The Basics of Option Agreements - Part 3

 

Editor’s Note: This is part 3 on my series discussing option agreements. You can find part 1 and part 2 at the links.

                Previously in my series on option agreements, I discussed the basics of what an option entails, rudimentary numbers, and some of the intricacies around the rights being granted. This post will discuss termination and reversion. Simply put, termination is when the agreement ends or is terminated  and reversion is when the rights being granted revert back to you. Sometimes these terms may be used interchangeably, but there is a meaningful difference.

As I mentioned in my first post, an option is usually granted for 12-18 months with the ability to extend. This would be the Term of the agreement, and if the option is not exercised, the agreement would terminate. There may also be language allowing either party to terminate an agreement early if certain things occur, usually involving a breach of one of the party’s obligations.

A reversion is when rights that have been granted to a third party revert back to you, which would only occur if the option had been exercised which means the third party has acquired the rights to adapt your work. It is usually viewed differently than an early termination because no party is in breach of the agreement or has otherwise violated the agreement. Often, it means that time has run out to develop the work, or the work has stopped being exploited.

Key elements of a reversion are when it takes place, what is included and how much money is the third party entitled to for the reversion.

It is common for reversion to take place if development has not occurred within a set amount of time, or if production has not started on a project within two years from the exercise of the option. It can also revert if a pilot is produced but not picked up, and if a series was started and then cancelled.  

It is also important to address what is included. Sometimes it is a complete reversion, and you now own everything the studio worked on. Sometimes, it is just a reversion of underlying rights, and the materials the studio developed will be frozen, with neither party able to use them. This latter part is more common with developmental materials if the option is not exercised than if it is. However, it’s still important to be aware of it.

If the property is subject to reversion, then it is common for the third party who exercised the option to request to be repaid all money it has spent on the property plus interest, a royalty payment, and a future percentage of backend. This can vary depending on who is requesting it, but you will see it in most option agreements. The figure can also vary depending on how much time has passed.

My next post will wrap up this series and will address other types of consideration and a brief mention of shopping agreements.

Aftershock filed bankruptcy. What now?

 

NOTE: I do not generally practice bankruptcy law, and, as stated elsewhere on this blog, the below does not constitute legal advice or create an attorney-client relationship. Consult with your attorney to address your specific legal needs.               

The news recently broke that Aftershock Comics filed for chapter 11 bankruptcy. Contrary to the opinion of many, this does not mean that Aftershock Comics will be immediately going out of business. Chapter 11 bankruptcy is primarily used by businesses to hold off creditors, reorganize their debt, and continue operating. That is the intent, anyways. If it is unsuccessful, then the company may end up selling off its assets to pay back creditors or otherwise be dissolved.

Unfortunately, the bankruptcy process can take some time to complete. Those who are owed, or likely to be owed, money (the creditors) should be receiving official documents regarding the bankruptcy and relevant deadlines. Once received, creditors should review them carefully.

In addition to being lengthy, the bankruptcy process can also be incredibly frustrating. There are going to be things that will seem unfair and anger many. For instance, now that Aftershock has filed for bankruptcy, they cannot assign property in exchange for waiving debt without the court’s permission, and creditors cannot knowingly harass the company for payment. Some people who have recently received payments may be asked to return them. There is also the possibility that some people may be required to continue working with the company even though they haven’t been paid. Finally, even though someone might be owed money, there is still a strong chance that they will (i) receive less than what they are owed or (ii) receive nothing at all.

There are likely to be a lot of twists and turns to this, and every creditor will have to decide how involved they want to be. Some questions to ask are:

1)      Do you want to just follow along with the process and see what happens?

2)      If eligible, do you want to be actively involved and try to influence and shape the reorganization process?

3)      How much time and money do you want to spend on this? Is it worth it versus what is owed?

While we wait for more information, if you think you are owed money, make sure you are listed as a creditor. If you are listed, then verify that the listed information is accurate. If you are not listed, then you will need to file a claim before the relevant deadlines. Now is also a good time to review your contract and gather all relevant information and evidence regarding any claims you may have against Aftershock.  Finally, it may make sense to consult with an attorney to evaluate your options.

The Basics of Option Agreements - Part 2

 Editor’s Note: This is part 2 on my series discussing option agreements. You can find part 1 here.

If you are approached about having a work optioned, the first thing you need to understand is if you have the rights to grant the option. Who else may have an interest in the rights to your work and will need to be consulted? Do you have to involve any of your co-creators? If you did not do all of the work yourself, or you did not acquire all of the rights for yourself, then you will need to involve them. Do you have an agent? Do they have the right to negotiate media deals on your behalf? If they do, you’ll need to get them involved. Also, do you still have the right to negotiate or grant the option? You will have to review your publishing agreement. Some publishers leave media rights with the creators. Some publishers merely want a cut of any option money you receive. Some want to negotiate it on your behalf and have the contractual right to do so. Worse yet, some have acquired the rights to negotiate and dispose of it without your involvement. You’ll need to see who else you need to involve and what rights you currently have.

