Distributors' Gross Revenue shall mean all monies derived by the Producer, the Head Distributor and/or sub-distributors, as provided below, in any manner whatsoever from the distribution of the production, including through the sale, license or other like means of distribution of the production and shall be calculated before or simultaneously with any other gross participants from first dollar, without deductions of expenses of any kind. For greater certainty:
- Monies derived though the exploitation of ancillary, allied and underlying rights and like rights, such as merchandising, novelization and sequel rights, shall not be included in Distributors' Gross Revenue.
- Distributors' Gross Revenue shall also mean all monies received by those Distributors with which the Producer has entered into a distribution agreement (the "Head Distributor") in respect of the production.
The Distributors' Gross Revenue shall also include all monies received by sub-distributors which:
- are Related Persons to, or which do not have an arm's length relationship with, the Producer or the Head Distributor, or,
- have an obligation to report and remit Revenue directly to the Producer or Head Distributor.
- Sale revenues (including pre-sale revenues, i.e. sales made prior to production) shall be included in Distributors' Gross Revenue. A sale means the grant, to an end user, of a licence or rights to utilize a Production, for consideration. Distribution Advances, i.e. advances received by a Producer from a Distributor, shall not be included in Distributors' Gross Revenue for the purpose of triggering the payment of Distribution Royalties to Writers; however, a Distributor shall not be entitled to deduct the amount of the Distribution Advance from the Distributors' Gross Revenue for the purpose of calculating the Distribution Royalty. Monies received by Distributors pursuant to Article C1103b) above shall be considered Distributors' Gross Revenue whether or not the Distributor has recouped its Distribution Advance.
- Notwithstanding the foregoing, Distributors' Gross Revenue derived from the sale or rental of Compact Devices (excluding any secondary use) shall be deemed to be equal to twenty percent (20%) of the wholesale selling price of such Compact Devices, provided that in the event that the wholesale selling price is at or less than the typical sell-through price to wholesalers (currently $30 per unit), the deemed Distributors' Gross Revenue shall be ten percent (10%).
- Packaging. It is acknowledged by the parties that distributors may seek to diversify their risks by packaging more successful and less successful productions. Where productions are packaged together for the purposes of distribution, the parties shall allocate the revenue attributable to each individual production, subject to the right of the Guild to refer any difference to Arbitration under Article A5.
- Official Treaty Co-Productions
- While Distributors' Gross Revenue includes revenue from all sources on a world wide basis, in respect of Official Treaty Co-productions certified by Telefilm Canada or by any successor organization, the Distributors' Gross Revenue shall be:
- all those revenues derived from the distribution of the Official Treaty Co-production in those territories to which the Canadian co-producer is exclusively entitled to distribution revenues and has no obligation to report or remit revenues to the foreign co-producer;
- a proportion of those revenues derived from the distribution of the Official Treaty Co-production in those territories in which the Canadian co-producer is entitled to distribution revenues on some shared basis with its foreign co-producer, which proportion shall be equal to that proportion of revenues agreed by the co-producers to be paid to the Canadian co-producer from such territories (the Canadian Share). The Canadian Share shall be no less than the percentage of the total amount of the production budget financing derived, directly or indirectly, from any Canadian source(s).
- Prior to production, the Producer shall disclose the production's status or intended status as an Official Treaty Co-production to the Guild and will provide the following information to the Guild:
- the name and legal status of the co-producers;
- the details of the agreement between or among the co-producers in respect of the manner in which the revenues from the Official Treaty Co-production will be divided between (or among) them, including details of territories to which either co-producer is exclusively entitled to distribution revenues and has no obligation to report or remit revenues to the other, and any material amendments to the agreement in such respect; and
- evidence, satisfactory to the Guild that the Production has been approved by Telefilm Canada and the competent foreign authorities as an Official Treaty Co-Production.
- If the Associations negotiate a definition of Distributors' Gross Revenue (or the equivalent) which in some or all aspects is superior to the definition in this Article, with any other trade union or association that bargains collectively on behalf of its members, the definition hereunder shall be amended to reflect the improvement.