contract STANDARD PROVISIONS - COMMERCIAL PRODUCTION CONTRACT

contract STANDARD PROVISIONS - COMMERCIAL PRODUCTION CONTRACT 1. Ownership All right, title and interest in and to the commercials and/or advertisements, all negatives, prints, soundtracks and other elements thereof, all materials exposed and/or processed in connection therewith, and all other materials relating thereto, whether or not used in the commercial(s) and/or advertisement, (the Work(s) ) shall be and remain vested in Client. In confirmation thereof, and without in any way limiting the foregoing. Contractor hereby assigns to Client all right, title and interest in and to Work(s) herein commissioned and that of any persons that Contractor engages connection with the Work(s), including copyright throughout the world and including the unqualified right of Client to create, use and to assign, license or authorize others to create and use derivative works based thereon. To the extent that the Work(s) hereunder qualify as works for hire under the provisions of the U.S. Copyright Act. Contractor hereby confirms that the Client is and shall be deemed the author thereof. Contractor agrees to execute all further documents deemed necessary in Client s sole discretion, to effectuate the terms of this assignment and shall secure the cooperation of all persons it engages to execute such further documents upon demand by Client. Client shall have the sole and exclusive right to use the Work(s) at any time in any way it chooses throughout the world, to reproduce and revise the Work(s) or any part(s) thereof, and to license others to do any of the foregoing. Client shall have the sole and exclusive right to register and claim copyright ownership of the Work(s) in all countries of the world in its own name or in the name of any other party Client may choose. Contractor shall have no right to use or authorize others to use the Work(s), whether furnished by Contractor or Agency, in any manner without the prior written approval of Agency or Client. 2. Insurance Of Elements Contractor shall at its expense obtain and maintain, until complete delivery of the Work(s) has taken place as specified, insurance covering all sound and picture elements and all other materials and properties hereunder against all loss, damage, hazard and risk in an amount sufficient to cover the cost of replacing such elements, materials and properties. At Agency s request, Contractor shall furnish evidence that such insurance is in effect. 3. Independent Contractor It is understood that Contractor is acting as an independent contractor. Any and all contracts made by Contractor in the performance hereof shall be made by Contractor as principal and not as agency of Client or Agency and neither Client nor Agency shall have any liability to any party to any such contracts made by Contractor. Contractor shall discharge all obligations imposed by any federal, state or local law, regulation or order now or hereafter in force, including, but not limited to, taxes, unemployment compensation or insurance, social security and workmen s compensation and including the filing of all returns and reports required of employers and the payment of all assessments, taxes, contributions and other sums required of them. Contractor shall remain responsible for supplying all elements necessary for the complete production provided for in the agreement. 4. Liability Insurance Contractor shall at its expense carry comprehensive public liability insurance covering any death or injury or damage to persons or property arising out of or in connection with Contractor s performance hereunder. Contractor shall at Contractor s expense carry and shall require any subcontractor that Contractor may engage, to carry the insurance coverage prior to commencement of the work hereunder. Such certificate shall provide that Agency and its client(s) are named as additional insured. The certificates shall evidence the following coverages and limits: Workers Compensation shall be in the amount required by state law and Employer s Liability shall be no less than $500,000, Commercial General liability and Automobile Liability shall be no less than $1,000,000 per occurrence and $2,000,000 in the aggregate (coverage shall include, but is not limited to, damage to persons or property; independent contractors; products liability and any contractual liability assumed under the indemnification provisions set forth in this contract). Agency and the Client reserve the right to require additional insurance coverage(s) commensurate with the nature of the production. Contractor shall obtain and maintain at Contractor s expenses, until final delivery of the commercial has taken place, insurance covering the full replacement value and additional cost that may be incurred with respect to: (a). Negative film and video (in an amount not less than the net production cost) (b). Faulty stock, camera or processing (c). Props, sets wardrobe and miscellaneous equipment (in an amount not less than what has been budgeted for each item) (d). Extra expense (e). Property damage liability 5. Warranties And Representations Contractor warrants and represents that: (a). Contractor will obtain and furnish to Agency appropriate signed consents, releases, clearances, licenses, authorizations, and other YOUNG AND RUBICAM FALL 2005 1

