairs, maintenance or cleaning are requi'red due to Tenant's gross negligence or willful misconduct or the gross negligence or willful misconduct of Tenant's agents, clients, contractors, directors, employees, invitees, licensees, officers, partners or shareholders, then, Tenant shall, within ten (l 0) days after receipt of Landlord's billing therefor, reimburse Landlord, as Additional Rent, for any expense of such repairs, cleaning and/or maintenance in excess of any insurance proceeds available for reimbursement thereof, including for any deduatible anticipated in connection therewith.

Tenant hereby waives all right to make repairs at Landlord's expense under the provisions of SectiOn 1932(1), 1941 and 1942 of the Civil Code of California.

Section 12.2.Repair Period Notice. Tenant shall give prompt notice to Landlord of Tenant's actual knoWledge of any damage or destruction to all or any part of the Premises or Building resulting from or arising . sing out of any fire, earthquake, or other identifiable event of a sudden, unexpected or unusual nature (individually or collectively a "Casualty"). The time periods specified in this Section 12.2 shall commence after from the earlier of the date Landlord receives said written notice from Tenant of the occurrence of a Casualty or Landlord independently, at its officer level, obtains actual knowledge that a Casalty has occurred (the "Casualty Date"). After the Casualty Date, Landlord shall, within the later of:

a)	sixty (60) days after the date on which Landlord determines the full extent of the damage caused by the Casualty; or

b)	thirty (30) days after Landlord has determined the extent of the insurance proceeds available to effectuate repairs, but

c)	in no event more than ninety (90) days after the Casualty Date,

Provide written notice to Tenant indicating the anticipated time period for repairing the Casualty (the "Repair Period Notice"). The Repair Period Notice shall also state, if applicable, Landlord's eleciion either to repair the Premises, or to terminate this Lease, pursuant to the provisions of Section 12.31 and if Landlord elects to terminate this Lease, Landlord shall use commercially reasonable efforts to provide Tenant with a minimum period of ninety (90) days within which to fully vacate the Premises.

Section 12.3.Landlord's Option to Terminate or Repair. Notwithstanding anything to the contrary contained herein, Landlord shall have the option, but not the obligation to elect not to rebuild or restore the Premises and/or the Building if one or more of the following conditions is present:

a)	repairs to the Premises cannot reasonably be completed within one hundred and eighty (180) days after the date of the Casualty (when such repairs are made without the payment of overtime or other premiums);

b)	repairs required cannot be made pursuant to the then-existing laws or regulations affecting the Premises or Building, or the Building cannot be restored except in a substantially different structural or architectural form than existed before the Casualty;

the holder of any'mortgage on the Building or ground or underlying lessor with respect to the Real Property and/or the Building shall require that all or such large a portion of the insurance proceeds be used to retire the mortgage debt, so that the balance of insurance proceeds remaining available to Landlord for completion of repairs shall be insufficient to repair said damage or destruction;

d)	the holder of any mortgage on the Building with respect to the Real Property and/or the Building shall terminate the mortgage and Landlord elects not to commence repairs within one (1) year following the occurrence of the Casualty;

provided Landlord has carried the coverage Landlord is required to obtain under Section 19.1 of this Lease, the damage is not fully covered, except for deductible amounts, by Landlord's insurance Policies and Landlord elects not to commence repairs within one (1) year following the occurrence of the Casualty;

f)	more than thirty-three and one-third percent (33 1/3%) of the Building is damaged or destroyed, Whether or not the Premises is affected, provided that Landlord elects to terminate all other leases in the Buildina for similarly affected premises.

If Landlord elects not to complete repairs to the Building or Premises, pursuant to this Section 12.3, Landlord's election to terminate this Lease shall be stated in the Repair Period Notice, in which event this Lease shall cease and terminate as of the date contained in Landlord's Repair Period Notice.

If one hundred percent of the Building is damaged or destroyed, as certified by an independent building inspector, this Lease shall automatically terminate after Tenant's receipt of written notice of such Itermination from Landlord, and without action beyond the giving of such notice being required by either Landlord or Tenant.

Upon any termination of this Lease pursuant to this Section 12.3, Tenant shall pay its prorata share of FiXed Monthly Rent and Additional Rent, properly apportioned up to the date of such termination, reduced by any abatement of Rent to which Tenant is entitled under Section 12.5; after which both Landlord and Tenant shall thereafter be freed and discharged of all further obligations under the Lease, except for those obligations which by their provisions specifically survive the expiration or earlier termination of the Term.

Section 12.4.Tenant's Option to Terminate. If

a)	the Repair Period Notice provided by Landlord indicates that the anticipated period for repairing the Casualty exceeds one hundred and eighty (180) days after the Casualty (the "Repair Period"), or

b)	the Casualty to the Premises occurs during the last twelve (12) months of the Term;

then Tenant shall have the option, but not the obligation, to terminate this Lease by providing written notice ("Tenant's Termination Notice") to Landlord within thirty (30) days after receiving the Repair Period Notice in the case of 12.4 (a); or within thirty (30) days after the Casualty, in the case of Section 12.4 (b). Furthermore, if:

c)	Landlord does not complete the repairs required hcreinabove within the Repair Period, and

d)	farther provided Landlord has not diligently commenced and continued to prosecute to completion repair of the damage and/or destruction caused by the Casualty, and

e)	Landlordhas not completed the repairs thereafter on or before thirty (30) days after the expiration of the Repair Period,

then Tenant shall also have the option, but not the obligation, to terminate this Lease by giving Landlord written notice of its intention to so terminate, which notice shall be given not more than forty-five (45) dayS after expiration of the Repair Period.

Tenant's failure to provide Landlord with Tenant's Termination Notice within the time periods specified hereinabove shall be deemed conclusive evidence that Tenant has waived its option to terminate this Lease.

Section 12.5, Temporary Space and/or Rent Abatement During Repairs or Renovation. During the Repair Period or during any such period that Landlord completes Work (as defined hereinbelow) or Renovations (as defined in Section 12.11 hereinbelow), if available, and if requested by Tenant, Landlord shall make available to Tenant other space in the Building which, in Tenant's reasonable opinion, is suitable for the temporary conduct of Tenant's business. However, if such temporary space is smaller than the Premises Tenant shall pay Fixed Monthly Rent and Additional Rent for the temporary space based upon the calculated rate per Rentable square foot payable hereunder for the Premises, times the number of Rentable square feet available for Tenant's use in the temporary space.

If no temporary space is available that is reasonably satisfactory to Tenant, and any part of the PreMises is rendered untenantable by reason of such Casualty, Work or Renovation, then to the extent thatiall or said portion of the usable area of the Premises is so rendered untenantable by reason of such Casualty, Work or Renovation, Tenant shall be provided with a proportionate abatement of Fixed Monthly Rent and Additional Rent. Said proportional abatement shall be based on the Usable Square Footage of the Premises that cannot and is not actually used by Tenant, divided by the total Usable square feet contained in the Premises but shall be one hundred percent (100%) if the amount of the damage is partial and the remaining of the usable portion of the Premises would preclude Tenant's utilization of the Premises for the Specified Use and Tenant actually vacates the Premises. That proportional abatement, if any shall be provided during the period bcginning on the later of:

a)	the Casualty Date; or

b)	the actual date on which Tenant ceases to conduct Tenant's normal business operations in all or any portion of the Premises,

and shall end on the date that both (i) Landlord achieves substantial completion of restoration of the Premises and (ii) a certificate of occupancy is issued by the governmental agency having authority therefor. Tenant's acceptance of said abatement of Rent shall be deemed conclusive evidence of Tenant's waiver of any further claim or right of future claim for any loss or damage asserted by Tenant arising out of tlie Casualty Repair, Work or Renovation, as the case may be.

Section 12.6. Tenant'sWaiver of Consequential Damages. Subject to Section 12.4, the provisions contained in Section 12.5 are Tenant's sole remedy arising out of any Casualty. Landlord shall not be liable to Tenant or any other person or entity for any direct, indirect, or consequential damage (including but aot limited to lost profits of Tenant or loss of or interference with Tenant's business), unless caused by the gross negligence or willful misconduct of Landlord or the gross negligence or willful misconduct of Landlord's agents, contractors, directors, employees, licensees, officers, partners or shareholders, due to apsing out of or as a result of the Casualty (including but not limited to the termination of the Lease in connection with the Casualty).

Section 12.7.Repair Of The Premises When Casualty Not Caused By Tenant. If the cost of repair of any Casualty is covered under one or more of the insurance policies Landlord is required herein to provide, or elected to provide and which cost was included in Operating Expenses, Landlord shall restore the base core and shell of the Premises to its condition prior to the Casualty and repair and/or replace the Improvements previously installed in the Premises, to a maximum of $35.00 per usable square foot. Tenant shall have the option to either, at Tenants sole expense, complete the balance of repairs needed to restore the Improvements contained in the Premises to their condition prior to the Casnalty or to continue Tenant's normal business operations in the Premises in the condition to which Landlord has so restored the Improvements.

If Landlord has elected to complete repairs to the Premises, and has not elected to terminate this Lease, as specified in Section 12.3, then Landlord shall complete such repairs within the Repair Period, in a manner, and at times, which do not unreasonably interfere with Tenant's use of that portion of the Premises remaining unaffected by the Casualty. Provided Landlord has elected to make the repairs required hereunder, and Tenant did not terminate this Lease pursuant to Section 12.4, this Lease shall not be void or voidable during the Repair Period, nor shall Landlord be deemed to have constructively evicted Tenant thereby.

Section 12.8. INTENTIONALLY OMITTED.

Section 12.9.Repair of the Building. Except as specified hereinabove, unless Landlord or Tenant terminates this Lease as permitted hereinabove, Landlord shall repair the Building, parking structure or other! supporting structures and facilities within two hundred and seventy (270) days after Landlord becomes aware of such damage and/or destruction.

Section 12.10.Government-Required Repairs. If during the Term, additional inspections other than those standard annual or biannual inspections to which the Building may generally be subject; testing, repairs and/or reconstruction (collectively the "Work") are required by any governmental authority, or if upon the recommendation of its engineers, Landlord independently elects to undertake all or any portion of the Work prior to being required to do so by such governmental authority, Landlord shall give notice thereof to Tenant and shall use its best efforts not to unreasonably interfere with Tenant's use of the Prernises while completing the Work. Tenant shall cooperate fully with Landlord in connection with the Work and, upon the prior written request of Landlord, shall make the Premises available for completion of the Work. Tenant and Landlord agree that Landlord shall only be able to allocate all costs associated with completion of the Work to the Building's Operating Expenses, when permitted to under the provisions of Section 4.1 of this Lease.

If Landlord elects to undertake the Work during the Term, then Tenant shall be entitled to an abatement of rent, pursuant to the provisions of Section 12.5 hcreinabove, and Landlord shall be completely responsible for repair of any damage to the Premises and all costs associated with the removal, moving and/or storage of Tenant's furniture, artwork, office equipment and files. Landlord will restore any and all areas damaged by completion of the Work to their previous quality and pay all cleanup costs. Landlord further agrees that it shall use commercially reasonable efforts to see that all construction, such as coring or power nailing or work that makes excessive noise, dust, or requires the displacement of tenant personnel or that could otherwise be disruptive to Tenant's normal business operations shall, in so far as is reasonably possible, be performed between the hours of 7:00 p.m. to 7:00 a.m.;Monday through Friday; after 1:00 p.m. on Saturdays and/or at any time on Sundays (this sentence is referred to as the "Premises Work Restrictions").

Except in the case of Landlord's gross negligence and/or willful misconduct or the gross negligence and/Or willful misconduct of Landlord's agents, contractors, directors, employees, officers, partners, and/or shareholders or except as otherwise provided in this Lease, Tenant shall not have the right to tennnate this Lease as a result of Landlord undertaking the Work, nor shall Tenant or any third party claiming under Tenant be entitled to make any claim against Landlord for any interruption, interference or disruption of Tenant's business or loss of profits therefrom as a result of the Work, and except as otherwise provided in this Lease Tenant hereby releases Landlord from any claim which Tenant may have against Landlord arising from or relating to, directly or'indirectly, the performance of the Work by Landlord.

Section 12.11.Optional Landlord Renovation, It is specifically understood and agreed that Landlord has no obligation and has made no promises to alter, remodel, improve, renovate or decorate the Premises, Building, or any part thereof and that, except as set forth herein, no representations respecting the condition of the Premises or the I3uilding have been made by Landlord to Tenant.

However, at any time and from time to time during the Term, Landlord may elect, in Landlord's reasonable discretion, to otherwise renovate, improve, alter or modify elements of the Real Property, the Building and/or the Premises (collectively, "Renovations") including without limitation, the parking facilities, common areas, systems, equipment, roof, and structural portions of the same. which Renovations may include, without limitation:

a)	modifying the common areas and tenant spaces to comply with applicable laws and regulations, including regulations relating to the physically disabled, seismic conditions and building safety and security, and

b)	installing new carpeting, lighting and wall covering in the Building common areas.

In connection with such_Renovations, Landlord may, among other things, erect scaffolding or other necessary structures in or about the Building, limit or eliminate access to portions of the Building, common areas or parking facilities serving the Building, or perform other work in or about the Building, which work may create, noise, dust or debris that remains in the Building.

Landlord shall have the right to access through the Premises as well as the right to take into and upon and through all or any part of the Premises, or any other part of the Building, all materials that may reasonably be required to make such repairs, alterations, decorating, additions or improvements pursuant to the provisions of this Section 12.11. So long as Tenant shall maintain reasonable access to the Premises, the Building and the parking facilities, Landlord shall also have the right, in the course of the Renovations, to close entrances, doors, corridors, elevators, or, other building facilities, or temporarily to abatd the operation of such facilities.

So long as Tenant is able to continue business operations and is not required to vacate the Premises for any reason arising out of the Renovations, and maintains reasonable access to and complies with the Premises Work Restrictions, the Premises and the parking facilities, Tenant shall permit all of the Renovations to be done, and except in the case of Landlord's gross negligence or willful misconduct or the gross negligence or willful misconduct of Landlord's contractors, directors, employees, officers, partners or shareholders, without claiming Landlord is, guilty of the constructive eviction or disturbance of Tenant's use and possession.

Landlord shall not be liable to Tenant in any manner (except as expressly provided otherwise in this Lease), whether for abatement of any Rent or other charge, reimbursement of any expense, injury, loss or damage to Tenant's property, business, or any person claiming by or under Tenant, by reason of interference with the business of Tenant or inconvenience or annoyance to Tenant or the customers of Tenaht resulting from an^y Renovations done in or about the Premises or the Building or to any adjacent or nearby building, land, street or alley. However, Landlord agrees that the Renovations shall be scheduled insofar as is commercially reasonable to permit Tenant to continue its normal business operations, with advance notice thereof, and in such commercially reasonable manner so as to minimize Tenant's inconvenience and in compliance with'the Premises Work Restrictions.

Section 12.12.Optional Tenant Changes During the Term. After completion of the initial Improvements contemplated hereunder, if any, Tenant shall make no alteration, change, addition, removal, demolition, improvement, repair or replacement in, on, upon, to or about the Premises, or at any time to any portion of the Building (collectively or individually a "Tenant Change"), without the prior written consent of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed. Notwithstanding the foregoing, Tenant shall have the right, without Landlord's consent but upon ten (10) days prior written notice to Landlord, to make interior non-structural, non-mechanical additions, removals, repairs and alterations ("Minor Alterations") to the Premises that do not (i) involve the expenditure of more than $20,000.00 in the aggregate in any twelve (12) month period during the Term, (ii) affect the exterior appearance of the Building, or (iii) affect the Building Systems or the Building Structure.. Except as otherwise specified in Article 7, any Tenant Change shall, at the termination of this Lease, become a part of the Building and belong to Landlord, pursuant to the provisions of Article 7. Any application for Landlord's consent to a Tenant Change, and the completion thereof, shall be in conformance with the provisions of Exhibit B-1, attached hereto and made a part heMof by reference.

Tenant shall not knowingly permit Tenant's agents clients contractors, directors, employees, invitees, licensees, officers, partners or shareholders to deface the walls, floors and/or ceilings of the Preinises, nor mark, drive nails, screws or drill holes into, paint, or in any way mar any surface in the Building. Notwithstanding the above, Tenant is hereby permitted to install such pictures, certificates, licenses, artwork, bulletin boards and similar items as are normally used in Tenant's business, so long as such installation is carefully attached to the walls by Tenant in a manner reasonably prescribed by Landlord in writing.

If Tenant desires, as a part of any Tenant Change, to make any revisions whatsoever to the electrical, HVAC, mechanical, life-safety, plumbing, or structural systems of the Building or Premises, such revisions must be completed by subcontractors approved by Landlord, which approval will not be unreasonably withheld and in the manner and location(s) reasonably prescribed by Landlord. If Tenant desires to install any telephone outlets, the same shall be installed in the manner and location(s) reasonably prescribed by Landlord in writing.

If Landlord consents to, any requested Tenant Change, Tenant shall give Landlord a minimum of ten (10)1business days written notice prior to commencement thereof. Landlord reserves the option, but not the obligation, to enter upon, the Premises for the purpose of posting and maintaining such notices on the Premises as may be reasonably necessary to protect Landlord against mechanic's liens, material man's liens_,or other liens, and/or for posting any other notices that may be proper and necessary in connection with^lTenant's completion of the Tenant Change.

