fact patterns that you choose shall determine your grade. Certain terms and explanation to why those terms are applicable to the facts may weigh more than others. Do not add all terms in your answers but explain how the key terms are applied appropriately under the specific circumstance. You must apply the facts in the fact patterns and also apply the outlines, the handouts, as well as any applicable excerpts from the reading materials. For example, one term that I would expect to see in a fact pattern dealing with how the Covid-19 virus affects the entertainment industry would be “Force Majeure,” and the explanation of what and why “Force Majeure” is significant in that situation; e.g., a

I’m working on a business law multi-part question and need a sample draft to help me learn.


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Hello, there are three fact patterns you only need to do two. I attached the blaw prep file as a compilation of the material. This is an entertainment law class so the answers might be specific.



DIRECTION: I will send out the Examination via email as well as post the examination on Brightspace. You will have a few days to complete this examination, but it should take you about 2 hours if you are prepared. Please submit your answers to the Final Examination by emailing directly back to me by Wednesday May 5th night at 11:59pm PST (DUE DATE) (please email me if you are unable to do so by the Due Date for consideration of later submission). There are 3 fact patterns with multiple questions under each fact pattern. Choose and answer only 2 of the fact patterns. You must write your answers clearly and in complete sentences. Each answer to each fact pattern should not exceed 5 pages (Double Space, Times Roman Font, Font Size 11). Some questions will require more information; while others will not. Therefore, you must answer only 2 fact patterns, and so the maximum number of pages for both answers is 10 pages. Please consider your answers carefully as there can be many answers to these questions; however, the best legal analysis to the 2 fact patterns that you choose shall determine your grade. Certain terms and explanation to why those terms are applicable to the facts may weigh more than others. Do not add all terms in your answers but explain how the key terms are applied appropriately under the specific circumstance. You must apply the facts in the fact patterns and also apply the outlines, the handouts, as well as any applicable excerpts from the reading materials. For example, one term that I would expect to see in a fact pattern dealing with how the Covid-19 virus affects the entertainment industry would be “Force Majeure,” and the explanation of what and why “Force Majeure” is significant in that situation; e.g., a Force Majeure clause is when a performance of a contract is excused when an unforeseeable event e.g., an epidemic caused by the Covid-19 virus and mandatory quarantine, outside of the parties’ control renders performance impossible or impracticable thereby excusing performance and used as a defense to a breach of contract claim. Best of Luck! It has been a pleasure teaching you about Entertainment Law; I hope you enjoyed it too! FACT PATTERN #1 I am considering either you or one of your classmates for the Summer Law Associate position at our law firm. In doing so, we are considering how you will answer these questions from the facts that are recently presented to us. One of our famous clients, Talent Lena walked into our office and said that she wants to form her own independent film company. Her goal is to produce a film that will provide her with an Academy Award winning role. Ms. Lena is a well-known actress who has worked in the industry for a long time. She is also a United States citizen and a California resident and owns a lot of real properties and other assets. She also mentioned that she had discussions with her wealthy friend, Investor Chris, who is a United Kingdom resident. Mr. Chris wants to be a part of her new production company and to be involved in her independent film projects. They are thinking of shooting most