, LexisNexis(R) Forms FORM 556-9-1B

Summary

A producer or executive producer who has acquired rights in a literary property may seek an agreement with a third-party entity (which may be a studio, major production company or independent film production company) to provide financing and support services to produce a motion picture based upon the literary property.

A typical format for such an agreement, especially in the case of an independent film production company, uses a short (i.e., usually four to six pages) initial document containing the principal deal terms which contain the most important variables and therefore are usually subject to the most extensive negotiation (referred to herein as the “principal agreement”). Attached to the principal agreement may be one or more exhibits containing standard terms and a possible net proceeds definition. Although the principal agreement is generally the subject of the most extensive negotiations, the attachments which contain standard terms may also be negotiated.

Due to various exigencies, such as time constraints, which necessitate the execution of a short agreement before the long form agreement can be negotiated, the parties may negotiate and execute the principal agreement and subsequently work out the terms of the attached Standard Terms and Conditions and Net Proceeds Definition. Consequently, there is often some overlap between the terms contained in the principal agreement and the attachments. For that reason, the agreement will usually recite that in the case of conflicts between the principal agreement and the attachments, the terms of the principal agreement will control.

By comparison to the studio version (FORM 9–1A), the independent production company version of the producer employment agreement reflects a narrower focus on issues which are deemed significant by the independent production company. The differences between the two versions of these agreements reflect adaptations by the independent production company to the milieu in which it operates (often dictated by limitations of budget and time), so that issues which may be of such significant concern to a studio that they must be resolved contractually, may be bypassed by the independent production company.

In the following sample agreement, the individual producer (or executive producer) enters a contract with the production company through a loan-out company (previously formed to take advantage of certain tax (and sometimes health) benefits as well as the protection provided by the limitation on personal liability). However, the agreement can be modified for direct employment if a loan-out company is not being used.

While some provisions relating to compensation and credit in this producer agreement appear in other agreements, such as a director agreement or performer agreement, other provisions are usually found only in a producer agreement. For example, in entering into an agreement with an independent production company rather than a studio, the producer may achieve a better position to exercise rights of consultation and approval over the production of the motion picture.

While terms relating to compensation and credit may relate, with some variation, to recognized standards in the motion picture industry that depend upon the budget of the particular picture and the producer’s experience and professional stature, there may also be variations in these provisions to accommodate, e.g., financial considerations which would not be present in a studio motion picture. It is possible that to a greater extent than in a studio motion picture, the producer’s experience and track record will be significant elements in the terms which are ultimately obtained by the producer. The experienced producer may be influential (or even have approval rights) regarding elements of the production (such as schedule, final screenplay approval, and selection of the performers and director) as well as over the distribution strategy, selection of distribution pattern, selection of distribution companies and terms of distribution agreements made for the motion picture.

On the other hand, some independent production companies maintain tight controls (because of time and budgetary limitations) whether the producer has extensive or limited experience or no track record at all. Even if a producer obtains some limited input, the financial and creative decisions will be subject to final determination by the production company, since joint approvals create the undesirable possibility of a deadlock, which could frustrate the purpose of the agreement. In such instances, the effectiveness of consultation rights depends largely on the good faith of the party having final approval.

As of (insert date of agreement)

(insert name of loan-out company) f/s/o

(insert name(s) of individual producer(s))

(insert address of loan-out company)

Attention: (insert name of contact person)

Re: (insert name of production company)/“(insert title of project or property)”/(insert name of loan-out company) f/s/o (insert name(s) of individual producer(s))

Dear (insert name of contact person):

This agreement is made and entered into as of the (insert date), by and between (insert name of production company) (“Production Company”), on the one hand, and the (insert name of loan-out company) (“Lender”) furnishing the services of (insert name(s) of individual producer(s)), on the other hand, concerning [executive] producing services for the proposed feature-length theatrical motion picture based on the screenplay written by (insert name of writer) (the “Picture”). (insert name(s) of individual producer(s)) shall be [jointly and severally] sometimes referred to herein as “Artists”/”Artist”. The parties hereto agree as follows:

1. CONDITIONS PRECEDENT: All of Production Company’s obligations hereunder are subject to and conditioned upon the following:

1.1 Production Company’s receipt of this agreement fully executed by Lender and Artists.

1.2 Production Company’s receipt of an executed agreement in a form approved by Production Company concerning the acquisition of the screenplay written by (insert name of writer) (“Writer”) to be used as the basis for the Picture (the “Writer Agreement”). Specifically, the Writer Agreement must grant Production Company the worldwide rights in all media to develop and produce the Picture.

[1.3 Production Company’s confirmation that Production Company has closed a deal with (insert name of studio or other production company) concerning the financing of production of the Picture.]

2. ENGAGEMENT: If Artists are available when and where reasonably required by Production Company, Production Company shall engage Lender to provide the services of Artists to render services as [executive] producers for the Picture, and Artists shall accept such engagement, upon the terms and conditions herein contained. [As part of Artists’ services hereunder, Artists shall ([use their reasonable good faith efforts to obtain] or [assist Production Company in obtaining]) all life story rights releases that Production Company deems necessary for the Picture. Such life story rights releases shall be in a form approved by Production Company.]

3. EXCLUSIVITY: Artists’ services hereunder shall be non-exclusive during development and ([first priority] or [exclusive]) during production of the Picture; provided, however, that any services that Artists may render for third parties or on Artists’ own account during non-exclusive periods shall not materially interfere with the timely performance of Artists’ services and obligations hereunder. [Notwithstanding anything to the contrary in the foregoing, during the production period, at least one of Artists shall be ([non-exclusive on a first priority basis] or [exclusive]) and the other Artist shall be on a ([non-exclusive non-material interference basis] or (non-exclusive on a first priority basis]).]

4. REIMBURSEMENT OF DEVELOPMENT EXPENSES: Upon satisfaction of the Conditions Precedent [and upon Production Company’s receipt of all life story rights releases required by the Production Company], Production Company shall reimburse Lender for Lender’s previously incurred third-party out-of-pocket development expenses [up to a maximum of (specify maximum amount of reimbursement for development expenses)] for the development of the Picture promptly following Production Company’s receipt from Artists of verifiable documentation substantiating such expenses to Production Company’s [reasonable] satisfaction.

5. [EXECUTIVE] PRODUCER COMPENSATION: As full and complete consideration for all the undertakings and services of Lender and Artists, and all rights and materials herein purchased, granted and agreed to be granted, and upon the condition that Lender and Artists shall fully and faithfully complete all services that may be [reasonably] required hereunder, and provided that Lender and Artists are not in material breach or default, Production Company agrees to pay to Lender, and Lender agrees to accept, the following [executive] producer fees (“[Executive] Producer Fees”), which fees shall be payable (specify amount of percentage installments of fees, e.g., Ten Percent (10%) upon closing of the financing of the Picture, Twenty Percent (20%) upon commencement of principal photography of the Picture, Thirty-five Percent (35%) on completion of principal photography and Thirty-five Percent (35%) on the earlier of the delivery of the Picture and the completion of all of Artists’ services):

5.1 Budget $10 million and over: If the Budget (as defined below) of the Picture is $10 million or more, Lender shall receive [executive] producer fees in an amount equal to (specify percentage amount of fee based on the budget, e.g., Two and a Half Percent (2 1/2%) of the Budget); provided, however, in no event shall Lender receive more than (specify maximum amount of fee, e.g., Four Hundred Thousand Dollars ($400,000)) for a Picture with a Budget of $10 million or more.

5.2 Budget under $10 million: If the Budget of the Picture is less than $10 million, Lender shall receive [executive] producer fees in an amount equal to (specify percentage amount of fee based on the budget, e.g., Two Percent (2%) of the Budget); provided, however, in no event shall Lender receive less than (specify maximum amount of fee, e.g., One Hundred Twenty-five Thousand Dollars ($125,000)) for a Picture with a Budget under $10 million.

5.3 Budget: “Budget” shall be defined as the final “going in” direct cost budget of the Picture approved by Production Company, excluding bond fees, contingency and finance fees. [Lender and Artists shall have meaningful consultation with respect to the “Budget”; provided, however, in the event of any disagreement, Production Company’s decision shall be final.]

6. CONTINGENT COMPENSATION: Provided Lender and Artists are not in material breach or default, Lender will be entitled to receive an amount equal to (specify percentage of contingent compensation, e.g., Ten Percent (10%) of one hundred percent (100%)) of Production Company’s “Net Proceeds,” if any, of the Picture. “Net Proceeds,” shall be defined, computed and accounted for in accordance with Production Company’s standard definition contained in its Net Proceeds Definition, attached hereto. [For purposes of the Net Proceeds Definition, Production Company agrees to use all reasonable best efforts to engage in transactions on an arm’s length basis and to act in reasonable good faith with respect to the expenditure and allocation of costs.] [The definition of Net Proceeds accorded to Lender shall be no less favorable than that accorded to any other “Net Proceeds” participant on the Picture.]

