Security Interest
a. To the extent, if any, that the Producer owns any right, title or interest in the Collateral, the Producer hereby grants to the Guarantor a security interest in the Collateral to secure repayment of the Secured Sums, if any. Said security interest shall be subject to the Prior Rights, but shall have priority over any other rights or security interests of any other person, company or entity in or with respect to the Collateral, including deferments and gross receipts or net profit...
Conditions precedent
The loan agreement will incorporate a list of all the conditions that will need to be fulfilled before the loan can be drawn down. The length of the list will vary from transaction to transaction but typically will contain between 15 and 40 conditions. Below are some general headings into which these conditions fall and a brief explanation of some individual matters that will need attention. 1. Account opening documents. The bank's account opening requirements must be fulfilled. These will...
Force Majeure
One of the major issues for consideration in the completion guarantee is the force majeure clause. This means 'superior force' and it refers to certain events beyond the control of the completion guarantor that may force suspension of the agreement. The actual clause in a completion guarantee may look like this The term 'Force Majeure' shall refer to any production exigency, including but not limited to prevention or interruption of the production of the film because of an accident fire...
Schedule Form of Certificate of Delivery
The undersigned, 'Guarantor' hereby certifies and confirms to ' ' the following in respect of the feature length theatrical film tentatively entitled ' ' 'the Film' . 1. The Film stars as ' ', as ' ', as ' ' or substitute actresses and or actors engaged in accordance with the terms of the Interparty Agreement relating to the Film between, inter alia, and Guarantor. The Film is directed by or a substitute director engaged in accordance with the terms of the Interparty Agreement relating to the...
Schedule Insurance
a. Cast Insurance in an amount equal to at least 100 per cent of the amount of the Budget to cover, among other things, extra expense necessary to complete the principal photography of the Film due to the death, injury or sickness of any principal performer or the director. b. Negative Insurance in an amount equal to at least 100 per cent of the amount of the Budget to cover, among other things, all risks of direct physical loss, damage or destruction of raw film stock, exposed film, whether...
FCAMS Standard Terms of Agreement
1.1 Any Party owning or controlling any Rights hereby undertakes with FCAM and the other Parties hereto to issue irrevocable instructions to Sub-Distributors in a form approved in writing by FCAM to pay all Gross Receipts directly into the Collection Account. 1.2 The Producer hereby undertakes to procure that the Distributor or, if no Distributor is appointed, the Producer itself will promptly notify FCAM of delivery of the Film to the respective Sub-Distributor s and, to the extent known, the...
Distribution of Gross Receipts
3.1 FCAM shall commence distribution of Collected Gross Receipts from the Collection Account from the later of the Delivery Date or the last date of the month during which Gross Receipts are first credited to the Collection Account and then monthly thereafter for the first year, quarterly for the following two years and annually thereafter. 3.2 FCAM shall not be obliged to remit Entitlements to any Beneficiary unless such Beneficiary is entitled to be paid not less than USD 500.00. 3.3 FCAM...
Foreword
Barely a day goes by without some film-related story making the pages of the average newspaper. We are not just talking about the reviews ghetto, but the lifestyle, travel and business sections. With some films and film companies having become brands in their own right, the corporate divorce between Disney and Pixar was treated to front page treatment. What does this tell us Film has become big news, big business and dominated by the studio big-boys. Maybe. But at the same time part of its...
Liability of the Completion Guarantor
Under a completion guarantee, the guarantor is not liable for any payments under the guarantee until certain condition precedents have been satisfied. In the completion guarantee there are certain conditions whereby the completion guarantor is under no obligation to make any payments until an amount called the 'Strike Price' has been paid into the production bank account. The Strike Price is the total amount of contributions by the financing parties of a production that the guarantor will agree...
Exceptions
Two issues are relevant in the determination of points required under the Convention. First, the performer points awarded for the first, second and third roles are determined by the number of days worked, not by prominence of credit or financial compensation to the performers. Accordingly, a film with a non-European star need not lose three points for the appearance of that star if he or she is on set fewer days than one of the European performers. Second, a film that achieves fewer than 15 of...
