Film agreement exhibit for distributor agreements
EXHIBIT ________
DEFINITION OF NET PROFITS
THIS IS EXHIBIT _____ TO THE ______________________ [insert name of agreement] AGREEMENT
DATED ________________ (THE “AGREEMENT”)
BETWEEN _______________________ [list parties]
DEFINITION OF NET PROFITS
Unless otherwise defined in this Exhibit, all words and phrases used in this Exhibit shall have the
meanings ascribed to them in the Agreement where the context so admits, and shall be construed in
accordance with the interpretation provisions contained in the Agreement.
For the purposes of the Agreement the following words and phrases shall have the following meanings:
“Auxiliary Receipts” means ______% of all Receipts derived by the Company pursuant to the terms of
any licenses granting rights in the music contained in the Film or in any recording contained in the Film
or in any publishing or merchandising rights in the Film after the deduction of all direct costs and
expenses of whatever nature incurred in connection with the exploitation of such rights and the
Company's overhead fee of _____%, provided that where any of such rights are exploited by an Associate
of the Company the amount of Auxiliary Receipts shall be such amount as shall be determined by the
Company in its sole discretion based on prevailing industry practice.
“Deferments and Participations” means all deferred fees and participations in profits and receipts from
the Film and other sums payable by the Company in respect of the Film, whether for services, goods,
facilities or finance, however calculated [delete if not applicable: excluding participations calculated solely
by reference to Net Profits].
“Distribution Expenses” means all costs, expenses and charges paid or incurred or required to be paid or
incurred by the Company in connection with [revise as applicable: the Company's rights in the Film or the
Distribution or the Film] including without limitation:
(a) “Advertising and Publicity Costs” means all costs and expenditure in connection with the
advertising and publicizing of the Film, including:
(i) the costs of advertising space in newspapers, periodicals and other printed publications;
(ii) the costs of advertising time on radio and television;
(iii) the manufacture of any physical materials required to advertise or publicize or promote
the Film;
(iv) the engagement of services, facilities and personnel required to advertise, promote or
publicize the Film;
(v) the costs of preparing and sending by mail or mail shot or insert advertising or
promotional material;
(vi) the costs of purchasing advertising space on billboards and other locations;
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(vii) the costs of engaging publicists, press representatives, and field and exploitation
personnel;
(viii) the costs of entertaining;
(ix) the costs of creation, preparation, placement and supervision of promotional material;
(x) the costs of formulation, performance and evaluation of research surveys, studies and
tests of advertising concepts, campaigns, media effectiveness, market demographics and
other similar matters;
(xi) the costs of creation, preparation, production, manufacture and distribution of press
books, press kits, screening invitations, tickets, programs, teasers, trailers, film clips,
special photography, biographies, synopses, displays, stills, publicity releases, posters,
advertising accessories, and records;
(xii) the costs of the creation, preparation, manufacture and distribution of artwork,
engravings, separations, mechanicals and other physical materials;
(xiii) the costs of festivals, markets and conventions and other similar promotional activities or
matters;
(xiv) the costs of participating or co-operative advertising;
together with the advertising overhead charge of the Company being _______% of the aggregate
of the above;
(b) “Checking Costs” means all costs and expenses incurred in connection with the verification or
checking of attendance and receipts at cinemas and theaters in order to determine the accuracy of
reports and statements or incurred in connection with the investigation of unauthorized
distribution, exhibition or exploitation of the Film, or to determine full use of rights granted to
any distributor, whether such costs are direct expenses or an allocatable portion of the
Company’s aggregate general checking expenses in connection with the distribution of the Film;
(c) “Claims and Litigation Costs” means all costs incurred in connection with any actual or alleged
claims by third parties, directly or indirectly, in connection with the production, distribution,
exhibition, or exploitation of the Film, including such reserves as may be established by the
Company in its reasonable business judgment as necessary to protect or indemnify the Company
in respect of any claim and all sums paid or payable by the Company, whether by means of
settlement or pursuant to any court order, and costs and expenses relating to any and all of the
foregoing;
(d) “Collection Costs” means all costs and expenses incurred in connection with the collection of
sums payable to the Company or its licensees, including reasonable legal and accountancy and
auditing fees, and all losses, damages or liabilities incurred or suffered by the Company in
connection with the collection or attempted collection of such sums, whether by litigation or
otherwise;
(e) “Conversion Costs” means the cost of conversion and transmission of all sums of money
including without limitation all administrative costs and expenses incurred in obtaining consents
requiring authorization of remittance of funds and any and all legal costs in contesting any
restriction or remittance or reclaiming any element of tax in respect of the same;
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(f) “Copyright Costs” means all costs and expenses in connection with the registration of copyrights
or titles or trade marks, or the extension or renewal of copyrights or rights of trade mark or other
similar rights throughout the world, or incurred in order to protect the ownership of copyrights
or titles or trade marks or other rights, or to prevent the infringement of such rights in the Film,
including all sums payable by the Company to third parties by way of damages or indemnity;
(g) “Insurance Costs” means all costs for insurance coverage for any risks, loss or damage in respect
of the Film or any part of it to the extent such insurance is not included in the Negative Cost,
including errors and omissions insurance and loss or damage to prints and physical material,
and, in the event that the Company shall self-insure, the insurance cost shall be such amount as
would be equal to the insurance premium the Company would have had to pay for such
insurance, as determined by the Company in its sole discretion;
(h) “Miscellaneous Costs” means telephone, telex, facsimile, postage, messenger, photocopying and
courier costs and expenses and any costs incurred in connection with the meeting of any quota
system operating in any country;
(i) “Print Costs” means all costs and expenses not included in the Negative Cost of the Film relating
to the manufacture, preparation, duplication and delivery of inter-negative material, inter-
positive material, video or electronic tape material, cassettes, discs, or other physical material
relating to the Film charged at the prevailing costs of equivalent materials in ___________ [insert
country] at __________________ [insert name of laboratory] or any similar organization, regardless
of location, selected by the Company, including without limitation:
(i) all manufacturing costs including labor, service, materials, and facilities;
(ii) all costs incurred in connection with the manufacture and delivery of foreign language
versions of the Film, whether dubbed or sub-titled, in one or more languages, including
translation, narration, looping, re-titling, superimposition and recutting, spotting, re-
recording, re-mixing, re-dubbing, re-editing the Film and any trailers of the Film, and
transportation, packaging and handling of prints;
(iii) costs incurred in connection with re-scoring, re-mixing and re-dubbing the Film,
including changes, eliminations and additions required to exploit the Film or conform to
the requirements or recommendations of censorship, classification or rating by any
government or local organizations or any other persons, including exhibitors and
religious and ethnic groups and national and political regulations of any territory;
(iv) all costs of inspection, repair, and renovation of any of the foregoing materials and costs
of packaging, storing, shipping and transporting and delivering the same;
(j) “Residuals” means any residual, repeat, re-run fees and payments, fringe benefits, taxes and
other sums payable pursuant to union, guild or collective bargaining agreements in