When optioning a work, it is important to specify what is being included in the option. It is important to clarify if it just includes the main comic book or a specific series, or if it also includes any future works developed relating to the main comic book. Ideally, as a creator, you want to limit it as much as possible, as it gives you more opportunities to exploit the work and profit from it. However, most studios will want the right to incorporate or develop direct sequels into media adaptations. It is important to make sure it is addressed, and if needed, the compensation adjusted to account for the inclusion of additional works.

                The next key element of an option is what rights are being granted. For most production houses and studios, they want the right to almost everything. They will usually want film and TV rights, theatrical, radio, publishing, etc. Sometimes, however, a third party may only be interested in acquiring the rights for one thing, such as film or theatrical. Usually this is done because it is often cheaper to acquire limited rights, and the third party may not have the ability to exploit a full set of rights.

When granting rights in an option, anything you are able to reserve might be able to be licensed later on for additional money. These are called reserved rights. If possible, you should try and retain theatrical, radio/podcast, or games/video game rights. Another lucrative right is merchandising. Most studios will want the right to make and sell merchandise, and you will usually receive a separate royalty for these goods. Sometimes, you may be able to retain some limited merchandising rights to create goods based upon the original work (think goods based on a comic versus goods based on the movie).  This is something creators should push for, as it gives you an extra revenue stream. Every situation and studio is different.  With very few exceptions, creators should almost always retain publishing rights.

When dealing with the distribution and acquisition of rights, it is also common for studios to request that certain rights are frozen or subject to a right of first negotiation/refusal. If rights are frozen, then that means that one or both parties cannot exploit the rights, typically for a set amount of time, without the other party’s permission. If any reserved rights are subject to a right of first negotiation, rights of last refusal, or something similar, it means the party optioning the rights has the ability to negotiate for any rights it has not previously acquired. 

            Next time, I will discuss reversion and termination.

Comic Book Recommendations - 2022

             It’s the end of another year, and it’s time to recommend some of the comic books I read this year. As I mentioned in 2020 and 2021, I tend to focus on creator-owned titles, these will mostly be graphic novels/trade paperbacks, and they may not all have been released this year.

            As always, I’ve provided links where I can. Links to Amazon will be affiliate links. Anywhere else is not. Even so, if you’re intrigued by these books, try to buy them from your local comic shop or book store. 

Touching Evil, vol. 3, by Dan Dougherty

I’ve been a fan of this series for years, and I believe it to be one of the more unique ideas in horror comics in a while. A satisfying end to the series, but here’s to hoping for more in the future.

 You can buy it here.

Wasted Space,  vols. 4 & 5, by Michael Moreci and Hayden Sherman

This series wrapped up its run this year, and you should be able to find a collected edition. Moreci seemed to have a lot on his mind during the course of the series, and he used it to explore topics of politics, religion, creation, and destiny. Sherman’s gritty and dynamic artwork helped bring this world to life.

 

Maggie the Mechanic: A Love and Rockets Book, Jamie Hernandez

Remember when I said I am sometimes woefully behind on comics? This is a prime example. These books have been around for 40 years, and this is the first time I’ve read a Love and Rockets book. Great art, interesting and entertaining story. Even though comics have been diversifying for some time, there’s still not much on the stands that looks and reads like this.

 

The Many Deaths of Laila Starr, by Ram V and Filipe Andrade

This is a book that will stay with you. It’s a fascinating exploration of life and death and destiny, and the art from Andrade is perfect for the story being told.  

 

Money Shot , vol. 2, by Tim Seeley, Sarah Beattie, and Rebekah Issacs

Volumes one and two of this very-much NSFW comic are incredibly entertaining if you don’t mind your entertainment being more risqué. If that’s you, definitely consider checking out.

 

Previous volumes of the books below have appeared on other years’ lists, but I felt like they deserved a follow up.

 

Something is Killing the Children, vol. 4

This volume starts a new arc for the series, and it continues to be superb. This series was definitely one of my favorites of the past few years, and I look forward to wear it goes.

 

The Good Asian, vol. 2

There were only two volumes to this book, and both are fantastic noir. You’re missing out if you don’t read the whole story set in San Francisco’s Chinatown in the early 1900s.

The Basics of Option Agreements - Part 1

                I recently did a presentation on option agreements for literary works, and, while I’ve mentioned them here before, I haven’t given much explanation as to what they are and what’s involved in them. So, it seems like a good time to give a brief primer on option agreements.