agreements with regard to all persons whose names, appearances, likenesses, voices or other attributes are contained in the Work(s) and for all music, properties and materials furnished by Contractor in connection with the Work(s) including but not limited to agreements assigning and confirming that all rights including copyright in the Work(s) vest and are granted to Client for its unfettered use, exploitation and disposition of the Commercials in all mediums and media throughout the world; (b). Upon delivery to Agency the Work(s) shall be free and clear of any and all claims, liens, mortgages or other encumbrances of any kind or nature whatsoever; (c). As to materials and services supplied by Contractor in its performance hereunder, Contractor shall not, and the use of the Work(s) by or under authority of Agency or Client shall not, (i) violate or infringe upon the private, civil, property or other rights of any kind or nature whatsoever of any person, firm or corporation, or (ii) violate any federal, state or local laws, orders or regulations; (d). The Work(s) shall be produced in compliance with the rules, regulations and requirements of any applicable collective bargaining agreement of any labor union or guilds with which Agency or Client may have to be required to have an agreement in order to perform this contract. All persons supplied or employed by Contractor in connection with its performance hereunder, whose services are subject to any such collective bargaining agreement, shall be compensated by Contractor at any rate not less than the minimum rate required for such services by the applicable collective bargaining agreement; (e). The prices specified herein are no less favorable to Agency than those which Contractor would be willing to offer to or accept from any other party for the services to be rendered. 6. Screen Actors Guild Agency represents that it has signed a letter of adherence to the current Screen Actors Guild/AFTRA Commercials Contract(s). 7. Indemnification Contractor hereby indemnifies and holds Agency and the Client and their respective subsidiaries, affiliates, parents, partners and licensees harmless from and against any loss, cost, liability, damage or expense (including reasonable attorney s fees and expenses) any of them may incur or be liable for arising out of any breach or alleged breach of Contractor s obligations hereunder, including but not limited to negligence, willful misconduct as well as breach of any of the representations and warranties Contractor made hereunder. 8. Force Majeure If due to force majeure occurrences, labor conditions, war, governmental action or any other cause beyond Contractor s reasonable control, Contractor shall be unable to perform its obligations hereunder, Contractor shall not be deemed to be in breach of this Contract but Agency may, by written notice to Contractor, either extend the time specified for delivery of the Work(s), or terminate this Contract forthwith or upon the expiration of any time extension Agency has granted. In the event of termination, Contractor shall promptly deliver to Agency all material in the course of production, whether complete or incomplete, and Agency s only obligation shall be to reimburse Contractor for all out-ofpocket expenses incurred by Contractor prior to termination, and only to the extent that such expenses exceed payments theretofore made by Agency hereunder. 9. Cancellation Agency shall have the right to cancel this Contract by written notice to Contractor at any time prior to completion of principal photography. In such event, Contractor shall deliver to Agency all completed and uncompleted films and material and Agency shall be liable to pay Contractor, in lieu of the price specified in Paragraph1-D of this contract, a sum which will reimburse Contractor for reasonable direct costs to the date of cancellation. In no case, however, shall payment pursuant to this paragraph exceed the price specified in Paragraph 1-D of the contract. 10. Failure To Deliver Work(s) If at any time Contractor refuses or fails for any reason other than those specified in Paragraph 8 above, to deliver Work(s) in accordance with provisions hereof, or if Contractor shall otherwise be in default under this Contract and shall fail to cure such default promptly upon Agency giving Contractor written notice to do so, or if there is filed by or against Contractor a petition of bankruptcy, insolvency or reorganization or for the appointment of a receiver or trustee of all or part of Contractor s property, or if Contractor should make an assignment for the benefit of creditors, then Agency shall have the right to terminate this Contract forthwith, and Contractor shall promptly return all Agency s and Client s property to Agency, without relieving Contractor of any obligation or waiving Agency s right to refund of all sums paid to Contractor hereunder, over and above the reasonable value of any property or material prepared by Contractor and delivered to Agency up to the date of such termination. 11. Publicity Except as otherwise authorized in writing by Agency, Contractor shall not (a) furnish or deliver in whole or in part to anyone, other than Agency and Client, the Commercial(s) or the storyboard(s), script(s), advertising copy or other elements used for or in the production of the Work(s) or (b) allow anyone, other than personnel of Agency, Client and Contractor, to view or inspect in whole or in part the Work(s) or any such other material or (c) otherwise disclose in whole or in part to anyone, other than personnel of Agency, Client and Contractor, the contents of the Work(s) or any such other materials or (d) authorize or release any advertising matter or publicity of any form containing any reference to the Work(s) or to the corporate names and or trademarks of Client and/or Agency or to Contractor s engagement or services hereunder. YOUNG AND RUBICAM FALL 2005 2

