Writing for the Green Light

by Scott Kirkpatrick

  At Purchaser’s sole discretion (meaning their decision, not Jessica’s), Purchaser may elect to extend the Initial Term for an additional period of twelve (12) months (“First Extended Term”), upon payment of One Thousand Five Hundred United States dollars (US$1,500) (“First Extended Term Payment”).

  They will undoubtedly have more language explaining a pay-out structure for yet another term hereafter, but there are no guarantees the option will ever go past an Initial Term. Concluding this section will be a block of text essentially stating that during a “living Option Term” (when Purchasing Production Company holds the rights), the rights belong exclusively to them and Jessica will not engage in conversations with the intention of soliciting her own screenplay with any third party. However, at the end of the Option Term(s) if no progression towards a Purchase is made, the rights will be returned to her. There will probably be a claim that the purchaser will provide Jessica with a breakdown or summary of all entities with whom it openly discussed her Property, but this will also be followed by generic “within reason” or “to the best of its ability” text, which basically means she’ll never exactly know who has been pitched her work and who hasn’t.

  3. “Set-Up Bonus”: In the event Purchaser assigns this Agreement (sells off the rights to Jessica’s script) to a third party and/or enters into an Agreement for further development and/or production of a Picture based upon the Property, then Purchaser shall pay Owner a lump sum amount, called a “Set-Up Bonus,” In other words, once Jessica signs over her script, the Purchasing company has the right to “flip” the rights to her script to another entity—either as a one-time sale, or as a partnership, in order to get a production into motion (and Jessica will have no control nor approval over the terms of that deal). Sometimes there might be language offering “With Owner’s Written Consent,” but not always. The amount of the “Set-Up Bonus” will always vary (again, dependent on a variety of factors), but for practical purposes, we’ll assume Jessica’s “Set-Up Bonus” to be valued at Five Thousand United States Dollars (US$5,000) in the event Purchasing Production Company, LLC ever sells off her script to another entity during their Option Period.

  4. “Exercise of Option”: This paragraph can be listed with a multitude of different titles, but the gist is to define the exact moment when this Agreement transfers from a simple Option (or “borrowing”) of Jessica’s script rights versus an outright Purchase of those rights. This clause is here to protect both the Purchaser as well as the Owner. Example: Purchasing Production Company, LLC could flip the rights to Jessica’s script to another entity it already owns (and pay Jessica the Set-Up Bonus), then simply never inform her that the company they’ve flipped it to is changing the name of her script and going into production under a different title—which would require the Purchasing company to pay Jessica the remainder of her Purchase Price… . This also protects the Purchasing company against any wild claims Jessica might make (such as assuming a film of comparable style and tone is based off her script when it is, in fact, just coincidentally similar). The generally excepted “moment” of an Exercised Option (or an Option that has transitioned into a Purchase) is the moment a camera captures an image, while on a set, depicting a scene from the optioned script (whether that film is produced by Purchasing Production Company, or any future entity Purchaser engages in business on behalf of Jessica’s script) that can reasonably be traced back to this Option/Purchase Agreement (whether that film is going by another title or not).

  5. “Purchase Price”: Once the Purchaser finally places and secures a deal to officially green-light and produce a Feature Film based upon Jessica’s script, her script has become “Purchased.” And with this new transition comes (1) a lump sum payment owed to her, along with (2) a long list of protections and contingencies that all hover around Purchasing Production Company and any future claims brought against them.

  First, about the “Purchase Price” payment: Sometimes there is a minimum amount herein (a flat dollar amount, or a minimum benchmark of some kind to be used as a reference), but not always. More often than not, it is a more vague and open-ended price based upon bits of data you’re simply not privy to. For instance, the Purchase Price might be, “the amount equal to five percent (5%) of the total production’s budget as defined herein as Production Budget (“Production Budget”) less initial Option fee, all financing costs, completion bod fees, contingency services, bank or financial institutional charges and respective interest, insurances, general overhead, subject to a minimum ‘floor’ of not less than Fifteen-Thousand United States Dollars (US$15,000) (‘Minimum Purchase Price’) and a maximum ‘ceiling’ of not more than One Hundred Fifty Thousand United States Dollars (US$150,000) (‘Maximum Purchase Price’).” What does this really mean?

