CITY, STATE ZIP
Dear Mr./Ms. AUTHORlast:
This letter, once signed as accepted by you, shall serve as the Memorandum Agreement setting forth the basic terms of the agreement between AUTHORfirst AUTHORlast (“Author”) and the undersigned, PRODUCERfirst PRODUCERlast (“Producer”), regarding Producer's option to acquire the worldwide motion picture, television and video rights, rights in all other audio-visual mediums, motion picture distribution rights in all territories and certain merchandising rights, in and to the book BOOKTITLE (“Work”), written by Author, published by PUBLISHER (“Publisher”) and registered for copyright in the name of Author in the United States Copyright Office.
1. OPTION. In consideration of the sum of OPTION AMOUNT ($$$$), payable upon execution of this agreement, Author hereby grants to Producer an exclusive and irrevocable option for the Term (as defined below), exercisable at any time within the Term ("Option") to acquire the exclusive television, motion picture and allied rights in and to the Work, in perpetuity, for exploitation worldwide in all language versions and in all manner and media of communication now or hereafter known. Producer shall have the right, at its election, to extend the Term of the Option for a second year by payment to the Author of an additional SECOND OPTION AMOUNT ($$$$) at any time prior to the expiration of the initial Option Term. The sum advanced by Producer to secure the Option shall be credited against the Rights Fee (as hereinafter defined) for exercise of the Option at such time, if any, as Producer exercises the Option pursuant to Paragraph 3 of this Agreement. The sum advanced by Producer to extend the Option beyond the initial one year term shall not be applicable for credit against the Rights Fee.2. TERM. The Option shall have an initial term (the “Term”) beginning on the date of your signed acceptance of this letter and ending twelve (12) months thereafter (subject to extension as provided herein) and subject to the payment specified in paragraph 1 above.
3. EXERCISE OF THE OPTION. Producer may exercise the Option provided in Paragraph 1 of this Agreement by paying to Author the sum of RIGHTS FEE ($$,$$$) ("Rights Fee"), less the total sum advanced for the Option, prior to the expiration of the Option period, as that period may be extended pursuant to Paragraph 1 of this Agreement, and in any event no later than the commencement of principal photography of the Motion Picture. The Rights Fee is based on a Motion Picture running time of two (2) hours or less, including commercials or advertisements if the Motion Picture is a made-for-television movie. Should the running time of the Motion Picture exceed two hours, including commercials and advertisements if the Motion Picture is a made-for-television movie, the Rights Fee will be increased proportionately (e.g., a three hour running time would result in a Rights Fee of $$$,$$$). If the Option is not exercised by payment of the Rights Fee prior to the expiration of the Option Period as the same may be extended, then all payments made pursuant to Paragraph 1 of this Agreement shall become the sole property of Author, and all of Producer's rights in and to the Work shall terminate and the Work shall thereafter belong to Author free and clear of any obligation to Producer.4. PRODUCER’S RIGHTS. In exchange for payment of the Rights Fee, Author grants to Producer the exclusive worldwide rights (the “Rights”) to
(a) produce, distribute, project, exhibit, broadcast, and otherwise transmit a Motion Picture based on the Work on all forms of television and through theatrical and non-theatrical exhibition and in all other audio-visual mediums,
(b) produce, project, exhibit, broadcast, distribute and transmit the Motion Picture in all language versions theatrically, non-theatrically, on television, by means of television, by means of videocassettes and/or laser videodiscs, cassettes or other video recording devices, and in all other media now or hereafter known howsoever transmitted and on media of all gauges and sizes;
(c) produce and distribute products and merchandise based on the images and/or sounds used in the Motion Picture; (d) the exclusive right to use the title of the Screenplay and the names of any characters in the Screenplay in connection with the manufacturing and exploitation of merchandise based on the Projects;
(d) make, publish and copyright, or cause to be made published and copyrighted, in our name or in the name of our nominees, in any and all languages and throughout the world, during the legal term of unrestricted copyright, excerpts from the Screenplay; and
(e) broadcast and transmit by radio and television, excerpts from and condensations of the Screenplay or any part thereof for the purposes of advertising and exploiting the Projects.
In addition, Producer shall have the non-exclusive right, but only for the purpose of advertising and exploiting the Projects, to use Author’s name, likeness, and biographical data.
5. AUTHOR WRITTEN SEQUELS. Should the Author write a sequel or sequels to the Work, Producer shall have the right of first negotiation and first refusal with respect to the motion picture rights of such work(s) on terms to be mutually agreed among Author and Producer.