[7. REUSE: Production Company shall have the unlimited right to release the Picture theatrically, rerun the Picture on television, make foreign telecasts thereof and release the Picture in any and all supplemental markets anywhere in the world and otherwise exploit the Picture in all media throughout the universe, and, if Production Company exercises any such rights, neither Lender nor Artists shall receive additional compensation, except as provided herein.]

8. CREDIT: If Artists perform all their [material] services, and provided that Lender and Artists are not in material breach or default, [and, if the Picture is produced outside the United States, subject to the restrictions and limitations imposed by any foreign government entity having jurisdiction over such credits,] Production Company shall accord the following credits on the Picture produced by Production Company:

8.1 Individual Credit: Artist(s) shall receive screen credit on a separate card (i.e., (insert name(s) of individual producer(s)) [and shall share a card with each other only] in the main titles of all positive prints of the Picture in substantially the form of (“Executive Producer(s), (insert name of executive producer) [and (insert name of executive producer)]” or “Produced by (insert name of producer) [and (specify name of producer)]”).

8.2 Production Company Credit: Artist(s) shall also receive a (non-logo) production company credit substantially in the form of “(insert name of producers’ company)” on a separate card in the ([main] or [end]) titles of all final finished copies of the Picture.

8.3 Paid Advertising: The above individual and production company credits, subject to the limitations herein, shall appear in all paid advertising issued by or under the control of Production Company[ if and to the extent the billing block is used in such paid advertising].

8.4 Other: All other matters relating to credit shall be determined by Production Company in its sole and exclusive discretion [(including the right to designate one or more additional individual [executive] producers and/or production companies to receive credit on the Picture)] and subject to the standards and operating policies and practices as established and determined by (specify the entity making the determination, e.g., the studio or similar party). [Production Company agrees to use all good faith efforts to advise distributors in privity with Production Company of the above credit requirements.] No inadvertent or casual failure by Production Company or any failure by a third party to accord the credit provided herein shall be a breach of this Agreement. [Upon written notice from Lender of a failure to comply with the credit provision, Production Company shall take such steps as are reasonable and practicable to cure such failure on a prospective basis as to copies of the motion picture not yet made and advertisements not yet placed, as applicable, which are distributed or issued by Production Company or under Production Company’s control.] [The size, style, and duration of Lender and Artists’ credits set forth in Clauses 8.1, 8.2 and 8.3, above, shall be accorded on a not less favorable basis than that accorded any other individual [executive] producer or production company on the Picture, as applicable.] [Production Company will notify all third parties with which Production Company is in contractual privity of the credit requirements in this Clause 8.]

9. NO OBLIGATION TO PRODUCE/PAY-OR-PLAY: Nothing herein shall be deemed to obligate Production Company to use Artists’ services, or the results of such services in the Picture, to produce, release or distribute the Picture, or to continue the release and distribution of the Picture if released, or to otherwise exploit any rights granted to Production Company. Production Company shall have fully discharged Production Company’s obligations by payment to Lender of the [Executive] Producer Fees set forth in this Agreement.

10. FURTHER DOCUMENTS: Production Company’s obligations hereunder are subject to Production Company’s receipt of this Agreement fully executed by Lender and Artist(s). Lender and Artist(s) agree to execute such further documents as may be necessary for their services hereunder, including, without limitation, any required employment forms (e.g. I-9, W-4) and a Certificate of Engagement in a form approved by Production Company.

11. PAYMENTS/NOTICES: Payment and/or notices shall (unless and until written notice to the contrary is received) be sent to the addresses set forth above. The date of mailing or personal delivery shall be deemed the date of service.

12. RIGHTS: Lender and Artist(s) acknowledge that the Picture and the results and proceeds of Artists’ services are a “work-made-for-hire.” Accordingly, Production Company shall be the sole and exclusive author and owner of the Picture and Artists’ results and proceeds for all purposes throughout the universe in perpetuity. To the extent, if any, that ownership of the Picture produced hereunder or the results and proceeds of Artists’ services do not vest in Production Company solely, exclusively and automatically by virtue of this Agreement, Lender and Artist(s) assign to Production Company all rights (including all rights of copyright) of every kind and character in and to the Picture and the results and proceeds of Lender’s and Artists’ services. Artist(s) hereby waive(s) all “moral rights.” Production Company shall have the right to make such changes in the Picture, or portions thereof, with other material, and to make any and all uses of the Picture (including, but not limited to, ancillary and derivative uses), all as Production Company may determine, without any further payment to Lender and/or Artist(s). Lender and Artist(s) grant to Production Company the right to use Artists’ name, (approved) voice, (approved) likeness and (approved) biographical material, for advertising and publicity for the Picture. Neither Lender nor Artist(s) shall issue any news releases or other information regarding the Picture[, but Artist(s) may make non-derogatory reference to the Picture in issuing news information primarily relating to Artist(s) personally].

[13. FCC: Lender and Artist(s) represent that they are aware that it is a criminal offense under the Federal Communications Act of 1934, as amended, (“Communications Act”) for any person, in connection with the production or preparation of any television program, to accept or pay any money, service or other valuable consideration for the inclusion of any plug, reference or product identification or other matter as a part of any Picture produced hereunder unless such acceptance or payment is disclosed in the manner required by law. Lender and Artist(s) further understand that it is Production Company’s policy not to knowingly permit the acceptance or payment of any such consideration and that any such acceptance or payment will be cause for immediate dismissal, it being Production Company’s intention that the Picture shall be capable of being broadcast without the necessity of any disclosure or announcement which would otherwise be required by Section 317 or Section 507 of the Communications Act. Lender and Artist(s) represent, warrant and agree that neither Lender nor Artist(s) have paid or accepted, and will not pay or accept any money, service or other valuable consideration for the inclusion of any plug, reference or product identification, or any other matter in the Picture, and that neither Lender nor Artist(s) have any knowledge of any information relating to the Picture which is required to be disclosed by Lender and Artist(s) under Section 507 of the Communications Act. Lender and Artist(s) further agree that they will promptly deliver to Production Company, upon request, such affidavits and/or statements as Production Company may require with respect to said Section 507.]

14. REMEDIES: A waiver by either party of any terms and conditions of this Agreement in any one instance shall not be deemed or construed to be a waiver of such terms or conditions for the future, or of any subsequent breach. Production Company’s remedies and rights contained in this agreement shall be cumulative and the exercise of any remedy or right shall not be in limitation of any other remedy or right. Lender and Artist(s) agree that if Production Company breaches this agreement, the damage, if any, caused Lender or Artist(s) thereby will not be irreparable or otherwise sufficient to entitle Lender or Artist(s) to injunctive or other equitable relief. Lender and Artist(s) agree that no breach by Production Company shall entitle either Lender or Artist(s) to rescind this Agreement, to restrain Production Company’s exercise of any rights hereunder, to enjoin Production Company’s use of the results and proceeds of Lender’s or Artists’ services, or to restrain the exhibition or exploitation of the Picture, in whole or in part; in the event of any breach by Production Company, Lender’s and Artists’ sole remedy shall be an action at law for damages.

15. TRANSPORTATION, ACCOMMODATIONS AND PER DIEM: If Production Company requires Artist(s) to render services on the Picture more than (specify distance from each Artist’s principal residence, e.g., seventy-five (75) miles) away from (each) Artist’s principal residence (a “Distant Location”), then Production Company shall furnish Artist(s) with round-trip transportation (if available and if used) and, while Artist(s) are at such Distant Location at Production Company’s request, reasonable hotel accommodations, ground transportation and a per diem to be negotiated in good faith within Production Company’s customary parameters for comparable engagements[; provided however, in no event shall Artist(s) be treated or accorded less favorable treatment regarding the terms of this Clause than any other executive producer or producer providing services on the Picture].

[16. DERIVATIVE PRODUCTIONS/FIRST OPPORTUNITY: If Production Company produces the Picture, that Artist(s) is/are not in material breach, and Artist(s) is/are available to render [executive] producing services as, when and where [reasonably] required by Production Company, then, if Production Company desires to produce a television or theatrical sequel or remake or television series based on the Picture (a “Derivative Production”), Production Company will negotiate in good faith with Artist(s) regarding such Derivative Production on terms to be negotiated in good faith and in accordance with industry standards for comparable engagements (with a floor of this deal in all respects for a theatrical motion picture). If such negotiations do not result in an agreement concerning the principal, including financial, terms within (specify time period for negotiation of an agreement, e.g., thirty (30) days) from commencement thereof, Production Company shall have no further obligations to Artist(s) under this paragraph.

[17. DVD: Subject to Artist(s) signing Production Company’s standard lending agreement, Production Company shall provide [each] Artist with a DVD copy of the Picture, when commercially available.]