If any alterations, additions or improvements made by Tenant result in Landlord being required to make any alterations to other portions of the Building in order to comply with any applicable statutes, ordinances or regulations (e.g., "handicap ordinances") then Tenant shall reimburse Landlord upon demand for all costs and expenses incurred by Landlord in making such alterations. In addition, Tenant shall_, reimburse Landlord for any and all of Landlord's out of pocket costs incurred in reviewing Tenant's plans for any Tenant Change or for any other "peer review" work associated with Landlord's review of.Tenant's plans for any Tenant Change, including, without limitation, Landlord's out of pocket costs incurred in engaging any third party engineers, contractors, consultants or design specialists. Tenant shall pay such costs not to exceed three percent (3%) of Landlord's actual costs) to Landlord within five (5) business days after Landlord's delivery to Tenant of a copy of the invoice(s) for such work.

Section 12.13. Express Agreement. The provisions of this Lease, including those contained in this Article 12, constitute an express agreement between Landlord and Tenant that applies in the event of any Casualty to the Premises, Building or Real Property. Tenant, therefore, fully waives the provisions of any Statute or regulations, including California Civil Code Sections 1932(2) and 1933(4), and any other law or statute which purports to govern the rights or obligations of Landlord and. Tenant concerning a Casualty in the absence of express agreement. Tenant and Landlord expressly agree and accept that any successor or other law of like import shall have no application hereunder.

ARTICLE 13

CONDEMNATION

Section 13.1. Condemnation of the Premises. If more than twenty five percent (25%) of the Premises is laWfully condemned or taken in any manner for any public'or quasi-public use, or if any portion of the Building is condemned or taken in such a manner that Tenant is reasonably prevented from obtaining access to the Building or the Premises, this Lease may, within ten (10) business days of such taking, be terminated at the option of either Landlord or Tenant by one party giving the other thirty (30) days written notice of its intent to do so. If either Landlord or Tenant provide the other party written notice of termination, the Term and estate hereby granted shall forthwith cease and terminate as of the earlier of the date of vesting of title in such condemnation or taking or the date of taking of possession by the condemning authority.

If less than twenty-five percent (25%) of the Premises is so condemned or taken, then the term and estati hereby granted with respect to such part shall forthwith cease and terminate as of the earlier of the date of vesting of title in such condemnation or taking or the date of taking of possession by the condemning authority, and the Fixed Monthly Rent payable hereunder (and Additional Rent payable purstiant to Articles 3 or 4) shall be abated on a prorated basis, by dividing the total number of Usable square feet so taken by the total number of Usable square feet contained in the Premises, then muihiplying said percentage on a monthly basis, continuing from the date of such vesting of title to the date specified in this Lease for the expiration of the Term hereof.

Section 13.2. Condemnation of the Building. If less than twenty-five percent (25%) of the Building is so condemned or taken, then Landlord shall, to the extent of the proceeds of the condemnation payable to Landlord and with reasonable diligence, restore the remaining portion of the Building as nearly as pradticable to its condition prior to such condemnation or taking; except that, if such proceeds constitute less; than ninety percent (90%) of Landlord's estimate of the cost of rebuilding or restoration, then Landlord may terminate this Lease on thirty (30) days prior written notice to Tenant.

If more than twenty-five percent (25%) of the Building is so condemned or taken, but the Premises are unaffected thereby, then Landlord shall have the option but not the obligation, which election shall be in Landlord's sole discretion, to terminate this Lease, effective the earlier of the date of vesting of title in such condemnation or the date Landlord delivers actual possession of the Building and Premises to the condenming authority, which election by Landlord shall be provided to Tenant in writing.

Section 13.3. Award. If any condemnation or taking of all or a part of the Building takes place, Tenant shall be entitled to join in any action claiming compensation therefore, and Landlord shall be entitled to receive that portion of the award made for the value of the Building, Premises, leasehold improvements made or reimbursed by Landlord, or bonus value of the Lease, and Tenant shall only be entitled to receive any award made for the value of the estate vested by this Lease in Tenant, including Tenant's proXimate damages to Tenant's business and reasonable relocation expenses. Nothing shall preclude Tenant from intervening in any such condemnation proceeding to claim or receive from the condemning authority any compensation to which Tenant may otherwise lawfully be entitled in such case in respect of Tenant's property or for moving to a new location.

Section 13.4. Condemnation for aLimited Period. Notwithstanding the provisions of Section 13.1, 13.2 or 13.3, except during the final twelve (12) months of the Term, if all or any portion of the Premises are condemned or taken for governmental occupancy for a limited period (i.e. - anticipated to be no lonubr than sixty (60) days), then this Lease shall not terminate; there shall be no abatement of Fixed Monthly Rent or Additional Rent payable hereunder; and Tenant shall be entitled to receive the entire maid therefor (whether paid as damages, rent or otherwise). Tf during the final twelve (12) months of the Term, all or any portion of the Premises are condemned or taken for ^uovernmental occupancy for a limited period anticipated to be in excess of sixty (60) days, or Or a period extended after the expiration of the initial Term, Tenant shall have the option, but not the obligation, to terminate this Lease, in which case, Landlord shall be entitled to such part of such award as shall be properly allocable to the cost of restoration of the Premises, and the balance of such award shall' be apportioned between Landlord and Tenant as of the date of such termination.

If the termination of such governmental occupancy is prior to expiration of this Lease, and Tenant has not elected to terminate this Lease, Tenant shall, upon receipt thereof and to the extent an award has been made, restore the Premises as nearly as possible to the condition in which they were prior to the condemnation or taking.

ARTICLE 14

MORTGAGE SUBORDINATION; ATTORNMENT AND MODIFICATION OF LEASE

Section 14.1. Subordination. This Lease, the Term and estate hereby granted, are and shall be subject and Subordinate to the lien of each mortgage which may now or at any time hereafter affect Landlord's interest in the real property, Building, parking facilities, common areas or portions thereof and/or the land hhereunder (an ''Underlying Mortgage"), regardless of the interest rate, the terms of repayment, the use of the proceeds or any other provision of any such mortgage, provided that Tenant receives, as a condition precedent to such subordination, a commercially reasonable subordination, non-disturbance and attornment agreement in sum and substance the equivalent of Exhibit H ("SNDAA"). Tenant shall from time to time execute and deliver such instruments as Landlord or the holder of any such mortgage may reasonably request to confirm the subordination provided in this Section 14.1, subject to the foregoing.

Section 14.2. Attornment. Tenant confirms that if by reason of a default under an Underlying Morigage the interest of Landlord in the Premises is terminated, provided Tenant is granted in writing continued quiet enjoyment of the Premises pursuant to the terms and provisions of this Lease, Tenant shall attorn to the holder of the reversionary interest in the Premises and shall recognize such holder as Tenant's landlord under this Lease, but in no event shall such holder be bound by any payment of Rent paid more than one month in advance of the date due under this Lease. Tenant shall, within ten (10) calendar days after request therefor, execute and deliver, at any time and from time to time, upon the request of Landlord or of the`holder of an Underlying Mortgage any instrument which may be necessary or appropriate to evidence such attoniment.

Section 14.3.Modification of Lease; Notice of Default. If any current or prospective mortgagee or ground lessor for the Building requires a modification or modifications of this Lease, which modification or mbdifications will not cause an increased cost or expense to Tenant or in any other way materially and adversely change the rights and obligations of Tenant hereunder, then in such event, Tenant agrees that this Lease may be so modified. Tenant agrees to execute and deliver to Landlord within ten (10) business days following the request therefor whatever reasonable documents are required to effectuate said modification. Should Landlord or' any such current or prospective mortgagee or ground lessor require execution of a short form of Lease for recording, containing, among other customary provisions, the names of the parties, a description of the Premises and the Term, Tenant agrees to execute and deliver to Landlord such short form of Lease within ten (10) business days following the request therefor. Further, Tenant shall give written notice of any default by Landlord under this Lease to any morkgagee and ground lessor of the Building of whom Tenant has received written notification and shall affol-d such mortgagee and ground lessor a reasonable opportunity to cure such default prior to exercising any remedy under this Lease.

Section 14.4.Non Disturbance Agreement. Landlord agrees to obtain and deliver to Tenant, within thirty (30) days after mutual execution and delivery of this Lease, an SNDAA from the holder of the existing deed of trust affecting the Building SNDAA is in form and substance comparable to the SNDAA attached hereto as Exhibit H.

ARTICLE 15

ESTOPPEL CERTIFICATES

Section 15.1. Estoppel Certificates. Tenant shall, within ten (10) business days alter receipt of Landlord's written request therefor, execute, acicnowledge and deliver to Landlord an Estoppel Certificate, which may be conclusively relied upon by any prospective purchaser, mortgagee or beneficiary under any deed of trust covering the Building or any part thereof Said Estoppel Certificate shall certify the following:

a)	that this Lease is unmodified and in full force and effect (or, if there have been modifications, that this Lease is in full force and effect, as modified, and stating the date and nature of each modification);

b)	the date, if any to which rental and other sums payable hereunder have been paid;

c)	that no notice has been received by Tenant of any default which has not been cured, except as to defaults specified in the certificate;

d)	that Landlord is not in default under this Lease or if so, specifying such default; and

e)	such other factual matters as may be reasonably requested.by Landlord.

Tenant's failure to deliver the Estoppel Certificate within the time period specified above shall constitute a material default under the Lease, and Landlord shall have the option, but not the obligation, to enforce the remedies contained in Article 18.

ARTICLE 16

NOTICES

Section 16.1. Notices. Any notice, consent, approval, agreement, certification, request, bill, demand. statement, acceptance or other communication hereunder (a "notice") shall be in writing and shall be considered duly given or furnished vvhen:

a)	delivered personally or by messenger or overnight delivery service, with signature evidencing such delivery; or

b)	upon the date of delivery, after being mailed in a postpaid envelope, sent certified mail, return receipt requested.

In each case such notices must be when addressed to Landlord as set forth in the Basic Lease Information and to Tenant at the Premises and any other address for Tenant specified in the Basic Lease Information; or to such other address or addressee as either party may designate by a written notice given pursuant hereto

ARTICLE 17

DEFAULT AND LANDLORD'S OPTION TO CURE

Section 17.1. Tenant's Default. For the purposes of this Section 17.1, if the term "Tenant'', as used in this Lease, refers to more than one person, then, such term shall be deemed to include all of such persons or any one of them; if any of the obligations of Tenant under this Lease are guaranteed, the term "Tenant," as used in Section 17.1(e) and Section 17.1(1), shall be deemed to also include the guarantor or ifi there is more than one guarantor, all or any one of them; and if this Lease has been assigned, the term i "Tenant," as used in Sections 17.1 (a) through (11), inclusive, shall be deemed to include the assignee and assignor, jointly and severally, unless Landlord shall have in connection with such assignment, previously released the assignor from any further liability under this Lease, in which event the term "Tenant," as used in said subparagraphs, shall not include the assignor that was previously released

This Lease and the covenants and estate hereby granted are subject to the limitation that:

a)	Tenant fails to make any payment of Fixed Monthly Rent or Additional Rent within five (5) bUsiness days following Tenant's receipt of written notice that any such amount is due and unpaid;

Tenant defaults in the keeping, observance or performance of any covenant or agreement including any provisions of the rules and regulations established by Landlord , and if such default continues and is not cured by Tenant within thirty (30) days after Landlord has given to Tenant a notice specifying the same, or in the case of such a default which for causes beyond Tenant's reasonable control (including occupancy of a sublessee) cannot with due diligence be cured within such period of thirty (30) days, if Tenant

c)	if Tenant fails to deliver the Estoppel Certificate required under Article 15 hereof within the time Period specified in the last paragraph of said Article 15, or

d)	if Tenant:

i)	applies for or consents to the appointment of or the taking of possession by a receiver, custodian, trustee or liquidator of itself or of all or a substantial part of its property;

ii)	admits in writing its liability, or is generally unable to pay its debts as such debts become due;

iii)	makes a general assignment for the benefit of its creditors;

iv)	commences a voluntary case under federal bankruptcy laws (as now in hereafter in effect);

v)	files a petition seeking to take advantage of any other law relating to bankruptcy, insolvency, reorganization, winding up, or composition or adjustment of debts;

vi)	fails to controvert in a timely or appropriate manner, or acquiesces in writing to any petition filed against it in an involuntary case under such bankruptcy laws;

vii)	take any action for the purpose of effecting any of the foregoing, or

e)	if a proceeding or case is commenced, without the application or consent of Tenant, in any court of competent jurisdiction, seeking:

i)	the liquidation, reorganization, dissolution, winding up, or composition or readjustment of debts, of Tenant; or

ii)	the appointment of a trustee, receiver, custodian, liquidator or the like of Tenant or of all or a substantial part of its assets; or

iii)

The occurrences described in Section 17.1 (a)-(e) above are deemed, individually and collectively, an "Event of Default".

Section 17.2.Landlord's Option to Cure Tenant's Default If Tenant enters into a default under this Lease, upon Landlord's issuance of a written notice, as specified hereinabove, Landlord may cure the same at the sole expense of Tenant:

immediately and without notice in the case of emergency; if said default is specified in Sections 17.1 (a), (b) or (c), or if such default unreasonably interferes with the use by any other tenant of the Building; with the efficient operation of the Building; or will result in a violation of law or in a cancellation of any insurance policy maintained by Landlord, and

b)	after the expiration of Landlord's 3-Day Notice of Intent to Cure, in the case of any default other than those specified in Section 17.2 (a) hereinabove.

Section 17.3.Landlord's Option to Terminate this Lease. In addition to any other remedies Landlord may have at law or in equity, upon an Event of Default, Landlord shall be entitled to give to Tenant a written notice of intention to terminate this Lease at the expiration of three (3) days from the date of the uivin^cr of such notice, and if such notice is given by Landlord, and Tenant fails to cure the defaults specified therein, then this Lease and the Term and estate hereby granted (whether or not the Commencement Date has already occurred) shall terminate upon the expiration of such three (3) day period (a 'Default Termination"), with the same effect as if the last of such three (3) days were the Termination Date, except that Tenant shall remain liable for damages as provided hereinbelow or pursuant to law.

SectIon I74.Certain Payments. Bills for all reasonable costs and expenses incurred by Landlord in connection with any performance by it under Section 17.2 shall be payable, as Additional Rent, pursuant to the provisions of Section 4.3.

Section 17.5. Certain Waivers. Unless Tenant has submitted documentation that it validly disputes Landlord's billing for Fixed Monthly Rent hereunder, or is completing an audit of Landlord's Operating Expense Statement, if Tenant is in default in payment of Fixed Monthly Rent or Additional Rent hereunder, Tenant waives the right to designate the items against which any payments made by Tenant are to be credited. In lieu thereof, Landlord may apply any payments received from Tenant to the then-oldest billing remaining unpaid on Tenant's rental account or to any other payment due from Tenant, as Landlord sees fit.

Section 17.6.Landlord Default. Notwithstanding anything to the contrary set forth in this Lease, Landlord shall not be in default in the performance of any obligation required to be performed by Landlord pursuant to this Lease unless:

a)	in; the event such default is with respect to the payment of money, Landlord fails to pay such unpaid amounts within five (5) business days of written notice from Tenant that the same was not paid when due, or

in the event such default is other than the obligation to pay money, Lanlord fails to perform such obligation, within thirty (30) days after the receipt of notice form Tenant specifying in detail Landlord's failure to perform; provided, however, if the nature is such that more than thirty (30) days are required for its performance, then Landlord shall not be in default Under this Lease if it shall commence such performance within such thirty (30) days period and thereafter diligently pursue the same to completion within a reasonable time period.

Upon any such default by Landlord under this Lease, 'fen= may except as otherwise specifically provided in this Lease to the contrary, exercise any of its rights provided at law or in equity.

ARTICLE 18

DAMAGES; REMEDIES; RE-ENTRY BY LANDLORD; ETC.

Section 18.1. Damages. In the event of a Default Termination, Landlord may recover from Tenant the

a)	the worth at the time of award of the unpaid Fixed Monthly Rent and Additional Rent earned to the date of such Default Termination; and

b)	the worth at the time of award of the amount by which the unpaid Fixed Monthly Rent and Additional Rent which would have been earned after the 'date of such Default Termination until the time of award exceeds the amount of such rental loss that Tenant proves could have been reasonably avoided; and

c)	the worth at the time of award of the amount by which the unpaid Fixed Monthly Rent and Additional Rent which would have been earned for the balance of the Term after the time of award ekceeds the amount of such rental loss that Tenant proves could have been reasonably avoided; and

any other amount reasonably necessary to compensate Landlord for all of the detriment proximately caused by Tenant's failure to observe or perform any of its covenants and agreements under this Lease or which in the ordinary course of events would be likely to result therefrom, including, without limitation. the payment of the reasonable expenses incurred or paid by Landlord in reebtering and securing possession of the Premises and in the reletting thereof (including, without liMitation, altering and preparing the Premises for new tenants and brokers' commission); and

e)	at Landlord's sole election such other amounts in addition to or in lieu of the foregoing as may be permitted from time to time under applicable California laws.

