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How To Succeed in Animation

Chapter 10: We Hereby Agree

Most animation books I’ve read leave out one of the most important things an animator needs to know: How To Make a Contract! Do you really need a lawyer? Here are some examples of how you can Do It Yourself and retain your ass.

There are a vast array of ways an animator or independent filmmaker can get screwed. If you get involved with a real expert, there may be no escape. But a well-drawn written agreement can save you in most cases. Decide for yourself if you need a lawyer, but legal eagles generally fly high, and need plenty of enriched dollars to keep them aloft. I may be lucky, but I've done better on contracts I've drafted myself. A lawyer has enough boiler plate to make a contract that is thicker than your full-length-film script, and you probably won't understand most of it.  From my experience with vampire producers, I have boiled down the essential armor plate to just a few pages - often just a single page - with the essentials all there. However, every project is different in one way or another, so what I present you with here are only examples, which can be modified to fit your case. The essential points:

  1. Clarity. Simple, but precise language.
  2. Use of the word "shall" in preference to "will." There is a mighty difference!  (“Will” is what you want something to be. “Shall” is what must be!)
  3. Fairness to all parties. A tricked up, one-sided contract leads to intense pain, and is non-workable in practice.

In animation work there are generally three types of contracts or agreements.

  1. Full-time employment, usually on the premises of the employer.
  2. Free lance, where your own creation is involved, and you may work externally.
  3. Free lance, where you are contracted to produce a specifically assigned project; a property, not your creation or your property.

I will show you here examples of each of these contracts, that I have actually signed and worked under, (the names have been changed to avoid attack by real lawyers.) I will follow each one with explanations of the good and bad points as necessary.

This first employee agreement is authentic, only the names are changed, and I present it in some embarrassment:

"The following shall constitute an Agreement between Foxy L.Grandpa, doing business as FoxyWoxyFilms, 123 South 45th Street, Nontown, XX 10000 USA, hereinafter referred to as "Foxy," and Gene Deitch, 999 Way Out Road, Desolation Depths, NG 99999 USA, hereinafter referred to as "Deitch."

  1. This Agreement sets forth the terms of employment of Deitch by Foxy.
  2. Deitch shall be employed as Creative Director of FoxyWoxyFilms for a two year period beginning January 1, ----, and ending December 31, ----
  3. During the term of this Agreement, Deitch shall act as creator and/or director of any cartoons or cartoon productions selected by Foxy. Deitch agrees to devote his full time and efforts to such assignments for Foxy, and to perform his assignments as such places in the United States or Europe as may be selected from time to time by Foxy. His expenses in connection with any travel made at Foxy's request shall be paid by Foxy.
  4. Deitch's functions as creator and/or director of cartoons and cartoon projects for Foxy shall be substantially similar to the functions previously performed by him during the two year period preceding this Agreement.
  5. Foxy shall pay Deitch as a minimum consideration for his services during the term of this Agreement, a salary of $000000 per annum. This sum shall be paid at the rate of $0000 per week for 50 weeks during each of the two years of this Agreement.
  6. As additional compensation for Deitch's services hereunder, Foxy shall pay to Deitch 25% of Foxy's net profits on each cartoon created and/or directed by Deitch for Foxy, after first deducting the $000000 annual salary payable in Paragraph 5 of this Agreement. Foxy's net profits shall be as determined by its accountants after deducting all production costs, salaries, travel expenses, and a fixed 30% for overhead costs. Payment of Deitch's share of the net profits shall be made at the end of each calendar year during the term of this Agreement, and shall be accompanied by a statement of Foxys accountants.
  7. This Agreement supercedes all prior Agreements between the parties hereto, except that nothing contained in the Agreement shall affect Deitch's share of profits in [LIST FILMS] series or any other cartoon films in which Deitch has any interest, under the terms of the original Agreement between Foxy and Deitch.
  8. Foxy shall have the option, exercisable by written notice given to Deitch  not later than November 15, ----, to renew this Agreement on the same terms and conditions as contained in this Agreement, for an additional period of two years, commencing on January 1st, ----, and ending on December 31st, ----, provided that Deitch's minimum guaranteed salary during the two-year renewal period shall be increased from the $000000 provided for in Paragraph 6 herein, to $000000 per year.
  9. If Foxy does not exercise its option to renew this agreement, Deitch shall continue to receive his share in the net profits subsequently realized by Foxy on all cartoons theretofore created and/or directed by Deitch, in which he has a continuing share of said profits.
  10. It is agreed that in all cartoons created or directed by Deitch, screen  credits given to Deitch shall be given equal prominence to the credit given to Foxy Grandpa.
  11. This Agreement, being personal in nature, may not be assigned by either party hereto, except that Foxy may assign its rights hereunder to any partnership or corporation with which Foxy Grandpa shall be connected as a principal.
  12. All notices under this Agreement shall be given in writing by registered or certified mail addressed to the respective parties pat their addresses as hereinabove set forth, unless notice of change of address is given.
  13. This Agreement shall be construed under and be governed by the laws of the State of --------, and may not be changed orally.
  14. The signatures of both contracting parties affixed hereto shall constitute this a valid Agreement.