                At its core, an option agreement is an agreement that gives the Purchaser the right to buy the media rights to the seller’s comic book for a set amount – the purchase price. The reason it’s called an option is because often the Purchaser does not immediately purchase the rights to the comic book. They pay the seller a fee to reserve the exclusive right (the option) to purchase the comic book for a set period of time. Once that set period of time has ended, they must either (a) pay the purchase price to acquire the rights to the book, (b) pay an additional fee to extend the time to pay, or (c) allow the agreement to end and the seller can shop the media rights to the comic book to others.

                In general, the option period typically lasts between 12-18 months. The amount of the option fee can vary, but it often is equal to ten percent (10%) of the purchase price. If the purchaser exercises the option, the initial option fee is customarily included in the purchase price. For example, if the purchase price was $200,000 and the initial option fee was $20,000, then the amount paid by the purchaser when exercising the option would be $180,000. The fee paid to extend the option period, which is often for the same amount of money (or higher) and the same amount of time, is customarily not allowed to set off from the purchase price.

                Next time, I will discuss some of the key things you need to be aware of when negotiating an option.

Media Rights and Producer Credits

 

            A frequent topic I have written about on this blog involves media rights. Personally, I believe it to be a valuable topic for creators to understand, and I doubt there will be a time when I will not be writing about publishers’ various attempts to obtain and exploit media rights. Previously, I have mostly discussed whether a publisher should be granted the right to exploit a comic’s media rights. While weighing whether or not to grant a publisher these rights, it is also important to understand any additional compensation publishers and creators and creators can obtain in these types of deals.

Recently, there has been a flurry of announcements of comic books being optioned by film studios. When I read these announcements, one of the key things I look for is who is named as a executive producer or producer. The vast majority of these deals tend to find the publisher, or some of the publisher’s “key” staff, listed as executive producers. Creators are frequently absent from these positions.       

            Why is this important? Money and prestige. Often, executive producers receive compensation, which can add up to being a decent amount of money depending on the deal structure. Additionally, being listed as executive producer on a successful film or TV series also raises the profile and prestige of those involved. Personally, I believe comic book creators should receive no less favorable treatment than the publisher or the publisher’s staff. The comic book would not exist without the creators, and they should benefit as much as possible from their creation. If creators do not receive these positions, then they are receiving less money than they could, and they are being deprived of a role that could open future opportunities.

Furthermore, many publishing agreements that allow a publisher to seek these types of deals exclude this money from being split with the creators. Often, these types of deals will have the publisher and creators splitting the money received from an option, and then the publisher using its position to obtain separate exec producer deals. The creators might be given the ability to negotiate for a separate deal, but the publisher often includes language that prevents them from using the leverage they need in order to obtain it—the creators cannot scuttle the deal if they don’t receive a separate producer deal. It feels exploitative to me that any type of “creator-owned” publisher would use their position to obtain positions and fees based on the creators’ work and not it share with them.

            As I have stated numerous times, I believe a publishing agreement, particularly one that is supposed to be for a “creator-owned” work, should only cover publishing rights—that is, the right to publish your comic. If a publisher wants anything to do with a comic’s media rights, it should be via a separate deal. If a publisher obtains the right to exploit the media rights, I believe the publisher and the creator should be treated equally, and the creator should have ultimate say in the disposition of the media rights. Unfortunately, these types of arrangements seem far too rare and, based on what I’ve been seeing lately, decreasing.

            Be wary of any publishing deal that grants a publisher the right to exploit your media rights without additional (or any) compensation, gives the publisher the right to grant your media rights to others without your consent, and does not obligate the publisher to treat the creators with the same respect and positions as it gives its staff.

Halloween Costumes and Knock-offs - Part VI

     Once again, we've entered October. As I said before, Halloween is one of my favorite times of year. For the last few years, I have been doing a post on what I believe to be knock-offs of superhero costumes, and you can find last year's post here. Surprisingly, this year was a little harder to find them on Amazon than in previous years. Thankfully, my wife introduced me to another site that seemed to have plenty. One thing to note, I'm disappointed by the current lack of creativity with the knock-offs. The rise of printed bodysuits really has taken the fun out of this. (Note: all links to Amazon are affiliate links.)

                                                         

This costume might be poisonous to my list, as I cannot tell if I've previously featured it.

    

                                                             

 This one looks fishy.

                                                                   

If the star-spangled man has a plan, what does this star-spangled hero have?

Having done this costume before, this is one of the laziest costumes you can do, and paying $50 for a knock-off is a bad idea.

The moon should punish somebody for this one.