Introduction Ded
The discounting of production receivables is the essence of all production financing. Whether for television or film, production receivables can include, among other things, licences to broadcasters, pre-sales or licences to distributors, negative pick-ups, equity investments, tax funds and grants or rebates made available by various institutions. The production receivables for a particular project are typically assigned to the bank by notice of assignment and the proceeds received are used to...
Gross Receipts 1
The Recoupment Schedule set out below reflects a sales agency agreement between a sales agent and a producer in relation to an advance of funds to the producer for certain rights in a film. The term 'Advance' will also be defined in the agreement with the producer. Other terms such as 'Deferred Fees', 'Sales Agent Costs', 'Excluding Sales Agent Costs', 'Gross Receipts', 'Net Receipts', 'Film', 'Producer' and others will also be defined within the agreement. The example below reflects an...
European Convention
The Council of Europe's Convention on Cinematographic Co-production came into force in 1994. The Convention has been ratified by more than twenty European countries, including the UK. As with the official co-production treaties, a production that is produced in accordance with the terms of the Convention will be entitled to receive national status and national benefits from each of the co-producing countries. If one of the co-producers is a British company, the film will be entitled to receive...
Financing Intellectual Property Rights
One of the fundamental elements of the film business is the buying and selling of rights rights in books, scripts, treatments, magazine articles, short stories and various other forms of intellectual property. It is customary for a producer or production company to initially option the underlying rights in a project that is based on an existing form of intellectual property. For economic reasons, the cost of an option is much less than buying the rights. As a rule of thumb, producers generally...
About the Author
Philip Alberstat is a media finance and production lawyer specializing in film, television and broadcasting. He has worked on films such as The 51st State, Goodbye Mr Steadman, Beyond The Sea and numerous television programmes and series. He is on the editorial board of Entertainment Law Review and is the author of the Independent Producers' Guide to Film and TV Contracts 2000 , and Law and the Media 2002 . Philip is involved in raising finance for film and television productions and...
Notices Xxx
8.1 Every notice or other communication other than a L C Demand under this Letter of Credit A. shall be in writing delivered personally or by pre-paid registered or recorded letter or, in the case of any communication other than a notice from the Beneficiary to the Issuer releasing the Issuer from its obligations hereunder in accordance with the terms of Clause 3 A which shall be delivered by hand in writing , by fax confirmed by letter B. shall be deemed to have been received, in the case of a...
Gap Financing
If you think gap financing is to fix your kids' teeth, think again. Lewis Horowitz, well-known film financier and banker Gap financing, is a form of lending whereby a bank lends money against the value of unsold rights to a film. For example, if the budget for a film is three million pounds 3 m and two million pounds 2 m of the budget is already covered by pre-sales, tax funds, public subsidies and other collateral, the remaining one million pounds 1 m that is not covered by any collateral, is...
Treaty requirements
The Convention applies to theatrical feature films only. It provides that a film co-produced by a company that is established in the UK and one that is established in one of the other signatory countries of the Convention will be entitled to national treatment in each co-producing country if the film is produced under the terms of a co-production agreement between the two producers and in accordance with the requirements of the treaty. Generally, each co-producer must contribute at least 20 per...
Consideration
The due diligence process will ensure that all payments have been made or will be paid on the first day of principal photography. This clause will also set out what is being paid for, i.e. film rights, TV rights or separate payments for different types of exploitation. 6. Representation and Warranties and No Infringement Standard representations and warranties that the writer is the owner of the copyright, the work is original, has not breached any third party rights and that the rights have...
Governing Law Pfx
This Agreement shall be construed and performed in all respects in accordance with and shall be governed by English Law and the parties irrevocably submit to the arbitration procedure contained in Clause 8. AS WITNESS the hands of the parties hereto the day and year first above written. EXECUTED and unconditionally delivered as its Agreement by FREEWAY CAM B.V. EXECUTED and unconditionally delivered as its Agreement by STICHTING FREEWAY CUSTODY EXECUTED and unconditionally delivered as its...
Net Profits
As a general rule of thumb, a film producer should try to retain 50 per cent of net profits for himself and use the other 50 per cent to pay investors in the film. Producers will be required to pay talent, such as writers, actors and the director, a share of the net profits as part of their overall payment. The balance retained by the producer is sometimes known as 'Producer's Net Profits'. During the deal-making process, it is important to define what the producer is actually offering. Those...