6. SERIES OPTION. Once Producer exercises the Option, Producer shall retain, until the earlier of three (3) years after the first broadcast of the Motion Picture in the United States or five (5) years from the Option exercise date, an exclusive option ("Series Option") to purchase the rights, identical to those granted upon exercise of the Option, to produce a television series based on the Work ("Series Rights"). The fee and royalty payment for Producer to exercise the Series Option shall be in an amount to be negotiated by Producer and Author in good faith, provided that if Producer and Author are unable to agree upon a fee within thirty (30) days, such Series Option shall terminate and all Series Rights shall revert to Author. Upon the expiration of the three or five year period, Producer's Series Option shall terminate and the Series Rights shall thereafter belong to Author free and clear of any obligation to Producer. This Series Option shall remain in effect regardless of whether Bantam Doubleday Dell Publishing Group, Inc. controls the Series Rights.
7. RESERVATION OF RIGHTS. Author expressly reserves for itself for his sole use and disposition all rights not specifically granted herein, including but not limited to the right to publish the Work in printed form, and to make spoken-word, audio-only recordings of the text of the Work and novelization rights in the Work or Motion Picture. Producer agrees not to produce any audio-only product based on the soundtrack of the Motion Picture or the Sequel(s) that contains spoken dialogue from the Work for more than 10% of the running time of the audio-only product nor to produce or to license others to produce a novelization of the Motion Picture.
8. ASSIGNMENT OF RIGHTS. Producer may at its option form a Production Company (whether a partnership, a corporation, or any other business association that may now or in the future be created) to produce the films provided for under this Agreement. Alternatively, Producer may form a separate Production Company to produce each film provided for hereunder. Producer shall have the unrestricted right to assign its rights and obligations under this Agreement to said Production Company provided, however, that any such assignment shall not release Producer from its obligations hereunder unless the assignee is a major studio, major television network, or the assignment is approved in writing by Author. With the approval of the Author, Producer may similarly assign its rights and obligations under this Agreement to a partnership, corporation, or other business association in which Producer holds no interest, or to an individual or other entity. Author's approval of any such assignment shall not be unreasonably withheld. The inability of a proposed assignee in which Producer holds no interest to comply with its financial obligations under this Agreement shall be deemed reasonable grounds for withholding approval.
9. REPURCHASE OF RIGHTS BY AUTHOR. If Producer has not produced the Motion Picture within five (5) years after exercising the Option, pursuant to Paragraph 3 of this Agreement, all rights to the Work to be represented in the unproduced Motion Picture conveyed under this Agreement shall revert to the Author.
10. ROYALTY PAYMENTS. In addition to the payments provided for in the preceding paragraphs, Producer shall pay to Author five Percent (5%) of One Hundred Percent (100%) of Producer's Net Revenues from all sources derived from exhibition and exploitation of the Motion Picture. Producer's Net Revenues shall consist of proceeds actually received by the Producer (or, if the Motion Picture is produced by a Production Company, by the appropriate Production Company) from exhibition of the Motion Picture after the deduction of only (i) the actual cost of production of the Film; (ii) distribution costs, including commissions and expenses; (iii) interest charges; and (iv) residuals, royalties or other payments payable to third parties in respect of any use, distribution or exploitation of the film and provided that Net Revenues shall be defined, computed and accounted for and paid no less favorably than for any other net revenue or profit participant and under no circumstances shall there be any overbudget, abandonment or cross-collateralization penalty to Author. Producer agrees to notify Author at such time as the Motion Picture has recouped production and distribution costs and deferrals. Producer shall also pay Author Five Percent (5%) of One Hundred Percent (100%) of Net Merchandising Revenues derived from the sale of merchandise based on the images and/or sounds of the Motion Picture. Net Merchandising Revenues shall consist of all proceeds actually received by the Producer (or, if the Motion Picture is produced by a Production Company, by the appropriate Production Company), from the merchandiser or other licensee in connection with the sale, license or other exploitation of such merchandise provided that Net Revenues shall be defined, computed and accounted for and paid no less favorably than for any other net revenue or profit participant and under no circumstances shall there be any overbudget, abandonment or cross-collateralization penalty to Author.
11. CREDIT. Author acknowledges the right of the Producer to make changes in the Work deemed necessary by Producer in production of a motion picture. Author shall receive credit as Author of the Work not smaller than that accorded the screenwriter on a separate card in the main titles on all positive prints of any motion picture based on the Work. Such credit will be included in all print advertising controlled by Producer.
12. AUTHOR’S WARRANTIES. Author hereby represents and warrants: (a) that Author has full right and authority to enter into this Agreement and to grant the rights granted herein; (b) that the Work does not infringe upon or violate any right of privacy or publicity or right against defamation or any copyright, trademark or trade secret of any person, firm, corporation, or other entity; that Author holds all rights in the Work granted herein free and clear of any liens, encumbrances, claims, or litigation, whether pending or threatened; and (d) that Author has not, at any time, licensed any interest in the Work to any other person or entity, and has not to date entered, and will not hereafter enter, into any agreement, commitment, or obligation that will or might conflict with or impair Producer's full enjoyment of the rights granted herein. Author hereby agrees to defend and indemnify Producer against any loss or damage (including reasonable attorneys' fees) incurred by reason of any breach or claim of breach of the foregoing representations and warranties. The foregoing warranties and indemnities are confined solely to the contents and context of Author's edition of the Work and shall under no circumstances apply to any claim, loss or litigation occasioned, influenced, or contributed to by any other treatment or material including, but not limited to, Producer's advertising and solicitation materials.
