The parties intend to produce the Picture for an approved budget of approximately , which the parties intend to fund via the Investment (as defined below), with the difference covered by production tax incentives paid via a state or country in which the Picture is produced (with the understanding that Company may secure a loan against an estimate of such tax credit proceeds).

Upon satisfaction of the Funding Conditions (as defined below), will use good faith reasonable efforts to provide or source equity financing for the Picture in the amount of approximately (the “Investment”).

The Investment will be held in the designated Company bank account until such time as the Parties have obtained a completion bond for the Picture (if Company elects to have the Picture bonded) and secured agreed-upon financing to cover anticipated tax credits or incentives, in accordance with the approved finance plan.

In this regard, and will mutually approve a budget, finance plan and cash flow for the Picture.

The funding of the Investment shall be subject to the satisfaction of the following:

i. Mutual approval of the budget for the Picture;
ii. Mutual approval of the finance plan for the Picture.

or financing sources secured by may elect to allow for the use of funds, pursuant to a mutually approved draw down schedule, from the Investment prior to the entire amount of the Investment being secured, if they so elect in their sole discretion.

In the event the equity investors (including ) in the Picture do not permit funds to be drawn down prior to the entire amount of the Investment being secured, then will provide sufficient funding to cover certain mutually-approved development expenses (e.g., engaging a casting director, location scout, line producer, etc.) (the “Development Advance”), which Development Advance will be repaid to (plus a return thereon at an annualized rate of ) as a budgeted production cost on the first day of principal photography of the Picture.

The budget of the Picture will be increased (i.e., “grossed-up”) to cover the amount of the Development Advance and the premium return thereon.

shall have approval rights over (e.g., final shooting budget, casting of lead roles, finance plan, distribution arrangements), which shall be exercised reasonably and in good faith.

a. (and/or its source, as applicable) will receive a “Preferred Return” of % of the Investment or portion thereof (i.e., the amount of the Investment plus an additional return of % thereon). (and/or its source) will recoup the Preferred Return immediately after the deduction from gross receipts of the following: distribution and sales fees and expenses, collection account fees (if any), union residuals (or a reserve established for the payment of union residuals), repayment of debt (if any).

After and any applicable sources have received the Preferred Return in full, the remaining gross receipts after the deduction of the other ongoing expenses set forth above shall be deemed “Net Profits”, and shall be payable to any approved deferments and thereafter to Net Profits participants.

All Net Profits derived from the Picture and all rights therein and by-products thereof shall be allocated % to equity investors in the Picture (the “Investors’ Share”), based on the proportion such investor’s contribution bears to the entire amount financed (i.e., the total equity invested in the Picture).

By way of illustration only, if a third party investor contributes of a total equity raise of , then such investor will be entitled to receive % of the Investor’s Share (i.e., % of 100% of all Net Profits).

The remaining of Net Profits shall be allocated to the “Producer’s Pool”, provided that all third party participations shall be allocated and payable from the Producer’s Pool (i.e., any percentage thereof granted to actors, crew, etc.).

may, in its sole and absolute discretion, make an equity investment for the production of the Picture to cover all or a portion of the Investment. If elects to make such an investment, then will enter into a separate agreement therefor with the Company, on terms to be negotiated in good faith, but consistent with the finance plan and the terms contained in this document, and in any event, on a favored nations basis with all other equity investors.

Producer Engagement

, and will be engaged as the lead producers of the Picture on terms to be negotiated in good faith.

Director Engagement

will be engaged as the writer and director of the Picture on terms to be negotiated in good faith.

Other Services

If any Party is engaged to perform services on the Picture other than producing or executive producing services (e.g., writing, directing, line producing, etc.), such services will be the subject of a separate agreement to be negotiated in good faith and the Party performing such services will be entitled to retain all forms of compensation for such services as his/its sole and exclusive property.

Consultations and Approvals

will fully and meaningfully consult with regarding the key creative and all business matters regarding the Picture. will fully and meaningfully consult with regarding the key creative and all business matters regarding the Picture.

As between and , will have final decision-making authority on all creative matters (subject to ’s approval rights set forth in paragraph 3.d. above) and the Parties will approve all business matters in accordance with the Company operating agreement; provided, will not be required to obtain ’s approval over individual expenditures within the budget once the budget, cash flow and finance plan have been agreed upon.

The Parties will use their respective consultation and approval rights reasonably and in good faith, and will not use such rights to renegotiate this Agreement, or to otherwise interfere with or prevent the development, finance, production, distribution, exploitation and exhibition of the Picture.

Books and Records

The Parties will have access to all books and records of the Company and the Picture for the purpose of performing quarterly reviews and annual audits.

Credits

, and will be accorded “Producer” credit on the Picture in first position among all producer credits on a separate card in the main titles thereof, in paid ads (subject to customary exclusions), and anywhere the so-called billing block appears.

Subject to applicable WGA and DGA requirements, will be accorded “Written By” credit (on a shared card) and shall be accorded “Directed By” credit on the Picture (on a separate card) in the main titles thereof, in paid ads (subject to customary exclusions), and anywhere the billing block appears.

and will each be accorded production company and logo credit equally, above the title of the Picture, on screen and in paid ads, and anywhere the billing block appears. Logo credits may be animated on screen, and shall appear as “bug” logo credits in the billing block. All other aspects of the foregoing credits will be determined by Company in its sole discretion.

Other Terms

This Agreement is deemed to include such other reasonable and customary terms as are included in agreements of this type, including without limitation subsequent productions, reciprocal representations, warranties and indemnities, prohibition on injunctive or equitable relief, notice and cure for alleged breaches, insurance coverage, travel, amenities (e.g., premieres and festivals, DVD copies, etc.), subject to good faith negotiation.

In this regard, it is anticipated that the Parties will execute a more formal agreement adopting the terms of this Agreement and incorporating such other terms as the Parties may agree upon following good faith negotiations. Until such time as the Parties enter into a more formal agreement, this Agreement constitutes the entire understanding of the Parties with respect to the subject matter hereof, supersedes all prior agreements and understanding, whether written or oral, with respect to the subject matter hereof, and cannot be modified except by written agreement of the Parties.