[18. PREMIERE: If Production Company sponsors a premiere for the Picture, Production Company shall invite each Artist, together with a guest for each Artist, to the Premiere.]

[19. APPROVALS/CONSULTATION RIGHTS: Lender and Artist(s) shall have consultation rights with respect to all business and financial aspects of the Picture; provided however, in the event of any disagreement, Production Company’s decision shall be final.

20. MISCELLANEOUS: The balance of this Agreement shall be Production Company’s Standard Terms and Conditions, a copy of which is attached, subject to those changes made in writing, if any, after good faith negotiations and within Production Company’s customary parameters for comparable engagements of this type. Unless and until the parties enter a more formal agreement, this letter shall constitute a binding agreement between/among the parties, shall supersede any prior or contemporaneous agreements, and may not be waived or amended, except by a written instrument signed by the parties.

Please indicate your agreement to the terms of this letter by signing in the space provided below on all enclosed copies of this Agreement, and then returning all signed copies to the undersigned. I will then arrange for counter execution and will provide you with a fully signed original. [I am simultaneously sending this Agreement to our client and must reserve the right of further change and comment.]

To induce (insert name of Production Company) (“Borrower”) to enter into the agreement dated as of (insert date of agreement) (the “Agreement”) with (insert name of Loan-Out Company) (“Lender”), and in consideration of Borrower’s execution and delivery thereof, the undersigned hereby represents and warrants that the undersigned is familiar with each term and condition of the Agreement, and the undersigned consents and agrees to the execution and delivery of the Agreement by Lender and agrees to render all the services therein provided to be rendered by the undersigned and to be bound by and duly perform and observe each and all the terms and conditions of the Agreement requiring performance or compliance on the part of the undersigned, and hereby joins in all warranties, representations, agreements and indemnities made by Lender, and further agrees that if Lender should be dissolved or should otherwise cease to exist or for any reason should fail, be unable, neglect or refuse duly to perform and observe each and all of the terms and conditions of the Agreement requiring performance or compliance on the part of Lender, the undersigned shall, at the election of Borrower, be deemed substituted as direct party or parties to said Agreement in place and stead of Lender, and further agrees that in the event of a breach of the Agreement by Lender or by the undersigned, Borrower shall be entitled to seek legal and equitable relief by way of injunction or otherwise against Lender, or against the undersigned, or against both Lender and the undersigned, in Borrower’s discretion, in any event, without the necessity of first resorting to or exhausting any rights or remedies which it may have against Lender; all of the foregoing to be to the same extent and with the same force and effect as if the undersigned had agreed to render services to Borrower as an employee.

Further, the undersigned waives any claim against Borrower for wages, salary or other compensation of any kind to said Agreement, and the undersigned agrees that the undersigned will look solely to Lender for any and all compensation that the undersigned may become entitled to receive for services under the Agreement, provided said compensation is paid to Lender.

Dated as of (insert date of agreement)

1. GENERAL: These Standard Terms and Conditions are incorporated into the principal agreement to which they are attached (“the Agreement”). The individual rendering personal services pursuant to the Agreement is referred to herein as “Artist”. If Artist’s services are furnished by a corporation loaning services, that corporation is referred to herein as “Lender”. The entity engaging Artist’s services under the Agreement either directly or through Lender is referred to herein as “Production Company”, and the motion picture (or motion pictures) in connection with which Artist is engaged is referred to herein as the “Picture”. In the event of express inconsistency between the Agreement and these Standard Terms and Conditions, the Agreement shall prevail.

2. SERVICES: Artist shall render all services required at such place or places as [reasonably] required by Production Company during the term. Subject to the terms and conditions of the Agreement, Artist shall render all services under the supervision, direction and control of Production Company, in a diligent and conscientious manner, and to the best of Artist’s ability, and comply with all of Production Company’s [reasonable] instructions, directions, requests, rules and regulations (including those relating to matters of artistic taste and judgment). Except as otherwise expressly provided to the contrary in the Agreement, Artist shall render Artist’s services exclusively and solely for Production Company during the entire term. Artist agrees, when requested by Production Company, to report to all development, pre-production, principal photography and post-production activities, publicity interviews, publicity photography, story conferences, song conferences, production conferences, making of stills, and the like, and for changes in and/or foreign versions of the Picture, and for no additional compensation. If any such services would conflict with any of Artist’s existing professional commitments, then Artist shall give Production Company timely notice of same, in which case Artist shall fully cooperate with Production Company in becoming available to render such services.

3. SERVICES UNIQUE: Artist acknowledges that rights granted to Production Company and Artist’s services are of a special, unique, unusual, extraordinary and intellectual character giving them peculiar value, the loss of which cannot be reasonably or adequately compensated in damages, and that a [material] breach by Artist may cause Production Company irreparable injury and damage. Accordingly, without limiting or waiving any other rights or remedies of Production Company, Production Company shall be entitled to [seek] injunctive or other equitable relief to prevent such breach and to prevent Artist from exclusively performing services for himself/herself, or any person or entity other than Production Company.

4. RESULTS AND PROCEEDS: Production Company shall own, in perpetuity, throughout the universe, all right, title and interest in and to the Picture, the elements thereof, and the results and proceeds of Artist’s services and all materials produced or furnished by Artist, of any kind and nature whatsoever, to the maximum extent permitted by any applicable guild or union agreement and free and clear of any and all claims for royalties and other compensation except as specifically set forth in the Agreement. Artist acknowledges that any and all results and proceeds of Artist’s services shall be a work-made-for-hire for Production Company, specially commissioned for use as part of a motion picture or other audiovisual work. Production Company shall have the right to adapt, change, revise, delete from, add to or rearrange the Picture, or any part thereof, and Artist waives throughout the universe the benefit of any law, doctrine or principle known as “droit moral” or moral rights of authors or any similar law, doctrine or principle however denominated, to the maximum extent permitted in each applicable jurisdiction. Production Company shall own the Picture produced and all rights therein, including, but not limited to, all copyrights, throughout the world and in perpetuity, and in all its elements, and shall have the right to sell, lease, license and otherwise exploit such rights and elements, as Production Company may determine in its sole discretion. Artist’s grant includes all rights regarding the renting, lending, fixing, reproducing and other exploitation of the Picture conferred under any applicable laws, directives or regulations, including without limitation, those of the European Union (“EU”).

5. REPRESENTATIONS AND WARRANTIES; INSURANCE; [FCC;] INDEMNITY: Artist hereby represents, warrants and agrees as follows:

(a) Artist is free to enter into the Agreement, and is not subject to any obligation or disability which will or might prevent Artist from keeping and performing all conditions, obligations, covenants and agreements to be kept or performed hereunder; and Artist has not made, and will not make, any agreement, commitment, grant or assignment, nor do any act or thing which might interfere or impair the complete enjoyment of the rights granted and the services to be rendered to Production Company.

(b) [Except for source material provided by Production Company to Artist,] all ideas, creations and literary, musical and artistic materials and intellectual properties (collectively, “materials”) furnished by Artist, shall be wholly original with Artist except materials in the public domain, and that, to the best of Artist’s knowledge or that which should have been known in the exercise of reasonable prudence, neither the materials nor the use thereof will infringe upon or violate any right of privacy of or constitute a libel, slander, or any unfair competition against, or infringe upon or violate the copyright, common law rights, literary, dramatic, photoplay, right of publicity, or any other rights of any third party.

(c) If and only if expressly required by Production Company for the services to be performed by Artist, Artist will become, at Artist’s sole cost and expense, and will remain throughout the term, a member in good standing of the properly designated labor organization or organizations (as defined and determined under applicable law) representing persons performing services of the type and character that are to be performed by Artist.

[(d) Artist represents that Artist is aware that it is a criminal offense under the Federal Communications Act of 1934, as amended (“Communications Act”), for any person, in connection with the production or preparation of any television Picture to accept or pay money, service or other valuable consideration for the inclusion of any plug, reference or product identification or other matter as a part of the Picture unless the acceptance or payment is disclosed in the manner required by law. Artist further understands that it is Production Company’s policy not to knowingly permit the acceptance or payment of any such consideration and that any acceptance or payment will be the cause of immediate dismissal, it being Production Company’s intention that the Picture shall be capable of being broadcast without the necessity of any disclosure or announcement which would otherwise be required by Section 317 or Section 507 of the Communications Act, Artist represents, warrants and agrees that Artist has not paid or accepted, and will not pay or accept any money, service or other valuable consideration for the inclusion of any plug, reference or product identification or any other matter in the Picture, and that Artist has no knowledge of any information relating to the Picture which is required to be disclosed by Artist under Section 507 of the Communications Act. Artist further agrees that Artist will promptly deliver to Production Company, upon request, such affidavits and/or statements as Production Company may require with respect to Section 507.]

