WARNER
                    BROS.

                   

                  Warner
                    Bros, Inc.

                  4000
                    Warner Blvd.

                  Burbank,
                    CA 91522

                  (213)
                    843-6000

                  Cable
                    Address: Warbros

                


        

         

        Exhibit
          10.20

        December
          16, 1981

        
 

        


        Robert
          16, 1981

        Levine
          and Thall, PC

        485
          Madison Avenue

        New
          York,
          NY 10022

        


        RE:
          “NATIONAL LAMPOON’S VACATION”

        


        Dear
          Bob:

        


        The
          following are the terms of the agreement between Warner Bros. Inc. and
          Studio 21
          Productions, Inc., a wholly-owned subsidiary of National Lampoon, Inc.
          for Matty
          Simmons to develop, and if set for production by Warner Bros., to produce
          a
          motion picture tentatively entitled “NATIONAL LAMPOON’S VACTION ‘58”, based upon
          John Hughes’ story published in issue No. 43 of the magazine “NATIONAL LAMPOON”
          in September, 1979. 

        


        1.   Development

        


        Matty
          Simmons to perform all development services required by Warner Bros. For
          the
          following consideration payable to Studio 21:

        


        	A.  	
                $15,000
                  payable one-half on the later of signature by studio 21 and National
                  Lampoon, Inc. of a copy of this letter or commencement of John
                  Hughes’ a
                  service pursuant to a signed agreement for his services, and one-half
                  on
                  the earlier of completion of Hughes’ writing services on the first draft
                  and set of revisions or abandonment of the
                  projects;

              


         

        	B.  	
                $10,000
                  if Warner Bros. exercises the option for the second draft screenplay
                  from
                  Hughes, or budgets the first draft screenplay written by Hughes,
                  or hires
                  another writer, payable one-half when Warner Bros. options the
                  second
                  draft from Hughes, elects to budget Hughes first draft, or hires
                  another
                  writer, and one-half upon the earlier of completion of the second
                  draft by
                  Hughes, completion of all writing services required by Warner Bros.
                  of the
                  second writer, or the earlier of abandonment of the project or
                  when the
                  picture is set for production; and

              


        	 	 


         

         

        
          
             

          

          
             

            
              

            

          

          
             

          

        

         

        
          	C.  	
                  $5,000
                    if Warner Bros. options a second draft by Hughes and thereafter
                    hires
                    another writer, or budgets the second draft screenplay by Hughes
                    or any
                    screenplay written by a subsequent writer, payable one-half when
                    Warner
                    Bros. hires a subsequent writer or elects to budget Hughes’ second draft
                    or any screenplay written by another writer, and one-half upon
                    the earlier
                    of abandonment of the project or when the picture is set for
                    production.

                


        

         

        2.   Producer
          Fee

         

        If
          Warner
          Bros. sets the picture for production, Matty Simmons to produce for
          consideration payable to Studio 21 of $250,000 payable 20% less the development
          fees when the picture is set for production, 60% at 3% per week for twenty
          weeks
          beginning six weeks prior to the schedule commencement of principal photography
          of the picture, 10% upon completion of scoring, and 10% on delivery of
          the
          answer print. Subject to default, incapacity, or force majeure, Matty Simmons
          shall be pay-or-play to produce the picture when the picture is set for
          production by Warner Bros. The picture shall be deemed “set for production” by
          Warner Bros. at such time as the screenplay and budget have been approved
          by
          Warner Bros., and a definite starting date has been scheduled for commencement
          of principal photography subject to acceleration or delay to accommodate
          the
          availability of facilities, locations, or principal cast members.

        


        3.   Contingent
          Compensation

        


        As
          additional consideration for the producer services of Matty Simmons, Studio
          21
          be entitled to receive 50% of 100% of the net profits of the picture reducible
          by all third party net and gross participations to 22 1⁄2% of 100% of the net
          profits of the picture and thereafter by unabsorbed third party gross
          participation and the deferments for use of the name “National Lampoon”
          off-the-top, but excluding the gross participation after actual moving
          breakeven
          for the use of the name “National Lampoon” which participation shall be absorbed
          in and borne by Studio 21’s share of net profits.

