The INS and OUTS of the CAM Agreement

After hosting a fantastic webinar on CAM agreements for Stage 32, Fintage House rep David Zannoni wanted to share the basics of this essential agreement with our entire community. Keep reading to find out how the CAM Agreement can help your production.

The collection account management agreement, also called CAMA or CAM Agreement, is one of the few multi-party agreements in the entertainment industry.

It deals with only one, but rather essential element of independently produced film and TV projects: the allocation and disbursement of revenues. In layman’s terms, it’s who gets paid what and when. Getting yourself and others paid for work when you’re producing film and television projects isn’t straightforward. You have to negotiate your worth, and you can’t do that if you don’t know the central agreement used.

In this article, we will discuss the INS and OUTS of the CAM Agreement, with the aim to provide you with a detailed understanding of how CAM Agreement works and what to focus on when you need to negotiate one.

What is a CAM Agreement?

The CAM Agreement deals with the receipt, allocation, and disbursement of the worldwide revenues of a film or TV project.

The purpose of the CAM Agreement is to make sure that each beneficiary of the project receives its share of the revenues.

The CAM Agreement can be required by the producers of the film or the series, or by investors, financiers, the project’s sales agent, the US Guilds, talent and/or law firms representing any of the parties.

When does a film or TV series need a CAM Agreement?

The CAM Agreement can be needed in the following cases:

1. When a project is independently produced.
2. In the case of an independently financed project, that is to say, when the financing comes from several financing sources.
3. If a project is independently distributed, whereby there are several sources of exploitation.
4. In the case of a(n) (international) co-production.
5. If the film or the TV series is sold by an international sales agent or worldwide distributor.
6. When there are US Guild members attached to the project and US Guild Residuals are payable.
7. If the director, the writer, and any of the actors are entitled to receive a contingency compensation, box office bonuses and/or a profit participation from the revenues of the project.

Benefits of having a CAM Agreement in place

There are multiple benefits of having a CAM Agreement in place. Here are four of the main benefits.

1. Protection of revenues - None of the parties with a financial interest in the project will control the receipt, allocation, and distribution of revenues.
2. Avoidance of conflicts - Only one agreement rules and therefore, the risk of disagreement and conflict is substantially reduced or even eliminated.
3. Transparency - The CAM reports all payments and how revenues are allocated, and that information is 24 / 7 available online.
4. Outsourcing of administrative work - The CAM does the administrative work in connection with the revenues, on behalf of the beneficiaries.

Key elements of the CAM Agreement

The below are what I consider the key elements of what is being agreed by means of a CAM Agreement.

1. The appointment of a Collection Account Manager or CAM.
2. The establishment of a Collection Account.
3. Formalization of the obligation for producer and sales agent to instruct distributors (i.e., the licensees of the film or TV series) to pay into the Collection Account.
4. Incorporation of the Recoupment Schedule that overrules all single payment and recoupment related deal terms.
5. Description of the reporting obligations on the CAM’s side, which includes the issuance of payment notifications and statements.
6. Description of the frequency of disbursements from the Collection Account to the beneficiaries.

The CAM, a neutral, trusted, third party, is appointed by the parties of interest as the sole administrator of the revenues of the project.

Subsequently, a Collection Account is set up. The Collection Account is a designated bank account for one single project. The Collection Account is opened in the name of the CAM, and only the CAM has access to the account.

The Collection Account receives exclusively the project’s revenues, generated by international distribution of the project.

Any revenues received directly by one of the other parties to the CAM Agreement, will need to be immediately remitted to the Collection Account by such party.

The CAM is the only party that can make disbursements from the Collection Account.

Other areas of concern with CAM Agreements

Some additional topics you need to consider when establishing a CAM Agreement deal, include the following:

1. Recoupment Schedule – This is the payment schedule that shows the order and manner in which the revenues are allocated and disbursed amongst the beneficiaries. Please check out this article for more info about how to put together a Recoupment Schedule for your project.
2. Reporting and Disbursement obligations – Under your agreement, the CAM has the obligation to report, issue a payment notification, circulate statements with the progress in the Recoupment Schedule and Gross Receipts Report, and more.
3. Indemnification – to indemnify the CAM in case of any third-party claims.
4. Arbitration – In case of a dispute between two or more parties under the CAM Agreement.
5. Term and termination of the CAM Agreement – the CAM Agreement is usually in place for a limited number of years, and the term can be extended in case needed.
6. Due diligence and compliance – The CAM will need to comply with national and international regulations, and therefore it requires Know Your Client (KYC) related information and documentation from the beneficiaries.
7. Doubtful Entitlements – A procedure as to how the CAM should handle if it is in doubt about one or more entitlements in the Recoupment Schedule.
8. Signatory parties – Who signs the CAM Agreement. Anyone with a major financing interest in the revenues. There are those who do not sign the CAM Agreement but will still receive payment from the account.
9. Right to receive entitlements – All beneficiaries have a right to their share of the revenues. Signatories parties to the CAM Agreement (may) also have additional rights to be discussed.
10. Obligations of the signatory parties – Signatory parties have obligations that generally include instructing distributors to pay into the Collection Account, remit any revenues received directly into the Collection Account, etc.
11. Guild Residuals – For more info about the calculation and payment of US Guild Residuals, please check out this previous article on Stage 32.
12. Types of CAM Agreements – There are a couple of industry-standard templates of the CAM Agreement, including Standard, Basic, format with the US Guilds, and Pre-CAMA, which you will need to choose between early on.

For a deeper understanding of these elements, check out this invaluable webinar.

Conclusion

The CAM Agreement is essential for independent film and TV productions.

Essential elements of the CAM Agreement are the appointment of the CAM, establishment of the Collection Account, the Recoupment Schedule, and the reporting obligations of the CAM.

Under the CAM Agreement, all Beneficiaries have the right to receive entitlements.

Only signatory parties have full-fledged rights, as well as obligations under the CAM Agreement. Third-party beneficiaries only have the right to receive payment of their entitlements, and they do not have any obligations.

There are several formats of the CAM Agreement, amongst others a specific format to deal with payment of US Guild Residuals.

Do you want to know about the CAM Agreement for Independent Film and TV Projects?

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