(e) Artist shall indemnify and hold Production Company, any licensee or distributor of the Picture[, any station or network telecasting the Picture, each sponsor and its advertising agency,] and the shareholders, directors, officers, agents, employees, successors, licensees and assigns of any of the foregoing, harmless from and against any and all liability, loss, damage, costs, charges, claims, actions, causes of action, recoveries, judgments, penalties and expenses, including [outside] attorney’s fees, which they or any of them may suffer by reason of the services rendered or the use of any materials furnished by Artist, or any breach of any representation, warranty, or agreement made by Artist in the Agreement. Except as to any matter arising out of Artist’s breach of representation, warranty or agreement or arising out of Artist’s tortious conduct, Production Company shall indemnify and hold Artist harmless from and against any and all liability, loss, damage, costs, charges, claims, actions, causes of action, recoveries, judgments, penalties and expenses, including reasonable [outside] attorneys’ fees, which they or any of them may suffer by reason of (1) the use of any materials furnished by Production Company to Artist, and (2) the development, production, distribution or other exploitation of the Picture.

(f) Lender and Artist shall be added as additional insureds on Production Company’s errors and omissions and general liability insurance policies, if any, subject to the terms and restrictions of such policies. Production Company may secure any type of insurance covering Artist, insuring Production Company or its designees. Artist will assist Production Company prior to principal photography in procuring such insurance by submitting to customary examinations [(with Artist to have the right to have Artist’s physician present at such exams)] and by filling out required applications. If Production Company is unable to procure such insurance covering Artist at normal rates and without special exclusions, Production Company may terminate Artist’s services and be relieved of any further obligations to Artist. [If Production Company is unable to obtain insurance at the regular rates, Lender and Artist shall have the opportunity to pay the difference in the insurance coverage premium.] From [the date (specify time period for Artist to avoid dangerous activities, e.g., three (3) weeks) before] the scheduled start of principal photography until completion of all services required of Artist, Artist will not ride in any aircraft, other than as a passenger on a scheduled flight of a United States or major international air carrier maintaining regularly published schedules, or engage in any extra-hazardous activity without Production Company’s prior written consent in each case.

(g) Production Company and Lender acknowledge and agree that the following sums are in consideration of, and constitute equitable remuneration for, the rental right included in the rights herein granted: (i) an agreed allocation to the rental right of (specify percentage of fixed compensation allocated to rental rights, e.g., 3.8%) of the fixed compensation and, if applicable, (specify percentage of contingent compensation, if any, allocated to rental rights, e.g., 3.8%) of the contingent compensation provided for in this agreement; and (ii) any sums payable to Lender with respect to the rental right under any applicable collective bargaining or other industry-wide agreement; and (iii) the residuals payable to Lender under any such collective bargaining or industry-wide agreement regarding home video exploitation which are reasonably attributable to the sale of home video devices for rental purposes in the territories or jurisdictions where the rental right is recognized. If under the applicable law of any territory or jurisdiction, any additional or different form of compensation is required to satisfy the requirement of equitable remuneration, then it is agreed that the grant to Production Company of the rental right shall nevertheless be fully effective, and Production Company shall pay Lender such compensation or, if necessary, the parties shall in good faith negotiate the amount and nature in accordance with applicable law. Since Production Company has paid or agreed to pay Artist equitable remuneration for the rental right, Artist hereby assigns to Production Company, except to the extent specifically reserved to Artist under any applicable collective bargaining or other industry-wide agreement, all compensation for the rental right payable or which may become payable to Lender or Artist on account or in the nature of a tax or levy, through a collecting society or otherwise. Artist shall cooperate fully with Production Company in the collection and payment to Production Company of such compensation. Further, since under this Agreement Production Company has paid or agreed to pay Artist full consideration for all services rendered and rights granted by Artist, Artist assigns to Production Company, except to the extent specifically reserved to Artist under any applicable collective bargaining or other industry-wide agreement, all other compensation payable or which may become payable to Artist on account or in the nature of a tax or levy, through a collecting society or otherwise, under the applicable law of any territory or jurisdiction, including by way of illustration only, so-called blank tape and similar levies. Artist shall cooperate fully with Production Company for the collection and payment to Production Company of all such compensation.

6. PRODUCTION COMPANY’S CONTROLS: As between Artist and Production Company, subject to the terms of the Agreement, Production Company shall have full and exclusive budgetary, financial, creative and business control over the Picture. Artist shall not at any time without Production Company’s prior written approval obtained in each case (whether before, during or after the term), make any public statements, release or authorize any information, advertising or publicity relating to the engagement hereunder, the Picture, or Production Company or Production Company’s personnel or operations[, provided Artist can make incidental non-derogatory references in personal publicity].

7. NAME AND LIKENESS: Production Company shall have the perpetual right, and may grant to others the right, to disseminate, display, reproduce, use, print, publish and make any other uses of Artist’s name, (approved) sobriquet, (approved) voice, (approved) signature and/or (approved) likeness (whether or not taken from the Picture), and (approved) biographical material concerning Artist as news or information matter for advertising, publicizing and exploiting the Picture. Artist’s services, including but not limited to, the right to use and authorize others to use the same in the credits of the Picture, in trailers, in commercial tie-ups, and in all other forms and media of advertising and publicity and for novelizations and other publications, and for advertising and/or merchandising any product, commodity or service[; provided that Artist shall not be represented as endorsing any products or services without Artist’s prior consent]. Production Company contemplates recording and exploiting motion pictures, including, without limitation, “behind-the-scenes” or “making-of” productions (jointly and severally, “Promotional Rights”) about the development and production of the Picture. Artist agrees to participate in and consents to such recording and exploitation (including, without limitation, the use of any clip footage from such Picture and behind-the-scenes photography and recorded interviews with Artist (but excluding any depiction of Artist in the nude without Artist’s approval) and grants to Production Company, in perpetuity and throughout the universe, the right to use Artist’s name, (approved) voice and (approved) likeness in connection with such Promotional Rights for no additional consideration, inasmuch as the compensation payable to Artist under this Agreement for the Picture shall be deemed to include compensation for all rights granted pursuant to this paragraph.

8. PRODUCTION COMPANY’S BREACH: Notwithstanding any contrary provision, or the operation of law, the Agreement shall not be terminated because of a breach by Production Company of any of the terms, provisions or conditions in this Agreement until Artist has given Production Company written notice of any such breach and Production Company has not within a period of (specify time period for Production Company to implement a cure, e.g., ten (10) business days) after receipt of such notice from Artist cured such breach. Artist’s rights and remedies in any event shall be strictly limited, if otherwise available, to the recovery of damages in an action at law, and in no event shall Artist be entitled to rescind this Agreement, revoke any of the rights granted, or enjoin or restrain the production, distribution, exhibition or exploitation of the Picture, or any other motion picture, remake, sequel, television Picture or derivative production.

9. NO OBLIGATION TO USE: Production Company shall have no obligation to produce, release, broadcast or otherwise exploit the Picture, or to use Artist’s services or the rights granted, and Production Company shall be deemed to have fully satisfied its obligations by paying to Artist the fixed compensation due Artist per the terms of the Agreement.

10. CREDIT: Except as expressly provided to the contrary in the Agreement, Production Company shall determine, in its sole discretion, the manner, form, size, style, nature and placement of any credit given to Artist, subject only to the provisions of applicable guild or union agreements. No inadvertent failure of Production Company to comply with the provisions regarding credit, no failure, error or omission in giving credit due to acts of third persons, nor the omission of credit where the exigencies of time make the giving of credit impracticable, shall constitute a breach of the Agreement. In the event of a breach of this paragraph, Artist’s remedies, if any, shall be limited to the right to recover damages in an action at law and in no event shall Artist be entitled to terminate or rescind the Agreement, revoke any of the rights granted or to enjoin or restrain the distribution or exhibition of the Picture.

11. NOTICES; PAYMENTS: All notices, accountings and payments (collectively, “notices”) which either Production Company or Artist shall be required to give shall be in writing and shall be served by United States mail to the address specified in the Agreement or by email (with confirmation of receipt) or by personal delivery, or at such other address which either party may hereafter give by written notice. Service of any notice, statement or other paper upon either party shall be deemed complete if and when the same is personally delivered to such party, upon receipt of such party of an email (with confirmation), or upon its deposit in the continental United States in the United States mail, postage or prepaid registered or certified mail, return receipt requested, and addressed, as the case may be, to the party which is the recipient at its address in the Agreement. [Production Company agrees to provide a courtesy copy of all notices to (insert name, address and email address of Artists’ attorney); provided however, any inadvertent or casual failure to do such by Production Company shall not be deemed a breach of this Agreement.]