        


        
          
             

          

          
            2

            
              

            

          

          
             

          

           

        

        4.   Exclusivity

        


        During
          the development of the project and production of the picture, Matty Simmons
          shall be non-exclusive, provided that during the period beginning eight
          weeks
          before commencement of principal photography and continuing until completion
          of
          principal photography of the picture, Matty Simmons shall be non-exclusive
          on a
          first priority basis and no other services for any third party shall interfere
          with the non-exclusive services of Matty Simmons for the picture or require
          Matty Simmons to perform exclusive services. In the event of (i) a death
          or
          incapacity of Matty Simmons, or (ii) principal photography of the picture
          coincides with principal photography of another picture produced by Matty
          Simmons or Studio 21 requiring Matty Simmons’ non-exclusive producer services,
          Studio 21 shall furnish at Studio 21’s cost a substitute producer subject to
          Warner Bros. reasonable approval to perform Matty Simmons’ producer services.
          The substitute shall be exclusive to the picture for a period beginning
          the
          later of (i) eight weeks prior to commencement of principal photography,
          or (ii)
          the commencement of principal photography of the other picture or (iii)
          the
          death or incapacity of Matty Simmons and continuing until completion of
          principal photography of the picture and all other times on a non-exclusive
          first priority basis.

        


        5.   Credit

        


        Matty
          Simmons shall be entitled to the following credits if the picture is produced
          by
          Matty Simmons:

        


        	A.  	
                An
                  above-the-title production credit in substantially the form of
“A Matty
                  Simmons Production” on screen, and in paid ads, in size of type of the
                  title of the picture;

              


        


        	B.  	
                A
                  credit as producer on screen and in paid ads in size equal to 50%
                  and 35%
                  respectively of the size of type of the title of the
                  picture;

              


        


        	C.  	
                Warner
                  Bros. normal exclusions and artwork title exception to apple except
                  the
                  credit as producer shall appear in any excluded ad in which director
                  credit appears to the director or writer credit appears to the
                  writer
                  except for award, congratulatory or special
                  ads.

              


        


        	D.  	
                Warner
                  Bros. may not give executive, associate and/ or producer credit
                  to any
                  third party except subject to Studio 21’s approval, which shall not be
                  withheld unreasonably.

              


         

        
          
             

          

          
            3

            
              

            

          

          
             

          

           

        

        6.   Election
          to proceed

        


        If
          forty-five days after delivery of any draft or revised draft of a screenplay
          Warner Bros. has not requested revisions the last writer or committed to
          hire
          another writer, Studio 21 can then request Warner Bros. by notice in writing,
          that Warner Bros. designate said screenplay as the final screenplay for
          which
          Warner Bros. elects to have a budget prepared. Warner Bros. shall have
          thirty
          days from receipt of the request within which to commit to revision or
          to hire
          another writer, or designate said screenplay as the final screenplay for
          preparation of a budget. If Warner Bros. fail to do either, then said screenplay
          shall be designate the final screenplay for which Warner Bros. elect to
          have a
          budget prepared, subject to Warner Bros. right of final approval of the
          screenplay and budget. If within six months from when the final screenplay
          for
          preparation of a budget is designated by Warner Bros. or is deemed to have
          been
          designated such a screenplay, Warner Bros. has not set the picture for
          production, then Studio 21 can request Warner Bros. by notice in writing
          to
          elect either (a) set the picture for production, as “set for production” is
          defined in paragraph 2 above, or (b) commit to the payment of the producer
          fee
          without setting the picture for production (i.e., go pay-or-play to Studio
          21
          and Matty Simmons) or (c) abandon production of the picture. If within
          10
          business days from receipt by Warner Bros. of Studio 21’s request Warner Bros.
          fails to elect any, then Warner Bros. shall be deemed to have elected (c).
          If
          Warner Bros. elects (b), 20% of the producer fee, less the development
          fee,
          shall be paid when Warner Bros. elects (b), 60% not later than six months
          after
          Warner Bros. elects (b), unless prior to that date the picture has commenced
          principal photography, and the remaining 20% not later than one year after
          Warner Bros. elects (b). In the event production of the picture is abandoned
          by
          Warner Bros. after Warner Bros. has elected (b), any producer fee unpaid
          shall
          be paid within ten days after abandonment. If Warner Bros. elects (a),
          if
          principal photography of the picture has not commenced within thirty days
          following the designed start date, subject to acceleration or delay to
          accommodate the availability of facilities, location, or principal cast
          members,
          then the producer fee shall be paid as if the picture had commenced principal
          photography on the day which is thirty days following the designated start
          date,
          with the last 20% payable not later than one year after Warner Bros. elects
          (a).