Sectfon 18.2. Computations: The "worth at the time of award" is computed: 1the total Fixed Monthly Rent for the balance of the Term, plus

a)	in paragraphs (a) and (b) above, by allowing interest at the rate of ten percent (10%) per annum (but in no event in excess of the maximum rate permitted by law); and

b)	in paragraph (c) above, by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus one percent (1%).

c)	For purposes of computing unpaid rental which would have accured and become payable under this Lease, unpaid rental shall consist of the sum of:

i)	the total Fixed Monthly Rent for the balance of the Term, plus

ii)

a computation of Tenant's Share of Additional Rent due under the Lease including; without limitation, Tenant's Share of any increase in Operating Expenses (including real estate taxes) for the balance of the Term. For purposes of computing any increases due Landlord hereunder, Additional Rent for the calendar year of the default and for each future calendar year in the Term shall be assumed to be equal to the Additional Rent for the calendar year prior to the year in which default occurs, compounded at a rate equal to the mean average rate of inflation for the preceding five calendar years as determined by the United States Department of Labor, Bureau of Labor Statistics Consumer Price Index (All Urban Consumers, all items, 1982-84 equals 100) for the metropolitan area or region of which Los Angeles, California is a part. If such index is discontinued or revised, the average rate of inflation shall be determined by reference to the index designated as the successor or substitute index by the government of the United States.

Section 18.3. Re-Entryby Landlord.

Upon an Event of Default, Landlord or Landlord's authorized representatives may re-enter the Premises with appropriate legal process, and remove all persons and all property therefrom, either by summary dispossession proceedings or by any suitable action or proceeding at law, without being liable to indictment, prosecution or damages therefor, and may repossess and enjoy the Premises. No re-entry or repossession of the Premises by Landlord or its representatives under this Section 18.3 shall be construed as an election to terminate this Lease unless a notice of such election is given to Tenant or unless the termination thereof is decreed by a court of competent jurisdiction. The words "re-enter", "re-entry" and "re-entering" as used herein are not restricted to their technical legal meanings.

If an Event of Default specified occurs and continues beyond the period of grace (if any) therefor, then if Landlord does not elect to terminate this Lease Landlord may, from time to time and without terminating this Lease, enforce all its rights and remedies under this Lease, including the right to recover the Fixed Monthly Rent and Additional Rent as the same becomes payable by Tenant hereunder.

If Landlord consents thereto, Tenant may sublet the Premises or any part thereof (which consent Landlord agrees will not be unreasonably withheld), subject to Tenant's compliance with the requirements of Article 11 of this Lease. So long as Landlord is exercising this remedy it will not terminate Tenant's right to possession of the Premises, but it may engage in the acts permitted by Section 1951.4(c) of the California Civil Code.

If Tenant permanently abandons the Premises in breach of this Lease, Landlord shall have the right o relet the Premises or any part thereof on such terms and conditions and at such rentals as Landlord in its reasonable discretion may deem advisable, with the right to make alterations and repairs in and to the Premises necessary to reletting. If Landlord so elects to relet, then gross rentals received by Landlord from the reletting shall be applied:

i)	first, to the payment of the reasonable expenses incurred or paid by Landlord in re-entering and securing possession of the Premises and in the reletting thereof (including, without limitation, altering and preparing the Premises for new tenants and brokers' commissions);

ii)

second, to the payment of the Fixed Monthly Rent and Additional Rent payable by Tenant hereunder; and

iii)

third, the remainder, if any to be retained by Landlord and applied to the payment of future Fixed Monthly Rent and Additional Rent as the same become due.

Should the gross rentals received by Landlord from the reletting be insufficient to pay in full the sums stated in Section 18.3 (a) and (b) hereinabove, Tenant shall, upon demand, pay the deficiency to Landlord.

Section 18.4. Certain Waivers. After Landlord has actually obtained possession of the Premises pursbant to any lawful order of possession granted in a valid court of law, Tenant thereafter waives and surrenders for Tenant, and for all claiming under Tenant, all rights and privileges now or hereafter existing to redeem the Premises (whether by order or jud^gment of any court or by any legal process or writ) to assert Tenant's continued right to occupancy of the Premises; or to have a continuance of this Lease for the Term hereof. Tenant also waives the provisions of any law relating to notice and/or delay in levy of execution in case of_, an eviction or dispossession for nonpayment of rein, and of any successor or other law of like import.

Section 183. Cumulative Remedies. The remedies of Landlord provided for in this Lease are cumulative and are not intended to be exclusive of any other remedies to which Landlord may be, lawfully entitled. The exercise by Landlord of any remedy to which it is entitled shall not preclude or hinder the exercise of any other such remedy.

ARTICLE 19 INSURANCE

Section 19.1. Landlord Obligations:

a)	Landlord shall secure and maintain during the Term of this Lease the following insurance:

i)	Commercial General Liability and Umbrella Liability insurance relating to Landlord's operation of the Building, for personal and bodily injury and death, and damage to other's property.

ii)

All risk of standard fire insurance and extended coverage including vandalism and malicious mischief and sprinkler leakage endorsements relating to the Building, the parking facilities, the common area improvements and any and all improvements installed in on or upon the Premises and affixed thereto (but excluding Tenant's fixtures, furnishings, equipment, personal property or other elements of Tenant's Property);

iii)	Such other insurance (including, without limitation, boiler and machinery, rental loss, earthquake and/or flood insurance) as Landlord reasonably elects to obtain or any Lender requires.

b)	Insurance effected by Landlord under this Section 19.1 will be:

i)	In amounts which Landlord from time to time reasonably determines sufficient or which any ; Lender requires; and

ii)	Subject to such deductibles and exclusions as Landlord reasonably deems appropriate.

Notwithstanding any contribution by Tenant to the cost of insurance premiums as provided herein, Tenant acknowledges that Tenant has no right to receive any proceeds from any insurance policies carried by Landlord, but shall continue to receive the waiver of subrogation benefits pursuant to Section 19.4 below,

Section 19.2. Tenant Obligations.

Prior to the Commencement Date or Tenant's anticipated early possession date of the Premises and thereafter during the Term of this Lease, Tenant shall`secure and maintain, at its own expense throughout the Term of this Lease the following minimum types and amounts of insurance, in form and in companies acceptable to Landlord, insuring Tenant, its employees, agents and designees:

i)	Workers' Compensation Insurance, the amount and scope required by statute or other governing law.

ii)	Employer's Liability Insurance in amounts equal to the following: Bodily Injury by accident -, $1,000,000 each accident; Bodily Injury by disease - $1,000,000 policy limit; and Bodily Injury by disease - $1,000,000 each employee.

iii)

CommercialGeneral Liability on an occurrence basis, without claims-made features, with bodily injury and property damage coverage in an amount equal to the greater of (1) the insurance currently maintained by Tenant or (2) a combined single limit of $2,000,000; and such insurance shall include the following coverages: (A) Premises and Operations coverage with X, C, and U exclusions for explosion, collapse, and underground property damage deleted under both premises/operations and contractual liability coverage parts, if applicable; (B) Owner and Contractor Protective coverage; (C) Products and Completed Operations coverage; (D) Blanket Contractual coverage, including both oral and written contracts; (E) Personal Injury coverage; (F) Broad Form Comprehensive General Liability coverage (or its equivalent); and (G) Broad Form Property Damage coverage, including completed operations.

iv)

All risk of standard fire insurance and extended coverage with vandalism and malicious mischief and sprinkler leakage endorsements, insuring fixtures, glass, equipment, merchandise, inventory and other elements of Tenant's Property in the Premises, and all other contents of the Premises (e.g. Tenant Improvements, furniture, fixtures, equipment). Such insurance shall be in an amount equal to 100% of the replacement value thereof (and Tenant shall re-determine the same as frequently as necessary in order to comply herewith). The proceeds of such insurance, so long as this Lease remains in effect, shall be used to repair and/or replace the items so insured.

v)	A commercially reasonable and customary policy of business interruption insurance with respect to the operation of Tenant's business.

vi)	Any other forms of insurance'Landlord may reasonably require from time to time as compared to prudent landlords of Comparable Buildings, in form and amounts and for insurance risks against which a pnident tenant of comparable size in a comparable business would protect itself.

b)	All insurance policies maintained to provide the coverages required herein shall:

i)	Be issued by insurance companies authorized to do business in the state in which the leased premises are located, and with companies rated, at a minimum "A- VII" by A.M. Best;

ii)	Bc subject to the prior approval of Landlord (which approval shall not be unreasonably withheld) as to form, substance and insurer;

iii)	Provide for a deductible only so long as Tenant shall remain liable for payment of any such j deductible in the event of any loss;

iv)	Intentionally Omitted;

v)	Contain provisions for at least ten (10) days advance written notice to Landlord of cancellation due to non-payment and thirty (30) days advance written notice to Landlord of material modification or cancellation for any reason other than non-payment; and

vi)	Stipulate that coverages afforded under such policies are primary insurance as respects Landlord and that any other insurance maintained by Landlord are excess and non-contributing with the ; insurance required hereunder.

e)	No endorsement limiting or excluding a required coverage is permitted.

Tenant shall deliver to Landlord written evidence of insurance coverages required herein prior to the Delivery Date. Tenant shall deliver to Landlord no less than fifteen (15) days prior to the expiration Of any required coverage, written evidence of the renewal or replacement of such coverage. Landlord's failure at any time to object to Tenant's failure to provide the specified insurance or written evidence thereof (either as to the type or amount of such insurance) shall not be deemed as a waiver of Tenant's obligations under this Section.

Landlord shall be named as an additional insured on the Tenant's policies of General Liability and gmbrella Liability insurance. Landlord shall be named as a loss payee on the Tenant's policies of All Risk insurance as their interest may appear to the extent any fixtures, equipment, improvements and installations attached or built into the Premises by Tenant or on Tenant's behalf at any time during the Term shall, at the expiration or earlier termination of this Lease, be deemed the property of Landlord; become a permanent part of the Premises and remain therein. Tenant shall deliver to Landlord the appropriate endorsements evidencing additional insured and loss payee status. Any claim for loss under said insurance policies shall be payable notwithstanding any act, omission, negligence, representation, misrepresentation or other conduct or misconduct of Tenant which might otherwise cause cancellation, forfeiture or reduction of such insurance.

f)	The insurance requirements in this Section shall not in any way limit, in either scope or amount, the indemnity obligations separately owed by one party to the other under the Lease.

Nothing herein shall in any manner limit the liability of one party for non-performance of its obligations or for loss or damage for which such party is responsible, except as provided in Section 19.4. The aforementioned minimum limits of policies shall in no event limit the liability of either party hereunder.

Tenant may, at its option, satisfy its insurance obligations hereunder by policies of so-called blanket insurance carried by Tenant provided that the same shall, in all respects, comply with the provisions hereof In such event, Tenant shall not be deemed to have complied with its obligations hereunder until Tenant shall have obtained and delivered to Landlord a copy of each such policy together with an appropriate endorsement or certificate applicable to and evidencing full compliance with the specific requirements of the Lease (irrespective of any claim which may be made with respect to any other property or liability covered under such policy), and until the same shall have been approved by Landlord in writing.

Section 19.3.Compliance with Building Insurance Requirements. After Tenant takes occupancy of the Premises, Tenant shall not violate or permit in, on or upon the Premises the violation of any condition imposed by such standard fire insurance policies as are normally issued for office buildings in the City or County in which the Building is located. Tenant shall not do, suffer or permit anything to he clone, or keep, suffer or permit anything to be kept, in the Premises which would, increase the risk ratings or premium calculation factors on the Building or property therein (collectively an `Increased Risk"), or which would result in insurance companies of good standing refusing to insure the Building or any property appurtenant thereto in such amounts and against such risks as Landlord may reasonably deterniirie from time to time are appropriate.

Notwithstanding the above, if additional insurance is available to cover such Increased Risk, Tenant shall not be in default hereunder if:

a)	Tenant authorizes Landlord in writing to obtain such additional insurance; and

b)	prepays the annual cost thereof to Landlord for such additional coverage, as well as the additional Costs, if any of any increase in Landlord's other insurance premiums resulting from the existence or continuance of such Increased Risk.

Section 19.4.Mutual VVaiver of Subrogation. Landlord and Tenant intend that their respective property loss risks shall be borne by reasonable insurance carriers to the extent above provided, and Landlord and Tenant hereby agree to look solely to and seek recovery only from their respective insurance carriers in the event of a property loss to the extent that such coverage is agreed to be provided hereunder. The parties each hereby waive all rights and claims against each other for such losses, and waive all rights of subrogation of their respective insurers, provided such waiver of subrogation shall not affect the right to the insured to recover thereunder. The parties agree that their respective insurance poliCies are now or shall be endorsed such that the waiver of subrogation shall not affect the right of the insured to recover thereunder.

Section 19.5.Failure to Secure. If at any time during the Term, and after expiration of three (3) business days' prior written demand therefore from Landlord, Tenant fails to:

a)	Provide Landlord with access to a registered insurance broker of record that can verify Tenant's compliance with the requirement contained in this Article 19; or

b)	provide documentation reasonably acceptable to Landlord that Tenant has secured and maintained the insurance coverage required hereunder,

then such failure shall be considered a material default under the Lease, and Landlord shall have the option, but not the obligation, upon prior written notice to obtain such insurance onbehalf of or as the agent of Tenant and in Tenant's name.

Tenant shall pay Landlord's billing for the premiums associated with such insurance policy or policies within five (5) days after receipt of Landlord's billing, as well as such other reasonable costs and fees arising out of such default together with interest on the entire amount so advanced by Landlord, at the rate of ten percent (10%) per annum, computed from the date of such advance. Such advances, if made by Landlord, shall be construed as, and considered Additional Rent under this Lease.

ARTICLE 20

MISCELLANEOUS

Section 20.1.Entire Agreement. This Lease, including the exhibits and guaranty of lease, if any, annexed hereto, contains all of the agrecinents and understandings relating to the leasing of the Premises and the obligations of Landlord and Tenant in connection therewith and neither party and no agent or representative thereof has made or is making, and neither party in executing and delivering this Lease is relying upon, any warranties or representations, except to the extent set forth in this Lease. All understandings and agreements heretofore had between Landlord and Tenant relating to the leasing of the Premises are merged in this Lease, which alone fully and completely expresses their agreement. The Riders (if any) and Exhibits annexed to this Lease and the Construction Agreement are hereby incorporated herein and made a part hereof.

Section 20.2. NoWaiver or Modification. The failure of Landlord or Tenant to insist in any instance uponithe strict keeping, observance or performance of any covenant or agreement contained in this Lease or to exercise any election herein contained shall not be construed as a waiver or relinquishment for the future of such covenant or agreement, but the same shall continue and remain in full force and effect. No Waiver or modification by either Landlord or Tenant of any covenant or agreement contained in this Lease shall be deemed to have been made unless the same is in writing executed by the party whose rights are being waived or modified. No surrender of possession of any part of the Premises shall release Tenant from any of its obligations hereunder unless accepted in writing by Landlord. The receipt and retention by Landlord, and the payment by Tenant, of Fixed Monthly Rent or Additional Rent with knowledge of the breach of any covenant or agreement contained in this Lease shall not be deemed a waiver of such breach by either Landlord or Tenant.

Section 20.3.Time of the Essence. Time is of the essence of this Lease and of all provisions hereof.

Section 20.4. Force Majeure. For the purposes of this Lease, "Force Majeure" shall be defined as any or all prevention, delays or stoppages and/or the inability to obtain services, labor, materials or reasonable substitutes therefor, when such prevention, delay, stoppage or failure is due to strikes, lockohts, labor disputes, terrorist acts, acts of God, governmental actions, civil commotion, tire or other casualty, and/or other causes beyond the reasonable control of the party obligated to perform, except that ForcelMajeure may not be raised as a defense (except as provided in a specific rent abatement provision of thiS Lease) for Tenant's non-performance of any obligations imposed by the Lease with regard to the payment of Fixed Monthly Rent and/or Additional Rent or Landlord's payment obligations.

Notwithstanding anything to the contrary contained in this Lease, Force Majeure shall excuse the performance of such party for a period equal to any suite prevention, delay, stoppage or inability. Therefore, if this Lease specifies a time period for performance of an obligation by either party, that time peribd shall be extended by the period of any delay in such party's performance caused by a Force Mal,e u re.

Section 20.5. Broker. Landlord and Tenant represent to one another that each has dealt with no broker or agent in connection with this Lease or its negotiations other than Douglas, Emmett and Company andBeitler Commercial Realty. Landlord and Tenant shall hold one another harmless from and against any and all liability, loss, damage, expense, claim, action, demand, suit or obligation arising out of o^lr relating to a breach by the indemnifying party of such representation. Landlord agrees to pay all commissions due to the brokers listed above created by Tenant's execution of this Lease.

Section 20.6. Governing Law. This'Lease shall be governed by and construed in accordance with the laws of the State of California.

Section 20.7. Submission of Lease. Whether or not rental deposits have been received by Landlord from Tenant, and whether or not Landlord has delivered to Tenant an unexecuted draft version of this Lease for Tenant's review and/or signature, no contractual or other rights shall exist between Landlord and Tenant with respect to the Premises, nor shall this Lease be valid and/or in effect until this Lease has been fully executed and a duplicate original of said fully-executed Lease has been delivered to both Landlord and Tenant.

The submission of this Lease to Tenant shall be for examination purposes only and does not and shall not constitute a reservation of or an option for Tenant to lease, or otherwise create any interest by Tenant in the Premises or any other offices or space situated in the Building. Execution of ibis Lease by Tenant and its return to Landlord shall not be binding upon Landlord, notwithstanding any time interval, until Landlord has in fact executed and delivered a fully-executed duplicate original of this Lease to Tentint. Landlord and Tenant agree hereby to authorize transmission of all or portions of documents, inchiding'signature lines thereon, by facsimile machines, and further authorize the other party to rely conclusively upon such facsimile transmissions as if the original had been received.

