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Profit Participation Agreement Dated November 7, 2008 Between 301 Productions, Inc. And VS Investmen

This is an actual contract by National Lampoon.

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Sectors: Media
Governing Law: California , View California State Laws
Effective Date: November 07, 2008
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THIS PROFIT PARTICIPATION AGREEMENT (as amended, restated or otherwise modified from time to time, the "Participation Agreement ") is entered into as of the 7th day of November, 2008, by and among 301 PRODUCTIONS, INC., a California corporation (the "Grantor" ). VS INVESTMENT B, LLC (referred to as the " Grantee" ), and National Lampoon, Inc. ("NL"). The Grantor, Grantee and NL are sometimes referred to herein collectively as the "Parties " and each individually as a "Party ".


WHEREAS, simultaneously herewith, the Grantee is making a loan in the principal amount of $600,000 (the "Loan"), evidenced by that Secured Promissory Note of Grantor dated as of November 7, 2008 (the " Secured Promissory Note "), the proceeds of which will be used to fund the production, marketing and distribution of the motion picture currently titled "National Lampoon's The Legend of Awesomest Maximus" (the "Picture ").

WHEREAS, simultaneously herewith, the Grantee, Grantor and NL are entering into that Loan and Security Agreement dated November 7, 2008 (the "Security Agreement ") pursuant to which Grantor and NL agreed to enter into this Agreement.

WHEREAS, NL controls and owns all of the issued and outstanding equity securities of Grantor, and NL and Grantor have entered into that certain Worldwide Distribution Agreement dated as of November 7, 2008 (the "NL Distribution Agreement" ) pursuant to which Grantor has appointed NL as the worldwide distributor of the Picture.

WHEREAS, NL is receiving direct benefits as the result of the Loan and under the Security Agreement, and Grantee is not willing to make the Loan unless NL enters into this Agreement.

NOW, THEREFORE, as a further inducement to the Grantee to make the Loan evidenced by the Secured Promissory Note and the Security Agreement, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows:


1. PARTIAL ASSIGNMENT OF PROFIT PARTICIPATION. NL shall pay, or cause to be paid, to Grantee, an amount equal to Fifteen and Four-Tenths percent (15.4%) of One Hundred Percent (100%) of all Net Profits, as defined below (the " Participation Amount ").

As used herein, the term " Net Profits " shall mean the sum of all Gross Proceeds (defined below) minus the sum of the following:

(i) Distribution and sales fees, which shall not exceed 20% (inclusive of any NL override fee);

(ii) Actual, direct, out of pocket sales, marketing or distribution expenses, and out-of-pocket costs of manufacturing or delivery of the Picture incurred by NL or Grantor, if any, which expenses and costs have been approved by Grantee and Grantor in writing, in advance;

(iii) All guild residuals and deferred compensation paid directly by Grantor (and not included in "negative costs" pursuant to clause (v) below) to any person providing rights or services in connection with production of the Picture;

(iv) Financing costs, including interest, paid by Grantor to all
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