  It means Purchasing Production Company’s minimum check to Jessica would be $18,500 if they secure a deal through a third party, and $13,500 if they simply move into production themselves… . Sure, the minimum “floor” is $15,000, but that amount is less the initial $1,500 Option Fee. If a Third Party is involved, Purchasing Production Company must pay Jessica that additional $5,000 Set-Up Bonus on top of the $13,500 owed to her. But what if the Production Budget soars and Jessica’s script turns into a major Hollywood Studio film? Very slim chance… . All of these figures are really based upon a hypothetical Production Budget (one that also has several other costs and factors which can be added or removed at will). And what have we learned about Production Budgets? The numbers change depending on who’s asking and who’s telling. The way the payment structure is spelled out here, the smaller the budget, the less money Purchasing Production Company would owe Jessica (which means it’s to their advantage to find a way to make the budget as small as possible).

  Key point to look for here: You want a flat Purchase Price, one that is very clear without a bunch of floating variables. A percentage of a high Production Budget is a definite floating variable to be avoided. Sure, it could be a jackpot, but the truth is Production Budgets are rarely reported accurately and indie films get shot for much less than you’d imagine. Only sign on a contract where you clearly understand the exact amount you’ll get paid, while trying to avoid “if/then” scenarios—they’ll always be used against you.

  6. “Contingent Proceed Compensation”: This paragraph, which can go by a number of different titles, essentially exists to discuss hypothetical royalties. Well-intentioned indeed, but don’t royalties always seem to be contingent on something? As long as Jessica isn’t in Material Breach (meaning, as long as she hasn’t broken any of the terms within this Agreement), then she could be entitled to a small amount of “back-end,” should it exist—but this amount will always be “net” of something (meaning she’ll only be gaining a small percentage of what are often referred to as “Defined Proceeds,” or the amount the Production Company will actually “recognize” (or “acknowledge”) as legit profit. Again, when working in the non-union indie zone, do not get held up by the notion of royalties. These are often used as barter tools by the contract negotiators to get you to sign for a lower Purchase Price or Initial Option Fee. Jessica should only be looking at the guaranteed minimums in this deal (as should you). That’s not to suggest that Production Companies are all crooked, it’s just that in reality there’s rarely anything left after they’ve added up all their conceivable expenses and paid out everyone else in the royalties line.

  7. “Grant of Rights”: When the “Option is Exercised” (meaning, once the Purchaser legitimately Purchases Jessica’s script), the Purchaser shall own, in perpetuity (forever) and “throughout the Universe” (yes, real contracts say this) any and all interest to the Property excluding only those certain “Reserved Rights” (“Reserved Rights”) as defined below (collectively, the “Grant of Rights”). Notwithstanding the foregoing (in addition yet separate from the above), Purchaser acknowledges that decisions made by any Third Party regarding individual appearances, etc., shall be negotiated separately between Third Party
and Purchaser (meaning they can essentially do whatever they want to Jessica’s script after they Purchase it from her). Without limiting the generality of the foregoing, the Grant of Rights shall be defined as:

  (a) Audiovisual Works: Here, the Purchaser will breakdown that they have the sole right to produce any conceivable audiovisual work derived from Jessica’s script. The key point is that the end result must be some type of Motion Picture (even if in short form); however, they would also own all the audio rights to that said product (including soundtrack rights). It’s not out of the question that occasionally Soundtracks featuring the music from a film might also include quotes spoken on screen. Those quotes, even though derived from Jessica’s script, would “belong” to the Purchasing Production Company. In short, if Purchasing Production Company is “buying” the script, they want to own (or at least have a piece of) any altered or derived version adapted from the Audiovisual Work (movie, TV pilot or Web-series) they create. If Jessica is allowed to hold onto any rights related to the Script (such as the ability to adapt the same script into a stage play or book), it would be spelled out here.