Banking Documents Lucy Walker and Philip Alberstat
Banks and Security Documents - An Introduction 54 Notice of Assignment and Irrevocable Payment 96 Instruction Acknowledgement of Notice of Assignment 98 Laboratory Pledgeholder's Agreement 101 5 The Interparty Agreement 106 6 The Completion Guarantee 121 Liability of the Completion Guarantor 123 Payments under the Guarantee 124 Completion Guarantors 129 How to Find Sample Completion Guarantor's Documents 129 Completion Bond Letter of Commitment 130 Film Finances' Sample Completion Guarantee 131...
Bank Facility Letter
From Name of Bank To Producer Date 200 The bank has agreed to provide you with production finance of up to amount of Facility the 'Production Finance Facility' in respect of the Film as defined below inclusive of all applicable interest, costs and fees subject to the following terms and conditions and repayable in accordance with the Repayment Schedule This is the introductory paragraph to the Facility Letter which is addressed to the Borrowers. The paragraph should contain an indication of the...
Official Coproduction Treaties
These include treaties agreed between Great Britain and Canada, Australia, New Zealand, France, Germany, Italy and Norway. The treaties vary in their individual requirements and guidelines. Some require that the production qualifies under a points system i.e., Australia , where points are awarded to key participants who are nationals of one or other of the co-producing countries, while other treaties have less onerous qualification requirements. See the table for highlights of the individual...
Appendix A Glossary of Film Production and Finance Terms
Above the line term denoting portion of a film's budget, usually including the writer, director, producer and main cast. Access letter a letter under which a laboratory undertakes to honour orders placed by a distributor, even though the laboratory may be owed money by the producer or, in relation to the film, by other persons. See also Laboratory letter and Pledge holder agreement. Adjusted gross deal a distribution agreement where the distributor deducts from gross receipts the costs of...
Notice of assignment and acknowledgement
a. The Producer hereby notifies the Licensee that it has irrevocably assigned to the Bank and has granted the Bank a security interest in and to all right, title, and interest in and to the Film, the Producer's rights in and to and under the Licence Agreement, the licence fee payable to the producer in respect of the Film under Paragraph of the Licence Agreement in the amount of the 'Licence Fee' and any and all other sums if any payable thereunder or hereunder collectively, the 'Bank's...
Alan Harris BCom BSc MBA ACCA Managing Director Atlantic Film Group
Alan is Managing Director of Atlantic Film Productions Limited, a specialist company that is involved in development and production of feature films. Some of the features with which Atlantic has been involved include Imagining Argentina with Myriad Pictures starring Antonio Bandaras and Emma Thompson , Citizen Verdict starring Jerry Springer and Nicholas Nickleby with MGM Studios . Alan was formerly Financial Director at Grosvenor Park Media where he completed several hundred million pounds...
Letter of Credit
Irrevocable Letter of Credit - insert name of film production partnership or company On the terms and subject to the conditions set out below, Issuer hereby issues this irrevocable Letter of Credit in favour of the Beneficiary at the request of the Distributor. The introductory paragraph relates to issuance of the letter of credit in favour of the Beneficiary. In this example, the letter of credit has been issued at the request of the Distributor. In film transactions, letters of credit and or...
Termination
9.1 FCAM and FCustody may at any time terminate this Agreement upon thirty 30 Business Days by written notice to all of the Parties provided that FCAM's and FCustody's notice shall specify the arrangements proposed to be made by FCAM and FCustody to pay Entitlements which, apart from such termination, would then have been payable to Beneficiaries under the provisions hereof and FCAM and FCustody shall give good faith consideration to any representations made to FCAM and FCustody concerning such...
Credit Provisions
The credit provisions will be checked to ensure that prior to delivery of the film, the writer or author will receive their agreed credit. This provision should state that any inadvertent failure to give a credit will not enable the individual entitled to that credit to seek an injunction against the producers or subsequent theatrical distributor. If this was the case, then a writer who was entitled to a credit that was not given for whatever reason could actually stop the film from being...