of the film projects in Louisiana because of the tax credits, and hope to hire a sales agent and a collection agent. Provide a Legal Memorandum addressing the following: QUESTIONS: A legal analysis of how you would advise Ms. Lena on entity formation in protecting herself as an actress. Also please advise Ms. Lena in the creation of her new independent film company, including without limitation, a legal analysis of the pros and cons of the entity structures that Ms. Lena should consider; and the best management structure to such entity. Please provide a legal analysis of the potential financial issues that Ms. Lena and Mr. Chris may face if Mr. Chris acts as a lender or as an investor, including without limitation, the agreements and their contract terms that Ms. Lena and Mr. Chris may consider. Include other types of financing and the reasons for these financing that Ms. Lena and Mr. Chris may consider in producing their film projects, and the recoupment process for these potential financiers. FACT PATTERN #2 Congratulations! You made it as our Summer Law Associate at our law firm. Our highest fee-paying Client is an independent studio named “Studio Tree Inc.” Studio Tree Inc. is interested in the screenplay, written by Writer Nik. The screenplay is based on the true story of Mr. Nik’s aunt, a famous ballerina. They may want to bring in another writer to help finish the screenplay. They want Mr. Nik as the director of this film. They are interested in hiring our former client, Ms. Lena, who is a famous actress and union member of the actor guild to play the lead acting role of the ballerina in their film. They are considering shooting the film in New York, and there may be a scene in a theater with a live audience. They want to have certain popular products shown in the film, and may use film clips from old movies. Provide a Legal Memorandum addressing the following: QUESTIONS: A legal analysis of the pre-production/ development issues that Studio Tree Inc. should consider, including without limitation, optioning the screenplay and any applicable agreements and their terms, as well as any intellectual property issues related to the screenplay and the film. Also provide a legal analysis of the production issues and the agreements and the key contractual terms that Studio Tree Inc. should consider; including without limitation, hiring A-list talent for actor and director as well as any crew-related issue, and the filming process of shooting in New York. FACT PATTERN #3 It is a year later, and you are back and hired as a full time Law Associate at our law firm. Studio Tree Inc. is entering into a co-production, co-finance, co-distribution agreement with one of the big Studios, Universal Pictures. You are now directly responsible for helping our Client, Studio Tree Inc., finish its film titled “You Did It” and distribute the film via Universal Pictures. The music that Studio Tree Inc. wants to add to their film is a popular song by the famous band Coldplay. Studio Tree Inc. is also interested in creating their own song to put in the film soundtrack. Universal Pictures will be distributing the film worldwide (but excluding the North American territory which will be distributed by another Studio Paramount), and may consider using a sales agent and sub-distributors for those foreign territories. The film will have its first premiere at the Cannes Film Festival in May with its leading actors. Studio Tree Inc. intends on making promotional materials, e.g., movie posters, and creating new merchandise for the film. Please provide a Legal Memorandum advising Client Studio Tree Inc. regarding the following: QUESTIONS: Provide a legal analysis of the music issues that Studio Tree Inc. will need to address in order to complete the film, including without limitation, the relevant agreements and significant contract terms. Also, provide a legal analysis of the distribution arrangements that Studio Tree Inc. will have respectively with Universal Pictures and then with Paramount, and what significant deliverable materials (and why) Studio Tree, Inc. should provide to Universal Pictures and