cine Finance

1. cineFinance Lights…Camera…Money!

2. cineFinance The Role of the Completion Guarantor in International Film Financing

3. cineFinance What is a Completion Guaranty (or Bond)? A guarantee - Assuring Financiers that the Film will be completed… On Time; On Budget; and In accordance with the approved screenplay A Completion Guaranty assures the Financier that there will be a Film to deliver at the end of the production process. The International Forum on Creative Production and Global Marketing for Chinese Film

4. cineFinance A Completion Guaranty is a Performance Guarantee…not a Financial Guarantee. A Completion Bond does not guarantee that the financing will be made available, only that the funds will be spent properly and that the film will be finished and delivered on time and within budget. The International Forum on Creative Production and Global Marketing for Chinese Film

5. cineFinance A Completion Guaranty is an insurance contract between the Financiers and the Completion Guarantor. The Guarantor Agrees to: A)Complete and deliver the Film and pay any over-budget costs that are essential to do so; Or B)Repay the Financiers what they have invested if the film cannot be completed The International Forum on Creative Production and Global Marketing for Chinese Film

6. cineFinance Guarantor agrees to issue a Bond only after... 1.Evaluation of Financing, production plans and personnel; and 2.Review of all distribution contracts, legal documentation and delivery obligations The International Forum on Creative Production and Global Marketing for Chinese Film

7. cineFinance Essential items for initial evaluation: Script Budget Production Schedule Limits risk to truly unpredictable events and actions Financing Agreements Distribution Agreements The International Forum on Creative Production and Global Marketing for Chinese Film

8. cineFinance Document Checklist: (Production) -List of Cover Sets - Special Effects Contracts - Union Agreements - Sound and Film Lab Agreements - Music Agreements -Production Budget & Cash Flow - Pre-Production Cost Report - Day Out Of Days - Post-Production Schedule - Cast & Crew Resumes/Contracts The International Forum on Creative Production and Global Marketing for Chinese Film

9. cineFinance Document Checklist: (Legal) - Financing Agreements - Distribution Agreements - Principal Cast Contracts - Director’s Agreements • - Individual Producer’s Agreement • - Bank Loan & Term Sheet • Evidence of Insurance • Chain of Title documents The International Forum on Creative Production and Global Marketing for Chinese Film

10. cineFinance The Agreements: Completion Guaranty Agreement Producer’s Agreement Interparty Agreement The International Forum on Creative Production and Global Marketing for Chinese Film

11. cineFinance Completion Guaranty Agreement ... • outlines the obligations of the Guarantor to complete and deliver the film or to repay the Financier if the Film cannot be completed. It contains information regarding: • the financing of the picture; and • the total amount of funding that is required • It is signed by the guarantor and each beneficiary covered under the guaranty The International Forum on Creative Production and Global Marketing for Chinese Film

12. cineFinance Completion Guaranty Agreement The Guarantor is not responsible for the success (or failure) of the film only that it is completed and delivered in accordance with the script, budget and schedule. The Distributor will be required to make payment to the Financier regardless of the artistic quality of the film. The Guarantor is obligated to deliver a film of “first class technical quality.” The International Forum on Creative Production and Global Marketing for Chinese Film

13. cineFinance Producer’s Completion Agreement ... outlines the obligations of the Producer to the Guarantor in producing the Film, and the rights of the Guarantor to ensure that the film will be completed and delivered in accordance with the Completion Guaranty. The International Forum on Creative Production and Global Marketing for Chinese Film

14. cineFinance Producer’s Completion Agreement The Guarantor has no “up-side” potential in the success of the Film; they merely want the Film produced as planned. Any additional scenes or creative enhancements must therefore be paid by the producer but only if they arrange additional financing The International Forum on Creative Production and Global Marketing for Chinese Film

15. cineFinance Producer’s Completion Agreement If the production begins to go “off-track”, the Guarantor will assure that the production stays “on track,” by providing instruction to the Producer, replacing personnel and/or taking financial control. Essentially, the Guarantor will protect the Financiers’ investment by seeing that the Film is delivered as agreed. The International Forum on Creative Production and Global Marketing for Chinese Film

16. cineFinance Interparty Agreement Only agreement to which Financiers, Guarantor and Distributors are a party Reconciles any inconsistencies in individual contracts, such as delivery dates, delivery materials, etc. The International Forum on Creative Production and Global Marketing for Chinese Film

17. cineFinance Summary of Insurance Coverages: Cast Insurance Props, Sets & Wardrobe Extra Expense Negative Film / Faulty Film Stock Third Party Property Damage Errors and Omissions The International Forum on Creative Production and Global Marketing for Chinese Film

18. cineFinance Guarantor’s Role: Evaluation Before production begins, the Guarantor evaluates: Script Budget including contingency of 10% of direct costs Schedule Financing Plan And all Production, Distribution and Delivery Documents The International Forum on Creative Production and Global Marketing for Chinese Film

19. cineFinance Guarantor’s Role: Monitoring During production, the Guarantor monitors: Call Sheets/Daily Production Reports; Cost Reports; On-Set Supervision The International Forum on Creative Production and Global Marketing for Chinese Film

20. cineFinance Guarantor’s Role: Post Production Monitor editing, scoring and sound mixing Track music licensing and deliverable items assuring that the work follows the post-production calendar The International Forum on Creative Production and Global Marketing for Chinese Film

21. cineFinance Guarantor’s Role: Post Production Ensure that the film is delivered on or before the delivery date per the Completion Guaranty Make certain the physical work done at the lab fulfills technical standards required and that actual delivery takes place in accordance with the delivery schedule Coordinate materials including physical elements and all documentation necessary to fulfill delivery per the contract The International Forum on Creative Production and Global Marketing for Chinese Film

22. cineFinance As methods of financing Film productions change and get more complex, the Guarantor acts as an additional resource for the Producer in order to enable the smooth and timely completion of the production The International Forum on Creative Production and Global Marketing for Chinese Film

23. cineFinance For the Financier, it is a chain of security to cap their investment risk and act as an active risk management tool for evaluating and controlling their financial participation in film projects The International Forum on Creative Production and Global Marketing for Chinese Film

24. cineFinance For more information, please contact: President and CEO cineFinance LLC – Fred Milstein 1875 Century Park East Suite 1345, Los Angles, CA 90067, USA Tel: (310) 226.6800 fax: (310) 226.6800 Email: fmil@cinefinance.net Hong Kong office Ivy Law 6th Floor, Landmark East 12 Ice House Street, Central, Hong Kong Tel: (852) 3101-7168 Fax: (852) 3101-7960 Email: ilaw@cinefinance.net www.cinefinance.net The International Forum on Creative Production and Global Marketing for Chinese Film