12. SUSPENSION; TERMINATION: If Artist fails, refuses or is unable for any reason to render any of Artist’s material services, or if Production Company’s development and/or production of the Picture is interrupted or materially interfered with by reason of any governmental law, ordinance, order or regulation, or by reason of fire, flood, earthquake, epidemic, pandemic, labor dispute, lockout, strike, accident, act of God or public enemy or by reason of any other cause, thing or occurrence of the same or any other nature not within Production Company’s control (collectively, “Force Majeure”), Production Company shall have the right: (i) to terminate the Agreement (whether or not Production Company has previously suspended the Agreement) and Production Company shall have no further obligation to Artist (except to pay accrued but unpaid compensation in the event of Force Majeure or the death or disability of Artist), or (ii) at Production Company’s option, to suspend the Agreement for a period equal to the duration of any such failure, refusal, or inability or the occurrence of any events of Force Majeure, and no compensation shall be paid or become due to Artist for such period. No suspension shall relieve Artist of Artist’s obligation to render services when and as required by Production Company under the Agreement, except during the continuance of a disability of Artist. Unless the Agreement shall have been previously terminated as provided above, any such suspension shall end promptly after the cause of such suspension ceases, and all time periods and dates hereunder shall be extended by a period equal to the period of such suspension. Notwithstanding the foregoing, upon the material breach by Artist of any terms and conditions of the Agreement, Production Company shall immediately have the right, exercisable at any time, to terminate the Agreement by so notifying Artist; provided, that Production Company agrees to notify Artist in writing of such election to terminate and Artist shall have a period of (specify time period for Artist to cure a breach after notice from Production Company, e.g., forty-eight (48) hours (twenty-four (24) hours during principal photography)) following receipt of such notice within which to cure the breach, provided that the breach is curable and was not willful and provided further that the right to cure shall only be available for the first breach of this Agreement by Artist and shall not be deemed a waiver of Production Company’s right to recover damages resulting from Artist’s breach. If Artist is terminated because of one or more events of force majeure and the Picture resumes development and/or production within (specify time period of resumption of development and/or production after a force majeure interruption, e.g., twelve (12) months) thereafter, Artist shall have the right, provided Artist is available when and where required by Production Company, to be reinstated per the terms of the Agreement. [Artist shall not be suspended because of a force majeure event, unless all other individuals rendering services on the Picture are suspended, and Artist shall have not less favorable rights regarding suspension, termination and resumption because of a force majeure event as those accorded by Production Company to any other individual rendering services on the Picture.]

13.(a) Waiver: No waiver by either party hereto of any failure by the other party to keep or perform any covenant or condition of the Agreement shall be deemed to be a waiver of any preceding or succeeding breach of the same, or any other covenant or condition. Neither the expiration nor any other termination of the Agreement shall affect the ownership by Production Company of the results and proceeds of the services rendered by Artist, or any warranty or undertaking on the part of Artist. The remedies provided shall be deemed cumulative and the exercise of any one shall not preclude the exercise of or be deemed a waiver of any other remedy, nor shall the specification of any remedy exclude or be deemed a waiver of any rights or remedies at law, or in equity, which may be available to Production Company, including any rights to damages or injunctive relief. All rights granted to Production Company are irrevocable and without right of rescission by Artist or reversion to Artist under any circumstances, and Artist’s rights and remedies shall be limited to the recovery of damages. Artist shall not have the right to enjoin or restrain the production, distribution, exhibition or other exploitation of the Picture in whole or in part.

(b) Assignment: Production Company shall have the right to assign all or any part of its rights under the Agreement to any person, but no such assignment shall relieve Production Company of its obligations hereunder unless the assignment is to a studio, major production company, a network, a Lender acquiring substantially all the assets of Production Company, a parent of Production Company or a financially responsible party who assumes Production Company’s obligations in writing. Artist shall not have the right to assign the Agreement or any of Artist’s rights. This agreement will be binding upon and inure to the benefit of the Production Company’s respective licensees, successors and assigns. No additional compensation shall accrue or be payable to Artist for any services rendered at night, on Sundays or holidays or after the expiration of any number of hours of services in any period.

(c) Jurisdiction: The laws of the State of (specify name of state of governing law) applicable to agreements executed and to be wholly performed within the State of (specify name of state of governing law) shall apply to this Agreement. The parties agree and consent to the jurisdiction of the courts of the State of (specify name of state of governing law) and agree to venue in courts located in (specify location of city and state of venue of any legal proceedings). If there shall be any conflict between any provision of the Agreement and any applicable law, or applicable guild or union agreement, the latter shall prevail, and the provision or provisions of the Agreement shall be modified only to the extent necessary to remove such conflict, and as so modified the Agreement shall continue in full force and effect.

(d) Guild/Union: Production Company shall have the rights to the maximum extent permissible subject to applicable guild or union agreements, to apply all compensation paid to Artist on account of Artist’s services under the Agreement as a credit against any and all amounts which may be required under the collective bargaining agreements to be paid to Artist for Artist’s services, the results and proceeds thereof, the rights granted by Artist and for any other reasons. If, pursuant to such collective bargaining agreements, Artist is entitled to any payment in addition to or greater than those specified by the Agreement, then any such additional or greater payment made by Production Company shall, except to the extent expressly prohibited by the collective bargaining agreements, be considered as an advance against and deducted from any sum which may subsequently become payable to Artist hereunder. If, in determining the payments to be made hereunder, there is required any allocation of the compensation paid to Artist as between Artist’s various services, Artist agrees to be bound by such allocation as may be made by Production Company in good faith.

(e) Withholdings: Production Company may deduct and withhold from the compensation payable to Artist any union dues and assessments to the extent permitted by law and any amounts required to be deducted and withheld under the provisions of any statute, regulation, ordinance, order and any and all applicable amendments requiring the withholding or deduction of compensation. If, pursuant to Artist’s request or authorization, Production Company shall make any payments or incur any charges for Artist’s account, Production Company shall have the right to deduct from any compensation payable to Artist any charges so paid or incurred, but such right of deduction shall not be deemed to limit or exclude any other rights of credit or recovery or any other remedies that Production Company may have. Nevertheless, Production Company shall not be obligated to make any such payments or incur any such charges.

(f) Directed Withholdings: If Production Company is directed, by virtue of service of any garnishments, levy, execution or judicial order, to apply any amounts payable hereunder to any person, firm, corporation or other entity or judicial or governmental officer, Production Company shall have the right to pay the amounts in accordance with such directions, and Production Company’s obligations to Artist shall be discharged to the extent of such payments. If because of conflicting claims to amounts payable hereunder, Production Company becomes a party to any judicial proceeding affecting payment or ownership of such amounts, Artist shall reimburse Production Company for all costs, including attorneys’ fees, so incurred.

(g) Entire Agreement: These Standard Terms and Conditions and the principal agreement to which they are attached constitutes the entire Agreement between the parties, supersedes all prior agreements and understandings, whether written or oral, pertaining thereto, and cannot be modified except by a written instrument signed by Artist and an authorized officer of Production Company. No officer, employee or representative of Production Company has any authority to make any representation or promise in connection with the Agreement or the subject matter which is not contained herein, and Artist agrees that Artist has not executed the Agreement in reliance upon any such representation or promise.

(h) Lender’s Obligations, Representations and Warranties, and Dissolution: If the Agreement is entered between Production Company and a corporation (“Lender”) which furnishes the services of Artist, Lender represents and warrants that it is duly organized and presently in good standing in its state of incorporation or organization, as applicable; has a valid agreement with Artist under which Lender has the right to enter the Agreement and grant Production Company any and all services and rights granted and make all representations, warranties and agreements made by Artist. Production Company shall pay Lender all compensation that would have been payable to Artist if Production Company had directly employed Artist, and Production Company shall not be obligated to make any payments to Artist. Artist’s services shall be rendered as Lender’s employee and Lender agrees to fully perform all such obligations and indemnifies Production Company from all claims, liabilities and expense (including, without limitation, [outside] attorneys’ fees) for withholding and/or payment of any sums required to be paid by an employer to any governmental authority or pursuant to any guild or union health, welfare or pension plan, or on account of any other so-called fringe benefits, or workers’ compensation premiums. Artist represents and warrants that Artist is familiar with the terms hereof and agrees to be bound by same and agrees to look solely to Lender for all compensation or other consideration for the rights granted and services to be rendered. If Lender or Lender’s successors in interest should be dissolved or otherwise cease to exist or for any reason fail, be unable, neglect or refuse to perform, observe or comply with any or all of the terms and conditions of the Agreement, Artist may, at Production Company’s election, be deemed a direct party to the Agreement until completion of the services required of Artist, upon the terms and conditions of the Agreement. In the event of a breach or a threatened breach of the Agreement by Lender and/or Artist, Production Company shall be entitled to seek legal, equitable and other relief against Lender and/or Artist, in Production Company’s sole discretion. Production Company shall have all rights and remedies against Artist that Production Company would have if Artist were a direct party to the Agreement. Production Company shall not be required to resort first to or exhaust any rights or remedies Production Company has against Lender before exercising Production Company’s rights and remedies against Artist.