        


        7.   Turnaround

        


        If
          Warner
          Bros. abandons the picture then Studio 21 shall have a one-year turnaround
          subject to Warner Bros. standard terms including changed elements and less
          favorable terms provisions, interest at a rate equal to 125% of the moving
          prime
          commercial rate of the First National Bank of Boston, acceleration of payment
          if
          Studio 21 enters into agreement with any third party for the development,
          production, financing and/ or distribution of the picture, but excluding
          overhead of 15% of Warner Bros.’ direct costs incurred for the
          project.

        


        
          
             

          

          
            4

            
              

            

          

          
             

          

           

        

        8.   Completion
          of Picture

        


        The
          answer print of the picture shall be completed no later than the earlier
          of
          eight months from commencement of principal photography or five months
          from
          completion of principal photography.

        


        9.   Consultation

        


        Warner
          Bros. shall consult with Matty Simmons in connection with the development
          of the
          script, choice of the key creative personnel and cast and initial theatrical
          domestic advertising campaign for the picture, provided Warner Bros.’ decision
          advertising campaign for the picture, provided Warner Bros.’ decision is
          determinative.

        


        10.   Travel
          and Living

         

        When
          required by Warner Bros. to perform services away from his principal residence,
          Matty Simmons shall be provided with round-trip transportation, first class
          if
          available, and by air if appropriate, plus actual reasonable, accountable
          expenses up to a maximum of $1,000 per week ($1,500 in major cities) pro
          rata
          for any portion of a week. During production of the picture Matty Simmons
          shall
          be provided with one additional round-trip transportation to and from the
          location on an “as used” basis.

        


        11.   Office
          and Secretary

        


        Warner
          Bros. will furnish Studio 21 Productions offices and a production secretary
          from
          eight weeks prior to the start date, or sooner if necessary, until completion
          of
          the answer print.

        


        12.   Remakes,
          Sequels and Television Programs

        


        If
          within
          fie years after initial release of the picture Warner Bros. elects to produce
          a
          theatrical remake or sequel or television program or series, subject to
          network
          approval with regard to any television program or series, provided Studio
          21 is
          then actually and activity engaged in the production of theatrical or television
          motion pictures, Studio 21 shall have the right of first negotiation to
          furnish
          Matty Simmons, or a substitute subject to Warner Bros. reasonable approval,
          to
          produce the theatrical 

        remake
          or
          sequel on financial terms and conditions not less favorable to Studio 21
          then
          this deal, or to be individual or executive producer of any television
          program
          on financial terms to be negotiated in good faith, subject to the
          following:

        


        
          
             

          

          
            5

            
              

            

          

          
             

          

           

        

        	A.  	
                If
                  within thirty days after receipt by Studio 21 of Warner Bros.’ notice of
                  Warner Bros. election to produce a theatrical remake or sequel
                  and after
                  good faith negotiations, Studio 21 and Warner Bros. ‘ have note reached a
                  mutually satisfactory agreement, or Studio 21 has not accepted
                  the
                  financial terms and conditions of this deal, then Warner Bros.
                  shall be
                  released and discharged of any obligations to Studio 21 in connection
                  with
                  such remake or sequel, except Warner Bros. shall pay Studio 21
                  $100,000 on
                  completion of principal photography of such remake or sequel plus
                  a pari
                  passu contingent deferment of $50,000 and 5% of 100% of the net
                  profits
                  reducible by the net profits payable to any writer of such remake
                  or
                  sequel to not less than 2 1⁄2% of 100% of the net profits of such remake or
                  sequel. Warner Bros. shall not have the right to use the name “National
                  Lampoon” in such remake or sequel unless such remake or sequel is produced
                  by Studio 21 except as Studio 21 and Warner Bros. may
                  agree.

