Common use of Budget Definition Clause in Contracts

Budget Definition. The production cost for the picture shall consist of all direct and indirect costs actually incurred in connection with the picture. The only costs excluded in determining the production cost for purposes of this Sideletter shall be financing costs (i.e. loan origination fees, gap fees, legal fees and interest), contingency of up to ten percent (10%), essential element insurance costs, the cost of the completion bond, marketing expenses, contingent payments to talent or other parties which are based on the proceeds derived from the exploitation of the picture and received after recoupment of the negative cost, and delivery items required by sales agents, distributors or subdistributors (i.e. delivery materials beyond the answer print or the NTSC Video Master if the picture is delivered on videotape, or the digital equivalent if the picture is delivered in a digital format). For the avoidance of doubt, federal, state, and foreign rebates and tax credits shall not be excluded from the budget in determining the production cost or deducted from the Final Cost Statement.