(i) IRCA: All of Production Company’s obligations are conditioned upon and subject to Artist’s delivery to Production Company of a completed and certified Employment Eligibility Verification (Form I-9) in compliance with the Immigration Reform and Control Act of 1986.

(j) Further Documents: Artist agrees to perform such further acts and to execute, acknowledge and deliver such further documents and instruments, including, without limitation, certificates of authorship and certificates of engagement regarding all material furnished by Artist, as may be ([necessary or appropriate] or [required]) to carry out the intent of the Agreement, and to evidence Production Company’s ownership of the results and proceeds of all services rendered by Artist, and Artist hereby appoints Production Company as Artist’s attorney-in-fact, which appointment is irrevocable and coupled with an interest, with full power of substitution and delegation, to execute any and all such documents which Artist fails to execute within (specify time period for Artist to execute documents, e.g., five (5) business days) after Production Company’s request, and to do any and all such other acts that Artist fails to do after Production Company’s request. [Production Company shall promptly provide Artist with copies of all documents so executed.] [Production Company’s inadvertent failure to provide such copies to Artist shall not constitute a material breach of the Agreement.]

14. WORKER’S COMPENSATION: For the purpose only of determining the applicability of Workers’ Compensation statutes to Artist’s services under the Agreement if the Agreement is entered between Production Company and Lender, an employment relationship exists between Production Company and Artist, Production Company being Artist’s “special employer” and Lender being Artist’s “general employer”. In this regard, Lender agrees (a) that the rights and remedies of Artist and Artist’s heirs, executors, administrators, successors, licensees and assigns against Production Company, its officers, agents and employees (including any persons whose services are furnished to Production Company by any corporation or other entity under an agreement granting Production Company the right to supervise, control and direct such person’s services [“other special employees”] by reason of any injury, illness, disability or death of Artist which falls within the purview of applicable Workers’ Compensation statutes and which arises out of and in the course of Artist’s services under the Agreement will be limited to the rights or remedies provided under such Workers’ Compensation statutes; (b) that Production Company, its officers, agents and employees will have no obligation or liability to Lender or Artist by reason of any such injury, illness, disability or death; (c) that neither Lender nor Artist, nor any of Artist’s heirs, executors, administrators, licensees, successors or assigns will assert any claim by reason of any such injury, illness, disability or death against any other corporation or entity which furnishes to Production Company services of any other special employee; and (d) that to the extent required by law, Lender has and, at all times during the term of Artist’s engagement and services hereunder, shall maintain workers’ compensation insurance covering Artist. Lender and Artist hereby agree to defend, indemnify and hold Production Company, and any person or entity claiming under or through Production Company, harmless from and against all claims, demands, liabilities, losses, costs (including reasonable [outside] attorneys’ fees), and expenses (other than any claims, demands, etc. under applicable Workers’ Compensation statutes) arising in connection with any such injury, illness, disability or death. Lender, Artist and Production Company hereby make any election necessary to render Workers’ Compensation statutes applicable to Lender’s engagement to furnish the services of Artist hereunder.

Part of the Agreement (“Principal Agreement”), dated as of (insert date of Principal Agreement), between (insert name of Production Company) (“Production Company”) and (insert name of net proceeds participant, that is, the Artist) (“Participant”), relating to the motion picture presently-entitled “(insert title of motion picture)” (the “Picture”). To the extent Participant is entitled to any portion of “Net Proceeds” from the Picture pursuant to the Principal Agreement, said Net Proceeds shall be defined, computed, accounted for and paid in accordance with this Exhibit.

I. GENERAL COMPUTATION:

“Net Proceeds” means “Gross Receipts,” as defined in Article II, less the following, deducted in the following sequence:

A. “Distribution Fees” as defined in Article III;

B. “Distribution Expenses” as defined in Article IV;

C. “Production Cost” as defined in Article V, with interest on the unrecouped portion thereof at (specify interest computation, e.g., one percent (1%) per annum) above the prime rate charged from time to time by Production Company’s bank; interest shall be deducted before principal; provided, however, if the interest rate exceeds the maximum lawful rate of interest which may be charged by Production Company, then such interest shall be reduced to the maximum lawful rate; and

D. All contingent deferments, debts, and recoupments and other contingent amounts not included in Production Cost, other than net profit participations payable to third parties.

II. GROSS RECEIPTS:

A. “Gross Receipts” means all cash received (in U.S. dollars in the United States) by [or credited to] Production Company for the right to cause the exhibition of the Picture in substantially complete form to an audience in any medium, including, but not limited to, videocassette, DVD, all forms of television, internet or theatrical or non-theatrical direct projection, any reissue of the Picture, any foreign language or dubbed version, net recoveries of Production Company from infringement of copyright of the Picture, and the amounts referred to in Article II.D and E. Gross Receipts shall not include the following:

1. The receipts of any theatre or other user (including, but not limited to, radio or television broadcasters, streamers, cable and closed circuit producers and distributors, book or music publishers, phonograph and CD record producers or distributors, and merchandisers, manufacturers and the like) of the Picture or any rights connected therewith;

2. Any revenue from any theatrical or television remake of or sequel to, or any series based upon, the Picture, or the sale, transfer or assignment of all or any part of Production Company’s right to produce and/or exploit the same;

3. Any monies received from trailers, lithographs, lobby displays, slides and advertising accessories prepared and distributed in connection with the Picture;

4. Any revenue from the exploitation of any music in the Picture or any music publishing, commercial tie-ups, endorsements or merchandising rights except to the extent provided in Article II.D. and E;

5. Such monies derived from the distribution of the Picture as are contributed to charity; and

6. Any monies received for the use or disposition of any portion of the Picture as stock footage, cut-outs, trims, tracks, backgrounds, sound effects, props, costumes, stock shots or other properties, or monies held as deposits that are subject to refunds [until such become nonrefundable].

B. If the Picture is distributed in whole or in part by an Outside Distributor, Gross Receipts from such distribution shall be cash received by Production Company from such Outside Distributor after all charges, fees, costs, participations in net or gross receipts or other contingent payments, and all other deductions which have been made pursuant to Production Company’s agreement with each Outside Distributor; provided, however, that to the extent any items are deducted from Gross Receipts, pursuant to this Article II.B they shall not again be deducted as a Distribution Expense pursuant to Article IV.

C. Cash received by an Outside Distributor is deemed Gross Receipts when Production Company receives the Outside Distributor’s report of the computation of the portion of such cash to which Production Company is entitled and payment of such portion (or when Production Company receives such Outside Distributor’s report showing that, after the deductions and any set-offs made by the Outside Distributor on the report, Production Company is not entitled to payment of any portion of such cash). No refundable advance or security deposit paid to Production Company by any Outside Distributor shall constitute Gross Receipts [until such become nonrefundable]; but the Gross Receipts that are shown on any report received by Production Company from an Outside Distributor on which all or any part of such advance or security deposit is set off against the payment otherwise due to Production Company pursuant to such report, shall be deemed received when Production Company receives such report. Gross Receipts are subject to adjustments for refunds, rebates, credits, settlements, and discounts. If any sum that is owed by a Distributor to a licensee in connection with the exhibition of the Picture, such as a cooperative advertising allowance, shall be set off by the licensee from the amount owed for the right to cause such exhibition, the Gross Receipts shall be augmented by such sum. “Distributor” means any distributor of the Picture, including Production Company if and to the extent Production Company does its own licensing and distributing. “Outside Distributor” means any Distributor other than Production Company or any other entity owned or controlled by, owning or controlling, or under common ownership or control with, Production Company.

D. Regarding music publishing receipts, Production Company will include in Gross Receipts a sum equal to (specify percentage of receipts to be included, e.g., fifty percent (50%)) of the “publisher’s net share” of all mechanical reproduction and performing fees received (in U.S. dollars in the United States) by a music publisher which is owned or controlled by Production Company for music and/or lyrics written specifically for and synchronized with the Picture, and as to which such publisher is vested with all publishing rights. The “publisher’s net share” of mechanical reproduction fees shall be the full amount paid by the licensee, less any portion paid to any third party who may share in the publisher’s receipts, and less composer’s royalties, and less charges of any agent, trustee or administrator acting for the publisher and/or others in the collection of fees, in the amount of (specify percentage of the collector’ s fee, e.g., fifteen percent (15%)) thereof, if any; or, if the publisher shall administer the collection of such fees itself, a charge therefor not to exceed (specify maximum percentage of the collector’ s fee, e.g., fifteen percent (15%)) of such fees. “Mechanical reproduction” fees do not include synchronization license fees for use of the music by Production Company but do include synchronization fees received from unrelated third parties. The “publisher’s share” of performing fees shall be the net amount received by the publisher from any performing rights society for the music involved; or, if Production Company or the publisher shall administer the collection of all or any part of performance fees, the full amount of all performance fees collected, less composer’s share and reasonable costs and expenses in administering the collection of such fees. If the publishing rights are vested in any unrelated third party, and if a portion of mechanical reproduction or performing fees is paid by such third party to Production Company, then all of such portion paid to Production Company shall be included in Gross Receipts.