Section 20.8. Captions. The captions in this Lease are for`convenience only and shall not in any wily limit or be deemed to construe or interpret the terms and provisions hereof.

Section 20.9. Singularand Plural, Etc. The words "Landlord" and "Tenant", as used herein, shall inchide the plural as well as the singular. Words used in the masculine gender include the feminine and neuter. If there be more than one_. Landlord or Tenant the obligations hereunder imposed upon Landlord and Tenant shall be joint, and several.

Section 20.10.Independent Covenants. Except where the covenants contained in one Article of this Lease are clearly affected by or contingent upon fulfillment by either party of another Article or paragraph of this Lease, this Lease shall be construed as though, the covenants herein between Landlord and Tenant are independent and not dependent and Tenant hereby expressly waives the benefit of any statute to the contrary and agrees that if Landlord fails to peribrm its obligations set forth herein, Tenant shall' not be entitled to make any repairs or perform any actions hereunder at Landlord's expense or to any set-off of the Rent or other amounts owing hereunder against Landlord, except as otherwise provided herein; provided, however, that the foregoing shall in no way impair the right of Tenant to commence -a separate action against Landlord for the violation by Landlord of the provisions hereof so long as notice is first given to Landlord and any holder of a mortgage or deed of trust covering the Building, Real Property or any portion thereof of whose address Tenant has theretofore been notified, and an opportunity is granted to Landlord and such holder to correct such violations as provided above.

Section 20.11. Severability. If any covenant or agreement of this Lease or the application thereof to any person or circumstance shall be held to be invalid or unenforceable, then and in each such event the remainder of this Lease or the application of such covenant or agreement to any other person or any other circumstance shall not be thereby affected, and each covenant and agreement hereof shall remMo valid;and enforceable to the fullest extent permitted by law.

Section 20.12. Warrantyof Authority. If Landlord or Tenant signs as a corporation, limited liability company or a partnership, each of the persons executing this Lease on behalf of Landlord or Tenant hereby covenant and warrant that each is a duly authorized and existing entity, that each has and is qualified to do business in California, that the persons signing on behalf of Landlord or Tenant have full right and authority to enter into this Lease, and that each and every person signing on behalf of either Landlord or Tenant are authorized to do so.

Section 20.13.NoRepresentations or Warranties. Neither Landlord nor Landlord's agents or attorneys have made any representations or warranties with respect to the Premises, the Building or this Lease, except as expressly set forth herein, and no rights, easements or licenses are or shall be acquired by Tenant by implication or otherwise.

Section 20.14. No Joint Venture or Partnership. This Lease shall not be deemed or construed to create or establish any relationship of partnership or joint venture or similar relationship or arrangement between Landlord and Tenant hereunder.

Section 20.15. Tenant's Obligations At Its Sole Expense. Notwithstanding the net that certain references in this Lease to acts required to be performed by Tenant hereunder, or to breaches or defaults of thiS Lease by Tenant, omit to state that such acts shall be performed at Tenant's sole expense, or omit to state that such breaches or defaults by Tenant are material, unless the context clearly implies to the contrary each and every act to be performed or obligation to be fulfilled by Tenant pursuant to this Lease shall; be performed or fulfilled at Tenant's sole expense, and all breaches or defaults by Tenant hereunder shdll be deemed material.

Section 20.16. Attorneys' Fees. If litigation is instituted between Landlord and Tenant, the cause for which arises out of or in relation to this Lease, the prevailing party in such litigation shall be entitled to receive its costs (not Limited to court costs), expenses and reasonable attorneys' fees from the non-prevailing party as the same may be awarded by the court.

Setion 20.17.Waiver of Trial by Jury. In the interest of saving time and expense, Landlord and Tenant hereby consent to trial without a jury in any action, proceeding or counterclaim brought by either of the parties hereto against the other or their successor-in-interest in respect to any matters arising out of or relating to this Lease.

Section 20.18. NoMerger. The voluntary or other surrender of this Lease by Tenant, or a mutual cancellation thereof, shall not work a merger, and shall, at the option of Landlord terminate all or any exiting subleases or subtenancies, or may, at the option of Landlord, operate as an assignment to it of anylor all such subleases or subtenancies.

Section 20.19. Prohibition Against Recording. Except as provided in Section 14.3 of this Lease, neither this Lease, nor any memorandum, affidavit or other writing with respect thereto, shall be recorded by Tenant or by anyone acting through, under or on behalf of Tenant, and the recording thereof in violation of this provision shall make this Lease null and void at Landlord's election.

Section 20.20. Hazardous Waste. Tenant specifically agrees that, except for such limited quantities of office materials and supplies as are customarily used in Tenant's normal business operations, Tenant shall not engage or permit at any time, any operations or, activities upon, or any use or occupancy of the Premises, or any portion thereof, for the putpose of or in any way involving the handling, manufacturing, treatment, storage, use, transportation, spillage, leakage, dumping, discharge or disposal (whether legal or illegal, accidental or intentional) of any hazardous substances, materials or wastes, or any wastes regulated under any local, state or federal law.

Tenant shall, during the Term, remain in full compliance with all applicable laws governing its use and occupancy of the Premises, including, without limitation, the handling, manufacturing, treatment, storage, disposal, discharge, use, and transportation of hazardous substances, materials or wastes, and any wastes regulated under any local, state or federal law. Tenant will remain in full compliance with the terms and conditions of all permits and licenses issued to it by any governmental authority on account of any or all Of its activities on the Premises.

Nothing in this Lease shall impose any obligation or liability upon Tenant with respect to hazardous waste that was in the Premises and or Building before Tenant first took occupancy of each portion of the PreMises and or Building or which was placed in the Premises and or Building at any time by anyone other than Tenant.

Section 20.21. Transportation Management. Tenant shall, at Tenant's sole expense, fully comply with all present or future progams intended to manage parking, transportation or traffic in and around the Building, when the same have been mandated by an outside governmental authority having jurisdiction therefor and not when required for the convenience of Landlord.

In connection therewith, Tenant shall be responsible for the transportation planning and management for all of Tenant's employees while located at the Premises, by working directly with Landlord, any governmental transportation management organization or any other transportation-related committees or entities reasonably designated by Landlord. Such programs may include, without limitation: restrictions on the number of peak-hour vehicle trips generated by Tenant; requirements for increased vehicle occupancy; implementing an in-house ride-sharing program and/or appointing an employee transportation coordinator; working with employees of any Building (or area-wide) ridesharing program manager; instituting employer-sponsored incentives (financial or in-kind) to encourage employees to ridesharing; and utilizing flexible work shifts for employees.

a)	restrictions on the number of peak-hour vehicle trips generated by Tenant;

b)	requirements for increased vehicle occupancy;

c)	implementing an in-house ride-sharing program and/or appointing an employee transportation cordinator;

d)	working with employees of any Building (or area-wide) ridesharing program manager;

e)	instituting employer-sponsered incentives (financial or in-kind) to encourage employees to ridesharing; and

f)	utilizing flexible work shifts for employees.

Section 20.22.Signage. Tenant may not install, inscribe, paint or affix any awning, shade, sign. advertisement or notice on or to any part of the outside or inside of the Building, or in any portion of the PremiSes visible to the outside of the Building or common areas without Landlord's prior written consent, which shall not be unreasonably withheld, conditioned or delayed.

All signage and/or directory listings installed on behalf of Tenant, whether installed in, on or upon the public corridors, doorways, Building directory and/or parking directory (if any), or in any other location whatsoever visible outside of the Premises, shall be installed by Landlord, at Tenant's sole expense.

Tenant's identification on or in any common area of the Building shall be limited to Tenant's name and suite designation, and in no event shall Tenant be entitled to the installation of Tenant's logo in any portion of the Building or common areas. Furthermore, the size, style, and placement of letters to be used in any of Tenant's signage shall be determined by Landlord, in Landlord's sole discretion, in full conformance with previously-established signage program for the Building.

Except as specified hereinbelow, Tenant shall only be entitled to one (1) listing on the Building directory, or any parking directory ancillary thereto, which shall only show Tenant's business name and suite designation. Tenant shall also be entitled to a maximum of twenty (20) additional listings on said Building and/or parking directory, which listings shall be limited solely to Tenant's officers, employees, subSidiaries, affiliates and/or sublessees, if any. All of said Iidtings shall be subject to Landlord's prior written approval, which shall not be unreasonably withheld, conditioned or delayed.

Section 20.23. Disclosure. Landlord and Tenant acknowledge that principals of Landlord have a financial interest in Douglas Emmett Realty Advisors and P.L.E. Builders.

Section 20.24.Confidentiality. Landlord and Tenant agree that the covenants and provisions of this LeaSe shall not be divulged to anyone not directly involved in the management, administration, ownership, lending against, or subleasing of the Prerriises, which permitted disclosure shall include, but not be limited to, the board members, legal counsel and/or accountants of either Landlord or Tenant.

Section 20.25. Guaranty. Concurrently with Tenant's execution of this Lease and as a condition prededent to the effectiveness of this Lease, Tenant shall cause Scott Mitchell Rosenberg, an individual and (Brian K. Altounian, an individual, jointly and severally, to execute and deliver to Landlord a Guaranty of Lease in the form of the Guaranty of Lease attached to this Lease as Exhibit E.

Section 20.25.1. Substitution of Letter of Credit in place of the Guaranty. Landlord and Tenant agree that within the first sixty (60) days following the full execution of this Lease, Tenant shall replace the Guaranty with a "Letter of Credit" (as defined below iris Article 23) and only upon Landlord's acknowledged receipt of the Letter of Credit, shall the Guaranty deemed null and void. The Letter of Credit shall be delivered to Rita Silver, Controller at (Landlord's corporate offices located at 808 Wilshire Boulevard, Suite 200, Santa Monica, California 90401 via courier or overnight mail, no later than the expiration of the sixtieth (60th ) calendar day following the full execution of this Lease (the "Substitution Date").

ARTICLE 21

PARKING

Section 21.1.Parking. Throughout the Term, Tenant shall have the right, but not the obligation to purchase and assign to its employees the number of parking pennits set forth in

Section 21.1 of the Basic Lease Information (`BLI"). Except as othenvise permitted by Landlord's management agent in its reasonable discretion, and based on the availability thereof, in no event shall Tenant be entitled to purchase more than the number of parking permits listed in the BLI. If additional parking permits are available on a month-to-month basis, which determination shall be in the sole discretion of Landlord's parkingagent, Tenant shall be permitted to purchase one or more of said permits on a first-come, frst- serveebasis.

Said parking permits shall allow Tenant to park in the Building parking facility at the posted monthly parking rates and charges then in effect, plus any and all applicable taxes, provided that such rates may be changed from time to time, in Landlord's sole discretion. Landlord shall retain sole discretion to designate the location of each parking space, and whether it shall be assigned, or unassigned, unless specifically agreed to otherwise in writing between Landlord and Tenant.

Guests and invitees of Tenant shall have the right to use, in common with guests and invitees of other; tenants of the Building, the transient parking facilities of the Building at the then-posted parking rates and charges, or at such other rate or rates and charges as may be agreed upon from time to time between Landlord and Tenant in writing. Such rate(s) or charges maybe changed by Landlord from time to time in Landlord's sole discretion, and shall include, without limitation, any and all fees or taxes relating to parking assessed to Landlord for such parking facilities.

Tenant or Tenant's agents, clients, contractors, directors, employees, invitees, licensees, officers, partners or shareholders continued use of said transient, as well as monthly parking, shall be contingent upon Tenant and Tenant's agents, clients, contractors, directors, employees, invitees, licensees, officers, partners or shareholders continued compliance with the reasonable and non-discriminatory rules and regultions adopted by Landlord, which rules and regulations may change at any time or from time to time during the Term hereof in Landlord's sole discretion.

ARTICLE 22

CONCIERGE SERVICES

Section 22.1.Provision of Services. Landlord and Tenant acknowledge and understand that Landlord may, from time to time, make it possible for Tenant to use or purchase a variety of personal services which may include, but not be limited to, personal shopping, assistance with choosing or obtaining travel reservations, accommodations and/or tickets; tickets to performances, recommendations to eating establishments; and the like (collectively "Concierge Services").

Tenant acknowledges that said Concierge Services are provided by Landlord solely as an accommodation to and for the convenience of Tenant and Tenant's agents, contractors, directors, employees, licensees, officers, partners or shareholders, and Landlord does not make any representation, warranty or guarantee, express or implied, as to the quality, value, accuracy, or completeness of said Concierge Services, or whether or not Tenant shall be satisfied with the services and/or goods so provided and/or recommended. Landlord hereby disclaims any control over the variety or sufficiency of such srvices to be provided.

Tenant acknowledges that Tenant is not required to use such Concierge Services as a condition precedent to compliance with the Lease that Tenant's use of such Concierge Services is strictly voluntary, and at the sole discretion and control of Tenant. Tenant shall independently make such financial arrangements for payment of the services provided as Tenant deems reasonable and of value.

ARTICLE 23

LETTER'OF CREDIT

Prior to the Substitution Date (as defined above on Section 20.25.1), Tenant shall deliver to Landlord, as collateral for the full and faithful performance by Tenant of all of its obligations under this Lease, an irrevocable and unconditional negotiable letter of credit (the "Letter of Credit"), substantially in the form attached as Exhibit G hereto and made;a part hereof, and containing the terms required heren, payable in the County of Los Angeles, California, running in favor of Landlord, issued by a solvent bank reasonably approved by Landlord under the supervision of the Superintendent of Banks or the State of California, or a National Banking Association, in the amount of 5336,000.00 ("LC Amount''). The LC Amount shall be subject to reduction annually during the initial Lease Temi, per Section 23.2 below. Further, the Letter of Credit shall be:

a)	at sight and irrevocable;

maintained in effect for the entire period from the date of execution of this Lease through the date (`Lease Expiration Date) which is sixty (60) days following the expiration of the Term of this Lease, provide that the expiration date thereof shall be no earlier than the Lease Expiration Date or Provide for automatic, renewal thereof at least through the Lease Expiration Date, unless the issuing hank provides at least sixty (60) days prior written notice to Landlord of such non-renewal by certified mail, return receipt requested at the address set forth on the form of Letter of Credit attached as Exhibit G, and Tenant shall deliver a new Letter of Credit to Landlord at least sixty (60) days prior to the expiration of the Letter of Credit without any action whatsoever on the part of Landlord;

c)	subject to the Uniform Customs and Practices for Documentary Credits (1993-Rev) International Chamber of Commerce Publication #500; and

d)	fully assignable by Landlord in connection with only the first of any number of transfers during the Lease Term of Landlord's interest in this Lease (with Tenant bearing any fees, costs or expenses in connection with any such transfer), and permit partial draws.

In addition to the foregoing, the form and terms of the Letter of Credit (and the bank issuing the same) shall be acceptable to Landlord, in Landlord's reasonable discretion, and shall provide, among other things, in effect that:

Landlord, or its then managing agent, shall have the right to draw down an amount up to the face amount of the Letter of Credit upon the presentation to the issuing bank of Landlord's (or Landlord's then managing agent's) written statement that Landlord is entitled to make such drawing under this Lease, it being understood that if Landlord or its managing agent be a corporation, partnership or other entity, then such statement shall be signed by an officer (if a corporation), a general partner (if a partnership), or any authorized party (if another entity);

ii)	the Letter of Credit will be honored by the issuing bank without inquiry as to the accuracythereof and regardless of whether the Tenant disputes the content of such statement; and

iii)

in the event of a transfer of Landlord's interest in the Building, Landlord shall transfer the Letter of Credit, in whole or in part (or cause a substitute letter of credit to be delivered, as aPplicable) to the transferee and thereupon the Landlord shall, without any further agreement between the parties, be released by Tenant from all liability therefor, and it is agreed that the provisions hereof shall apply to every transfer or assignment of the whole or any portion of said Letter of Credit to a new landlord.

If as a result of any application or use by Landlord of all or any part of the Letter of Credit, the amount of the Letter of Credit shall be less than the LC Amount, Tenant shall, within five (5) business days hereafter, provide Landlord with an additional letter(s) of credit in an amount equal to the deficiency (or a replacement letter of credit in the total amount of the LC Amount) and any such additional (or replacement) letter of credit shall comply with all of the provisions of this Article 23, and if Tenant fails to comply with the foregoing, the same shall constitute an uncurable default by Tenant.

Temmt further covenants and warrants that it will neither assign nor encumber the Letter of Credit, or any part thereof and that neither Landlord nor its successors or assigns will be bound by any such assignment, encumbrance, attempted assignment or attempted encumbrance. Without limiting the generality of the foregoing, if the Letter of Credit expires earlier than the Lease Expiration Date, LandlOrd will accept a renewal letter of credit or substitute letter of credit (such renewal or substitute letter of credit to be in effect and delivered to Landlord, as applicable, not later than thirty (30) days prior to the expiration of the Letter of Credit), which shall be irrevocable and automatically renewable as above Iprovided through the Lease Expiration Date upon the same terms as the expiring Letter of Credit or such other terms as may be acceptable to Landlord in its reasonable discretion. However, if the Letter of Credit is not timely renewed or a substitute letter of credit is not timely received, or if Tenant fails to maintain the Letter of Credit in the amount and in accordance with the terms set forth in this Article 23, Landlord shall have the right to present the Letter of Credit to the issuing bank in accordance with the terms of this Article 23, and the entire sum evidenced thereby shall be paid to and held by Landlord as cash (the "Cash Collateral") to be held as collateral for performance of all of Tenant's obligations under this Lease and for all losses and damages Landlord may suffer as a result of any default by Tenant under this Lease pending Tenant's delivery to Landlord of the required replacement letter of credit in the LC Ambunt and otherwise complying with all of the provisions of this Article 23. Upon delivery of such replacement letter of credit, any Cash Collateral held by Landlord shall be returned to Tenant. Landlord shall have the right to hold Cash Collateral in a deposit account in the name of Landlord and commingle the Cash Collateral with its, general assets and Tenant hereby grants Landlord a security interest in the Cash Collateral. Tenant shall not be entitled to any interest earned on the Cash Collateral.