13. PRODUCER’S WARRANTIES Producer hereby agrees to indemnify Author against any loss or damage (including reasonable attorneys' fees) incurred by Author by reason of any claim for defamation or invasion of copyright, trademark, right of privacy, right of publicity, or any other right brought against Author based upon a scene, character, or event contained in the Motion Picture, Sequel(S) or Series but not contained in the Work or any other material or treatment not contained in the Work, including but not limited to Producer's advertising or solicitation materials.
14 NOTICES. All notices hereunder shall be delivered by certified mail at the address of each party set out below:
A copy, which shall not constitute notice, shall be delivered to:
For Producer: PRODUCER AGENT/ATTORNEY
For Author: AUTHOR AGENT/ATTORNEY
A notice shall be deemed given upon receipt by the party to which addressed.
15. PAYMENTS. All payments hereunder shall be made to and in the name of AUTHOR.
16. APPLICABLE LAW. This Agreement shall in all respects be governed by and construed in accordance with the laws of the State of STATE.
17. RESTRICTIONS ON PRODUCER. It is further understood and agreed that during the Option Period and the Extended Option Period, if applicable, Producer shall not be entitled to exercise any rights in the Work. It is understood, however, that during the Option Period, or Extended Option Period, if applicable, Producer may at its expense undertake necessary pre-production activities in connection with the potential production of a motion Picture of the Work, provided that in no event may Producer commence principal photography of a Motion Picture of the Work without exercising the Option as provided herein.18. ADDITIONAL DOCUMENTS. You agree that, in the event the Option is exercised by us, this document shall constitute a valid grant, assignment and conveyance of the Rights. However, if we, in our sole discretion, shall deem it necessary, you shall execute and/or deliver to us, any and all further documents necessary or proper to evidence or secure to us the Rights herein conveyed, granted and assigned, and to perfect the recording thereof. Without limiting the generality of the foregoing, you agree to execute and deliver short form assignments of the Option and any and all Rights, herein conveyed, granted and assigned to us, duly executed and acknowledged by you, and further you agree to secure and deliver to us a quit-claim or quit-claims of all rights, licenses, privileges and property herein granted to us, duly executed and acknowledged by any persons, firms or corporations having any interest in the Screenplay or any part thereof, if we shall request the same.
19. PRODUCTION STILLS. In the event a Motion Picture is produced pursuant to this agreement, at no expense to Author, Producer will furnish Author with at least ten (10) production still photographs cleared of permissions for Author to use such photographs in the republication of the Work, and will also so furnish the production's main title, promotional artwork and other tie-in materials for said republication, cleared of permissions. Author shall have the right to use the title of the Motion Picture or any television series produced hereunder as the title of any republication of the Work.
20. COPIES OF WORK. Upon the commencement of the Option Period as provided herein, at no expense to Producer, Author will furnish Producer with at least ten (10) copies of the Work in its currently available published format. It is understood that Producer will use the books in connection with its efforts to produce a Motion Picture of the Work, and that under no circumstances shall Producer offer the books for sale.
21. RIGHT TO EXAMINE BOOKS. Author, or its duly authorized representative, shall have the right to audit Producer's books and records insofar as they pertain to this Agreement, at reasonable business hours on at least five (5) days notice. If errors of accounting amounting to more than five percent (5%) of the sums in question are found to Author's disadvantage, Producer shall pay the cost of the audit. In any event, Producer shall immediately forward to Author all outstanding sums due.
22. CAPTIONS. The captions contained herein are for convenience only, and they shall not affect the construction of any provisions hereof.
23. FORMAL AGREEMENT. It is expressly understood and agreed that the parties hereto intend to negotiate and enter into a more formal agreement, which agreement shall contain all of the terms and conditions set forth herein and such other terms and conditions as are customarily included in an agreement for the acquisition of motion picture, television, videocassette, and merchandising rights in a literary product such as the Work, including without limitation, additional customary representations, warranties and indemnities. The parties agree to negotiate the terms of such agreement in good faith, provided, however, that unless and until such agreement is executed by the parties, this Memorandum Agreement shall remain in full force and effect and shall be binding upon the parties hereto. This Memorandum Agreement shall not otherwise be modified except by written document executed by both parties.
Please sign below to indicate your acceptance of this understanding, and thereby constitute this letter a binding agreement between the undersigned.
We look forward to producing a film of which you will be justly proud.
Accepted and Agreed:
By: ___________________________ Date:_______________