              


        


        	B.  	
                If
                  within thirty days after receipts by Studio 21 of Warner Bros.’ notice of
                  Warner Bros.’ notice of Warner Bros.’ election to produce a television
                  program or series and after good faith negotiations, Studio 21
                  and Warner
                  Bros. have not reached a mutually satisfactory agreement, or Studio
                  21 has
                  not accepted financial terms and conditions not less than those
                  then
                  currently being offered by Warner Bros. Television for individual
                  of
                  executive producer services in comparable situations, then Warner
                  Bros.
                  shall be released and discharged of any obligations to Studio 21
                  in
                  connection with such television program or series, except that
                  Warner
                  Bros. shall pay Studio 21, (a) for a prime time U.S. network television
                  series produced, if at all, based upon the picture, for each episode
                  of
                  such television series royalties, payable within thirty days after
                  the
                  first broadcast of each such episode, of $1,750 for each episode
                  which
                  does not exceed thirty minutes but does not exceed sixty minutes
                  in
                  length, and $2,250 for each episode which exceeds sixty minutes
                  in length,
                  and rerun payments for any such episode which has more than one
“run” in
                  the United States equal to 20% of the royalty paid for the initial
                  run of
                  such episode for each of the second, third, fourth, fifth and sixth
                  runs
                  thereof, provided that payment for the sixth such run, if any,
                  shall
                  constitute full and complete payment for the sixth and all subsequent
                  runs
                  thereof. Rerun royalties shall be payable not later than four months
                  after
                  the first telecast of the respective run in any city of the United
                  States.
                  In the event such
                  run is telecast on regional or national television network, the
                  applicable
                  rerun royalties shall be payable not later than thirty days after
                  the
                  first telecast of the respective run in any city in the United
                  States. In
                  the event such run is telecast on regional or national television
                  network,
                  the applicable rerun royalties shall be payable not later than
                  thirty days
                  after the first telecast of the respective run in any city in the
                  United
                  States; and (b) for a remake or sequel television motion picture,
                  or
                  multi-part program (such as “Shogun”) produced, if at all, based upon the
                  picture, for each such remake or sequel television motion picture
                  or
                  multi-part program, payable within thirty days after the first
                  broadcast
                  of each such remake or sequel television motion picture or episode
                  of such
                  multi-part program, $7,500 pro rata for each thirty minutes of
                  broadcast
                  time to a maximum of $25,000; and (c) 5% of 100% of the net profits
                  of any
                  such television program or series, reducible by net profits payable
                  to any
                  writer of such television program or series to not less than 2
1⁄2% of 100%
                  of the net profits of such television program or series. Net profits
                  shall
                  be defined, accounted for and paid in accordance with Warner Bros.
                  Television’s then current standard definition of net profits; (d) the
                  royalties and net profits payable pursuant to (a), (b) and (c)
                  above shall
                  include and bear similar payments to John Hughes or National Lampoon,
                  Inc.
                  for the story.

              


         

        
          
             

          

          
            6

            
              

            

          

          
             

          

        

         

        Warner
          Bros. shall not have the right to use the name “National Lampoon: in any such
          television program or series unless such television program or series is
          produced by Studio 21 except as Studio 21 and Warner Bros. may
          agree.

        


        13.   Use
          of
          the Name “National Lampoon”

        


        	A.  	
                For
                  use of the name “National Lampoon” in the picture Studio 21 shall receive
                  $250,00 on commencement of principal photography plus (i) as an
                  advance
                  against Studio 21’s net profits, up to $150,00 from 2 1⁄2% of the adjusted
                  gross receipts of the picture in excess of the greater of two times
                  the
                  cost of production of the picture and interest once or actual cash
                  breakeven including interest once, to actual breakdown, (ii) an
                  allocation
                  from Studio 21’s net profits of 5% of the gross receipts of the picture in
                  excess of actual moving breakdown, and (iii) deferments of $250,000
                  each
                  from the gross receipts in excess of gross receipts equal to the
                  aggregate
                  of actual moving breakeven plus $10,000,000 of the gross receipts,
                  and at
                  each $10,000,000 of gross receipts thereafter. In the event production
                  of
                  the picture is abandoned after commencement of principal photography,
                  for
                  any reason other than a default by Studio 21 or National Lampoon,
                  Inc.,
                  Studio 21 shall repay Warner Bros. on demand that portion of that
                  $250,000
                  paid on commencement of principal photography that the number of
                  weeks
                  from commencement of principal photography to abandonment bears
                  to the
                  scheduled number of weeks of principal photography of the picture.
                  In the
                  event of a material default by Studio 21 or National Lampoon, Inc.,
                  Studio
                  21 shall repay Warner Bros. the entire $250,000 on demand without
                  prejudice to any claim Warner Bros. may have or assert against
                  Studio 21
                  or the National Lampoon, Inc. as a result of said
                  default.

