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[Defcon1]

Any one have some good examples of profit share contracts and what has your experience been using them?

[Mister Dave]

In my understanding the law varies depending on the jurisdiction (state, country etc). In my state, in order to retain full IP ownership, and have a profit-sharing contract, the terms have to be under what's called work-for-hire. These contracts have to have been signed prior to the completion of the work.

It is no help for you to see such contracts of others unless they reside in the same jurisdiction as you. Furthermore, it is in your interest to have a qualified IP attorney review and revise your contracts as needed. The reason for this is that a contract that doesn't follow the law in your jurisdiction would be null and void in any legal action against you. In simple terms, it would be as if you had no contract at all.

[Defcon1]

Here's an example available from Indie Fund:

7. Revenue Share. As additional consideration for Indie Fund’s willingness to make the Loan to Developer, Developer agrees to pay Indie Fund 25% of all Gross Revenue (including revenue generated by exploitation of any work based upon or derived from Game) received by Developer above the Loan amount (“Revenue Share”). The Revenue Share shall apply to the first dollar received by Developer above the Loan amount and all gross revenue received by Developer until the total payment to Indie Fund (Repayment plus Revenue Share) is equal to twice the Loan, or the Term has been reached.  Developer shall pay the Revenue Share to Indie Fund monthly, within fifteen (15) days after the end of the month in which Developer received the revenue subject to the Revenue Share.

As far as the terms laid out, it's pretty clear and no mention of territories/state as 25% is universal.  They do have a section that states California law would preside over any litigation, perhaps this remedies what you are talking about?

I am currently in a profit share contract that is similar to this.

A license fee equal to 2.5% of the wholesale selling price of the Product, or if no wholesale price, 2.5% of the Product's gross income as received by the Licensee.

It later states that in the event of dispute...

This Agreement shall be interpreted in accordance with the laws of California, U.S.A..

Anyway, I still consider my experience with these type of contracts limited.

[Mister Dave]

Ah, you didn't mention that it was a funding contract from a creditor. That's a whole different area of law. I don't have creditors so I'm afraid my (lack of) experience won't be helpful, sorry. Maybe if you outlined your concerns people here will be able to give their impressions. But if you've accepted the terms of the contract, you're probably locked in. If you're looking to get out of it, review the termination clauses carefully with your attorney.

The Revenue Share shall apply to the first dollar received by Developer above the Loan amount and all gross revenue received by Developer until the total payment to Indie Fund (Repayment plus Revenue Share) is equal to twice the Loan, or the Term has been reached.

"equal to twice the Loan" sounds a bit onerous.

As far as the terms laid out, it's pretty clear and no mention of territories/state as 25% is universal.

This Agreement shall be interpreted in accordance with the laws of California, U.S.A..

This ensures that the law it was written under is the law that applies to disputes.

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