__________________________________________
FoxyWoxyFilms

__________________________________________
Gene Deitch

Witness: __________________________________________

I signed this contract in a weak position. It is chock full of holes and meaningless promises. Here are the main points:

Paragraph 3. The terms "cartoons" and "cartoon films" are imprecise, and today we would say "animated films" or whatever type of films or other work is involved. This paragraph also put my location at the discretion of Foxy.

Paragraph 4. This contract was a renewal of an earlier one.

Paragraph 5. The amount of your salary is of course a crucial issue, and usually requires delicate research, and the ability to feel out your prospective employer, balancing the sum against your needs or wants, what you think is realistically sustainable, and best of all, relating it to any other offers you might have. There is such a thing as getting too high a salary. If you can't produce enough value for your employer to make you worthwhile, you will certainly be out at his earliest option. I signed at a lower salary than I was actually worth to Foxy, because of other overriding personal considerations. There are always other considerations!

Paragraph 6. Now here is the most meaningless paragraph of all! There are no such things as "net profits" in movie production. The biggest grossing films in motion picture history never achieved any "net profits." It's all "up front." If you are of sufficient value to your employer as to be offered a share of return on productions you contribute to, then it must be a share of gross receipts. Even 1% of gross receipts is worth more than 25% of net profits. My own personal standard for the past 30 years is 5% of gross receipts, from the first dollar, and   in perpetuity. This should include not only returns on sales or rentals of the films in any form, television syndication, videos, etc, but also ancillary rights, including merchandising of toys, etc. Needless to say, I never received a penny from Paragraph 6. Even if any net profits miraculously appeared, this paragraph is laced with every form of weasel word old Foxy and his lawyers could come up with. Just read it carefully!

Paragraph 8. This gives FoxyWoxy all of the options. I had no options to get out of the contract, and would have faced loss of all salaries, and whatever rights there might be, if I would quit.

Paragraph 9. Ha ha! More empty guff, adding up to zero.

Paragraph 10. If not money, at least glory. I was able to get major screen credit rights, and this was not just for ego satisfaction. Screen credits are also money in the bank, and vital for your next career moves.

The rest of this early employment contract is standard "boiler plate," legal essentials. You'll see variations of this in the following examples.

The next example is a contract where you are hired to animate someone else's creative property or properties. The names are changed, but it is based on an actual contract I worked under successfully for many years.

CONTRACT FOR SERVICES

A G R E E M E N T dated this 1st day of ______ by and between KID FOOD, INC., a [State] corporation having its principal offices in Town, State 00000 (hereinafter called "Kid inc.") and Joe Animator, 1234 Street, Town, Country (hereinafter called "Animator").

  1. Kid inc. is in the business of producing and exploiting sound and silent motion pictures, sound recordings, videos, TV programs and other so-called "Mass Media".
  2. Kid inc. contracts directly with artists, illustrators, publishers, etc. for the rights for adaptation, production, co-production, and exploitation as motion pictures, (hereinafter called "Projects"), on which Animator shall perform services as: ADAPTER - ANIMATOR - DIRECTOR.
  3. As compensation for the services performed by Animator, Kid inc. shall pay hereunder:

A. [Several] thousand dollars ($00000.00) as a fee for the preparation of a storyboard adaptation for a film,

B. A minimum of [several] thousand dollars ($0000000) as a fee for directing or supervising the production of a film up to the running length of 7 minutes.

C. A minimum fee of [several] thousand dollars ($0000000) for directing or supervising the production of a film up to the running length of 8-14 minutes in length, and of a difficulty as represented by the example of the film, "Suchandsuch"

D. A minimum fee of [several] thousand dollars ($000000000) for directing or supervising the production of a film up to 3O minutes in length, and of a difficulty as represented by the version of "Suchandsuch", written by Animator.