E. Regarding records embodying all or a portion of the soundtrack of the Picture, and for exploitation of merchandising, commercial tie-ins and publishing rights in the Picture, Production Company shall be entitled to license such rights per Production Company’s usual and customary terms to any third party, including without limitation to a company owned or controlled by Production Company. The monies received by such licensee shall not be included in Gross Receipts, but all sums from said licenses received by Production Company shall be included in Gross Receipts, unless Participant separately shares in such sums per the Principal Agreement or otherwise.

III. DISTRIBUTION FEES:

A. “Distribution Fees” shall mean any and all sums which are actually paid by and/or charged to Production Company by Distributor as a distribution or similar fee for distribution of the Picture, which, if Production Company is the Distributor, shall be the following percentages of Gross Receipts:

1. (specify percentage fee for theatrical and non-theatrical distribution, e.g., Forty percent (40%)) for any theatrical or non-theatrical direct projection sale;

2. (specify percentage fee for initial network free television distribution, e.g., Ten percent (10%)) for the initial national network free television sale of the Picture (including reruns accomplished as a part of such sale) if the initial use of the Picture is on national network free television in the United States in prime time (out of which Production Company shall bear any agency packaging commission payable on account of such sale);

3. (specify percentage fee for national free television distribution, e.g., Twenty-Five percent (25%)) for any national network free television sale in the United States not specified above;

4. (specify percentage fee for syndicated television distribution, e.g., Forty percent (40%)) for any free television sale in the United States other than on a national network;

5. (specify percentage fee for free Canadian television distribution, e.g., Twenty-Five percent (25%)) for the initial free television sale to a Canadian network, including reruns accomplished as part of such sale;

6. (specify percentage fee for foreign television distribution, e.g., Forty percent (40%)) for any free television sale outside the United States, except (specify percentage fee for foreign television distribution in particular territories, e.g., forty-five percent (45%)) for any free television sale in Latin America, the Caribbean, Africa or the Middle East.

7. (specify percentage fee for distribution through sub-distributor, e.g., Fifteen percent (15%)) for any outright sale or license of distribution rights to an Outside Distributor for a flat sum where such Distributor is not obligated to account to Production Company;

8. (specify percentage fee for any other distribution, e.g., Fifty percent (50%)) for any sale not specified above.

B. “Sale” means any sale, license or grant of rights. If any distribution agreement between Production Company and a Distributor provides that said Distributor shall retain a percentage of the Gross Receipts without any allocation of the portion of the Gross Receipts retained by the Distributor between distribution fees and other items, including, without limitation, distribution expenses, recoupment of non-returnable advances previously applied by the Production Company to the Picture and said Distributor’s profits, if any (sometimes referred to in the theatrical motion picture industry as a “gross deal”), then the entire percentage of the Gross Receipts so retained by said Distributor shall be deemed to be the distribution fee payable to said Distributor and there shall be no separate deduction for said Distributor’s distribution expenses, except to the extent, if any, that such expenses are charged against a portion of Gross Receipts payable to the Production Company per the distribution agreement.

IV. DISTRIBUTION EXPENSES:

A. “Distribution Expenses” means all costs and expenses incurred and payments made by Production Company and any Outside Distributor(s) in connection with the sale, lease, license, distribution, exhibition or other disposition of the Picture or any subsidiary rights, in all media, including but not limited to [(If the Picture is part of a package of motion pictures sold by Production Company, Production Company agrees to use reasonable good faith efforts to apportion and allocate such costs.)]:

1. Any rerun, use, royalty, or other payment to any person or for any right, and any related payroll tax or union fringe benefit payment;

2. Any cost in connection with the preparation, making, digitizing, duplication, editing, cutting, dubbing, subtitling, possession, packing, inspection, repair, storage, protection, and shipment (such as to or from any laboratory, Distributor, or licensee, including the payment of any laboratory, Distributor, or licensee, including the payment of any custom, fees, taxes, or imposts in connection therewith) of any digital elements and film materials, audio or video tape, still photograph, script, continuity sheet, or cue sheet, including but not limited to costs of facilities, laboratory work, digital video files, raw film or raw audio or video tape stock, reels, containers, hard drives and other materials or services;

3. Any advertising, publicity, or promotion cost or expense (whether in the form of commissions, allowances, percentages, percentage of gross receipts or the like), any agency fee or commission;

4. Any share of Gross Receipts (whether before or after breakeven) or similar payments payable to any third party more than the amount which is included as a Production Cost;

5. Any tax, tariff or fees levied upon, payable with respect to, or arising in connection with the exploitation, use, distribution, revenues, or materials of the Picture, including but not limited to sales, gross receipts, turnover, withholding, remittance, excise, use, and personal property or similar taxes, but excluding any net income, corporate, franchise, or excess profits tax [offset by any refunds];

6. Any cost of converting, transmitting, or remitting currency; any cost of collecting money from, checking the receipts or costs of, or auditing any Distributor or licensee;

7. Any litigation or other cost related to any claim brought by or against Production Company, Participant, and/or any Distributor or licensee (including but not limited to any amount paid on any judgment or settlement) [(provided, however, any recovery shall be included in the gross receipts)];

8. Any amount charged to Production Company by any Outside Distributor (except the applicable Distribution Fee specified in Article III);

9. Any government fee or the cost of any government license or permit, including but not limited to those required for import, export, licensing, exhibition, or censorship, or the cost of contesting any of the same or any other regulation or law affecting the Picture;

10. Any cost of obtaining, maintaining, protecting, or registering any intangible rights, including but not limited to copyrights, titles, trademarks and trade names, for the Picture or any element thereof;

11. Any cost of protecting the Picture physically or from legal encumbrance, by security measures, legal action, or otherwise;

12. Any legal and accounting fees or court costs in connection with this Article IV;

13. Any cost of insurance, including but not limited to errors and omissions, digital video file, liability or other insurance covering physical elements and materials;

14. A fee of (specify fee for preparing television version, e.g., One Hundred Thousand ($100,000)] for Production Company for preparation of any television version of the Picture;

15. [Required] trade association dues and assessments[ and support payments to industry academies or institutions], and

16. All similar or dissimilar [customary] expenses of every kind and nature incurred by or for the account of Production Company or any Distributor in connection with the sale, licensing, exhibition, distribution, advertising and exploitation of the Picture and any rights therein.

B. No sum excluded from Gross Receipts shall be included as a Distribution Expense, and no sum included as a Distribution Fee shall be included as a Distribution Expense.

V. PRODUCTION COST:

A. “Production Cost” means all costs and expenses incurred for “Production” (which is deemed to mean the development, pre-production, production, and post-production of the Picture) calculated according to generally accepted accounting principles in the motion picture industry, including without limitation:

1. Any cost of a type listed in Article IV if incurred for Production rather than distribution (it being understood that any particular item included in Production Cost may not also be a Distribution Expense);

2. Any cost for the right to use or purchase facilities, equipment, materials, or personnel (“above-the-line”, “below-the-line”, or other) intended to be used in connection with Production including, but not limited to, performers, writers, directors, and producers;

3. Any cost of writing, or of rights to acquire or use underlying literary, artistic, musical, intellectual property, materials or other rights, intended to be used in connection with the Picture;

4. Any financing costs and charges (other than interest);

5. A production fee for the Picture, which shall be deemed a direct cost included as an item of Production Cost, in an amount equal to (specify the Production Company’s production fee, e.g., Two Hundred Fifty Thousand Dollars ($250,000));

6. Any cost of cast insurance, digital, video and film elements and materials insurance, or insurance covering personal injury or property damage, and any cost of title or copyright search or registration;

7. Cost of production auditor and accounting fees, and any cost of legal services required for production of the Picture;

8. Any contingent deferred amount paid or payable for the fair value of rights and/or services rendered in Production, whether as a flat amount or a participation in or percentage of Gross Receipts (whether before or after so-called “breakeven” and whether such “breakeven” is actual or fictitious), or similar payments;

9. If the aggregate of all other items of Production Cost (excluding any item of Production Cost that was not budgeted out that was either covered by insurance or caused by an event of force majeure) shall exceed the budget of the Picture by more than (specify percentage amount in excess of the budget, e.g., five percent (5%)) then, an amount equal to the excess shall be deemed an additional direct cost included as an item of Production Cost; and

10. Any overhead costs and/or fees paid or incurred by or charged to Production Company by an Outside Distributor and a supervisory and administrative fee equal to (specify percentage amount of overhead fees, e.g., fifteen percent (15%)) of all other items of Production Cost.

