3.
Grant of Option
In consideration of the sum of _________________ Dollars ($______________) (the "Initial Option Payment"), which Initial Option Payment shall be payable _________ upon signature hereof, _________________ six (6) months after the satisfaction of the Conditions Precedent and __________ six (6) months thereafter, and fully applicable against the Purchase Price (as defined in paragraph 6 below), Owner hereby grants to Purchaser:
the exclusive and irrevocable right to engage in development of the Picture during the period commencing as of ______________ and subject to satisfaction of the Conditions Precedent, and ending Eighteen (18) months after such date (the "Initial Option Period"), including the right to solicit and secure financing for the Picture;
the option to extend the Initial Option Period for the Extended Option Period as more fully set forth in Paragraph 3(b) below. The Initial Option Period and the Extended Option Period shall collectively be referred to as the "Option Period"; and
the sole, exclusive, and irrevocable option (the "Option") to acquire each and all of the "Purchased Rights" (as such term is defined in paragraph 6 below) in the Property during the Option Period.
The Option Period may be extended by Purchaser for an additional Eighteen (18) month period commencing on the date of the expiration of the Initial Option Period (the "Extended Option Period") for an additional payment of _______________ Dollars (________) (the "Extended Option Payment"). The Extended Option Payment shall be payable on or before the date of expiration of the Initial Option Period and shall not be applicable against the Purchase Price.
Notwithstanding anything to the contrary contained herein, any Option Period will be further extended for a period of time equal to any period during which Owner is in default or breach hereof, and for any period during which Purchaser's development, production, distribution and/or any other exploitation activities are interrupted or postponed due to any occurrence of an event of "force majeure" (as such term is customarily understood in the entertainment industry, including, without limitation, any strike by a union or guild or other labor dispute; but in no event for longer than 6 months).
This paragraph spells out the amount of the option payment and the length of the option, which includes when the exclusive option period starts and the Purchaser's ability to extend the option period upon payment of an additional set sum. Studios and production companies will try to commence the option term from the satisfaction of the Conditions Precedent, which makes clarifying those conditions even more important.
An initial option payment can range anywhere between $1,000 and $100,000, though typically, option fees range from $2,000-$25,000. The initial option payment amount is typically applied against the Purchase Price (which is addressed in Paragraph 4, below), which the Purchaser must pay when they decide to exercise the option. When optioning a book for adaptation, it is customary for the initial option term to be 18 months.
Any option extension (sometimes there can be two or more extension periods) usually mirrors the initial option both in amount and in length of term. The amount of any extension fee is typically non-applicable against the Purchase Price.