The producer, director, screenwriter, and talent are part of the Above-The-Line personnel. Their Work-For-Hire Agreements are complex because their responsibilities and salaries are greater than the crews. Below are most important deal terms included in each of the Above-The-Line’s Work-For-Hire Agreements.
You can refer to the above section on Production Agreements if your picture is being financed by a studio and you are being hired by the studio pursuant to a Production Agreement. Otherwise, you and the picture’s other producers will each enter into a producer’s Work-For-Hire Agreement (“Producer’s Agreement”) with the picture’s production company. The latter is the employer and the producers its employees. I usually draft a boilerplate Producer’s Agreement that I revise for each producer, as required by the circumstances. As such, not all of the clauses described below will be included in each Producer’s Agreement.
The producer’s services are divided into five phases: development, pre-production, production, principal photography, and post-production. The development phase occurs while the producers are developing the screenplay. Pre-production commences when the picture is greenlit (the producers decide that the picture is going into production). They confirm their financing sources, hire talent, the director, and crew, and finalize preparations so they may proceed into the picture’s principal photography phase. The principal photography phase is when the picture is filmed. Post-Production is when the completed picture is edited and completed.
The Producer’s Agreement is between the producer and the production company unless the producer has a “loan out company.” A loan out company is a corporation or limited liability company, owned by the person you are hiring, that employs the person you are hiring. They exist for tax, pension and limited liability purposes. The loan out company will lend the producer’s services to the production company, who pays the producer’s compensation not to the producer but his loan out company. The producer will need to execute an “Inducement” agreeing to abide by the Producer’s Agreement; this is located at the end of the Producer’s Agreement and is a paragraph in length. Writers, directors, and talent may have loan out companies as well, so I always ask prior to drafting agreements whether they do.
The producer’s services may be exclusive to the production from pre-production through post-production. Whether they are will depend on how many producers are involved in the picture’s production and what each producer is contributing to the process. It is necessary that each producer devote the time and effort required, so that is something to contemplate when you are entering into agreements with the picture’s other producers.
The Producer’s Agreement will include a detailed list of the producer’s obligations and a timetable for each of the picture’s production phases. Furthermore, it will state the picture’s specifications, e.g., PG or PG-13 MPAA rating and running time of no less than 90 or more than 110 minutes; that TV cover shots will be provided to the production company, etc.
The producers will be paid fixed compensation that is commonly referred to as the “producing fee.” The producing fee is paid in installments from the commencement of pre-production through the completion of post-production. The picture’s production budget and producer’s track record will influence how much of a producing fee is offered. Some producers warrant producing fees in excess of $1,000,000, but most are in the $200,000 to $500,000 range.
The producers are also paid contingent compensation/profit participation. How much of the profit participation each producer is allocated depends on the third-party allocations they make. The producers start out with 50% of the picture’s profit participation, but they have to subtract from that 50% the profit participation they agree to pay to the director, talent, etc. The producers divide amongst themselves whatever Profit Participation remains after all of the third party allocations. I suggest you decline any producer’s request for a gross profits definition if you are producing an independently financed film, since it is industry standard to offer producers net profits only. Keep in mind that if you allocate an actor 5% of the picture’s gross profits that you have to convert that sum into net profits in order to know how much of the producer’s 50% remains.
The producers and their production entities are credited on screen and in paid ads. The production entities may receive a “presentation credit” above the title of the picture, such as “Dinah Perez Productions.” The individual producer screen credits are usually after the title, on a single card or shared card. Whether the card is shared depends on the producer’s track record. The producers and their production entities receive their credits in paid ads subject to the distributor’s customary exclusions for congratulatory and nomination ads. The producers are going to insist that their credits be the same size, type, boldness and duration.
Representations and Warranties
The producers will represent and warrant that they have the right and ability to enter into the Producer’s Agreement. They will also represent and warrant that any material created by them and included in the picture is original or in the public domain, and that the material created by them does not infringe copyright or trademark or defame or breach right of privacy of any third party.
Pursuant to the Producer’s Agreement, one or all of the producers represent that they have the rights to the screenplay (and underlying literary property upon which it is based). Each producer with the aforementioned rights will assign said rights to the production company. The producers will also agree to perfect the chain-of-title by providing whatever documents are necessary in order to accomplish that, e.g., copyright assignments, Option/Purchase Agreements, writer Work-For-Hire Agreements, Life Story Agreement, etc. The production company needs to own the picture’s and screenplay’s copyright, so it is imperative that all of the necessary rights and documents are delivered to it. The unions, banks, and distributors will require a perfect chain-of-title prior to proceeding.
The producer will also represent and warrant that he has the capacity and ability to enter into the Producing Agreement, and that he has not entered, and will not enter into, a conflicting agreement that would preclude him from rendering the services he is agreeing to perform. The producer will have to agree to indemnify and hold the production company harmless from any monetary losses and legal fees caused by his breach of his representations and warranties. The production company will provide the producer with a reverse indemnity clause whereby the production company will indemnify and hold the producer harmless from financial liability and losses (including reasonable legal fees and costs) related to any matter arising in connection with the production and distribution of the picture.
Name, Voice, and Likeness
Via the Producer Agreement, the producers grant the production company the right to use their name, voice, and likeness for the reasons stated above. The producers may want to approve the photos and biographies included in the picture’s press kits.
The production company will arrange for the producers to have airline tickets, hotel, car or driver, and a per diem in the event the production is located in excess of 50 miles from their residences. The producers will probably want favored nations treatment with each other. For example, you will likely have to purchase first class airfare for all of the producers if you buy it for one.
One producer may have final approval of the picture’s creative and financial decisions. In the alternative, one producer may be given final approval in case there is no consensus among the producers.
Right of Substitution/Termination
You do not want the production company to be contractually bound to keep a producer that is causing your picture to be delayed or go over budget. The production company will want the right to substitute or terminate one or all of the producers if the picture goes over budget; there are production delays and/or non-performance by a producer. The industry standards is 10 or more days in delay or the picture is over budget by 10% or more. This is an especially important clause to include if the production company has completion bond insurance. The substituted/replaced producer’s fixed and contingent compensation will be prorated unless the producer was terminated due to non-performance. If the picture goes over budget halfway through principal photography, the producer may receive whatever fixed compensation was due through that day plus a prorated portion of the contingent compensation due under the Producer’s Agreement, though expenses occasioned by the producer may be deducted from any contingent compensation paid to the producer. The production company’s obligation to pay the producer fixed or contingent compensation will terminate if the producer was replaced due to non-performance.
The producer should be added as an additional named insured to the production company’s general liability and E&O insurance policies.