If there is an Event of Default under the Lease beyond any applicable grace period, Landlord may, but without obligation to do so, draw upon the Letter of Credit and/or utilize the Cash Collateral, in part or in whole, to cure any default of Tenant and/or to compensate Landlord for any and all damages of any kind or nature sustained or which may be sustained by Landlord resulting from Tenant's default. Tenant agrees not to interfere in any way with payment to Landlord of the proceeds of the Letter of Credit, either prior to or following a "draw" by Landlord of any portion of the Letter of Credit, regardless of whether any dispute exists between Tenant and Landlord as to Landlord's right to draw from the Letter of Credit. No condition or term of this Lease shall be deemed to render the Letter of Credit conditional to justify the issuer of the Letter of Credit in failing to honor a drawing upon such Letter of Credit in a timely manner.

Landlord and Tenant acknowledge and agree that in no event or circumstance shall the Letter of Credit or any renewal thereof or substitute therefor or Cash Collateral be:

a)	deemed to be or treated as a "security deposit" within the meaning of California Civil Code Section 1950.7;

b)	subject to the terms of such Section 1950.7; or

c)	intended to serve as a "security deposit" whitin the mening of such Section 1950.7.

The parties hereto:

recite that the Letter of Credit and/or Cash Collateral, as the case may be, is not intended to serve as a security deposit and such Section 1950.7 and any and all other laws, rules and regulations applicable to security deposits in the commercial context ("Security Deposit Laws") shall have no applicability or relevancy thereto; and

ii)	waive any and all rights, duties and obligations either party may now or, in the future, will have relating or arising from the Security Deposit Laws.

Section 23.1Burn-off of LC Amount. Notwithstanding the foregoing provisions of Article 23 to the contrary, the LC Amount shall be reduced at the end of the:

(i)	the twenty-fourth (24^th) calendar month of the initial Lease Term (the "First Reduction Date") from $336,000.00 to $252,000.00;

(ii)	thirty-sixth (36^th) calendar month of the initial Lease Term from $252,000.00 to $168,000.00;

(iii)

the forty-eighth (48th) month of the initial Lease Term from $168,000.00 to $84,000.00; and

[INTENTIONALLY LEFT BLANK]

(iv)	the sixtieth (60^th) calendar day following the sixtieth (60^th) calendar month of the initial Lease Term from $84,000.00 to $0.00.

There shall be no reduction in the LC Amount if there is an Event of Default of any of its Obligations under this Lease as of the First Reduction Date.

IN WITNESS WHEREOF, Landlord and Tenn the date(s) written below.

LANDLORD:

TENANT:

By executing below, Guarantor acknowledges receipt of the foregoing Lease, including Exhibits Athrough C, E, G and H.

By:	DOUGLAS, EMMETT AND COMPANY, a California corporation, its agent
By:	/s/ Michael J. Means	By:	/s/ Scott Mitchell Rosenberg
	Michael J. Means		Scott Mitchell Rosenberg
	Vice President	By:	/s/ Brian K. Altounian
Dated:	7/13/06		Center Operating Officer
		Dated:	7/11/06

GUARANTOR:

	By:	/s/ Scott Mitchell Rosenberg
		Scott Mitchel Rosenberg, an individual
	By:	/s/ Brian K. Altounian
		Brian K. Altounian, an individual
	Dated:	7/11/06
		Jointly and severally

EXHIBIT A — PREMISES PLAN

Suite 1400 at 11400 West Olympic Boulevard, Los Angeles, California 90064

Rentable Area approximately 12,493 square feet

Usable Area approximately 11,357 square feet

(Measured pursuant to the provisions of Section 1.4 of the Lease)

EXHIBIT B

IMPROVEMENT CONSTRUCTION AGREEMENT
CONSTRUCTION PERFORMED BY TENANT

Section 1. Tenant to Complete Construction.Concurrent with Tenant's occupancy of the Premises. whidb shall not entitle Tenant to any set-off or rent abatemei Teront's general contractor ("Contractor^-) shalll furnish and install Within the Premises those items or general construction (the "Improvements^-'), shown on the final Plans and Specifications approved by Landlordl and in compliance with all applicable codes and regulations. The definition of Improvemets shall include all costs associated with completing the Tenant Improvements, including but not limited to epace planning, design, architectural, and !engineering fees, contracting, labor and material costs, municipal fees and permit costs, and docurnent development and/or reproduction. All approvals shall not be unreasonably withheld, conditioned or delayed hereunder, and the parties shall act in good faith, to finalize the Tenant Improvements.

All Tenant selections of fiMshes shall'be indicated in the Plans and Specifications and shall be equal to or better than the minimum Building stonclards and speet'ications.

Any work not shown in final construction PL;ns and Specifications or included in the Improvements such as, but not limited to telephone service, furnishings, or cabinetry, for vhich Tenant contracts separately shall be subject to Landlord's policies and shall be conducted in such a w ay as to not unreasonably hinder or delay the walk of Improvements.

Section 2. Tenant'sPayment of Costs. Subject to Landlords reimbursement as specified liereinbelmv, Tenaht shall bear all costs of the Improvements, and shall timely pay said costs directly to the Contractor. From time to time, Tenant shall provide Landlord with such evidence as Landlord may reasonably request that the Contractor has been paid in full for the work completed to-date.

In addition, Tenant shall reimburse Landlord for any and all of Landlord's out of pocket co.ts incurred in reviewing Tenant's PIaes and Specificatioes by engaging any third party engineers, contractors, consultants or design specialistsor for any other "peer review:" work associated smith Landlord's review of Tenant's Plans and Specifications. Tenant shall pay such costs (not to exceed three percent (3%) of the actual cost of work) to Landlord wintin five (5) business days after Landlord's delivery to Tenant of a copy of the invoice(s) for such work.

Tenant shall also pay the cost of any renovations or revisions which Landlord is required to make to any common area or portion of the Building, which such revisions and repairs or revisions arise out of or are required in connection with Tenant's completion of the Improvements contemplated herein.

Sectfon 3. LienReleases. Contractor shall provide Landlord with lien releases as requested by Landlord and confirmation that no liens have been filed a;e:tinst the Premises or the Building. If any Inns larise against the Premises or the Building as a result of Tenant's Improvements, Tenent shall immedicitely, at Tenant's sole expense, remove such liens at, .t provide Landlord evidence that the title to the Bbilding and Premises have been cleared of such liens.

Section 4. Performance Bonds.Intentionally Omitted

Section 5. Landlord's Reimbursemet for Costs. Landlord's reimbursement to Tenant for the Improvements in Paraaraph 1 above, shall be as set forth belew.

Section 5.1 Remaining Allowance.Provided Tzeant has substituted the Letter of Credit in place of the Guaranty per Section 20.25.1, and subject to Section 5.2 below, Tenant shall be eligible to be reimbursed by Landlord up to $10.00 per square feet of Usable Area contained in Premises, winch amount is approximately the sum of $113,570.00 based on $10.00 times approximately 11,357 usl) (the "Allowance"),

towards the costs of Tenant's design, permitting and c impletion of linprovemems to the Premises; it being understood that in no event shall any portion of the Allowance be used for cabling, moving expenses or furniture and equipment.

Section 5.2Reimbursement Conditions. Landlord shall, upon Tenant's submission to Landlord of (i) copies of checks paying for the completed tenant improvements to the Premises, and (ii) unconditional lien releases from the contractor andier t:ub-contractors providing the services therefor, reimburse Tenant up to an amount equal a 11 Allowance within thirty (30) days of receipt of a Written request for payment from Tenant. and so long as Landlord receives the items described in (i) and (ii) above no later than the last eelerelar day of the twelfth (12^th) calendar month of the initial Lease Term..

Section 6. Pre-Construction Requirements.Prior to Tenant or Contractor commencing any work:

Contractor, and its subcontractors and suppliers, shill be approved in wiriting by Landlord, which approval shall not be unreasonably withheld, conditteeard or delayed. As a condition of such approval, so long as the same are reasonably cost co:epetitive, Contractor shall use Landlord's heating, venting, air-conditioning. plumbing, and electric.:d subcontractors for such work;

b)	Tenant or Tenant's Contractor shall submit all Plans and specifications to Landlord, and no woik on the Premises shall be commenced before Tenant h:n received Landlord's final written approval thereof; which shall not be tun-eesonably withheld, delLy xi or conditioned;

EXHIBIT B

IMPROVEMENT CONSTRUCTION AGREEMENT (continued)

Contractor shall concurrently submit to Landlord and Tenant a written bid for completion of the Improvements. Said bid shall include Contractor's overhead, profit, and fees, and an administration fee of five percent (5%) of the construction budget, which Contractor shall pay directly to Landlord's managing agent to defray said agent's costs for supervision of the construction, except, to the extent Tenant hires Landlord's contractor to perform any tenant improvement work beyond painting the interior walls of the Premises, and/or installing new carpet throughout the Premises (the "Landlord Built Improvements"), then Landlord shall not charge Tenant any administrative fee in connection w_iith the Landlord Built Improvements;

d)	Contractor shall complete all architectural and planning review and obtain all permits including signage, required by the city, state or county in which the Premises are located; and

Contractor shall submit to Landlord verification of public liability and workmen's compensation insurance adequate to fully protect Landlord and Tenant from and against any and all Ih^.tbility for death or injury to persons or damage to property caused in, on or about the Premises or the Building from any cause whatsoever arising out completion of the hnprovements or any other work done by Contractor.

f)	Landlord and Tenant agree that if the hnprovements are actually constructed by Tenant's Contractor at a cost which is less than the Allowance, 'there shall be no monetary adjustment between Landlord and Tenant and the entire cost savings shall accrue to the benefit of Landlord.

Section 7. Landlord'sAdministration of Construction. Tenant's Contractor and its subcontractors and suppliers shall be subject to Landlord's reasonable administrative control and supervision. Landlord shall provide the Contractor and its subcontractors reasonable access to the Premises so as to timely complete the Improvements; reasonable use of the freight elevators at no cost for the movement of Conttactoes and its subcontractoes materials and laborers; and use of parking spaces in the parking facilities serving the Building at no cost so long as the same are available therefor without disturbing the quiet enjoyment or reasonable access of any other occupant of the Building.

Section 8. Fixed Date for Commencement Date. Tenant acknowledges and agrees that whether or not Tenant has completed construction' of the Improvements, the Conmiencement Date shall be as stated in Section 2.1 of the Lease.

Section 9. Compliance with ConstructionPolicies. During construction of the Improvements, Tenant's Contractor shall adhere to the Construction Policies specified hereinbelow, which represent Landlord's minimum requirements for completion of the Improvements.

CONSTRUCTION POLICY

The following policies outlined are the construction procedures for the Building. As a material consideration to Landlord for granting Landlord's pemdssion to Tenant to complete the construction conteinplated hereunder, Tenant agrees to be bound by and follow the provisions, contained hereinbelow:

Section 10. Administration.

a)	Contractors to notify Building Office prior to starting any work. No exceptions. All jobs must be scheduled by the general contractor or sub-contractor when no general contractor is being used.

b)	The general contractor is to provide the Building Manager with a copy of the projected work schedule for the suite, prior to the start of construction.

c)	Chntractor will make sure that at least one set of drawings 1.7,111 have the Building Manager's initials approving the plans and a copy delivered to the Building Office.

d)	AS-built construction, including mechanical drawings and air balancing reports will be submitted at the end of each project.

e)	The HVAC contractor is to provide the following items to the Building Manager upon being awarded the contract from the general contractor:

i)	A plan showing the new ducting layout, all supply and return air grille locations and all thermostat locations. The plan sheet should also include the location of any fire dampers.

ii)	An Air Balance Report reflecting the supply air capacity throughout the suite, which is to be given to the Chief Building Engineer at the finish of the HVAC installation.

f)	All paint bids should reflect a one-time touch-up paint on all suites. This is to be completed approximately five (5) days after move-in date.

The general contractor must provide for the removal of all trash, and debris arising during the course of construction. At no time are the building's trash compactors and/or dumpsters to be used by the general contractor's clean-up crews for the disposal of any trash or debris accumulated during construction. The Building Office assumes no responsibility for bins. Contractor is to monitor and resolve any problems with bin usage without involving the Building Office. Bins are to be emptied on a regular basis and never allowed to overflow. Trash is to be placed in the bin.

h)	Centractors will include in their proposals all costs to include: parking, elevator service, additional security (if required), restoration of carpets, etc. Parking will be validated only if contractor is ‘working directly for the Building Office.

EXHIBIT B

IMPROVEMENT CONSTRUCTION AGREEMENT (continued)

Any problems with construction per the plan, will be brought to the attention of and documented to the Building Manager. Any changes that need additional work not described in the bid will be approved in writing by the Building Manager. All contractors doing work on this project should first verify the scope of work (as stated on the plans) before submitting bids; not after the job has started,

Section 11. Building Facilities Coordination.

a)	All deliveries of material will be made through the parking lot entrance.

b)	Construction materials and equipment will not be stored in any area without prior approval of the Building Manager.

c)	Only the freight elevator is to be used by construction personnel and equipment. Under no circumstances are construction personnel with materials andior tools to use the "passenger" elevators.

Section 12. Housekeeping.

a)	Stine entrance doors are to remain closed at all times, except when hauling or delivering construction materials.

b)	All construction done on the property that requires the use of lobbies or common area corridors will have carpet or other floor protection. The following are the only prescribed methods allowed:

i)	Mylar -- Extra heavy-duty to be taped from the freight elevator to the suite under construction.

ii)	Masonite—1/4 inch Panel, Taped to floor and adjoining areas. All corners, edges and joints to have adequate anchoring to provide safe and "trip-free" transitions. Materials to be extra heavy-duty and installed frond freight elevator to the suite under construction.

c)	Restroom wash basins will not be used to fill buckets, make pastes, wash brushes, etc. If facilities are required, arrangement for utility closets will be made with the Building Office.

d)	Food and related lunch debris arc not to be left in the suite under construction.

e)	All areas the general contractor or their sub-contractors work in must be kept clean. All suites the general contractor works in will have construction debris removed prior to completion inspection.

This includes dusting of' all window sills, light diffusers, cleaning of cabinets and sinks. All common areas are to be kept clean of building materials at all times so as to allow tenants access to their suites or the building.

Section 13. Construction Requirements..

a)	All Life and Safety and applicable Building Codes will be strictly enforced (i.e., tempered glass. fire dampers, exit signs, smoke detectors, alarms, etc,). Prior coordination with the Buildine. Manager is required.

b)	Electric panel schedules must be brought up to date identifying all new circuits added.

c)	All electrical outlets and lighting circuits are to be properly identified. Outlets will be labeled on backside of each cover plate.

d)	All electrical and phone closets being used must have panels replaced and doors shut at the end of each day's work. Any electrical closet that is opened with the panel exposed must have a work person present.

All electricians, telephone, personnel, etc. will, upon completion of their respective projects, pick up and discard their trash leaving the telephone and electrical rooms clean. If this is not complied with, a clean-up will be conducted by the building janitors and the general contractor will be back-charged fqr this service.

f)	Welding or burning with an open flame will not be done without prior approval of the Building Manager. Fire extinguishers must be on hand at all times.

g)	All "anchoring" of walls or supports to the concrete are not to be done during normal working hours (7:30 AM - 6:00 PM, Monday through Friday). This work must be scheduled before or after these hours during the week or on the weekend.

h)	All core drilling is not to be done during normal working hours (7:30 AM - 6:00 PM, Monday through Friday). This work must be scheduled before or after these hours during the week or on the weekend.

i)	All HVAC work must be inspected by the Building Engineer. The following procedures will be followed by the general contractor:

i)	A preliminary inspection of the HVAC work in progress will be scheduled through the Building Office prior to the reinstallation of the ceiling grid.

ii)	A second inspection of the HVAC operation will aslo be scheduled through the Building Offcies and will take place with the attendance of the HVAC contractors Air Balance Enineer. This inspection will take place when the suite in question is ready to be air-balanced.

iii)	The Building Engineer will inspect the construction on a periodic basis as well.

j)	All existing thermostats, ceiling tiles, lighting fixtures and air conditioning grilles shall be saved and turned over to the Building Engineer.

EXHIBIT B

IMPROVMENT CONSTRUCTION AGREEMENT (continued)

Good housekeeping rules and regulations will be strictly enforced. The building office and engineering department will do everything possible to make your job easier. However, contractors who do not observe the construction policy will not be allowed to perform within this building. The cost of repairing any damages that are caused by Tenant or Tenant's contractor during the course of construction shall'be deducted from Tenant's Allowance or Tenant's Security Deposit, as appropriate.