E Security
i. The obligations of the Borrower to the Bank under this Facility Letter shall be secured by security in the Bank's preferred form as follows d The Laboratory Pledgeholder's Agreement e Such Distributor Notices as may be relevant and Any future security which the Bank may from time to time hold for the Borrower's liabilities relating to the Film. ii. For the avoidance of doubt, the Borrower acknowledges that all security held and to be held by the Bank for the Borrower's liabilities shall,...
Completion Guarantees
A completion guarantee is a particular type of contract of insurance required by financiers and distributors of films to protect the investment they have made until such time as the film is delivered to them for exploitation. Completion guarantors are specialist companies who offer a form of insurance coverage against certain events that could prevent a film production from being completed. Contributors to the financing of a production would lose their investment, without a hope of return, if a...
Certificate of Authorship
Reference is made to the film currently entitled the 'Film' I, Name of Writer hereby certify that I wrote the original screenplay entitled 'the Work' and that pursuant to various assignment agreements, 'the Producer' owns all right, title and interest throughout the world in and to said Film based on the Work and the results and proceeds of my writing services in accordance with the said agreement and the Producer shall be deemed the author and sole owner of the Work and all other literary...
Legal Advice
7.1 FCAM may at any time and in its absolute discretion but after having consulted with each of the Parties seek independent legal advice with regard to any non-payment of Gross Receipts by any Sub-Distributor or to any other matter relating to or affecting the performance of FCAM's duties or powers set out in this Agreement and each Party hereby undertakes to assist FCAM to obtain as fully informed and accurate legal advice as possible by 7.1.1 providing FCAM with copies of any relevant...
Criteria for Gap Financing
The banks that are now involved in the gap financing business usually have certain requirements before approving a loan. Banks, typically, will gap finance between 10 and 40 per cent of a film's budget. However, most gap financiers tend to gap only 20 per cent of a film's budget. In general, banks will not gap finance a film unless there are already several major pre-sales in place. Having a pre-sale in place shows that there is a market for this type of film and that the sale estimates given...
Short Form Option Agreement
KNOW ALL MEN BY THESE PRESENTS That in consideration of the payment of 1 and other good and valuable consideration, receipt of which is hereby acknowledged, the undersigned, Author , does hereby grant to 'Producer' and its assigns, successors, licensees and transferees forever, the exclusive and irrevocable right and option to purchase from the undersigned all audiovisual rights of every kind, now known or hereafter devised, including, without limitation, the sole and exclusive film, television...
Sample Recoupment Schedule
1. Sales Agent Fee. Sales Agent shall be entitled to deduct and retain a Deferred Sales Agent Fee in respect of the first Gross Receipts received up to in accordance with paragraph 2. Sales Agent shall be entitled to deduct and retain the Sales Agent Fee from Gross Receipts received beyond the first as set forth in the paragraph 2 c , such fee being inclusive of all sub-Sales Agent fees and any Sales Agent or similar fees whether or not paid to affiliates, subsidiaries or other companies...
Film Finances Sample Completion Agreement
AGREEMENT made as of the day of , between , a corporation 'Producer' of FILM FINANCES, INC., a California corporation herein 'Guarantor' , of 9000 Sunset Boulevard, Suite 1400, Los Angeles, California 90069. 1. Representations of Producer the Producer represents that it intends to produce a motion picture the 'Film' having the following elements i. Underlying literary property None ii. Screenplay entitled ' ', written by dated f. Principal members of the cast. in the role of ' ', in the role of...
Sale and Leaseback
The current UK tax legislation allows for a 100 per cent write off of film production costs for a qualifying British Film in the year of completion or acquisition of the film. The Government's stated objective when introducing such tax deductions was to offer producers a means to reduce the cost of their film production and thus promote production activity in UK. In order to take advantage of this tax deduction it has become common practice for film producers to enter into a transaction in the...
Sample Chain of Title Opinion Letter
Name of Bank the 'Bank' Name of Producer the 'Producer' Name of Film the 'Production' We act in the capacity of UK production counsel to the Producer in connection with the production and financing by the Producer of the Production. As such counsel, we have examined or reviewed the following agreements relating to the acquisition by the Producer of all rights and copyright in and to the screenplay in respect of the film currently entitled ' ' 2. Option Extension Agreement dated 3. Option and...