12. Audit Agency and/or Client shall have the right at any time to examine and audit all documents and records in the possession or under the account of Contractor pertaining to Contractor s services or charges under this Contract. 13. Client Wherever used in this Contract, the term Client shall mean the corporation identified as such on the reverse side hereof, its parent, subsidiary, affiliated and associated companies, its or their successors or assigns, or any one of them as such corporation may elect. 14. Agency / Client Relationship Agency is acting as agent for its Client. All rights, benefits, privileges and properties vested in Agency pursuant to this Contract are vested in Agency for the benefit of its client, and all obligations, liabilities and duties imposed on Agency by this Contract are imposed on Agency as agent for a disclosed principal and not as principal. 15. Assignment This Contract may not be assigned by either party without the written consent of the other except that Client at any time will have the right to designate any advertising agency in the place and stead of Agency, and upon such designation being made, this Contract will be read and construed as if the name of the advertising agency or firm so designated by Client was substituted for Agency or Young & Rubicam/NY wheresoever the same shall appear in this Contract, and Young & Rubicam/NY shall thereupon be released from all obligations, liabilities and duties hereunder. 16. Notices Service of all notices under this Contract shall be sufficient if given personally or mailed to any officer of Agency or Contractor at their respective addresses as herein set forth. Any notice mailed shall be deemed to have been given on the day it is mailed. 17. Failure To Exercise Rights The failure of any of the parties hereto to exercise the rights granted them herein upon the occurrence of any of the contingencies set forth herein shall not in any event constitute a waiver of any such rights upon the recurrence of any such contingency. 18. Entire Agreement This contract shall constitute the entire agreement between Contractor and Agency and no modification hereof shall be valid unless in writing and signed by both Contractor and Agency. 19. Law Governing This Contract shall be construed pursuant to the laws of the State of New York. YOUNG AND RUBICAM FALL 2005 3

contract analysis Young & Rubicam/NY is part of the WPP Group. This agency may attach riders to the Standard Commercial Production Contract. These riders may include the Direct Payment Assignment for Producer s Editorial Subcontract Charges and the Addendum to Commercial Production Contract (the Wrap-Up insurance addendum). These riders may or may not conform to AICP recommendations, and the Contractor is advised to review them carefully. Comment The cover letter to the contract stipulates that Y&R does not allow changes to their contract. Alternative If changes are made to the existing contract, add the following phrase under Contractor s signature: with noted exceptions, changes and modifications made directly on this document and on any accompanying addenda hereto signed by the Contractor. Front of Contract II. Completion of Film/Videotape Description This section holds the Contractor responsible for edited materials. Comment If the production company is not supplying editorial services, this section should list the editor as subcontractor and the sub-contractor should be responsible for the elements to be furnished in the section. Alternative Add the following to the section: For the purposes of this section II only, Contractor shall mean the editorial sub-contractor named in the Direct Payment Assignment for Producer s Editorial Subcontract Charges attached hereto. The production company as named in paragraph I shall not be responsible for any elements or services listed in paragraph II. III. Total Contract Price and Payment Schedule Description This contract includes the Agency s editor and editor s budget. The payment schedule lists the final 25% due upon delivery of elements and receipt by Agency of Proof of Performance. Comment If the Contractor is not supplying editorial services, the payment of the final 25% of production should not be contingent upon the Agency s receipt of the final edited elements. There is no Proof of Performance definition or form. Alternative In the last line of the section strike the following and add the underlined words so the sentence reads as follows: 25% upon delivery of Shooting Elements. elements and receipt by Agency of Proof of Performance. Description The Agency lists the payment schedule as 50% upon execution of the Agreement, 25% upon approval of dailies, and 25% upon delivery. Comment This payment schedule does not conform to the AICP Guidelines. Contractor should review the AICP Guidelines to determine which payment schedule is appropriate for the production. IV. General (A) Comment The Agency identifies that work done by Contractor shall be in accordance with storyboards, scripts, etc. The next sentence is too broad. Alternative hereof. Strike the following sentence, All written instructions of Agency shall be considered an integral part YOUNG AND RUBICAM FALL 2005 4

