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WARNER
BROS.
Warner
Bros, Inc.
4000
Warner Blvd.
Burbank,
CA 91522
(213)
843-6000
Cable
Address: Warbros
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| A. |
$15,000
payable one-half on the later of signature by studio 21 and National
Lampoon, Inc. of a copy of this letter or commencement of John
Hughes’ a
service pursuant to a signed agreement for his services, and one-half
on
the earlier of completion of Hughes’ writing services on the first draft
and set of revisions or abandonment of the
projects;
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| B. |
$10,000
if Warner Bros. exercises the option for the second draft screenplay
from
Hughes, or budgets the first draft screenplay written by Hughes,
or hires
another writer, payable one-half when Warner Bros. options the
second
draft from Hughes, elects to budget Hughes first draft, or hires
another
writer, and one-half upon the earlier of completion of the second
draft by
Hughes, completion of all writing services required by Warner Bros.
of the
second writer, or the earlier of abandonment of the project or
when the
picture is set for production; and
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| C. |
$5,000
if Warner Bros. options a second draft by Hughes and thereafter
hires
another writer, or budgets the second draft screenplay by Hughes
or any
screenplay written by a subsequent writer, payable one-half when
Warner
Bros. hires a subsequent writer or elects to budget Hughes’ second draft
or any screenplay written by another writer, and one-half upon
the earlier
of abandonment of the project or when the picture is set for
production.
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| A. |
An
above-the-title production credit in substantially the form of
“A Matty
Simmons Production” on screen, and in paid ads, in size of type of the
title of the picture;
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| B. |
A
credit as producer on screen and in paid ads in size equal to 50%
and 35%
respectively of the size of type of the title of the
picture;
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| C. |
Warner
Bros. normal exclusions and artwork title exception to apple except
the
credit as producer shall appear in any excluded ad in which director
credit appears to the director or writer credit appears to the
writer
except for award, congratulatory or special
ads.
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| D. |
Warner
Bros. may not give executive, associate and/ or producer credit
to any
third party except subject to Studio 21’s approval, which shall not be
withheld unreasonably.
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| A. |
If
within thirty days after receipt by Studio 21 of Warner Bros.’ notice of
Warner Bros. election to produce a theatrical remake or sequel
and after
good faith negotiations, Studio 21 and Warner Bros. ‘ have note reached a
mutually satisfactory agreement, or Studio 21 has not accepted
the
financial terms and conditions of this deal, then Warner Bros.
shall be
released and discharged of any obligations to Studio 21 in connection
with
such remake or sequel, except Warner Bros. shall pay Studio 21
$100,000 on
completion of principal photography of such remake or sequel plus
a pari
passu contingent deferment of $50,000 and 5% of 100% of the net
profits
reducible by the net profits payable to any writer of such remake
or
sequel to not less than 2 ½% of 100% of the net profits of such remake or
sequel. Warner Bros. shall not have the right to use the name “National
Lampoon” in such remake or sequel unless such remake or sequel is produced
by Studio 21 except as Studio 21 and Warner Bros. may
agree.
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| B. |
If
within thirty days after receipts by Studio 21 of Warner Bros.’ notice of
Warner Bros.’ notice of Warner Bros.’ election to produce a television
program or series and after good faith negotiations, Studio 21
and Warner
Bros. have not reached a mutually satisfactory agreement, or Studio
21 has
not accepted financial terms and conditions not less than those
then
currently being offered by Warner Bros. Television for individual
of
executive producer services in comparable situations, then Warner
Bros.
shall be released and discharged of any obligations to Studio 21
in
connection with such television program or series, except that
Warner
Bros. shall pay Studio 21, (a) for a prime time U.S. network television
series produced, if at all, based upon the picture, for each episode
of
such television series royalties, payable within thirty days after
the
first broadcast of each such episode, of $1,750 for each episode
which
does not exceed thirty minutes but does not exceed sixty minutes
in
length, and $2,250 for each episode which exceeds sixty minutes
in length,
and rerun payments for any such episode which has more than one
“run” in
the United States equal to 20% of the royalty paid for the initial
run of
such episode for each of the second, third, fourth, fifth and sixth
runs
thereof, provided that payment for the sixth such run, if any,
shall
constitute full and complete payment for the sixth and all subsequent
runs
thereof. Rerun royalties shall be payable not later than four months
after
the first telecast of the respective run in any city of the United
States.
In the event such
run is telecast on regional or national television network, the
applicable
rerun royalties shall be payable not later than thirty days after
the
first telecast of the respective run in any city in the United
States. In
the event such run is telecast on regional or national television
network,
the applicable rerun royalties shall be payable not later than
thirty days
after the first telecast of the respective run in any city in the
United
States; and (b) for a remake or sequel television motion picture,
or
multi-part program (such as “Shogun”) produced, if at all, based upon the
picture, for each such remake or sequel television motion picture
or
multi-part program, payable within thirty days after the first
broadcast
of each such remake or sequel television motion picture or episode
of such
multi-part program, $7,500 pro rata for each thirty minutes of
broadcast
time to a maximum of $25,000; and (c) 5% of 100% of the net profits
of any
such television program or series, reducible by net profits payable
to any
writer of such television program or series to not less than 2
½% of 100%
of the net profits of such television program or series. Net profits
shall
be defined, accounted for and paid in accordance with Warner Bros.