  (b) Copyright & Exploitation Rights: Generally, when you sell a property to another entity, they take on the copyright. If Jessica’s script were still in the Option phase, she could hold onto her copyright, but at the point of Sale, the Purchaser would inherit that copyright. They may or may not directly manage the actual paperwork with the Library of Congress, but there would be an official transfer of these rights at some point after the Purchase. Once the copyright officially belongs to the Purchaser, they forever have the right to “Exploit” that copyright and renew any “soon to expire” copyrights.

  (c) Alteration Rights: This block essentially hands the Purchaser the right to change Jessica’s script to meet its own needs. Blasphemy to some, but practical business sense to others… . The truth is, there are so many parties and entities that come and go during the process of making a film that her script will never end up word for word how she initially presented it… . Whether there are additions, deletions, translations, or any other modifications, Jessica is fully granting exclusive decision-making rights to the Purchaser.

  (d) Name, Likeness, and Biography Rights: If Jessica closes on this deal today, then in five years turns into a mega writing phenomenon, you’d better believe the mid-tier Production Company who Purchased this script will fully exploit her name, likeness, and biography for its own needs… . Sometimes, if Jessica’s script was adapted from a novel or other written source, this clause would rightfully assume you had the right to that author’s Name, Likeness, and Biography—and by the nature of this agreement, those rights would be handed over to the Purchaser. In addition to the above interpretation, this clause could also imply that if Jessica’s script were to be based on the “Life Rights” of a real person—and she acquired those Life Rights in order to write her spec script (which is now the property of the Purchaser)—then those Life Rights would also be considered the property of the Purchaser.

  (e) No Obligation to Proceed Rights: Don’t mistake this as an exit clause that Jessica can use to get herself out of the deal; No Obligation to Proceed means that after Jessica enters this Agreement and has her rights Purchased, she’s no longer required or expected to perform any further actions. In some instances, the writer might be requested to remain “available” or “on call” for a period of time to perform any rewrites or necessary tweaks to the script, but more often than not, at point of Purchase, the rights are stripped from the Owner, which here simply allows Jessica to move on without hesitation. (If Purchasing Production Company would hereafter wish to bring Jessica on board to perform a rewrite or tweak of her already Purchased script, they would then issue her a Writer-For-Hire Agreement, as seen in Appendix II.)

  8. “Reserved Rights”: These are all of the remaining rights that Jessica (as the Owner) would get to hold onto even after her script is Purchased. It’s important to note that at no point would the Owner of the script ever have direct rights to any media that the Purchaser produces based upon her script… . She could license clips from the finished motion picture, for instance, but just because she wrote the script does not mean she’s entitled to everything associated with it. However, even if her script is both Purchased and later Produced by the Purchaser, she will always hold onto at least a few rights to her script (though these will differ by company). Examples could include:

  (a) Publishing Rights: Jessica could be permitted to certain publishing rights, usually limited to excerpts, from her script (not from the movie). There will usually be a certain maximum preventing her from using the entire work, such as a maximum number of words or a capped percentage from the overall work. But, let’s hypothetically say she follows her career path and becomes a very well-known screenwriter, and she later decides to put together her own “how to write a screenplay” book based upon her industry experiences; under this reserved right, she could possibly use excerpts from the script she sold as an example within that book. Although she couldn’t use the whole script, she could use a few sections to exemplify things. In this particular Agreement, Jessica is having these Publishing Rights reserved just for her, meaning she holds onto all rights related to “Publishing” (including Print, Audio Recorded Readings [e.g., a human voice], and even Electronically Read Editions [including any computer program capable of ‘reading’ from a page and modulating an audible verbalization]). Within this clause, there’s usually language referring to how the Owner must notify the Purchaser of this type of decision, if ever exercised.