Back of Contract 1. Ownership Description This clause holds Contractor responsible to obtain all necessary patent and/or copyright licenses required for the production of commercial(s). Comment The Contractor can only assign or transfer the rights that it owns or has obtained. Alternative Add the following language to the end of the first paragraph: Notwithstanding anything to the contrary herein, Agency s rights are subject to the terms and conditions of any licenses, releases and contracts signed on behalf of said production (including but not limited to location releases, talent contracts, etc.) and Agency s rights are limited to such rights as the Contractor possesses or obtains through license or sublicense. Comment The paragraph gives all rights, title, and interest in the commercial to the Client before the Contractor has been paid. Alternative Add to the beginning of the paragraph: Upon Contractor s receipt of payment in full... Comment The definition of Works is too broad. The Contractor should not be responsible for assigning rights of materials that were not used in the commercial. Alternative Strike the following in the first sentence,...therewith, and all other materials relating thereto, whether or not used in the commercial(s) and / or advertisement, (the Work(s) ) shall be and remain vested in Client. Description The second paragraph is about the Contractor s right to use the work. Alternative withheld. Add the following to the end of the second paragraph: consent which shall not unreasonably be -or- Alternative Add the following to the end of the second paragraph: Agency hereby gives its consent to Contractor for the use of the commercial in Contractor s show reel. 2. Insurance of Elements Comment This paragraph is not applicable in the event the Agency or Client is insuring the production. Alternative Strike this paragraph if Contractor is not insuring the production. 4. Liability Insurance Comment The way this section is written, it implies that insurance is not part of the production budget. Alternative Strike the words at its expense in the first sentence of the first paragraph. Alternative Replace the word and with the word or in the first sentence of the second paragraph. Alternative In the third paragraph strike the following and add the underlined words so the sentence reads as follows: Contractor shall obtain and maintain at Contractor s expense, until final delivery by Contractor of the commercial has taken place,. Comment This paragraph discusses Workers Compensation and General Liability insurance. General Liability insurance is not applicable in the event the Agency or Client is insuring the production. Workers Compensation insurance, which remains Contractor s responsibility, will be dealt with in the Agency s Insurance Addendum. Alternative If Contractor is not insuring the production, strike this section 4 in its entirety. YOUNG AND RUBICAM FALL 2005 5

Note In the event the Agency or Client insure the production Contractor should be given an Insurance Addendum that describes the Agency s coverage, their policies, and how they will indemnify Contractor. It is important that the Agency or Client list Contractor as a Named Insured on their policies. Please also refer to AICP Wrap-Up Insurance memo, dated January 12, 2004 as well as Wrap-Up Checklist and Wrap-Up Sample form letter to Agency in the Contracts section of the AICP website. 5. Warranties and Representations Description Paragraph 5 (a) holds Contractor responsible to obtain all necessary patent and/or copyright licenses required for the production of commercials. Comment The Contractor can only assign or transfer the rights that it owns or has obtained. Alternative Add the following language: Notwithstanding anything to the contrary herein, Agency s rights are subject to the terms and conditions of any licenses, releases and contracts signed on behalf of said production (including but not limited to location releases, talent contracts, etc.) and Agency s rights are limited to such rights as the Contractor possesses or obtains through license or sublicense. 7. Indemnification Description Agency stipulates Contractor must indemnify Agency for production but this paragraph does not reciprocate indemnity for the Contractor. Alternative Add the following language to the end of the paragraph: Agency will similarly indemnify Contractor with regard to scripts and materials furnished by Agency as well as Agency s negligence, willful misconduct, and breach of any of Agency s representations and warranties. Comment The Agency is requesting Contractor to indemnify them with respect to any breach of Contractor s obligations and for losses or claims arising out of what may or may not be a breach of Contractor s obligations. Alternative In the fifth line of the paragraph strike the words or alleged breach. Comment This paragraph should be stricken or amended in the event Agency or Client is insuring the production. Alternative Strike the entire paragraph. -or- Alternative In addition to the alternatives listed above, add the following to the beginning of the sentence: To the extent such claims or damages are not covered by insurance... 8. Force Majeure Description This paragraph states that in the event of Force Majeure, Agency shall reimburse Contractor for out-ofpocket expenses and is under no obligation to make further payments to Contractor. Comment The AICP Guidelines state that the Contractor is entitled to a handling fee and director s fee, in addition to out-of-pocket expenses. If Contractor wishes to conform to the AICP Guidelines, make the following changes: Alternative Add the following language to the end of the paragraph, Agency agrees to adhere to the AICP Guidelines with respect to Contingency and Weather Days. -or- Alternative Strike and add the following language in the last sentence as indicated: In the event of termination Agency s only obligation shall be to reimburse Contractor for all out of pocket expenses incurred by Contractor prior to termination, plus director s fee and production company fee as negotiated, and only to the extent... YOUNG AND RUBICAM FALL 2005 6

