Option agreement clarity needed help.

Derick Thomas · July 28, 2008

Hi everyone,

I'm in the middle of signing an option agreement, but I don't want to get swindled. I'm in need of some help understanding what certain articles of this contract mean.

This is the first is the article.

"For $1.OO and other goods and valubles consideration, receipt of which is hereby acknowledged _______ ________("Owner") hereby grants to Faye Schwab Productions, Inc. (" Producer") her successors and assignes, an exclusive option ("Option") on the screenplay currently entitled "_____" ("The Screenplay") for a period expiring on _____ _____ ____ ("The Option Period").

I'd like to know what exactly does this mean, because it sounds like they are buying the screenplay for $ 1.00.

Here's another article I'd like clarity on.

"The purchase price of the screenplay is two and one-half percent of the budget with the floor of ________________________ and a ceiling of _________________________.

What does this mean? ceiling of what the budget or the screenplay's 2.1/2 percent?

Is 2 1/2 percent even fair? What if the budget is 120 million then what do I get.

Can anyone help with this thanks? What are some things I should be asking for?

Adrian Sierkowski · July 28, 2008

I highly recommend you find an entertainment lawyer and not rely on too much input from here. Or even someone who specilizes in contract law. YOu may pay some money, but it'll probably we well worth it..

Congrats, though, on making the sale!

Derick Thomas · July 31, 2008

You're most certainly right. I was hoping to get some insight from some others who might've gone through the process. Thanks agains.

I highly recommend you find an entertainment lawyer and not rely on too much input from here. Or even someone who specilizes in contract law. YOu may pay some money, but it'll probably we well worth it..

Congrats, though, on making the sale!

Jamie Metzger · September 2, 2008

You would need to discuss a bottom and a ceiling. You certainly do not want to pay 2% of 120 million.

Alex Ellerman · September 2, 2008

okay, the 2.5% part is kind of industry standard, i think. a 100million budget means you would get $2.5 million, a 10m budget means you would get 250k.and then they put min/max levels on that. so regardless of budget, they could put you in the 500k to 1.5m range. makes sense.

However, this will likely never happen.

she is giving you the famous $1 option. meaning, she has the right for the period of the contract to pimp the script exclusively to whoever she wants, and burn it out. once people start passing on a script, it can get burned quickly. what has Faye Schwab ever done? has she ever sold/produced anything? *see below people will pass on her project. and the $1 option doesn't exactly motivate her to get off her butt. if lighting strikes, great, she gets paid. if not, no problem to her.

the questions you have asked indicate you are in over your head. it also suggests that it is unlikely you possess a fantastic (saleable) script. harsh realities.

there are scattered cases of $1 options working, but they are notoriously bad ideas, especially with neophyte producers. if i'm wrong and she's a heavy hitter, disregard my advice. if the script is good enough to option, it's good enough to pay actual $ for the right.

* edit to add. donedeal thread on her. helpful. slightly good news.

http://messageboard.donedealpro.com/boards...ead.php?t=40454

According to Studio System she has four projects in development and the last project she had produced was a Hallmark Channel MOW in 2003 and Demolition Man in 1993.

if you want to disregard all this advice, by all means, but do yourself a favor, make the option for 3 months. ask her for a list of where she's sending it, specifically to who, and maybe even why (b/c they like action, b/c there last movie was low-budget horror, b/c they have a production deal with Jessica Biel). before signing.

Jim Keller · September 2, 2008

there are scattered cases of $1 options working, but they are notoriously bad ideas, especially with neophyte producers. if i'm wrong and she's a heavy hitter, disregard my advice. if the script is good enough to option, it's good enough to pay actual $ for the right.

(Bearing in mind that I primarily work as a producer and therefore have a genetic need to get as much out of people as I can with as little cash outlay as possible...)

I think a $1 option is a great deal for someone who is starting out and is unlikely to be able to sell the screenplay elseways. You can honestly say in your next interview/pitch session "I've got a screenplay that's currently under option," and that's every bit as real as if you were paid WGA minimum for the option. It's very true that if someone else is willing to take a risk on your writing, that makes you more attractive to everyone else. And since all rights revert back to you at the end of the option, if you believe in the screenplay you can always bootstrap the production later on.

Now, once you're established, you need to start getting real money for the options you grant. But until then, the $1 option is an important rung in the ladder.

Alex Ellerman · September 2, 2008

it more than likely is a false sense of hope, especially if you have only one script. Producer gets 1 year exclusive option for $1.

You go into next meeting and say: "i have a script currently under option." They say:

1. Oh yeah? great. can i read it?

A: well, it's under exclusive option. You can read it, but it's tied up.

2. oh. who optioned it, for how much?

A: er, Faye Schwab for none of your business for a year.

3. A year! that's too long. what else do you have?

A: (you better have another kick-ass script). Hey will you want to read it if/when the option expires?

4. You mean after everyone in town has read it and passed on it? No thanks.

This really only works if Producer shingle has some kind of experience/track record. I get your point, but can't see how a $1 option is the same as the WGA minimum in your description.

I just want to caution the TS to seek further help, and protect his work, don't sell for $1. that producer doesn't appear on paper to have enough substance behind them; seek more information. real people with real contacts have no problem giving more information & proof of ability.

Jim Keller · September 3, 2008

I concur that if your only script is under option, you need to be hammering out something else. But if the choice is $1 option or remain an unproduced, never-sold-anything screenwriter, by all means take the $1 option.

If there's a choice between a $1 option and a $10,000 option, I hope I don't need to tell you which one to take...

Alex Ellerman · September 3, 2008

i can't agree... here's why:

1. an option is not a sale. after a $1 option, you are still unsold and unproduced.

2. a $1 option is akin to an attachment that does you no good. it does you precious little good to attach Tara Reid to your spec script. Yeah, she was in a Coen Bros. movie and American Pie, but guess what? she will sink your project because she is dead weight. much the same with a $1 option to a producer. You are allowing them to use you 9/10.

i will make the 1/10 allowance for the odd up and coming producer with contacts who really likes you, takes you under their wing, introduces you to an agent/manager, etc.

Steve Wallace · September 4, 2008

This does not look like a swindle at all. You are unproduced. If you decide to go with it, that is completely up to you. But do seek out the advice of an entertainment lawyer (you may make a life-long connection, I've been introduced to people through an ent. lawyer). 2.5% is pretty normal, oh and try and get your floor to be the WGA minimum, if possible.