Paramount. Discuss other post-production issues and any legal and tax implications that Studio Tree Inc. needs to consider and be aware of, including without limitation, promoting and publicizing the film, and selling merchandise. CORPORATION v. LIMITED LIABLITY COMPANY CORPORATION (C & S): KEY SUPPORTING DOCUMENTS: – Articles of Incorporation – By-laws – Sub S Election (ex: Loan Out Company) – Minutes – Fictitious Business Name – Federal EIN – Statement of Information – Domestic Stock Corporation (Filed every year) “C” CORPORATION • • • LIMITED LIABILTY – SHAREHOLDER(S) NOT LIABLE FOR CORPORATE DEBT BUT DOUBLE TAXATION (TAXED AT BOTH ENTITY & SHAREHOLDER LEVELS/dividends) WHEN “U.S. C CORPORATION” REQUIRED: o Some FOREIGN COUNTRIES do not recognize LLC for tax purposes (e.g., Canada) o FOREIGN CORPORATION WANT TO CONDUCT BUSINESS IN US, including Partnership/LLC with 3rd party; limit audits and tax returns to that US “C Corp” o Studio – Production Services Company “S” CORPORATION • • • LIMITED LIABILITY- SHAREHOLDER NOT LIABLE FOR CORP DEBT INCOME / LOSS PASSES TO SHAREHOLDER (NO DOUBLE TAXATION) RESTRICTIONS: o 100shares;USresidents/citizens;onecommonshare • WHEN “S” CORP ELECTION REQUIRED: o TALENT’SLOANOUTCOMPANY:(Artist/Lendercreate“LOANOUTCOMPANY”to“lendout”Artist’s services to Producer/Studio; for tax advantages (pension & health) LIMITED LIABILITY COMPANY: KEY SUPPORTING DOCUMENTS: -Articles -Operating Agreement -Subscription Agreement -Opening Minutes -Fictitious Business Name -Federal EIN -Statement of Information – Limited Liability Company (Filed every 2 years) • • • • LIKE CORPORATION = LIMITED LIABILITY (LLC Member not liable for debts/obligations of LLC) LIKE PARTNERSHP = LLC ENTITY NOT SUBJECT TO INCOME TAX (Profit/Losses passed to LLC Members) MAY ELECT AS: SINGLE MEMBER; PARTNERSHIP; CORPORATION (for taxation) WHEN “LLC” OFTEN USED: o PRODUCTION COMPANY and/or PRODUCTION SERVICES COMPANY (PSC) and / or entertainment business with investor(s) MULTIPLE ENTITIES FORMATION • EXAMPLES: o PARENT COMPANY IS A CORPORATION or LIMITED LIABILITY COMPANY o EACH PRODUCTION / EACH PROJECT IS A LIMITED LIABILITY COMPANY or CORPORATION o Ex: Slate Financing for various entertainment and media project (s) TYPES OF FILM FINANCING: A. EQUITY INVESTMENTS 1. ACTIVE INVESTMENT / FINANCING AGREEMENTS (ACTIVE FINANCIERS) a. ACTIVE INVESTORS should be member or managing member of the Production Company LLC b. + must have meaningful consultations but controls remain with Managing Member / Producers c. + May require NON-DISCLOSURE AGREEMENT prior to Investing 2. PASSIVE INVESTMENT AGREEMENTS (PASSIVE INVESTORS) a. PASSIVE INVESTOR has SECURITIES INSTRUMENT; state / fed Securities Law applies and protects b. PRIVATE PLACEMENT OFFERINGS (PPO) or PRIVATE PLACEMENT • • – DIRECT OFFERING OF SECURITIES TO LIMITED # OF SOPHISTICATED INVESTORS – DEBT SECURITIES = PROMISSORY NOTE (or) EQUITY SECURITIES = OWNERSHIP IN COMPANY c. DOCUMENTS: PRIVATE PLACEMENT MEMORANDA / PRIVATE PLACEMENT OFFERINGS NO misrepresentation or omission of material facts (e.g., film; biographies; risks 2. SUBSCIPTION AGREEMENT 3. SUBSCRIBER QUESTIONNAIRE d. – U.S. FEDERAL SECURITIES LAW AND STATE BLUE SKY LAWS 1. OFFERING UNDER SECTION 4(2); REGULATION D RULES 504/ RULES 506 = EXEMPTION FROM REGISTRATION UNDER REGULATION D FILING Section 4(a)(2) of the Securities Act exempts from registration transactions by an issuer not involving any public offering. If your company offers securities to even one person who does not meet the necessary conditions, the entire offering may be in violation of the Securities Act Rule 504 of Regulation D – provides an exemption from the registration requirements of the federal securities laws for some companies when they offer and sell up to $5,000,000 of their securities in any 12-month period. Except in limited circumstances, purchasers of securities offered pursuant to Rule 504 receive “restricted” securities, meaning that the securities cannot be sold for at least six months or a year without registering them. Rule 506(b) of Regulation D is considered a “safe harbor” under Section 4(a)(2). It provides objective standards that a company can rely on to meet the requirements of the Section 4(a)(2) exemption. Companies conducting an offering under Rule 506(b) can raise an unlimited amount of money and can sell securities to an unlimited number of accredited investors. 