LANDLORD:

TENANT:

CONSTRUCTION BY TENANT DURING TERM

By:	DOUGLAS, EMMETT AND COMPANY, a California corporation, its agent
By:	/s/ Michael J. Means	By:	/s/ Scott Mitchell Rosenberg
	Michael J. Means		Scott Mitchell Rosenberg
	Vice President	By:	/s/ Brian K. Altounian
Dated:	7/13/06		Center Operating Officer
		Dated:	7/11/06

EXHIBIT B-1

1. Exhibit B governs the performance of the initial Improvements contemplated by Tenant, and among other things entitles Tenant to a reimbursement for the costs of the initial Improvements from proceeds of the Allowance. If, after the completion of the initial Improvements per Exhibit B, Tenant then wishes to make a Tenant Change, as specified in Section 12.12 of the Lease, such Tenant Change shall be completed pursuant to the provisions of Section 12.12 of the Lease and this Exhibit B-I. Tenant shall bear all costs of said Tenant Change, which shall be paid directly to Tenant's general contractor ("Contractor").

2. Contractor shall complete construction to the Premises pursuant to the final Plans and Specifications approved in writing by Landlord and Tenant (the "Tenant Change"), in compliance with all applicable codes and regulations. Tenant's selections of finishes and materials shall be indicated on the Plans and Specifications, and shall be equal to or better than the minimum Building standards and specifications. All Work not shown on the final Plans and Specifications, but which is to be included in the Tenant Change, including but not limited to, telephone service installation, furnishings or cabinetry, shall be installed pursuant to Landlord's reasonable directives.

3. Prior to commencing any work:

Tenant's proposed Contractor and the Contractor's proposed subcontractors and suppliers shall be alproved in writing by Landlord, which approval shall not be unreasonably withheld, conditioned or delayed. As a condition of such approval, so long as the same are reasonably cost competitive, then Contractor shall use Landlord's Heating, Venting, and Air-conditioning, plumbing, and electrical stibcontractors for such work.

During completion of any Tenant Change, neither Tenant or Contractor shall permit any subcontractors, workmen, laborers, material or equipment to come into or upon the Building if the use thereof, in Landlord's reasonable judgment, would violate Landlord's agreement with any union ilicividing work, labor or services in or about the Building.

Cbntractor shall submit to Landlord and Tenant a written bid for completion of the Tenant Change. Said bid shall include Contractor's overhead, profit, and fees, and, if the proposed Tenant Change is fOr cosmetic work in excess of $20,000 in aggregate value per occurrence or for structural work of any kind, Contractor shall:

i	pre-pay to Landlord's managing agent $250.00 as partial payment of said managing a^gent's construction administration fee, as specified hereinbelow, and

ii	upon completion of said Tenant Change, pay an administration fee for supervision of said Tenant Change equal to fifty dollars ($50.00) per hour, to a maximum of five percent (5%) of the total 1 cost of the Tenant Change, to defray said agent's costs for supervision of the construction;

4. Tenant or Contractor shall submit all Plans and Specifications to Landlord, and no work on the Premises shall be commenced before Tenant has received Landlord's final written approval thereof, which shall not be unreasonably withheld, delayed or conditioned. In addition, Tenant shall reimburse Landlord for any and all of Landlord's out of pocket costs incurred in reviewing Tenant's plans for any Tenant Change by engaging any third party engineers, contractors, consultants or design specialists or for any Other "peer review" work associated with Landlord's review of Tenant's plans for any Tenant Change. Tenant shall pay such costs to Landlord within five (5) business days after Landlord's delivery to Tenant of a copy of the invoice(s) for such work.

5. Contractor shall complete all architectural and planning review and obtain all permits, including signage, required by the city, state or county in which the Premises arc located; and

6. Contractor shall submit to Landlord verification of public liability and worker's compensation insurance adequate to fully protect Landlord and Tenant from and against any and all liability for death or injury to persons or damaae to property caused in or about or by reason of the construction of any work done by Contractor or Contractor's subcontractors or suppliers.

7. Intentionally Omitted.

8. Contractor and Contractor's subcontractors and suppliers shall be subject to Landlord's reasonable administrative control and supervision. Landlord shall provide Contractor and Contractor's subcontractors and suppliers with reasonable access to the Premises.

9. During construction of the Tenant Change, Contractor shall adhere to the procedures contained hereinbelow, which represent Landlord's minimum requirements for completion of the Tenant Change.

10. Upon completion of the Tenant Change, Tenant shall provide Landlord with such evidence as Landlord may reasonably request that the Contractor has been paid in full, and Contractor shall provide Landlord with hen releases as requested by Landlord, confirmation that no liens have been filed against the POmises or the Building. If any liens arise against the Premises or the Building as a result of the Tenant Change, Tenant shall immediately, at Tenant's sole expense, remove such liens and provide Landlerd evidence that the title to the Building and Premises have been cleared of such liens.

11. Whether or not Tenant or Contractor timely complete the Tenant Change, unless the Lease is otherWise terminated pursuant to the provisions contained therein, Tenant acknowledges and agrees that Tenant's obligations under the Lease to pay Fixed Month/y Rent and/or Additional Rent shall continue unabated.

EXHIBIT B-I

CONSTRUCTION BY TENANT DURING TERM

The following policies outlined are the construction procedures for the Building. As a material consideration to Landlord for granting Landlord's permission to Tenant to complete the construction contemplated hereunder, Tenant agrees to be bound by and follow the provisions contained hereinbelow:

CONSTRUCTION POLICY

1. Administration

a)	Contractors to notify the management office for the Building prior to starting any work. All jobs must be scheduled by the general contractor or sub-contractor when no general contractor is being used

b)	The general contractor is to provide the Building Manager with a copy of the projected work schedule for the suite, prior:to the start of construction.

c)	Contractor will make sure that at least one set of drawings will have the Building Manager's initials approving the plans and a copy delivered to the Building Office.

d)	As-built construction, including mechanical drawings and air balancing reports will be submitted at the end of each project.

e)	The HVAC contractor is to provide the following items to the Building Manager upon being awarded the contract from the general contractor:

i)	A plan showing the new ducting layout, all supply and return air grille locations and all thermostat locations. The plan sheet should also include the location of any fire dampers.

ii)	An Air Balance Report reflecting the supply air capacity throughout the suite, which is to be given to the Chief Building Engineer at the finish of the HVAC installation.

f)	All paint bids should reflect a one-time touch-up paint on all suites. This is to be completed approximately five (5) days after move-in date.

The general contractor must provide for the removal of all trash and debris arising during the course of construction. At no time are the building's trash compactors and/or dumpsters to be used by the general contractor's clean-up crews for the disposal of any trash or debris accumulated during construction. The Building Office assumes no responsibility for bins. Contractor is to monitor and resolve any problems with bin usage without involving the Building Office. Bins are to be emptied on a regular basis and never allowed to overflow. Trash is to be placed in the bin.

h)	contractors will include in their proposals all costs to include parking, elevator service, additional security (if required), restoration of carpets, etc. Parking will be validated only if contractor is Working directly for the Building Office.

2. Building Facilities Coordination

a)	All deliveries of material will be made through the parking lot entrance.

b)	Construction materials and equipment will not be stored in any area without prior approval of the Building Manager.

c)	Only the freight elevator is to be used by construction personnel and equipment. Under no circumstances are construction personnel with materials and/or tools to use the "passenger" clbvators.

3. Housekeeping

a)	Suite entrance doors are to remain closed at all times, except when hauling or delivering construction materials.

b)	All construction done on the property that requires the use of lobbies or common area corridors will have carpet or other floor protection. The following are the only prescribed methods allowed:

i)	Mylar: Extra heavy-duty to be taped from the freight elevator to the suite under construction.

ii)	Masonite 1/4 inch Panel, Taped to floor and adjoining areas. All corners, edges and joints to have adequate anchoring to provide safe and "trip-free" transitions. Materials to be extra heavy-duty and installed from freight elevator to the suite under construction.

c)	Restroom wash basins will not be used to fill buckets, make pastes, wash brushes, etc. If facilities are required, arrangements for utility closets will be made with the Building Office.

d)	Food and related lunch debris are not to be left in the suite under construction.

All areas the general contractor or their sub-contractors work in must be kept clean. All suites the general contractor works in will have construction debris removed prior to completion inspection. This includes dusting of all window sills, light diffusers, cleaning of cabinets and sinks. All common areas are to be kept clean of building materials at all times so as to allow tenants access to their suites or the building.

EXHIBIT B-1

CONSTRUCTION BY TENANT DURING TERM

All electricians, telephone personnel, etc. will upon completion of their respective projects, pick up and discard their trash leaving the telephone and electrical rooms clean. If this is not complied with, a clean-up will be conducted by the building janitors and the general contractor will be back-charged for this service.

4. Construction Requirements

a)	All Life and Safety and applicable Building Codes will be strictly enforced (i.e. tempered glass, fire dampers, exit signs, smoke detectors, alarms, etc). Prior coordination with the Building Manager is required.

b)	Electric panel schedules must be brought up to date identifying all new circuits added.

c)	All electrical outlets and lighting circuits are to be properly identified. Outlets will be labeled on blick side of each cover plate.

d)	All electrical and phone closets being used must have panels replaced and doors shut at the end of each days work. Any electrical closet that is opened with the panel exposed must have a work pOrson present.

f)	Welding or burning with an open flame will not be done without prior approval of the Building Manager. Fire extinguishers must be on hand at all times.

g)	All "anchoring" of walls or supports to the concrete are not to be done during normal working hours (7-30 AM - 6:00 PM, Monday through Friday). This work must be scheduled before or after these hours during the week or on the weekend.

h)	2⁶11 core drilling is not to be done during normal working hours (7:30 AM - 6:00 PM, Monday through Friday). This work must be scheduled before or after these hours during the week or on the weekend.

i)	All HVAC work must be inspected by the Building Engineer. The following procedures will be fdllowed by the general contractor:

i)	A preliminary inspection of the HVAC work in progress will be scheduled through the Building Office prior to the reinstallation of the ceiling grid.

ii)	A second inspection of the HVAC operation will also be scheduled through the Building Office and will take place with the attendance of the HVAC contractor's Air Balance Engineer. This inspection will take place when the suite in, question is ready to be air-balanced.

iii)	The Building Engineer will inspect the construction on a periodic basis as well.

j)	All existing thermostats, ceiling tiles, lighting fixtures and air conditioning grilles shall be saved and turned over to the Building Engineer.

Good housekeeping rules and regulations will be strictly enforced. The building office and engineering department will do everything possible to make your job easier. However, contractors who do not observe the construction policy will not be allowed to perform within this building. The cost of repairing any damages that are caused by Tenant or Tenant's contractor during the course of construction shall be deducted from Tenant's Allowance or Tenant's Security Deposit, as appropriate.

LANDLORD:

TENANT:

BUILDING RULES AND REGULATIONS

By:	DOUGLAS, EMMETT AND COMPANY, a California corporation, its agent
By:	/s/ Michael J. Means	By:	/s/ Scott Mitchell Rosenberg
	Michael J. Means		Scott Mitchell Rosenberg
	Vice President	By:	/s/ Brian K. Altounian
Dated:	7/13/06		Center Operating Officer
		Dated:	7/11/06

EXHIBIT C

RULES AND REGULATIONS

1. Access. Tenant and/or Tenant's agents, clients, contractors, directors, employees, invitees, licensees, officers, partners or shareholders shall only use the sidewalks, entrances, lobby(ies), garage(s), elevators, stairways, and public corridors as a means of ingress and egress, and shall take such actions as may reasonably be necessary to ensure that the same remain unobstructed at all times.

The entrance and exit doors to the Premises are to be kept closed at all times except as required for orderly passage to and from the Premises. Except on balconies available for the joint or exclusive use of Tenant as otherwise specified hereinabove, Tenant shall not permit its agents, clients, contractors, dircctors, employees, invitees, licensees, officers, partners or shareholders to loiter in any part of the Building or obstruct any means of ingressor egress. Tenant shall not cover any doors, and shall not cover_, any window, other than with vertical or mini-blinds pre-approved in writing by Landlord. Landlord specifically disapproves the installation of any film or foil covering whatsoever on the windbws of the Premises.

Neither Tenant, nor its agents, clients, contractors, directors, employees, invitees, licensees, officers, partners or shareholders shall, go up on the roof or onto any balcony serving the Building, except upon such roof, portion thereof, or balcony as may be contiguous to the Premises and is designated in writing by Lndlord as a roof-deck, roof-garden area, or exclusive use balcony area.

2. Restroom Facilities. The toilet rooms, toilets, urinals, wash bowls and other apparatus (the "Restroom Facilities"), whether contained in the common areas of the Building and/or the interior of the Premises, shall not be used for any puipose other than that for which they were designed. Tenant shall not permit its agents, clients, contractors, directors, employees, invitees, licensees, officers, partners or shareholders to throw foreign substances of any kind whatsoever or papers not specifically designated for use in the Restroom facilities down any toilet, or to dispose of the same in any way not in keeping with the instructions provided to Tenant by the management of the Building regarding same, and Tenant hereby specifically agrees to reimburse Landlord directly for the expense of any breakage, stoppage or damage resulting from Tenant's violation of this rule.

3. Heavy Equipment. Landlord reserves the right, in Landlord's sole discretion, to decline, limit or designate the location for installation of any safes, other unusually heavy, or unusually large objects to be used or brought into the Premises or the Building. In each case where Tenant requests installation of one Or more such unusually heavy item(s), which request shall be conclusively evidenced by Tenant's effort', to bring such item(s) into the Building or Premises, Tenant shall reimburse Landlord for the costs of any engineering or structural analysis required by Landlord in connection therewith. In all cases, each such heavy object shall be placed on a metal stand or metal plates or such other mounting detail of such size as shall be prescribed by Landlord.

Tenant hereby indemnifies Landlord against any damage or injury done to persons, places, things or the Building or its common areas when such damage or injury primarily arises out of Tenant's installation or use of one or more unusually heavy objects. Tenant further agrees to reimburse Landlord for th'e costs of repair of any damage done to the Building or property therein by putting in. taking out, or maintaining such safes or other unusually heavy objects.

4. 'Transportation of Freight. Except as otherwise agreed to by Landlord in writing, Tenant or Tenant's agents, clients, contractors, directors, employees, invitees, licensees, officers, partners or shareholders shall only^.carry freight, furniture or bulky materials in or out of the Building before or after Normal Business Hours, (as that term is defined in Section 8.1 of the Lease). Tenant may only install and/or move such freight, furniture or bulky material after previous written notice of its intention to complete such a move, given to the Office of the Building. The persons and/or company employed by Tenant for such work must be professional movers, reasonably acceptable to Landlord, and said movers must provide Landlord with a certificate of insurance evidencing the existence of worker's compensation and all risk liability coverage in a minimum•amount of 52 000 000.

Tenant may, subject to the provisions of the immediately preceding paragraph, move freight. furniture,, bulky matter and other material in or out of the Premises on Saturdays between the hours of 8:00 and 6:00 P.M., provided that Tenant pays in advance for Landlord's reasonably anticipated additional costs, if any, for elevator operators, security guards and other expenses arising by reason of such move by Tenant.

5. Flammable Materials. Except for such limited quantities of office materials and supplies as are custoniarily utilized in Tenant's normal business operations, Tenant shall not use or keep in the Premises or the Building any kerosene, gasoline, flammable or combustible fluid or material, other than those limited quantities of normal business operating materials as may reasonably be necessary for the operation or maintenance of office equipment. Nor shall Tenant keep or bring into the Premises or the Building any other toxic or hazardous material specifically disallowed pursuant to California state law.

6. Cooking /Odors / Nuisances. Tenant shall not permit its agents, clients, contractors, directors, employees, invitees, licensees, officers, partners or sharehblders to engage in the preparation and/or serving of foods unless the Premises includes a self-contained kitchen area. Nor shall Tenant permit the odors arising from such cooking, or any other improper noises, vibrations, or odors to be emanate from the Premises. Tenant shall not obtain for use in the Premises, ice, drinking water, food, beverage, towel or othbr similar services except at such reasonable hours and under such reasonable regulations as may be specified by Landlord.

EXHIBT C

RULES AND REGULATIONS

Tenant hereby agrees to instruct all persons entering the Premises to comply with the requirements of the 13uilding, by advising all persons entering the Premises that smoking of any tobacco or other substance is prohibited at all times, except in such common areas located outside the Building as may be designated by the Building management.

Tenant shall not permit Tenant's agents, clients, contractors, directors, employees, invitees, licensees, officers, partners or shareholders to interfere in any way with other tenants of the Building or withⁱthose having business with them.

Tenant shall not pennit its agents, clients, contractors, directors, employees, invitees, licensees, officⁱers, partners or shareholders to bring or keep, within the Building any animal, bird or bicycle, except such seeing-eye dog or other disability assistance type animal as may comply with the requirements of any handicapped ordinances having jurisdiction therefor.

Tenant shall store its trash and garbage within the Premises. No material shall be placed in the trash boxes or receptacles if such material is a hazardous waste or toxic substance or is of such a nature that its disposal in Landlord's ordinary and customary manner of removing and disposing of trash and garbage would be a violation of any law, ordinance or company regulation governing such disposal. All garbage and refuse disposal shall be made only through entry ways and elevators provided for such purposes and at, such times as Landlord shall designate. As and when directed by Landlord and/or if required by any governmental agency having jurisdiction therelbr, Tenant shall comply with all directives for recycling and separation of trash.

Tenant shall not employ any person to do janitorial work in any part of the Premises without the prior^l_iwritten consent of Landlord, which consent may be withheld in Landlord's sole discretion.

