OPTION PURCHASE DEAL MEMO

 Updated: Nov. 1, 2025

1. What is it?

An Option-Purchase Deal Memo is a shorter version of a long form agreement in which a producer or production company secures an exclusive, limited-time option to purchase the film or television rights to a screenplay from the writer or rights holder. The option grants the producer the right—but not the obligation—to acquire the full rights within a specified period by paying an agreed-upon purchase price. This agreement allows the producer time to develop, finance, or package the project while ensuring the writer’s work is temporarily “off the market.” If the producer exercises the option, the purchase provisions come into effect, transferring full rights. If the option lapses, rights revert fully to the writer.

The deal memo contains the main deal points and leaves most of the legal points and contractual language details for the long form negotiation. This allows the parties to do a comprehensive deal without getting tied up in the specific contract language drafting.

NOTE: This is not the same as a term sheet. A term sheet contains just the major financial terms and some rights terms.

2. Who is it for?

This deal memo is essential for producers, studios, and financiers seeking to secure exclusive control over a screenplay before committing to full acquisition or production but want to cover all their bases without going into protracted negotiations involving contract drafting. It also protects writers by ensuring they receive compensation during the option period and clear terms if the project moves forward.

Typical users include:

·       Independent producers developing original or acquired screenplays

·       Film and television studios securing rights for development

·       Screenwriters seeking to license their work while retaining ultimate ownership until purchase

·       Production companies packaging projects for investors or distributors

·       Agents and managers facilitating deals between writers and producers

3. What does it include?

The deal memo covers the main terms that a long form would including the option period, option fee, purchase price, rights granted, and obligations of both parties. It specifies how and when the option can be exercised, outlines the scope of rights being acquired upon purchase (including all media and territories), and addresses credit, royalties, and indemnities. The deal memo also covers warranties of ownership, confidentiality, termination, and governing law. It balances protecting the producer’s development interests with ensuring the writer’s rights and compensation.

Key Sections Typically Include:

·       Parties

o   Optionor (screenwriter or rights holder)

o   Optionee (producer or production company)

·       Grant of Option

o   Exclusive right to purchase screenplay rights for a defined period

o   Description of the underlying material (title, draft date)

·       Option Period and Extension

o   Length of option term (commonly 6-18 months)

o   Terms for extension, including additional fees or conditions

·       Option Fee

o   Payment amount for securing the option

o   Payment schedule and method

·       Purchase Price

o   Agreed price for full acquisition upon exercise of option

o   Payment terms and deadlines

·       Rights Assigned Upon Purchase

o   Exclusive, worldwide, perpetual rights to exploit screenplay in all media

o   Rights to produce, distribute, adapt, license, and sublicense

·       Exercise of Option

o   Method and timing for notifying optionor of exercise

o   Consequences of exercise or failure to exercise

·       Credit and Compensation

o   Screenwriter’s credit obligations (e.g., “Written by”)

o   Royalties, backend participation, or other compensation if applicable

·       Warranties and Representations

o   Optionor’s ownership and authority to grant rights

o   No conflicting agreements or encumbrances

·       Confidentiality

o   Non-disclosure of material and deal terms

·       Termination

o   Conditions under which agreement may terminate (e.g., nonpayment)

·       Miscellaneous Provisions

o   Governing law (commonly California)

o   Entire agreement and amendment procedures

o   Notices and counterparts

·       Signatures

o   Authorized signatures of both parties with dates

 NOTE: The PDF's do not save while filling them out. Save your entries on a separate document and then copy and paste the text into the PDF forms. Then print them out.

Copyright © 2025 Showbiz Consultants Inc.