9. Cancellation Description This paragraph states that in the event of Agency s cancellation, Agency shall reimburse Contractor for reasonable direct costs only. Comment The AICP Guidelines state that the Contractor is entitled to a production fee and director s fee, in addition to all out-of-pocket costs. If Contractor wishes to conform to the AICP Guidelines, make the following changes: Alternative Add the following underlined language in the second sentence as indicated, a sum which will reimburse Contractor for reasonable direct costs to the date of cancellation, plus director s fee and production fee as negotiated. 10. Failure to Deliver Work(s) Description In this paragraph the Agency reserves the right to terminate the Contract in the event the Contractor is in default. Comment If the Agency terminates the Contract under this section, the Contractor is not relieved of any of their obligations under the Contract, and the Agency is entitled to a full refund of all monies paid to the Production Company regardless of work completed. Alternative Add the following language to the end of the paragraph, Agency agrees to adhere to the AICP Guidelines with respect to Cancellation/Postponement. -or- Alternative Add the words bona fide before petition. Alternative Strike the following: without relieving Contractor of any obligation or waiving Agency s right to refund of all sums paid to Contractor hereunder, over and above the reasonable value of any property or material prepared by Contractor and delivered to Agency up to the date of such termination. 11. Publicity Description This paragraph holds Contractor responsible for releasing information about the spot and holds Contractor responsible for losses, claims and damages due to breach of this confidentiality. Comment The existing language is overly restrictive and/or not practical during the normal course of production. Alternative Add the following underlined language to the first sentence, Except as otherwise authorized in writing by Agency, which consent shall not be unreasonably withheld, Contractor shall not... Alternative Add the following to the end of the paragraph: except as may be necessary for Contractor to produce commercials in the usual and customary manner under this agreement. Comment This paragraph requires written consent for publicity or promotion of commercial(s). Alternative Add the following sentence to the end of the paragraph, Agency hereby consents to Contractor s use of commercial(s) in Contractor s show reel. 12. Audit Description In this paragraph the Agency reserves the right to audit all productions. Comment In some instances a firm bid job may contain specific areas that are cost plus. YOUNG AND RUBICAM FALL 2005 7

Alternative Add the following at the beginning of the sentence, For services or charges designated in this Contract as cost plus... and at the end of the sentence insert the following underlined words, pertaining to Contractor s cost plus services or charges under this Contract. Comment This paragraph allows the Agency to audit the Contractor for an indefinite period of time and to audit the Contractor s vendors. Alternative Strike the following in the first sentence at anytime and add in its place at reasonable times for a period of up to one year from Contractor s delivery of Shooting Elements. Alternative In the second line strike the work account and replace with the word control. 15. Assignment Description This paragraph allows Client to assign this agreement to another advertising agency without Contractor s consent. Comment Contactor has contemplated entering into this agreement with Client and its Agency, and may not wish to enter into an agreement with another advertising agency that the Client may choose. Alternative Strike and add the following language, This Contract may not be assigned by either party without the written consent of the other except that Client at any time will have the right to designate itself any advertising agency in the place and stead of Agency, and upon such designation being made, this Contract will be read and construed as if the name of the advertising agency or firm so designated by Client was substituted for Agency or Young & Rubicam/NY wheresoever the same shall appear in this Contract, and Young & Rubicam/NY shall thereupon be released from all obligations, liabilities and duties hereunder. No such designation shall relieve the Agency from any liability it has to the Contractor as of the date of designation. 16. Notices Alternative Replace the second mailed with received so the second sentence reads: Notices mailed shall be deemed to have been given on the day they are received. YOUNG AND RUBICAM FALL 2005 8