2. FORM D FILING = *Form D is a brief notice that includes the names and addresses of the company’s promoters, executive officers and directors, and some details about the offering, but contains little other information about the company. You can access the SEC’s EDGAR database to determine whether the company has filed a Form D. *Filing Regulation D filing usually 15 days after receipt of 1st investment funds. *File with particular State’s Securities Office usually after filing Federal Regulation D [CA = File with Department of Corporation]. e. JOBS ACT (APRIL 5, 2012) 1. REMOVE PROHIBITION ON “GENERAL SOLICITIATION” OF RULE 506 AND RULE 144A 2. + NEW EXEMPTION FOR CROWDFUNDING (NOT MORE THAN $1M & $2,000/5% OF INCOME & USE FUNDING PORTAL & PROVIDE DISCLOSURE MATERIALS) B. DEBT INSTRUMENTS / LOANS / LENDERS / LIENS 1. (PRIVATE LENDER) DEVELOPMENT LOAN AGREEMENTS / DEAL MEMO a. LOAN is “DEBT INSTRUMENT” NOT a securities so NO state/fed securities law. i. SECURED LOAN = Loan backed by specific collateral (e.g., security interest) (v) UNSECURED LOAN ii. iii. RECOURSE (Right to sue) v. NONRECOURSE (NO right to sue borrower’s assets, only secured by pty / “security interest” in film) iii. SENIOR LENDER must have security interest in film. b. GAP LENDER / FINANCIER = Lending against “unsold territories” for higher premium (10-15%) i. “GAP” – the amount of the Budget exceeds/“over” all fixed payments from PreSales/Distributors (Bank Pre-Sale Loan) ii. GAP LOANS – loans in amount that exceeds the existing Pre-Sales; based on Sales Agent’s “Estimates” of what film will hopefully sell for. c. (v). BRIDGE LENDER/FINANCER = Lending Loans to fund “pre-prodution expenses” with NO Completion Bond i. -Some are also Gap Lender secured by Pre-Sales & Loan secured by Tax Credits. I. BANK LOANS AND COLLATERAL FOR BORROWING +BANK LOANS “collateralized” by Distributor’s PRESALES AGREEMENTS -Step#1) PRODUCER assemble film package with SCRIPT, DIRECTOR; and key ACTOR -Step#2) Producer engages SALES AGENT to pre-sell film right in certain “territory” at “film markets” (Cannes, Toronto, Berlin, LA) with PRE-SALES CONTRACT -Step#3) Producer requests BANK to LOAN funds for production by PRE-SALES CONTRACTS -Step#4) Bank requests for COMPLETION GUARANTOR to guarantee film and “DELIVER” film to DISTRIBUTORS (which would trigger money in Pre-sales) a. VARIOUS FINANCING CLOSING DOCUMENTS 1. BANK FACILITY LOAN = Document that contains the main contractual terms between Bank and Borrower re “Loan Facility” [note: Bank Loans collateralized by DISTRIBUTOR PRE SALE /DISTRIBUTION AGREEMENTS] 2. LETTER OF CREDIT = Letter from 3rd party Bank 3. COMMITMENT LETTER – Initial Terms for commitment to fund; Terms include: +Amount +Bank (Arrangement) Fee/ Commitment Fee (e.g., 2pts = 2% of Loan)/Legal Fees +Interest Rate (% over LIBOR) +Repayment Date +CONDITION PRECEDENTS 4. LOAN & SECURITY AGREEMENT between Bank / Tax Credit Lender and Producer 5. PROMISSORY NOTE – Borrow promises to repay loan to certain date / terms 6. PRESALES AGREEMENT = +SALES AGENT “PRE-SALE” to Distributor (or Distributor “prebuy”) certain Distribution Rights for certain territories before film produced 7. COMPLETION BOND – Completion Guarantor “Guarantee” #1) film “completed/delivered” film in time and w/in budget (e.g., loan $ to producer or take over production); OR #2) Abandon film & pay financier / bank back 7. INTERPARTY AGREEMENTS – -Rights/obligations between all parties (bank, producer, bond, sales agent/distributor) re ORDER of “priority of RECOUPMENT 8. Approved BUDGET 9. Approved CASH-FLOW STATEMENT 10. Approved SCREENPLAY 11. Production Schedules 12. Production Bank Accounts ************************************************************************************* b. WHAT PROPERTY AS “SECURITY INTEREST” -UNDERLYING MATERIAL (SCREENPLAY, ETC) -COPYRIGHT TO FILM (See also