Landlord reserves the right,to exclude or expel from the Building any person who in Landlord's sole discretion is intoxicated or under the influence of liquor or drugs or who, in any manner, engages in any act in violation of the Rules and Regulations of the Building.

Tenant shall not conduct any public or private auction, fire sale or other sale of Tenant's personal property, furniture, fixtures or equipment or any other property located in or upon the Premises, without Landlord's prior written consent, which consent shall be in Landlord's sole discretion.

7. Storage.Tenant may only store goods, wares, or merchandise on or in the Premises in areas specifically designated by Landlord for such storage.

8. Directives to Management.Tenant's requirements, other than those Landlord specifically agrees to perform elsewhere in this Leas; shall only be attended to upon the Building management's receipt of Tenant's written request therefor. Landlord's employees shall not perform any work or do anything outside of their regular duties unless under special instruction from the Building management. No security guard, janitor or engineer or other employee of the Building management shall admit any person (Tenant or otherwise) to the Premises without specific instructions from the Office of the Building and written authorization for such admittance from Tenant.

9. Keys, and Locks.Landlord shall furnish Tenant with two keys to each door lock existing in the Premises. Tenant shall reimburse Landlord a reasonable charge for these and any additional keys. Tenant shall not be permitted to have keys mad; nor shall Tenant alter any lock or install a new or additional lock or bolts on any door of the Premises without Landlord's prior written consent. Tenant shall,in each case, furnish Landlord with a key for any additional lock installed or changed by Tenant or Tenant's agent(s). Tenant, upon the expiration or earlier termination of this Lease, shall deliver to Landlord all keys in the possession of Tenant or Tenant's agents, clients, contractors, directors, empleyees, invitees, licensees, officers, partners or shareholders, for doors in the Building, whether or not furnished to Tenant by Landlord. If Tenant, or Tenant's agents, clients, contractors, directors, employees, invitees, licensees; officers, partners or shareholders, lose or misplace any key(s) to the Building, Landlord shall, in Landlord's sole discretion, either replace said key(s) or re-key such locks as may be affected thereby, and Tenant shall reimburse Landlord for all such costs of such re-keying and/or replacement.

10. Solicitation.Tenant and/or its agents, clients, contractors, directors, employees, invitees, licensees, officers, partners or shareholders shall not permit any canvassing, peddling, soliciting and/or distribution of handbills or any other written materials to occur in the Premises and/or the Building, nor shall Tenant or Tcnant's agents, clients, contractors, directors, employees, invitees, licensees, officers. partners or shareholders engage in such solicitation or distribution activities.

11. Retail.Sales, Services and Manufacturing Prohibited. Except with the prior written consent of Landlord, Tenant shall not sell, or permit the retail sale of newspapers, magazines, periodicals, theater tickets or any other goods or merchandise to the general public in or on the Premises, nor shall Tenant carry On or permit or allow any employee or other person to carry on the independent business of stenography, typewriting or any similar business in or from the Premises for the service or accommodation of other occupants of any other portion of the Building. Tenant shall not pennit the PremiSes to be used for manufacturing or for any illegal activity of any kind, or for any business or activitY other than for Tenant's specific use.

12. Changein Name or Address. Landlord shall have the right, exercisable without notice and without liability to Tenant, to change the name and street address of the Building.

EXHIBIT C

RULES AND REGULATIONS

13. Projections from Premises. Tenant shall not install any radio or television antenna, loudspeaker or °theⁱr device on the roof or the exterior walls of the Building or in any area projecting outside the interior wall^/s of the Premises. Tenant shall not install or permit to be installed any awnings, air conditioning units or other projections, without the prior written consent of Landlord.

14. Superiority of Lease. These Rules and Regulations are in addition to, and shall not be construed to in any way modify or amend, in whole or in part, the covenants, agreements or provisions of this Lease. If a ^lconflict or disagreement between the Lease and these Rules becomes apparent, this Lease shall prevail.

15. Changes to Rules and Regulations. Provided such changes do not materially harm Tenant's ability to conduct its normal business operations, Landlord shall retain the right to change, add or rescind any rule or regulation contained herein, or to make such other and further reasonable and non-discriminatory Rules and Regulations as in Landlord's sole judgment may, from time to time, become necessary for the management, safety, care and cleanliness of the Premises, the Building or the Parking Facilities, or for the preservation of good order therein, or for the convenience of other occupants and tenants therein, so longlas such rescission, addition, deletion or change is thereafter reasonably applied to all occupants of the Building affected thereby.

PARKING RULES AND REGULATIONS

A.	Tenantshall strictly comply with all posted speed limits, directional signs, yield signs, stops signs and all other signs within or about the parking facilities.

B.	Tenant shall register all vehicle license plate numbers with the Building management.

0 0

C.	Tenantshall be responsible for the cost of repairing any damage to the parking facilities or cleaning any debris created or left by Tenant, including, without limitation, oil leakage from motor vehicles parked in the parking facilities under its auspices.

Landlord, in addition to reserving the right to designate one or more areas solely for visitor parking, wItch areas may be changed by Landlord from time to time with or without prior notice to Tenant, reserves the right to allocate additional visitor spaces on any floor of the parking facilities. Tenant stiall not park any vehicles in any spaces designated as visitor only spaces or customer spaces within the parking facilities.

E.	Tenant shall strictly comply with all rules, regulations, ordinances, speed limits, and statutes affecting handicapped parking andior access, and shall not park any vehicles within the fire lanes, along, parking curbs or in striped areas.

Tenant shall only use the number of parking permits allocated to it and shall not permit more than one of its employees to utilize the same parking permit. Landlord reserves the right to assign or reaSsign parking spaces within the Parking facilities to Tenant from time to time, and provided Landlord is required to do so by reason of any action arising out of a governmental mandate imposed on Landlord, Landlord further reserves the right at any time to substitute an equivalent number of parking spaces in a parking facilities or subterranean or surface parking facility within a reasonable distance of the Premises.

Except with Landlord's managing agent(s)' prior written consent, Tenant shall not leave vehicles in the parking facilities overnight, nor park any vehicles in the parking, facilities other than automobiles, Motorcycles, motor-driven'-or non-motor-driven bicycles or four-wheeled trucks or vans. Landlord may, in its sole discretion, designate separate areas for bicycles and motorcycles. Tenant shall ensure that vehicles parking in the parking facilities by using the parking permits assigned to Tenant shall be parked entirely within the striped lines designating "a single space and are not so situated or of such a width or length as to impede access to or egress from vehicles parked in adjacent areas or doors or loading docks. Further, all vehicles utilizing Tenant's parking permits shall not be higher than any height limitation that may be posted, or of such a size, weight or dimension so that entry of such vehicle into the parking facilities would cause any damage or injury thereto.

H.	Tenant shall not allow any of the vehicles parked using Tenant's permits, or the vehicles of any of Tenant's suppliers, shippers, customers or invitees to be loaded or unloaded in any area other than those specifically designated by Landlord for loading.

Tenant shall not use or occupy the parking'facilities in any manner which will unreasonably interfere with the use of the parking facilities by other tenants or occupants of the Building. Without limitation, Tenant agrees to promptly turn off any vehicle alarm system activated and sounding an alarm in the parking facilities. In the event said alarm system fails to turn off and no longer sound an intruder alert fifteen (15) minutes after commencing such an alarm, Landlord shall reserve the right tolremove the vehicle from the parking facilities at Tenant's sole expense.

J.	Tenant acknowledges that the Rules and Regulations as posted herein shall be in effect twenty-four hOurs per day, seven days per week, without exception.

Tenant acknowledges that the uniformed guard officers and parking attendants serving the parking faeilities are authorized to issue verbal and written warnings of Tenant's violations of any of the rules and regulations contained herein. Except in the case, of a car alarm continuing to sound in excess of a maximum of fifteen minutes, in which case no further notice by Landlord shall be required. If Tenant or Tenant's agents, contractors, directors, employees, officers, partners or shareholders continue to materially breach these rules and regulations after expiration of written notice and the opportunity to cure has been given to Tenant, then in addition to such other remedies and request for injunctive relief it may have Landlord shall have the right, without additional notice, to remove or tow away the vehicle involved and store the same, all costs of which shall be borne exclusively by Tenant and/or revoke Tenant's parking privileges and rights under the Lease.

EXHIBIT

RULES AND REGULATIONS (continued)

LANDLORD:

TENANT:

THIS GUARANTY OF LEASE ("Guaranty") is made by Scott Mitchell Rosenberg, an individual and Brian K. Altounian, an individual (jointly and severally, "Guarantor") in favor of DOUGLAS EMMETT 1995, LLC, a Delaware limited liability company ("Landlord") in connection with that certain lease dated July 10, 2006, (the "Lease") pursuant to which Landlord leases to PLATINUM STUDIOS, LLC, a California limited liability company ("Tenant") those premises generally located at 11400 West OlyMpic Boulevard, Suite 1400, Los Angeles, California 90064 (the "Premises") and more particularly described in the Lease. As a material inducement to and in consideration of Landlord entering into the LeaSe, Landlord having indicated that it would not enter into the Lease without the execution of this Gua'ranty, Guarantor does hereby agree with Landlord as follows:

By:	DOUGLAS, EMMETT AND COMPANY, a California corporation, its agent
By:	/s/ Michael J. Means	By:	/s/ Scott Mitchell Rosenberg
	Michael J. Means		Scott Mitchell Rosenberg
	Vice President	By:	/s/ Brian K. Altounian
Dated:	7/13/06		Center Operating Officer
		Dated:	7/11/06

EXHIBIT E

GUARANTY OF LEASE

Guarantor does hereby, jointly, severally, unconditionally and irrevocably guarantee and be liable fur any and all obligations and liabilities of Tenant under the terms of the Lease, subject to the limitation set forth in Paraaraph 20 below. Upon Tenant's delivery- of the Letter of Credit in accordance with Article 23 of the Lease, this Guaranty shall be void and of no further force or effect.

Guarantor does hereby agree that, without the consent of or notice to Guarantor and without affecting any of the obligations of Guarantor hereunder: (a) any term, covenant or condition of the Lease may be amended, compromised, released or otherwise altered by Landlord and Tenant, and Guarantor does guarantee and promise to perform all the obligations of Tenant under the Lease as so amended, compromised, released or altered; (b) any guarantor of or party to the Lease may be released, substituted or added; (c) any right or remedy under the Lease may be exercised, not exercised, iMpaired, modified, limited, destroyed or suspended; (d) Landlord or any other person acting on Landlord's behalf may deal in any manner with Tenant, any guarantor, any party to the Lease or any Other person; and (e) all or any part of the Premises or of Tenant's rights or liabilities under the Lease maybe sublet, assigned or assumed.

The obligations of Guarantor hereunder are in addition to and independent of the obligations of Tenant. A separate action or actions may be brought and prosecuted against Guarantor whether action is brought against Tenant or whether Tenant is joined in any such action or actions. Guarantor hereby waives and agrees not to assert or take advantage of: (a) any right to require Landlord to proceed against or exhaust any security held from Tenant or any other person; (b) any right to require Landlord to proceed against Tenant or any other person or to pursue any other remedy before proceeding against Guarantor; (c) the defense of any statute of limitations in any action under or related to this Guaranty or the Lease; (d) any right or defense that may arise by reason of the incapacity, lack of authority, death or disability of Tenant or any other person; and (e) any right or defense arising by reason of the absence, impairment, modification, limitation, destruction or cessation (ill banla-uptcy, by an election of remedies, or othenvise) of the liability of Tenant, of the sUbrogation rights of Guarantor or of the right of Guarantor to proceed against Tenant for reimbursement. Without in any manner limiting the generality of the foregoing, Guarantor hereby waives the benefits of the provisions of Sections 2809, 2810, 2819, 2845, 2847, 2848, 2849, 2850, 2899 and 3433, the second sentence of Section 2822(a) and all rights that are waivable pursuant to Section 2856, all of the California Civil Code, and any similar or analogous statutes of California or any other jurisdiction.

Guarantor hereby waives and agrees not to assert or take advantage of any right or defense based on the absence of any or all presentments, demands (including demands for performance), notices (including notices of adverse change in the financial status of Tenant or other facts which increase the risk to Guarantor, notices of non-performance and notices of acceptance of this Guaranty) and protests of each and every kind.

Until all Tenant's obligations under the Lease are fully performed, Guarantor: (a) shall have no right of subrogation against the Tenant by reason of any payments or acts of performance by Guarantor under this Guaranty, and (b) subordinates any liability or indebtedness of Tenant now or hereafter held by Guarantor to the obligations of Tenant under, arising out of or related to the Lease or Tenant's use or occupancy of the Premises.

The liability of Guarantor and all rights, powers and remedies of Landlord hereunder and under any other agreement now or at any time hereafter in force between Landlord and Guarantor relating to the Lease shall be cumulative and not alternative and such, rights, powers and remedies shall be in addition to all rights, powers and remedies given to Landlord by law.

This Guaranty applies to, inures to the benefit:of and binds all parties hereto, their heirs, devisees, legatees, executors, administrators, representatives, successors and assigns (including any purchaser at' a judicial foreclosure or trustee's sale or a holder of a deed in lieu thereof). This Guaranty may be assigned by Landlord voluntarily or by operation of law.

Guarantor agrees from'time to time upon Landlord's request, but not more than once in any 12 month period, to deliver to Landlord Guarantor's financial statement. All financial statements heretofore delivered to Landlord by Guarantor are, and all financial statements hereafter delivered to Landlord by Guarantor will be, true and correct in all material respects and fair presentations of the financial condition of Guarantor as of the date thereof, prepared in accordance with generally accepted accounting practices. No material adverse change has occurred in the financial condition of Guarantor since the date of the financial statements heretofore delivered to Landlord.

EXHIBIT E

GUARANTY OF LEASE (continued)

Guarantor shall not, without the prior written consent of Landlord, commence, or join with any other person in commencing, any bankruptcy, reorganization or insolvency proceeding against Tenant. The obligations of Guarantor under this Guaranty shall not be altered, limited or affected by any proceeding, voluntary or involuntary, involving the bankruptcy, insolvency, receivership, eorganization, liquidation or arrangement of Tenant, or by any defense which Tenant may have by reason of any order, decree or decision of any court or administrative body resulting from any such proceeding. Guarantor shall file in any bankruptcy or other proceeding in which the filing of claims is required or permitted by law all claims which Guarantor may have against Tenant relating to any indebtedness of Tenant to Guarantor and will assign to Landlord all rights of Guarantor thereunder. Landlord shall have the sole right to accept or reject any plan proposed in such proceeding and to take any other action which a party filing a claim is entitled to do. In all such cases, whether in administration, bankruptcy or otherwise, the person or persons authorized to pay such claim shall pay to Landlord the amount payable on such claim and, to the full extent necessary for that purpose, Guarantor hereby assigns to Landlord all of Guarantor's rights to any such payments or distributions to which Guarantor would othenvise be entitled; provided, however, that Guarantor's obligations hereunder shall not be satisfied except to the extent that Landlord receives cash by reason of any Such payment or distribution. If Landlord receives anything hereunder other than cash, the same Shall be held as collateral for amounts due under this Guaranty.

10.

This Guaranty shall constitute the entire ageement between Guarantor and the Landlord with respect to the subject matter hereof. No provision of this Guaranty or right of Landlord hereunder may be waived nor may any Guarantor be released from any obligation hereunder except by a writing duly executed by an authorized officer or director of Landlord.

11.

If more than one person signs this Guaranty, each such person shall be deemed a Guarantor and the obligation of all such Guarantors shall be joint and several. When the context and construction so requires, all words used in the singular herein shall be deemed to have been used in the plural. The Word "person" as used herein shall include an individual, company, firm, association, partnersh:p, corporation, trust or other legal entity of any kind whatsoever.

12.	Should any one or more provisions of this Guaranty be determined to be illegal or unenforceable, all Other provisions shall nevertheless be effective.

13.	The waiver or failure to enforce any provision of this Guaranty shall not operate as a waiver of any other brcach of such provision or any other provisions hereof.

14.

If either party hereto participates in an action against the other party arising out of or in connection with this Guaranty, the prevailing party shall be entitled to have and recover from the other party actual attorneys' fees, collection costs and other costs incurred in and in preparation for the action. in addition to the foregoing award of attorneys' fees, the ultimately successful party shall be entitled to its actual attorneys' fees incurred in any post: judgment proceedings to collect or enforce the jUdgment. This provision is separate and several and shall survive the merger of this Guaranty into any judgment on this Guaranty. In any action or proceeding arising under this Guaranty, Guarantor consents to trial without a jury.

15.	Time is strictly of the essence under this Guaranty and any amendment, modification or revision hereof.

16.

If Guarantor is a corporation, each individual executing this Guaranty on behalf of said corporation rePresents and warrants that he is duly authorized to execute and, deliver this Guaranty on behalf of said corporation, in accordance with a duly adopted resolution of the board of directors of said corporation or in accordance with the bylaws of said corporation, and that this Guaranty is binding upon said corporation in accordance with its terms. If Guarantor is a corporation. Landlord, at its option, may require Guarantor to concurrently, with the execution of this Guaranty, deliver to Landlord a certified copy of a resolution of the board of directors of said corporation authorizing or ratifying the execution of this Guaranty.

17.

