Article B3 - Options

B301

An Option contract grants the Producer the exclusive right, within a specified period, to acquire a license to produce a production based on the optioned Script Material. An Option contract does not convey such license in or of itself.

B302

Changes to and/or additional development of the optioned material may be made before this license is obtained by (i) negotiating with the original Writer, and (ii) contracting the new writing in accordance with the terms of this Agreement. In these circumstances, on the exercise of the option the Producer shall acquire a license to the optioned material as well as the changes and/or additional development contracted.

If the Producer contracts new Script Material with the original Writer under this Agreement based on the optioned material, but does not exercise the option within the specified period, the Writer may grant an option, license or assign the rights to the contracted changes to a subsequent Producer provided that:

i.	the Writer advises the subsequent Producer of the existence of the contract with the original Producer;
ii.	prior to signing a contract with the subsequent Producer, the Writer shall advise the original Producer of this fact; and
iii.	the contract between the Writer and the subsequent Producer shall be deemed to provide that the subsequent Producer shall reimburse the original Producer for its reasonable and verifiable development expenses, which amount shall be determined by the original Producer and the subsequent Producer.

The Writer may negotiate with such subsequent Producer that the Script Fees previously paid for the changes and/or additional development are not to be deducted from the Production Fee to be paid to the Writer.

B303

An Option contract between a Producer and a Writer shall specify:

i.	The payment of the Option fee, for which the Producer is granted the exclusive right to acquire a license to produce the Script Material;
ii.	The Option period, including renewals, which shall not exceed five (5) years;
iii.	The fee for each year of the Option, which shall not be less than ten percent (10%) per year (five percent (5%) per year in the case of Feature Films) of the fee payable on the exercise of the Option. This amount may be prorated;
iv.	That the only fee(s) deductible from the fee payable on exercise of the Option are Option fees paid with respect to the first eighteen (18) months;
v.	The stage of development of the Script Material being optioned and which will be acquired on the exercise of the Option (e.g. Treatment, First Draft Script, Second Draft Script, etc.); and
vi.	That if the Option contract provides for assignment, the Producer shall give written notice to the Writer immediately upon such assignment.

B304

An Option contract between a Producer and a Writer of three (3) months or less shall be completely negotiable between that Producer and Writer and shall not necessarily be subject to the provisions of this Article. In the case of Feature Films, this period may be six (6) months or less, for the first six (6) months.

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