Limited Liability Partnerships
Since April 2001 it has been possible to structure film production and sale and lease back partnerships as a Limited Liability Partnership 'LLP' . Although LLPs were originally conceived to be used for professional partnerships, such as architects and accountants, they have become the vehicle of choice for anyone seeking to set up a film fund. An LLP is a hybrid between a limited company and a partnership combining the limited liability of a company with the flexibility and tax transparency of...
Sample Sales Estimates
Used in a Gap Deal UK France Germany Co-production ASK PRICES US The foregoing projections are estimates only. No representation is being made that the projections will be realized. Actual results may vary materially from the projections for numerous reasons including, but not limited to, the final cast and creative elements of the picture.
Quit claim
a. The Producer remises, releases and quit claims all right, title and interest in and to the Screenplay and the Film granted pursuant to the Agreements, and for greater certainty, confirms that it is not currently and hereafter shall not subsequently be entitled to any revenues from the exploitation of the Film. b. The Producer further quit claims any and all copyright interest in connection with the Film. c. The Producer hereby agrees to execute any and all further documents and assurances...
Acknowledgement of Notice of Assignment
We hereby acknowledge receipt of the Notice of Assignment and Irrevocable Payment Instructions the 'Notice' dated relating to the Film and hereby undertake for the benefit of the Bank to comply with the Notice. Capitalized terms used in this Acknowledgement shall bear the meanings ascribed to them in the Notice. In consideration of 1 and of other valuable consideration the receipt and adequacy of which we hereby acknowledge , we hereby undertake and agree that i. we will not invoke or assert...
The Chain of Title Opinion
A chain of title opinion letter is usually required by a bank or financier as a condition precedent for closing the financing on a film production. Not only do banks require the chain of title opinion, but any other financier or participant who is at risk in a film transaction may ask to be named as a beneficiary to the opinion. The opinion acts as an additional form of comfort that all of the underlying rights are in order and that there is no likelihood of potential litigation or a claim...
a Definitions and interpretations
'Producers' Materials' shall mean all materials, information, documentation and any other thing whatsoever deposited with us by the Producer in relation to the Film in order for us duly to perform our obligations under the Agreement. 'Delivery Materials' shall mean all materials, information, documentation and any other thing whatsoever which we shall create or produce in relation to the Film in preparation for the delivery of the Film to the Sales Agent or the Producer. 'Materials' shall mean...
Quit Claim and Notice of Ownership of Copyright and Other Rights
This agreement the 'Agreement' is entered into and is effective as of by and between ABC Films Limited, the 'Producer' and A. By Agreement dated as of , Y entered into an Option Agreement the 'Short Form Option' with Producer, whereby Producer acquired an option to purchase the screenplay the 'Screenplay' currently entitled written by Y B. By Agreement dated as of , the Short Form Option was extended until the 'Option Extension' C. By Agreement dated as of , Y entered into a Literary Option and...
Points system
In addition, the Convention establishes a points system to measure the European nature of the co-production. The Convention requires a minimum of 15 points out of a total possible 19 points awarded on the basis of European nationality in creative and technical categories. The points available to a production are
Short Form Assignment Agreement
KNOW ALL MEN BY THESE PRESENTS That in consideration of the payment of 1 and other good valuable consideration, receipt of which is hereby acknowledged, the undersigned, Author , does hereby sell, assign, grant and set over unto 'Producer' and its assigns, successors, licensees and transferees, all audiovisual rights of every kind, now known or hereafter devised, including, without limitation, the sole and exclusive film, television, musical, merchandising and commercial tie-up rights, and all...
Getting to the Term Sheet
Putting together the finance of a film can be likened to completing a jigsaw puzzle. However, most often there is no picture on the front of the box to illustrate how the final puzzle should look. For all the parties, it is therefore important to obtain the terms of the deal on offer. This, at least, will give an outline of the picture and will help identify areas of conflict that will need to be resolved. As far as the bank is concerned, at the term sheet stage you are not seeking a commitment...