The term "Landlord" whenever hereinabove used refers to and means the Landlord in the foregoing Lease specifically named and also any assignee of said Landlord, whether by outright assignment or by assignment for security, and also any successor to the interest of said Landlord or of any assignee of such Lease or any part thereof, whether by assignment or otherwise. The term "Tenant" whenever hereinahove used refers to and means the Tenant in the foregoing Lease specifically named and also any assignee or subtenant of said Lease and also any successor to the interests of said Tenant, assignee or sublessee of such Lease or any part thereof, whether by assignment, sublease or otherwise.

18.	Any notice, request, demand, or other communication hereunder shall be in writing and shall be considered duly given or furnished when:

a.	delivered personally or by messenger or overnight delivery service, with signature evidencing such delivery;

upon the date of delivery, after being mailed in a postpaid envelope, sent certified mail, return receipt requested, when addressed to Landlord as set forth below and to Guarantor as set forth below; or to such other address or addressee as either party may designate by a written notice given pursuant hereto; or

EXHIBIT E

1c. upon confirmation of good shall have been provided in transmission if sent via faeSimile machine to such phone number as writing by Landlord or Guarantor, one to the other:

GUARANTOR:

Suitt Mitchell Rosenberg

5523 Villawood Circle

Cafabasas, CA 91302

Brian K. Altounian

2786 Monte Mar Terrace

Los; Angeles, CA 90064

LANDLORD:

c/o Douglas Emmett and Company

808 Wilshire Boulevard, Suite 200

Santa Monica, California 90401

Attn: Director of Property Management

19.	As a further material part of the consideration to Landlord to enter into the Lease with Tenant, Guarantor agrees:

a.	The law of the State of California shall govern all questions with, respect to the Guaranty;

b.	Any suit, action or proceeding arising directly or indirectly from the Guaranty, the Lease or the subject matter thereof shall be litigated only in courts located within the County of Los Angeles and the State of California

c.	Guarantor 'hereby irrevocably consents to the jurisdiction of any local, state or federal court located within the County of Los Angeles and the State of California;

d.	Guarantor hereby waives personal service of any and all process upon it and consents to all such service of process in the manner and at the address set forth in Paragraph 18 above; and

Without limiting the generality of the foregoing, Guarantor hereby waives and auees not to assert by way of motion, defense or otherwise in'any suit, action or proceeding any claim that Guarantor is not personally subject to the jurisdiction of the above-named courts, that such suits, action or proceeding is brought in an inconvenient forum or that the venue of such action, suit or proceeding is improper.

20.

Maximum Liability Amount. Notwithstanding any other provisions herein to the contrary, the aggregate liability of the undersigned for obligations and liabilities of Tenant under the Lease shall not exceed the Maximum Liability Amount (as defined below) in effect at the time the liability arises or is incurred, plus costs of enforcement of this Guaranty. The term "Maximum Liability Amount." means the amount of $336,000.00.

Executed on this day 11^th of June, 2006
	Guarantor
	By:	/s/ Scott Mitchell Rosenberg
		Scott Michell Rosenberg, an individual
	By:	/s/ Brian K. Altounian
		Brian K. Altounian an individual
	Dated:	7/11/06

STATE OF CALIFORNIA)

) SS:

COUNTY OF LOS ANGELES)

On July 11, 2006 , before me, Lora Ball, a Notary Public, personally appeared Scott Mitchell Rosenberg, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

	By:	/s/ Lora Ball
		Lora Ball
		Notary public

On, before me, Lora Ball, a Notary Public, personally appeared Brian K. Altounian, personally known to me (or proved to me on the basis or satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acicnowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their simiature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

	By:	/s/ Lora Ball
		Lora Ball
		Notary Public

EXHIBIT C

FORM OF LETTER OF CREDIT

[BANK LETTERHEAD]

Attention: Rita Silver, Controller
DOUGLAS EMMETT 1995, LLC
c/o Douglas, Emmett and Company
808 Wilshire Boulevard, Suite 200
Santa Monica. California 90401
Letter of Credit No.

Ladies and Gentlemen:

1 We hereby establish our Irrevocable Letter of Credit and authorize you to draw on us at sight for the abcount of PLATINUM STUDIOS, LLC, a California limited liability company ("Applicant") the aggregate amount of THREE HUNDRED AND THIRTY-Sa. THOUSAND DOLLARS (S336,000.00).

Funds under this Letter of Credit are available to the beneficiary hereof as follows:

Any and all of the sums hereunder may be drawn down at any time and from time to time from and after the date hereof by DOUGLAS EMMETT 1995, LLC, a Delaware limited liability company ("Belieficiary") when accompanied by this Letter of Credit and a written statement signed by an authorized signatory of Beneficiary, certifying that Beneficiary is entitled to make such drawing pursuant to the Lease, together with a notarized certification by any such individual representing that such individual is authorized by Beneficiary to take such action on behalf of Beneficiary, and a sight draft executed and endorsed by such individual. The sums drawn by Beneficiary under this Letter of Credit shall be payable upon demand without necessity of notice.

This Letter of Credit is transferable in its entirety, without any limitation on the number of such transfers. Should a transfer be desired, such transfer will be subject to the return to use of this advice, touether with written instructions.

1 The amount of each draft must be endorsed on the reverse hereof by the negotiating bank. We herebY agree that this Letter of Credit shall be duly honored upon presentation and delivery of the certification specified above.

This Letter of Credit is effective immediately and shall expire at 5:00 P.M., Pacific Standard Time on(the "Expiration Date").

I Notwithstanding the above expiration of this Letter of Credit, the term of this Letter of Credit shall be automatically renewed for successive, additional one (1) year periods (with the last such one (1) year period expiring no earlier than sixty (60) days after the expiration date of that certain Office Lease dated , (the "Lease') by and between Applicant, as Tenant, and Beneficiary, as

Landlord), unless, at least thirty (30) days prior to any such date of expiration, the undersigned shall give written notice to Beneficiary, by certified mail, return receipt requested and at the address set forth above or at such other address as may be given to the undersigned by Beneficiary, that this Letter of Credit will not be renewed; it being understood that if the Applicant fails to maintain the Letter of Credit in the amount and in accordance with the terms of the Lease, Beneficiary shall have the right to present the Letter of Credit to us for payment.

Our obligation under this Letter of Credit shall not be affected by any circumstances, claim or defense, real or personal, of any party as to the enforceability of the Lease between Beneficiary and AppliOnt or the validity of Beneficiary's claim, it being understood that our obligation shall be that of a primary obligor and not that of a surety, guarantor or accommodation maker.

Applicant shall pay all costs of or in connection with this Letter of Credit, including without limitation, any fees associated with only the first transfer or assignment of this Letter of Credit by the Beneficiary during the Lease Term.

This Letter of Credit is governed by the Uniform Customs and Practice for Documentary Credits (1993) Revision), International Chamber of Commerce publication 500.

This Letter of Credit sets forth in full the terms of our undertaking, and such terms shall not in any way be modified, amended, limited, discharged, or terminated except by a writing signed by authorized representatives of Beneficiary and the undersigned on or before the Expiration Date.

	Very truly yours,

	Company Name

Date	By:	/s/
		Name
		Title

RECORDING REQUESTED
BY AND WHEN RECORDED RETURN TO:
EUROHYPO AG
1114 Avenue of the Americas
29^th Floor
Newi York, New York 10036
Attention: Alice Ha

THIS AGREEMENT made July 10, 2006, between EUROHYPO AG, New York Branch, as Adrriinistrative Agent on behalf of a syndicate of lenders (collectively, the "Lenders"), having an office at 1114 Avenue of the Americas, New York, New York 10036 (the "Mortgagee"), and PLATINUM STUDIOS, LLC, a California limited liability company having an office at (the "Tenant");

AND ATTORNMENT AGREEMENT

(Lease)

WITNESSETH:

WHEREAS the Mortgagee (on behalf of the Lenders) is the present owner and holder of a certain mortgage, mortgages, deed of trust or deeds of trust (the "Mortgage) encumbering the premises located in, the County of Los Angeles, City and State of Los Angeles, CA, known as 11400 West Olympic Boulevard, Suite 1400, Los Angeles, California 90064 the "Premises") which Premises are more fully described in the attached Exhibit A;

WHEREAS the Tenant is the holder of a leasehold estate in a portion of the Premises under and pursuant to the provisions of a certain lease (the "Lease") dated July 10, 2006 by and between Tenant and DOUGLAS EMMETT 1995, LLC, a Delaware limited liability company (the "Landlord'); and

WHEREAS the Tenant has agreed to subordinate the Lease to the Mortgage and to the lien thereof and the Mortgagee has agreed to grant non-disturbance to the Tenant under the Lease on the tennS and conditions hereinafter set forth;

NOW THEREFORE, in consideration of good and valuable consideration, the receipt of which is hereby acknowledged, the Mortgagee and the Tenant hereby covenant and agree as follows:

1: The Tenant agrees that the Lease and all of the terms, covenants and provisions thereof and all right, remedies and options of the Tenant thereunder are and shall at all times continue to be subject and subordinate in all respects to the Mortgage and all of the terms, covenants and provisions thereof and to the lien thereof and to any and all increases, renewals, modifications, spreaders, consolidations, replacements and extensions thereof and to any and all sums secured thereby, with the same force and effect; as if the Mortgage had been executed, delivered and recorded prior to the execution and delivery of the Lease.

2., The Mortgagee agrees that if any action or proceeding is commenced by the Mortgagee to foreclose the Mortgage or to sell the Premises, the Tenant shall not be named as a party in any such action nor shall the Tenant be named a party in connection with any sale of the Premises, provided that at theltime of the commencement of any such action or proceeding or at the time of any such sale (i) the term of the Lease shall have commenced pursuant to the provisions thereof, (ii) the Lease shall be in full force and effect, and (iii) the Tenant shall not be in default under any of the terms, covenants or conditions of the Lease or of this Agreement on the part of the Tenant to be observed or performed thereunder or hereunder after the expiration of any applicable notice or cure period, unless applicable law requires the Tenant to be made a party thereto as a condition to proceeding against the Landlord or protecting such rights and remedies. In the latter case, the Mortgagee may join the Tenant as a defendant in such action only for such purposes and not to terminate the Lease.

3. The Tenant aurees that if the Mortgagee or any successors in interest to the Mortgagee shall become the owner of the Premises by reason of the foreclosure of the Mortgage or the acceptance of a deed Or assignment in lieu of foreclosure or otherwise, the Lease shall not be terminated or affected thereby but shall continue in full force and effect as a direct lease between the Mortgagee and the Tenant uponlall of the terms, covenants and conditions set forth in the Lease and in that event the Tenant agrees to adorn to the Mortgagee and the Mortgagee agrees to accept such attornment, provided, however, that the Mortgagee shall not be (i) liable for any accrued obligation of the Landlord, or for any act or omission of the Landlord, except to the extent the same pertains to a failure to repair or maintain and then only to the extent such failure continues for more than thirty (30) days, after Mortgage obtains possession and control over the Premises, (ii) subject to any offsets, claims or counterclaims which shall have accrued to the Tenant against the Landlord prior to the date on which the Mortgagee or its successor in interest shall become the owner of the Premises or (iii) liable for any security deposit or otherlmonies not actually received by the Mortgagee.

4. Without the prior written consent of Mortgagee, Mortgagee shall not be bound by (i) any agreement amending, or modifying the Lease unless executed to document the exercise of a specific right (other than a lease termination) under the Lease; or (ii) terminating the Lease or (ii) by any prepayment of the rents, additional rents or other sums due under the Lease'for more than one (1) month in adVance of the due date thereof

AND ATTORNMENT AGREEMENT (continued)

5. The Tenant hereby represents and warrants to the Mortgagee that as of the date hereof (i) the Tenant is the owner and holder of the tenant's interest under the Lease, (ii) the Lease has not been modified or amended, (iii) the Lease is in full force and effect and the term thereof is due to commence on September 1, 2006 pursuant to the provisions thereof, (iv) neither the Tenant nor the Landlord is in default under any of the terms, covenants or provisions of the Lease and the Tenant to the best of its knowledge knows of no event which but for the passage of time or the giving of notice or both would constitute an event of default by the Tenant or the Landlord under the Lease, (v) neither the Tenant nor the Landlord has commenced any action or given or received any notice for the purpose of terminating the Lease, (vi) all rents, additional rents and other sums due and payable under the Lease have been paid in full and no rents, additional rents or other sums payable under the Lease have been paid for more than one (1) month in advance of the due dates thereof, (vii) there are no offsets or defenses to the payment of the rents, additional rents, or other sums payable under the Lease and (viii) Tenant has received no notice of a prior assignment, hypothecation or pledge of the Lease or the rents, income, deposits or profits arising thereunder, other than in connection with the Mortgage.

6. Notwithstanding anything to the contrary in the Lease, Tenant shall not commence any action against Landlord or otherwise pursue any right or remedy against Landlord in consequence of a default by Landlord under the terms and provisions of the Lease unless written notice by Tenant specifying such default is delivered to Mortgagee at its address set forth below. Tenant further agrees that Mortgagee shall have the right, but shall not be obl_igated, to cure such default on behalf of Landlord within thirty (30) days after receipt of such notice, or if such default cannot reasonably be cured in such 30-day period, Mortgagee shall have the right to commence the cure of such default in such 30-day period and thereafter diligently pursue such cure until completed. Tenant further agrees not to invoke any of its remedies either express or implied, under the Lease (except in the case of emergency repairs) unless such default shall remain uncured at the expiration of the 30-day period after receipt of such notice of default, or if such default cannot reasonably be cured in such 30-day period, unless the cure of such default shall not be commenced within such 30-day period and thereafter prosecuted diligently to completion..

7. Anything herein or in the Lease to the contrary notwithstanding, in the event that the Mort^gagee shall acquire title to the Premises, or shall otherwise become liable for any obligations of the Landlord under; the Lease, the Mortgagee shall have ano obligation, nor incur any liability, beyond the Mortgagee's then interest, if any, in the Premises and the Tenant shall look exclusively to such interest of the Mortgagee, if any, in the Premises for the payment and discharge of any obligations imposed upon the Mortgagee hereunder or under the Lease and the Mortgagee is hereby released or relieved of any other liability hereunder and-under the Lease. The Tenant agrees that with respect to any money judgment which may be obtained or secured by the Tenant against the Mortgagee, the Tenant shall look solely to the estate or interest owned by the Mortgagee in the Premises and the Tenant will not collect or attempt to collect any such judgment out of any other assets of the Mortgagee.

8. Tenant shall neither suffer nor itself manufacture, store, handle, transport, dispose of, spill, leak or duMp any toxic or hazardous waste, waste products or substance (as they may be defined in any fedend or state statute, rule or regulation pertaining to or governing such wastes, waste products or substdnces) on the Premises at any time during the term, or extended term, of the Lease, except as are used in the ordinary course of Tenant's business as conducted on the Premises and in full compliance with environmental laws.

AND ATTORNMENT AGREEMENT (continued)

9. In connection with the assignment to Mortgagee pursuant to the Mortgage and/or the loan documents referred to therein of Landlord's interest in the Lease, Tenant agrees that after receipt of written notice from Mortgagee that Mortgagee is exercising its right under such assignment to have all rents _andother sums due under the Lease paid directly to Mortgagee, Tenant shall pay to Mortgagee all rent and other sums due to Landlord under the Lease. By its signature below, the Landlord under the Lease hereby authorizes and directs Tenant to so pay such rents and other sums due under the Lease directly to Mortgagee and agrees that the Tenant shall be fully protected in doing so.

10. Any notice, request, demand, statement, authorization, approval or consent made hereunder shall be in writing and shall be sent by Federal Express, or other reputable courier service, or by postage pre-paid registered or certified mail, return receipt requested, and shall be deemed given when received or refused (as indicated on the receipt) and addressed as follows:

If to the Mortgagee:

	Eurohypo AG, New York Branch,
	as Administrative Agent
	1114 Avenue of the Americas, 29th
	Floor New York, New York 10036
	Attention: Legal Director
	Facsimile: (212) 479-5803

With a copy to:

	Morrison & Foerster LLP
	555 West Fifth Street
	Los Angeles, California
	Attention: Thomas R. Fileti, Esq.
	Facsimile: (203) 892-5454

If to the Tenant:

	Platinum Studios, LLC,
	9744 Wilshire Boulevard, Suite 230
	Beverly Hills, California 90212
	Attention: Scott Mitchell Rosenberg

it being understood and agreed that each party will use reasonable efforts to send copies of any notices to the addresses marked With a copy to heremabove set forth; provided, however, that failure to deliver such copy or copies shall have no consequence whatsoever to the effectiveness of any notice made to the Tenant or the Mortgagee. Each party may designate a change of address by notice given, as hereinabove provided, to the other party, at least fifteen (15) days prior to the date such change of address is to become effective.

1.1 This Agreement shall be binding upon and inure to the benefit of the Mortgagee and the Tenant and their respective successors and assigns.

1.2 The term‘`Mortgagee" as used herein shall include the successors and assigns of the Mortgagee and any person, party or entity which shall become the owner of the Premises by reason of a foreclosure of the Mortgage or the acceptance of a deed or assignment in lieu of foreclosure or otherwise. The term "Landlord" as used herein shall mean and include the present landlord under the Lease and such landlord's predecessors and successors in interest under the Lease. The term "Premises" as used herein shall mean the Premises, the improvements now or hereafter located thereon and the estates therein encumbered by the Mortgage.

1.3 This Agreement may not be modified in any manner or terminated except by an instrument in writing executed by the parties hereto.

[INTENTIONALLY LEFT BLANK]