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Residuals for Made-for-Pay Television and Made-for-Videocassette Projects

Residuals for reuse on pay television or videocassette.

Residuals for made-for-pay television or made-for-videocassette projects can be both revenue based and fixed.

Residuals on programs on which the writer's services commenced prior to May 2, 1998.

For programs on which the writer's services commenced prior to May 2, 1998, the residuals due for reuse on pay television and videocassette are calculated as 2% of the Company's combined pay television and videocassette receipts that exceed the applicable break amount. The "break amount" is a negotiated amount defined in the MBA.

Your initial compensation covers salary and runs on the pay television services, as well as videocassette/videodisc sales until the Company's receipts exceed the break amount. Thereafter, the residual is calculated at 2% of the Company's combined receipts for pay television and videocassette.

Residuals on programs on which the writer's services commenced on or after May 2, 1998.

In the 1998 MBA, a new residuals formula was established for long form (90 minutes or longer) made-for-pay television programs of a type generally produced for prime time (e.g., RKO 281) on which writing services commenced on or after May 2, 1998 and prior to May 2, 2001. The break amount no longer applies and you are entitled to a percentage of the Company's pay television receipts after a set period of time and/or videocassette receipts after a certain number of sales. For other made-for-pay television projects and made-for-videocassette projects, the break amount was reduced by 30%. Under the 1998 MBA, residuals are payable as follows:

Market Produced For Residual Payment Owed
Made-for-pay television (long form) For dramatic product on which the writer's services commenced on or after May 2, 1998, for reuse on pay television, 2% of the Company's pay television receipts after the earlier of 10 exhibition days (defined as a 24-hour period) or one year on pay television. For reuse on videocassette, 2% of videocassette receipts after the sale of 100,000 units.
Made-for-pay television (all other) 2% of the Company's combined receipts that exceed the reduced break amount.
Made-for-videocassette 2% of the Company's combined receipts that exceed the reduced break amount.

Residuals are due within 60 days of the end of the quarter in which gross receipts are received by the Company.

Residuals on dramatic programs made for pay television on which the writer's services commenced on or after May 2, 2001.

For dramatic programs of a type generally produced for network prime time, including long form, (e.g. Sex and the City, The Sopranos, and Introducing Dorothy Dandridge), the residual for reuse on pay television is triggered by the earliest of 10 exhibition days or one year from the date of the initial exhibition of the program. Thereafter, for each of the next three exhibition years, the credited writer(s) will receive an aggregate residual payment as follows:

Program Length Payment Due
1/2 hour $3,500
1 hour $6,000
2 hours or more $8,500

For each of the fifth and subsequent exhibition years on that pay television service, the credited writer(s) will receive an aggregate residual payment as follows:

Program Length Payment Due
1/2 hour $750
1 hour $1,000
2 hours or more $1,250

Residuals are due within four months of the first exhibition day of the year in question.

For reuse of such programs on foreign pay television or a subsequent U.S. pay television service, a residual of 2% of receipts after the reduced break amount is due.

For reuse of such programs on videocassette, a residual of 2% of the videocassette receipts after the sale of 100,000 units is due.

For other made-for-pay television programs and for made-for-videocassette programs, a residual of 2% of receipts after the reduced break amount is due for reuse on pay television and videocassette.

Residuals are due within 60 days of the end of the quarter in which gross receipts are received by the Company.

Residuals For Reuse In All Other Markets

If your product is released in markets other than pay television or videocassette, the following residuals are due:

Reuse Market Residual Payment Owed & Due Date
Free Television Residuals are paid the same as if the project was made for free television. The use on pay television is considered the first broadcast; the first run of the program on free television is considered the second run. For network television reuse, residuals are due within 30 days of the date of telecast. For syndicated television reuse, residuals are due within four months of the date of telecast. For foreign free television and basic cable reuse, residuals are due within 30 days of the Company's knowledge of the first foreign telecast, but no later than 6 months from the first foreign telecast.
Theatrical 100% of the theatrical minimum for worldwide reuse. Residuals are due upon theatrical release.
Basic Cable 2% of distributor's gross receipts for domestic reuse. Residuals are due within 60 days of the end of the quarter in which the Company received the revenues.
In-flight 1.2% of distributor's gross receipts. Residuals are due within 60 days of the end of the quarter in which the Company received the revenues.