              


         

         

        
          
             

          

          
            7

            
              

            

          

          
             

          

        

        
 

        	B.  	
                Warner
                  Bros. shall have the right and the obligation subject to this paragraph
                  B
                  and paragraph E below, to use the “National Lampoon” name as part of the
                  title of the picture and in connection with the advertising, distribution
                  and marketing of the picture. Whenever any draft or revised draft
                  of a
                  screenplay is delivered to Warner Bros. if Studio 21 advises Warner
                  Bros.
                  with the delivery of the screenplay or revised draft screenplay
                  that
                  Studio 21 disapproves of said screenplay or revised draft for the
                  use of
                  the name “National lampoon,” then if Warner Bros. elects to proceed with
                  the development of a picture, or hire another writer, or request
                  revision
                  from the writer delivering the screenplay or revised draft, or
                  sets the
                  picture for production, then Warner Bros. may elect, (i) to terminate
                  the
                  agreement with Studio 21 including the right to use the name “National
                  Lampoon” in connection with the picture and Warner Bros. may proceed with
                  the development and/ or production of the picture and Warner Bros.
                  and
                  Studio 21 shall be released and discharged of any obligation to
                  one
                  another in connection with the picture except Warner Bros. shall
                  pay
                  Studio 21 any unpaid accrued development fee, and subject to Warner
                  Bros.
                  obligation to acquire the story from National Lampoon, Inc. in
                  the event
                  Warner Bros. elects to produce the picture or exercise the option,
                  or (ii)
                  to proceed with the development and/ or production of the picture
                  pursuant
                  to this agreement with Studio 21 without the right to use the name
                  “National Lampoon” in connection with the picture without prejudice to
                  Studio 21’s approval of the next revised draft of the screenplay and the
                  use of the name “National Lampoon” in connection with the
                  pictures.

              


        


        	C.  	
                Warner
                  Bros. shall also have the right to use the name “National Lampoon” in
                  remake and sequel motion picture and television programs provided
                  such
                  remake and sequel and television programs are produced by Studio
                  21
                  pursuant to and consistent with the terms and conditions for Warner
                  Bros.
                  use of the “National Lampoon” name for the first picture except that the
                  payment or royalty for use of the name “National Lampoon” in a television
                  program or series shall be negotiated in good
                  faith.

              


        


        	D.  	
                For
                  use of the name “National Lampoon” in merchandising, Studio 21 shall be
                  entitled to receive a separate royalty of a sum equal to 7% of
                  the
                  merchandising income actually received by Warner Bros. increasing
                  to 10%
                  of the merchandising income actually received by Warner Bros. after
                  the
                  picture is in net profits, after deducting from such income name
                  and
                  likeness payments or other expenses incurred by Warner Bros. directly
                  in
                  connection with any such merchandise products or commodities using
                  the
                  name “National Lampoon” to not less than 5% or 8% respectively of the
                  merchandising income actually received by Warner
                  Bros.

              


         

        
          
             

          

          
            8

            
              

            

          

          
             

          

        

         

        	E.  	
                Warner
                  Bros.’ right to use the name “National Lampoon” in the title of the
                  picture and in connection with advertising, distribution and marketing
                  of
                  the picture, shall be subject to Studio 21’s reasonable approval of the
                  general form of the use of the name “National Lampoon.” Once Studio 21 has
                  given approval of a particular form of use then Warner Bros. shall
                  have
                  the right to use that form of use for and in connection with the
                  picture.
                  If the picture is produced by Studio 21 then the name “National lampoon”
                  shall be used as part of the title of the picture such as “National
                  Lampoon’s Vacation ‘58” or such other form or other title as Studio 21 and
                  Warner Bros. may mutually agree. 