E. The exact fees for directing or supervising the production of each film will be agreed in writing by the parties at the time Kid inc. shall assign the project to Animator.

F. In addition to the fees as listed in items A. B. C. and D. above, Animator shall receive a royalty* [commission] of 5% (five percent) in perpetuity, of the gross revenue from all sources of the films directed by Animator under the terms of this contract.  Royalties/Commissions shall be paid to Animator semi-annually.

  1. Notwithstanding paragraph 3 hereinabove, it is conceived that each project will be part of a half-hour presentation, planned for TV, or for Kid inc.'s regular film market. Animator shall participate in the development and production of whatever additional material is required to "flesh out" productions to a thirty (30) minute length (write, direct, or both) and no additional fees will be paid to Animator for these additional services. However, Animator shall receive a royalty of five percent (5%) of Kid inc.'s gross receipts determined on a per capita basis for material produced by Animator and included in the completed work. The amount of royalty shall be determined on the basis of running time.
  2. Animator will be consulted on the development of a television show (currently called "XX"), and other matters, and will bill Kid inc. at the rate of [several] dollars ($0000) for an aggregate week's time, when no production work for Animator will necessarily accrue. Billing will be when his accumulated time equals one week, and no invoice shall exceed [several] dollars ($0000).
  3. Animator shall be given the first right to personally perform any required re-working of the productions, including any corrections, additions, deletions, changes, reediting, or sound remixing required by Kid inc. on projects directed by Animator under the terms of this contract. Animator may release this first right in individual cases to Kid inc. in writing. Not withstanding the above, if Animator's best efforts to re-work the film do not meet with the approval of Kid inc., Kid inc. shall, at its sole discretion, have the final right to make said corrections and Animator shall furnish necessary components in Animator's possession to Kid inc.
  4. Animator may be asked to participate in promotional efforts such as workshops, speeches, writing for publication, etc. For such services, Animator shall be paid a fee of [several] dollars ($0000) per day, including bona fide travel time, plus expenses.
  5. Within 60 days after each February 28th and August 31st, Kid inc. shall furnish Animator with a statement setting forth Kid inc.'s gross receipts from exploitation of the Projects, together with a cheque in payment of the royalty [commission] due Animator. For the purpose of verifying the accuracy of such statement, Animator or animator's representative may examine Kid inc.'s books at any reasonable time, insofar as they pertain to Kid inc.'s receipts from transactions concerning the Projects.
  6. It is understood and agreed that Kid inc. clearly owns all production materials made in conjunction with Projects which are written, animated, and/or directed by Animator, including, but not limited to: storyboards, backgrounds, cels, cut-outs, puppets, art work, and/or other pre-print materials, whether in the possession of Kid inc. or not. The materials referenced to therein are only those created by Animator and under the control or in the possession of Animator.
  7. All notices, statements and payments due Animator under this agreement will be sent to Animator at the name and address first above written.
  8. This agreement will be binding upon and inure to the benefit of the successors or assigns of Animator and the successors or assigns of Kid inc. Kid inc. may assign this agreement in whole or in part. Animator may assign any net sums due or to become due Animator hereunder, but Animator may not assign any other rights or obligations hereunder.
  9. This agreement constitutes the whole agreement between the parties and may not be modified except by the written consent of both parties. Nothing in this agreement shall be construed to create the relationship of employer and employee between the parties.
  10. This agreement will be governed by and construed in accordance with the laws of the [a particular State], United States of America, and shall be valid in all countries of the world.

ACCEPTED AND AGREED

Joe Animator KID FOOD, INC.

By______________________

By______________________

The circumstances and elements of every project are different, but this contract framework can be adapted to fit most actual undertakings.

The first paragraph states the names and addresses of the principals, and the shortened name each shall be referred to in the body of the contract.

Paragraphs 1. and 2. state the nature of the employer's business and the expected contribution of the employee.

Paragraph 3. sets the Animator’s minimum fees for each type of project contemplated, as well as any royalty figure Animator can negotiate. Whether

Animator wants his percentages to be called "royalties" or "commissions" will depend on tax considerations. In some instances the difference in term could be crucial, especially if you are resident in a foreign country. The IRS gives you a large deduction for "earned income," (commissions), but not for royalties! Check it out!)

Paragraph 4. covers the eventuality that individual films Animator directs may be combined into a TV show. The show may include films by other directors, so the language here indicates your payments will be pro-rated according to the running time of your films.

Paragraph 5. covers per week fees for consultation you may provide, where no actual new production work by you is required.