B. Any item may be included in Production Cost when the obligation to pay is noncontingent, even if payment has not yet been made. If Production Company furnishes any of its own facilities, equipment, materials, or services in connection with Production for which Production Company has a standard rate or a reasonable “loan-out fee” or such sum as Production Company would otherwise have paid to a third party, the amount of such standard rate, loan-out fee, or the amount that otherwise would have been paid to such third party shall be deemed a direct cost included as an item of Production Cost. If a person regularly employed by Production Company shall be assigned to render services on the Picture, the standard rate or loan-out fee shall be such reasonable portion of such person’s salary as Production Company may allocate to the Production Cost.

VI. STATEMENTS AND PAYMENTS:

“Accounting period” means each calendar year or other annual period that Production Company may from time to time elect. Within (specify time period after end of accounting period, e.g., ninety (90) days) after the end of each accounting period, Participant shall be sent a statement showing the computation of Net Proceeds for such accounting period and Participant shall be paid his, her or its share of such Net Proceeds, if any. No statement need be sent for any accounting period in which there are no Gross Receipts. All expenses, such as Distribution Expenses and items of Production Cost, incurred in any accounting period that are not recovered from Gross Receipts for the same accounting period may be carried forward or backward to any other accounting period. Any withholding or deduction required by law may be made. Any item in an Outside Distributor’s statement that is acceptable to Production Company in its business judgment is deemed acceptable to Participant. A reasonable sum may be retained from Net Proceeds of one or more accounting periods to establish a reserve for uncomputed retroactive charges, residuals and for deferred items of costs. Losses incurred for one accounting period may be applied against profits derived from any preceding or subsequent accounting period. Production Company shall liquidate such reserves within (specify time period for liquidation of reserves, e.g., six (6) months) provided the reason of Production Company for withholding such reserves ends.

VII. CONCLUSIVENESS OF STATEMENTS:

Production Company shall keep all its books and records directly relating to this Exhibit in accordance with customary accounting principles in the motion picture industry. Participant may, at Production Company’s offices and at reasonable times within regular business hours, but not more than once per calendar year, have a certified public accountant familiar with accounting procedures in the entertainment industry, inspect and make copies of any such books and records not previously inspected (to the extent the information contained has not become incontestable pursuant to this Article VII), all at Participant’s expense. Each such inspection shall be completed within (specify time period allowed for completion of audit, e.g., thirty (30) consecutive days). Production Company’s methods of treating any amount referred to in this Exhibit for Production Company’s tax or financial purposes will have no bearing on the computation of Net Proceeds. Each statement shall be deemed conclusive unless Participant shall object to Production Company in writing within (specify time period allowed for Participant’s written objections, e.g., twelve (12) months) after receipt thereof and shall state in detail in such writing the basis for the objection. Participant shall be barred from bringing any legal proceeding on the subject matter of such objections later than (specify time period for bar to objections, e.g., twelve (12) months) after making such objections. [To the extent that an independent audit by Participant results in Participant’s Net Proceeds increasing by more than a (specify percentage amount of discrepancy for cost of audit shift to Production Company, e.g., Ten Percent (10%)) discrepancy, then Production Company shall be responsible for Participant’s reasonable out-of-pocket audit costs.]

VIII. FOREIGN CURRENCY:

If any foreign government shall block the conversion or transmittal of currency to be included in Gross Receipts, if Participant so requests in writing, Production Company shall (if permitted by applicable laws, rules and regulations) pay Participant his, her or its share of Net Proceeds by depositing the same in Participant’s name and at Participant’s expense with such foreign depository as Production Company shall determine. If Production Company shall make any such deposit, Participant shall pay all related costs and expenses.

IX. RELATIONSHIP OF PARTIES:

A. Production Company shall not be deemed a fiduciary, partner, or joint venturer of Participant. Participant has no legal or beneficial ownership interest in the Picture, but only the contingent right to the payment specified. Any pledge, hypothecation, mortgage, or other encumbrance of the Picture or any element thereof, or anything created per the rights therein, or any assignment, sale or transfer of rights, purported to be made by Participant, shall be void[; provided, however, that after the completion of Participant’s performance under this Agreement any assignment, sale, or transfer of Participant’s right to receive payment under this Exhibit shall be valid if it shall be made specifically subject to Production Company’s rights; and provided further that in each instance in which Participant shall wish to make any such assignment, sale, or transfer, in whole or in part, to any third party, other than by gift or bequest, Participant shall first make a written offer to Production Company, that by its own terms shall be irrevocable for at least (specify time period for written offer to Production Company regarding an assignment, e.g., thirty (30) days) from Production Company’s receipt thereof, to make such assignment, sale, or transfer to Production Company on the same terms and conditions on which such assignment, sale or transfer would be made to such third party.] Participant waives any right to sue Production Company or any Distributor regarding any matter in connection with this Agreement for relief other than money damages.

B. As between Participant and Production Company, Production Company shall have sole discretion: to make a fair allocation of any amount that is relevant under this Exhibit (such as Gross Receipts, a Distribution Expense, or an item of Production Cost) from any larger sum in which it is included; to determine whether to incur any Distribution Expense or item of Production Cost, when it is incurred, and how it is computed; to determine when the conversion and/or transmittal of currency shall occur and the exchange rate at which such conversion shall occur; to determine what items included in Production Cost shall be considered direct costs as distinguished from overhead; to determine all terms of each agreement, if any, for the distribution of the Picture, or the exploitation of subsidiary rights, including but not limited to all terms affecting time, place, medium, frequency of use, and payment; to settle any claim with respect to any such agreement or with respect to the Picture; to retain reasonable portions of Net Proceeds as reserves for contingent, uncomputed, or retroactive debts; and to commingle funds applicable to payments hereunder with other funds owned or held by Production Company. Production Company makes no representation or warranty regarding Production Company’s efforts for distribution of the Picture or exploitation of subsidiary rights or that such distribution or exploitation will result in any minimum amount of Gross Receipts or Net Proceeds.

X. DISPOSITION OF RIGHTS:

A. [Production Company agrees to use good faith efforts to treat any disposition of rights to the Picture on fair and reasonable terms.] Notwithstanding anything to the contrary and in addition to Production Company’s other rights, contained in this Exhibit, Production Company shall have the sole right and discretion to sell or otherwise dispose any or all its rights to the Picture to any person, firm or corporation. If Production Company elects to sell or otherwise dispose of the Picture or any interest therein or any right or rights therein or thereto granted by the terms of the Principal Agreement, such sale or disposition shall be made either (i) “subject to the rights of Participant” or (ii) “including any or all rights of Participant under the Agreement and this Exhibit,” as those terms are hereinafter defined:

1. A sale “subject to the rights of Participant” shall be deemed to have been accomplished by Production Company if the purchaser or assignee of the Picture or any interest therein or of any rights granted per the Principal Agreement assumes the executory obligation of Production Company to Participant arising from the future exploitation, exhibition, and turning to account of the Picture or any interest therein or any rights under the Principal Agreement, to the same extent and in the same manner as Production Company is then obligated to Participant per the Agreement and this Exhibit. Upon the assumption of such obligations by the purchaser or assignee, Production Company shall be released from and of any further obligations to Participant regarding the payment of any share of Net Proceeds provided to be paid to Participant per the Principal Agreement or this Exhibit (such applicable share hereinafter referred to as “participation”) to the extent such participation is measured by receipts in the hands of such purchaser or assignee. If Production Company makes any sale or assignment subject to the rights of Participant, then the purchase price or other consideration received by Production Company from such purchaser or assignee shall not be included in computing Gross Receipts as hereinabove defined and shall be retained solely by Production Company, and such sale shall be deemed a novation.

2. A sale “including any or all rights of Participant under the Principal Agreement and this Exhibit” shall be deemed accomplished upon any sale or assignment of the Picture or any rights therein or any rights under the Principal Agreement if Production Company makes such sale or assignment without obtaining an agreement by the purchaser or assignee to assume Production Company’s executory obligations to Participant. In such event, Participant shall not be entitled to receive any participation based upon gross receipts in the hands of such purchaser or assignee, and all rights of Participant to any participation shall be deemed extinguished and terminated by such sale, subject, of course, to the accounting for and payment of any participation of Participant based on Gross Receipts derived by Production Company from the exploitation and turning to account of the Picture and the rights therein prior to such sale or assignment. If Production Company makes such sale or assignment including any or all rights of Participant under the Principal Agreement and this Exhibit then its gross receipts derived from such sale or assignment allocated to rights in the Picture, after deducting all expenses, costs, fees and commissions incurred, shall be added to the Gross Receipts for the purpose of accounting for Participant’s participation.

B. If any sale or assignment pursuant to the foregoing provisions of this Article does not include all rights in the Picture or all rights obtained by Production Company under the terms of the Principal Agreement, then Production Company shall continue to be obligated to account to Participant regarding any rights it retains in the Picture or obtained under the Agreement, to the same extent and with the same effect as it would have been obligated to account for Participant’s participation based upon such retained rights per the terms of the Principal Agreement and this Exhibit.