              


        


        	F.  	
                Provided
                  that Studio 21 or National Lampoon, Inc. has fully advised Warner
                  Bros. in
                  writing of the necessary requirements to protect Studio 21’s or National
                  Lampoon’s and trademarks in the name “National Lampoon,” Warner Bros.
                  shall follow such advice and requirements provided that an inadvertent
                  failure to comply with those requirements shall not be deemed a
                  breach by
                  Warner Bros. of any duty or obligation to Studio 21 nor shall any
                  such
                  inadvertent breach entitle Studio 21 or National Lampoon to sue
                  for or
                  recover damages. Warner Bros. shall make best efforts after notice
                  from
                  Studio 21 to cure prospectively any failure by Warner Bros. of
                  such advice
                  or requirements to protect the trademarks or trade names in the
                  name
                  “National Lampoon.”

              


        


        14.   Acquisition
          of Story

        


        National
          Lampoon, Inc. shall grant Warner Bros. an exclusive option to purchase
          all
          rights, excluding the right to publish the original story and reprint rights
          to
          the original story, but including publication rights to novelizations based
          upon
          a screenplay adaptation of the original story, in and to the original story
          entitled “Vacation ’58,” written by John Hughes and published in Issue 43 of the
“NATION LAMPOON” magazine in September, 1979 for $7,500 for one year from the
          date of this letter extendable for an additional year for $7,500 against
          a
          purchase price of $65,000 plus 2 1⁄2% of 100% of the net profits of the
          picture.

        


        15.   Writer’s
          Agreement

        


        Studio
          21
          shall assign to Warner Bros. the agreement between Studio 21 Productions,
          Inc.
          and the Huge Company for the writing services of John Hughes and Warner
          Bros.
          shall assume the executory obligations of said agreement except to the
          extent
          those obligations may be modified in writing by Warner Bros. and the Huge
          Company.

        


        
          
             

          

          
            9

            
              

            

          

          
             

          

           

        

        16.   Novelizations

        


        Subject
          to the applicable provisions of the writer’s Guild of America Basic Agreement
          and the rights if any of John Hughes pursuant to the agreement between
          Studio 21
          and the Huge Company, Warner Bros. shall have the right to publish or authorize
          the publication of novelizatons, photo novels, or any other publication
          in
          print, of adaptations of the screenplay for the picture. Warner Books shall
          have
          the right of first negotiation with regard to any publication in print
          and
          Warner Bros. shall license publication rights to Warner Books provided
          the
          financial terms of the deal are commercially acceptable. If Warner Books
          does
          not negotiate for any print publication rights then National Lampoon, Inc.
          shall
          have the right of second negotiation with regard to any publications in
          print,
          not published by Warner Books, and Warner Bros. shall license publication
          rights
          to National Lampoon, Inc. provided the financial terms of the deal are
          commercially acceptable. For any publications in print not published by
          Warner
          Bros. may accept any offer acceptable to Warner Bros. Advances and royalties
          received by Warner Bros. from publications in print shall be included in
          the
          gross receipts of the picture without distribution fee.

        


        The
          remaining terms and conditions shall be Warner Bros. standard terms and
          conditions, including the definition of net profits, subject to such changes
          as
          Warner Bros. may agree after good faith negotiations. Pending execution
          of more
          formal documents, this letter, when signed by Warner Bros. Inc., Studio
          21
          Productions, Inc., National Lampoon, Inc., and Matty Simmons shall constitute
          a
          valid and binding agreement among Warner Bros., Studio 21 Productions,
          Inc.,
          National Lampoon, Inc. and Matty Simmons.

        


        Very
          truly yours,

        


        Warner
          Bros. Inc.

        


        


        By
          /s/
          James R. Miller

        James
          R.
          Miller

        


        
          
             

          

          
            10

            
              

            

          

          
             

          

        

        


        


        AGREED:

        


        NATIONAL
          LAMPOON, INC. 

        


        


        By
          /s/
          Matty Simmons

        


        


        STUDIO
          21
          PRODUCTIONS, INC.

        


        


        By
          /s/
          Matty Simmons

        


        


        MATTY
          SIMMONS

        


        


        /s/
          Matty
          Simmons

        


        


        
          
             

          

          
            11