  (b) Radio Rights: These rights would be equivalent to any fully performed version of the script (either in full or simply an excerpt). It could constitute a full-on production—with sound effects and multiple actors for each role—down to a simple verbal reading. The catch here is that any recorded version of such an event would be accessible (usually for free) by the Purchaser for potential exploitation or for advertisement purposes later on.

  (c) Stage Rights: These are a bit interesting. Although here Jessica would get to hold onto her right to put together a live performance based upon her script, there would usually be a “holdback” (or a finite period of time that she must wait before doing so). This could be one year, all the way up to ten years. It essentially forces all potential revenue toward watching the motion picture version produced by the Purchaser versus any other version, so that there’s no marketplace competition.

  (d) Author-Written Prequels and Sequels: If Jessica Screenwriter were to be commissioned by a Company to write a script for them that later grew to be so popular it would merit a prequel or sequel, she would not be automatically granted any rights—because the Production Company would own those rights, since it was a “work-for-hire” work… . However, in the situation of an Option/Purchase, it was Jessica’s own organic idea for the film (or its characters) that she took the initiative to craft a story from, that later grew into a popular film, she would certainly be entitled to keep or hold onto her creation for purposes of prequel, sequel, or even book franchise opportunities. But that’s not to say that if her idea were so powerful that the opportunity for a sequel (or prequel) made financial sense, that the Purchasing company wouldn’t want a piece… . Here there would most likely be language constituting another holdback period and/or a requirement that Jessica must present the Purchaser with any opportunities by a third party regarding a prequel, sequel, or other intellectual property opportunity and give them a first attempt to make an offer. However, there will be further language explaining her Holdback.

  (e) Holdback Period: Jessica technically wouldn’t be able to simply go out and exploit the Author-Written Prequels and Sequels rights on a whim or even at the first sign opportunity… . There will be certain parameters, which she must work within (and which usually include some minimum amount of time before she could actively exploit [or even work with] the concept of writing or pitching a sequel or prequel). And even after that Holdback period comes and goes, the
Purchaser might just add another block of text explaining that they would have the “First Right to Negotiate” on (or “Match”) any offer in the marketplace related to those sequel or prequel rights.

  Don’t panic about these nuances, they are very rare… . And if you ever happen to be lucky enough to be dealing with such problems, you will have so many other opportunities in the works that arguing over nickels and dimes won’t even be on your radar.

  9. “Representations, Warranties, and Indemnities”: Within any Agreement, both parties must always Warrant and Represent (promise and assure) that they’re legit and legally able to enter the Agreement; if one party is later found not to be Warranting or Representing itself properly here, then they could be considered “in breach” of this Agreement. And if such an issue were to ever arise, they would be indemnifying (keeping out of the “legal complaint”) any of the successors or partners associated (or attributed) to that other party. This is a very common block of text, which is generally very large and wordy. It essentially boils down to the fact that both parties (Jessica as the writer and Purchasing Production Company as the Purchaser) have the right to legally enter into this deal and that both parties are being legit in their claims… . For Jessica, this means that “SELLABLE FEATURE-LENGTH SCRIPT” is legitimately her property and that no one will come out of the woodwork and be able to make a statement that she somehow “stole” this work from them; it would also mean that Jessica is not part of the WGA. For Purchasing Production Company, this clause would mean it is a legit organization that is up to date regarding paperwork with the State; it would also imply that it is not misrepresenting itself as a non-WGA signatory, etc. And if any issue were to arise and a lawsuit were to be filed, Jessica would have zero right to include any of Purchasing Production Company’s employees or partners into the suit directly, just as Purchasing Producing Company couldn’t legally go after Jessica’s parents or her siblings if she’d somehow misrepresented herself.