Television’s then current standard definition of net profits; (d) the
royalties and net profits payable pursuant to (a), (b) and (c)
above shall
include and bear similar payments to John Hughes or National Lampoon,
Inc.
for the story.
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| A. |
For
use of the name “National Lampoon” in the picture Studio 21 shall receive
$250,00 on commencement of principal photography plus (i) as an
advance
against Studio 21’s net profits, up to $150,00 from 2 ½% of the adjusted
gross receipts of the picture in excess of the greater of two times
the
cost of production of the picture and interest once or actual cash
breakeven including interest once, to actual breakdown, (ii) an
allocation
from Studio 21’s net profits of 5% of the gross receipts of the picture in
excess of actual moving breakdown, and (iii) deferments of $250,000
each
from the gross receipts in excess of gross receipts equal to the
aggregate
of actual moving breakeven plus $10,000,000 of the gross receipts,
and at
each $10,000,000 of gross receipts thereafter. In the event production
of
the picture is abandoned after commencement of principal photography,
for
any reason other than a default by Studio 21 or National Lampoon,
Inc.,
Studio 21 shall repay Warner Bros. on demand that portion of that
$250,000
paid on commencement of principal photography that the number of
weeks
from commencement of principal photography to abandonment bears
to the
scheduled number of weeks of principal photography of the picture.
In the
event of a material default by Studio 21 or National Lampoon, Inc.,
Studio
21 shall repay Warner Bros. the entire $250,000 on demand without
prejudice to any claim Warner Bros. may have or assert against
Studio 21
or the National Lampoon, Inc. as a result of said
default.
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| B. |
Warner
Bros. shall have the right and the obligation subject to this paragraph
B
and paragraph E below, to use the “National Lampoon” name as part of the
title of the picture and in connection with the advertising, distribution
and marketing of the picture. Whenever any draft or revised draft
of a
screenplay is delivered to Warner Bros. if Studio 21 advises Warner
Bros.
with the delivery of the screenplay or revised draft screenplay
that
Studio 21 disapproves of said screenplay or revised draft for the
use of
the name “National lampoon,” then if Warner Bros. elects to proceed with
the development of a picture, or hire another writer, or request
revision
from the writer delivering the screenplay or revised draft, or
sets the
picture for production, then Warner Bros. may elect, (i) to terminate
the
agreement with Studio 21 including the right to use the name “National
Lampoon” in connection with the picture and Warner Bros. may proceed with
the development and/ or production of the picture and Warner Bros.
and
Studio 21 shall be released and discharged of any obligation to
one
another in connection with the picture except Warner Bros. shall
pay
Studio 21 any unpaid accrued development fee, and subject to Warner
Bros.
obligation to acquire the story from National Lampoon, Inc. in
the event
Warner Bros. elects to produce the picture or exercise the option,
or (ii)
to proceed with the development and/ or production of the picture
pursuant
to this agreement with Studio 21 without the right to use the name
“National Lampoon” in connection with the picture without prejudice to
Studio 21’s approval of the next revised draft of the screenplay and the
use of the name “National Lampoon” in connection with the
pictures.
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| C. |
Warner
Bros. shall also have the right to use the name “National Lampoon” in
remake and sequel motion picture and television programs provided
such
remake and sequel and television programs are produced by Studio
21
pursuant to and consistent with the terms and conditions for Warner
Bros.
use of the “National Lampoon” name for the first picture except that the
payment or royalty for use of the name “National Lampoon” in a television
program or series shall be negotiated in good
faith.
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| D. |
For
use of the name “National Lampoon” in merchandising, Studio 21 shall be
entitled to receive a separate royalty of a sum equal to 7% of
the
merchandising income actually received by Warner Bros. increasing
to 10%
of the merchandising income actually received by Warner Bros. after
the
picture is in net profits, after deducting from such income name
and
likeness payments or other expenses incurred by Warner Bros. directly
in
connection with any such merchandise products or commodities using
the
name “National Lampoon” to not less than 5% or 8% respectively of the
merchandising income actually received by Warner
Bros.
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| E. |
Warner
Bros.’ right to use the name “National Lampoon” in the title of the
picture and in connection with advertising, distribution and marketing
of
the picture, shall be subject to Studio 21’s reasonable approval of the
general form of the use of the name “National Lampoon.” Once Studio 21 has
given approval of a particular form of use then Warner Bros. shall
have
the right to use that form of use for and in connection with the
picture.
If the picture is produced by Studio 21 then the name “National lampoon”
shall be used as part of the title of the picture such as “National
Lampoon’s Vacation ‘58” or such other form or other title as Studio 21 and
Warner Bros. may mutually agree.
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| F. |
Provided
that Studio 21 or National Lampoon, Inc. has fully advised Warner
Bros. in
writing of the necessary requirements to protect Studio 21’s or National
Lampoon’s and trademarks in the name “National Lampoon,” Warner Bros.
shall follow such advice and requirements provided that an inadvertent
failure to comply with those requirements shall not be deemed a
breach by
Warner Bros. of any duty or obligation to Studio 21 nor shall any
such
inadvertent breach entitle Studio 21 or National Lampoon to sue
for or
recover damages. Warner Bros. shall make best efforts after notice
from
Studio 21 to cure prospectively any failure by Warner Bros. of
such advice
or requirements to protect the trademarks or trade names in the
name
“National Lampoon.”
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