New York  |  Entertainment Law

Re: PARI PASSU - Definition

“Pari Passu” generally means that an equity party shall have the same rights as another equity party. In plain English that usually means that one investor shall receive the same ROI (or return on investment) as another investor. The term typically appears in investment instruments (everything from shareholders agreements to mutual fund regulations). Sometimes film labor agreements will characterize “above the line” recoupment in terms of pari passu.

In your case, pari passu is applied to investors. Based on the language you provided, 4% of the producer’s “adjusted net profits” shall be split equally, or on a pari passu basis, among the investors. More importantly, the language “as the term is commonly defined within the film industry” appears to define “adjusted net profits,” which has a unique meaning in that industry (i.e. what factors are typically netted out of gross).

Hope this was helpful. Good luck with your project and/or your research.

Kaiser