Paragraph 6. is intended to protect your work from being altered by others without first giving you the right to do any client-ordered alterations yourself. This is a difficult right to get, but is a great pain reliever.

Paragraph 7. is designed to make sure you will be paid for any extra-production or promotional work you may be asked to do.

Paragraph 8. spells out exactly when and how you will get your payments.

Paragraph 9. is a fact of life when you are animating properties belonging to your client. Everything you do belongs to them. That's why your royalties are your only stake in the basic value of the properties.

The rest of the contract is standard boiler plate.

Now let's look at an example of a contract involving a property of your own creation:

Let's say that your first serial idea, "Sam Poo, Hair-brained Cosmetician," faded, but your new brain-storm, "Greta Garlic, Malodorous Talk-Show Hostess," turned up a contract offer...

(The opening paragraphs, names and addresses, etc. can be the same as the earlier examples.)

  1. This document serves as an Agreement between WorldBeater and Animator, concluded this day, concerning the rights and revenue distribution of films involving the character now known as "Greta Garlic, Malodorous Talk-Show Hostess" hereinafter referred to as "Garlic."
  2. Garlic was created by Animator and is copyrighted © by Joe Animator.
  3. Beater has concluded an agreement with Saucy Syndicators, inc. to create 26 episodes of a one-half hour animated television show to be titled, "Joe Animator presents the Greta Garlic, Malodorous Talk-Show Hostess Show," hereinafter referred to as "The Show."
  4. Each Show will consist of a one 26-minute Garlic episode, plus standard opening and closing title sequences.
  5. All costs of financing, production, advertising, marketing and distributing of the Shows and related merchandising products shall be borne by Beater.
  6. Animator agrees to create and direct 26 episodes of Garlic, plus approximately 3 minutes of new title animation, featuring the character Greta Garlic to introduce and end the Show.
  7. Animator will perform his work for no fee, but will receive 25% (twenty-five percent) of gross revenues received by Beater in perpetuity from all uses of the Show. Animator or his heirs shall further receive 25% (twenty-five percent) of the gross revenues received by Beater or its assigns or successors from all merchandising and products using the Greta Garlic character and/or other characters Animator will have created in the Show.
  8. Gross revenues shall be defined as all income received by Beater from all sales, distribution, and any and all exploitation of the Garlic characters and Show, or any show in which the Garlic characters may be used, and from all Garlic-related merchandising, including, but not limited, to book, comics, toys, dolls, games of all types and in all media, and in all forms now known or hereafter devised.
  9. Subject to the approval and direction of Beater, Animator shall have the right to design all elements concerning the Garlic characters as used in the Show, including but not limited to the stories, plot and continuity, opening title sequence, lettering styles, and logo, and shall have right of approval of character voices, music, advertising, and licensed products.
  10. To the best of Animator's ability, Animator agrees to direct and/or supervise, without fee, any subsequent use of the Garlic characters in any future production, and shall have first refusal rights to do so. In any case, whether or not Animator participates in any further production of Garlic films or products, his royalty rights shall remain in force.
  11. All productions and products making use of the Garlic characters shall be copyrighted in the name of Joe Animator.
  12. All royalty rights included in this contract shall pass to the heirs of Joe Animator.
  13. Simultaneously, Animator hereby grants Beater exclusive and unlimited rights to market the programs created under the terms of this contract, and the use of the name Joe Animator and Greta Garlic in connection with such marketing in all media now known or subsequently devised.
  14. In the event of cancellation, or failure on the part of Beater to secure distribution of the Garlic series within a period of six months after completion of the first episode as approved by Beater, Animator shall be paid for his work at the rate of $ [several thousand dollars] per minute of running time of completed animation work. (This should be double the usual fee that "Animator" would get for his work.)

The rest of the contract can be the same standard boilerplate as shown in the earlier examples. Now you are ready to formulate a contract for your own newest creation, “The Adventures of Sam Poo, Hare-Brained Hong Kong Hair Stylist!”

I'm not guaranteeing you that you can actually get all of the rights and compensations indicated in that final example. They are what you should strive for. What you will actually get depends on what you've got to sell; how much the client/producer wants you or your creation. That, as they say, is Show Business!

No contract is fool-proof, and any can collapse for various extreme reasons. The most important point is to know who you are dealing with. Trust and mutual benefit are the only true guarantees of fulfillment. It is vital that all understandings be in writing, carefully worded to eliminate ambiguities, and that they be carefully read and understood.

As Casey Stengel once said, "Verbal agreements are not worth the paper they are written on!"

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