FOREIGN COPYRIGHT) -PHYSICAL FILM ELEMENTS -DISTRIBUTION RIGHTS / OTHER CONTRACT RIGHTS -ACCOUNTS RECEIVABLES /CASH 1. SECURITY AGREEMENT – In FINANCE, protect “Financier’s interest” and the “collateral” is the film / film elements + SHORT FORM SECURITY AGREEMENT = file along with UCC & Copyright Office 2. INTERCREDITOR AGREEMENTS – Rights/obligations between all parties (bank, producer, bond, sales agent) re order /“priority of Securities Interest”; usually everyone’s security interest “subordinate” to Bank 3. COPYRIGHT MORTGAGE – If producer “bankrupt” before (Bank/ tax credit) loan repaid; (Bank / Tax Credit) Lender gets repaid before producers / creditors. 4. POWER OF SALE – 5. PLEDGE HOLDER AGREEMENT – Film lab has film negative and must follow orders of (Bank / Tax Credit) Lender , e.g., give Producers access for Delivery 6. NOTICE OF ASSIGNMENT & DISTRIBUTOR ACCEPTANCE – Distributor pay (Bank / Tax Credit) Lender for $ earned by Producer ************************************************************************************* c. PERFECT TITLE -Give constructive NOTICE to world of security interest by “recording” security interest with approp govt agency & -Perfected Security Interest “survives a BANKRUPTCY” of the debtor 1, UCC FILINGS -Make sure the “correct title” is used in the UCC Filings and US Copyright Filing of the Security Interest (and note how many title(s) previously known as) 2, COPYRIGHT MORTGAGE – Lender “record” its security interest II. JOINT VENTURES AND CO-PRODUCTIONS 1. BETWEEN PRODUCTION COMPANIES 2. BETWEEN PRODUCTION CO AND DISTRIBUTION CO (i.e., STUDIOS) PRODUCTION-FINANCING-DISTRIBUTION (“PFD”) AGREEMENTS 1. Form of Partnership / JOINT VENTURE 2 or more Production Companies agree to “Co-Produce” a project/film/tv & sharing in the production costs (OR) A Partnership between Producer and Few Distributors 2. v. INTERNATIONAL CO-PRODUCTION Joint Production between 2 Production Companies in 2 Separate Countries pursuant to a “TREATY” between countries) Enjoy the TAX AND SUBSIDIES programs from both countries (OR) Usually between a Foreign Producer and US Producer in PFD, with one Producer as Financier and one Producer as Distributor (OR) Producer joins with Distributors and they join with Studio to acquire “Foreign Rights” to the film & Share in Profits: +A Partnership among the Distributors +A Partnership between the Distributors & the Producer = (“Co-Production Agreement”) +A Partnership between the Co-Producers and the Studio = (Production/Finance/Distribution Agreement (PFD)] 3. CO-PRODUCTION AGREEMENTS / TERMS/ISSUES: 1. ROLE & RESPONSIBILITY OF EACH CO-PRODUCER 2. COPYRIGHT ISSUES / OWNERSHIP OR RIGHTS 3. PRODUCTION OF FILM 4 FINANCING OF FILM *INTERPARTY AGREEMENT 5. MANAGEMENT OF PRODUCTION / & CONTROL ISSUES 6. CREDITS 7. LICENSE / DISTRIBUTION TERMS 8. TERMINATION, FORCE MAJEURE 9. NO PARTNERSHP 10. ASSIGNMENT 11. REPRESENTATIONS & WARRANTIES L2. PARTICIPATIONS AND RESIDUALS 13. INTERPARTY AGREEMENT v. (PRODUCTION (FINANCE) DISTRIBUTION AGREEMENT (“PFD”) and COLLECTION ACCOUNT MANAGEMENT AGREEMENT (CAMA ) – See later class. III. TAX INCENTIVES AND TAX CREDITS (STATE AND INTERNATIONAL) -State offers unlimited tax credits to entice film companies to shoot on location there= Louisiana -(v). Other states also are looking at reducing or eliminating film tax credits. 1. ASSIGNABLE TAX CREDIT – Credits can be sold to 3rd party; broker v. NONASSIGNABLE TAX CREDIT – State “refunds” production company the amount of credit (that is not offset against state tax liability) 2. TAX CREDIT LOAN – Production Co sell or borrow against 75% of the “TAX CREDIT” 3. Bond Company (FFI) usually will not lend until definitive Tax Credit Estimate Letter and Tax Credit Agreement from State 4. US TAX CREDIT & TAX CREDIT LOAN (e.g., Georgia, North Carolina) – Tax Credit Applic & -Evidence of Payment of Applic Fee – Tax Credit Estim Letter from State – Tax Credit Security Agreement – Tax Credit Authorization to Release Tax Info – Director’s Develop Certification as a Tax Credit Eligible Production 5. (v.) INTERNATIONAL / …
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