Funding Guidelines 1/10

Funding Guidelines 1/10

Content 1. Goals and Subject of Funding 2. General Conditions for Funding 2.1 General Prerequisites 2.2 Application 2.3 Allocation Procedure 2.4 Disbursement 2.5 Credits 2.6 Miscellaneous 3. Funding Categories 3.1 Development Funding 3.2 Production Funding 3.3 Distribution Funding 3.4 Theater Funding 3.5 Funding of Innovative Audio-Visual Content 3.6 Funding of Other Projects 4. Entry into Force 2/10

Funding Guidelines of Medienboard Berlin-Brandenburg GmbH effective January 1st, 2010 1. Goals and Subject of Funding Medienboard Berlin-Brandenburg GmbH (hereinafter, "Medienboard") has been commissioned by the States of Berlin and Brandenburg to promote media development in the entire region. The funding goals are to support the qualitative and quantitative development of the Berlin- Brandenburg media industry and culture; to facilitate varied and high-quality film, television and media production in Berlin-Brandenburg; to promote newcomers; to strengthen the economic competitiveness of the media companies in particular, the strengthening of independent producers and technical service providers by promoting the necessary regional infrastructure; to present and represent the region at home and abroad. Funding is furthermore intended to contribute to the strengthening of the audio-visual sector in Germany and Europe. The subject of funding is film and television production in all stages of development, as well as exploitation, including the showing of films. Funding will also be provided for innovative audio-visual content and other projects to strengthen the media industry. 2. General Conditions for Funding 2.1 General Prerequisites 2.1.1 Funding is only granted to high-quality projects which correspond to Medienboard's funding goals. Projects will not be funded which contravene the Constitution or the laws, offend personal rights or moral or religious feelings, or whose content is pornographic, extols violence or is likely to corrupt the young according to 131, 184 of the Criminal Code. 2.1.2 The allocation of public funds by Medienboard is limited by the budget made available to the funding programme by the States of Berlin and Brandenburg. There is no statutory right to funding by Medienboard. 2.1.3 Subsidies granted by Medienboard can be accumulated with those from other funding institutions. In so far as upper limits under German or European law apply to the accumulation of state subsidies, these limits also apply to funding according to these Guidelines. In accordance with European guidelines, state funding for films may not exceed 50% of total production costs. Exceptions may only be made for projects whose economic exploitation is subject to considerable risk due to their content or the way they are made. 2.1.4 As a rule, funding is only awarded to companies resident in Berlin-Brandenburg or Germany, i.e. companies which have their registered office, a subsidiary or at least an office or business premises in the States of Berlin or Brandenburg, or in the Federal Republic of Germany. At variance from the above, a project may also be funded if funding would be in the particular media cultural or economic interest of Berlin- 3/10

Brandenburg. Public and private broadcasters or organisers are not entitled to apply. 2.1.5 As a rule, funding is awarded in the form of conditionally repayable loans. 2.1.6 Due regard should be given to matters of professional training and education in subsidised projects. 2.1.7 Medienboard funds are granted as state aid (subsidy). Subsidy fraud is illegal under in Article 264 of the Criminal Code. The loan contract will be terminated without notice should a project constitute an objective offence or violate Section 2.1.1. 2.2 Application 2.2.1 Project funding by Medienboard requires a written application to be submitted within the time limits set by Medienboard. 2.2.2 Applications must be prepared and submitted using the forms available from Medienboard. The enclosures required with the applications follow from the application forms. Incomplete applications become void if the applicant fails to supply the missing information in a timely manner even after receiving a request with a grace period. 2.2.3 Projects for which funding has been applied may not have been started at the time of application. 2.2.4 Project costs must be calculated according to industry norms and the principle of economical financial management. 2.2.5 A project may only be funded if the applicant provides an adequate equity interest towards the financing of the project. 2.3 Allocation Procedure 2.3.1 Decisions on the allocation of funding are made by Medienboard after examining the application documents on the appointed dates. 2.3.2 If the decision is positive, Medienboard will provide a written commitment. 2.3.3 The commitment lapses if documentation of the project's entire financing is not provided within six months of the date the commitment is issued, at the most. This time limit may be extended upon request. 2.4 Disbursement 2.4.1 Disbursement presupposes the conclusion of a funding loan contract and documentation of the project's entire financing. 2.4.2 Funding loan contracts are transacted by an agent acting for Medienboard. Costs arising to the agent through the transaction of the funding loan contract are met by the applicant. 2.4.3 At least the funding provided by Medienboard must be used in Berlin-Brandenburg (regional effect). If a higher regional effect is indicated in the funding application, it must be provided. The regional effect may be partly or wholly ignored if the region has a particular interest in the project. Regardless of this fact, at least 20% of the production costs may be spent in another EU country. 4/10

2.4.4 Proof of deployment for the funds provided must be supplied to the agent of Medienboard. In the case of multiple subsidies, Medienboard can arrange a joint audit with the other funding bodies. 2.4.5 Details are governed by the funding contract. 2.5 Credits The front and end credits of subsidised film works, as well as all advertising, must contain an appropriate reference to the funding which has been formulated in consultation with Medienboard. All other subsidised projects must contain reference to Medienboard's funding at the appropriate spot. 2.6 Miscellaneous Otherwise, the rules of procedure according to Section 3 must be observed. Except insofar as separate rules are defined in these Guidelines, the provisions of the Film Funding Law (FFG) and the pursuant regulations of the Federal Film Board (FFA) apply in addition to these Guidelines to the extent that they are objectively relevant. References to the Film Funding Law and the pursuant regulations of the Federal Film Board relate in each case to the version currently in force. 3. Funding Categories 3.1 Development Funding Medienboard can award funding loans for films in the pre-production phase in the form of story development, project development and slate funding. Story development funding is offered for the preparation of screenplays for cinema films ready to go into production. Screenplays for television films may be funded in exceptional cases. Applications for story development funding should as a rule include a treatment containing a description of the plot, dramaturgical development and filmic structure and at least one fully worked-out scene with dialogue. For documentaries, an informative synopsis is required as well. Project development funding is offered for the development of a total concept (package) for a film, consisting of the creative elements of production, financing, marketing, distribution and exploitation. The prerequisite is a screenplay which is ready to go into production. Companies may be granted story and/or project development funding for up to five projects as slate funding. These projects can be at different stages of development. 3.1.1 Producers are entitled to apply for development funding. Producers applying for funding must demonstrate that they will pay at least 20% of the German development costs. 3.1.2 Modes of disbursement for the funding loan are defined in the loan contract. As a rule, the loan is paid out in three instalments. The first instalment is paid out after the joint signing if the contract and the fulfilment of all loan preconditions. The second instalment can be paid out on submission of a written status report which provides information about the state of development of the project. In the case of funding for screenplays, the second instalment can be paid out after acceptance of the first version of the screenplay. The third instalment is paid out after the complete final report is presented and once the agent confirms in its report that the project does not fall short of the development costs recognised by Medienboard or the regional effect, and that the project is not over-financed. 5/10

3.1.3 Repayment The loan must be repaid on commencement of principal photography or if rights to the funded material are otherwise exploited, without regard to the precedence of equity interest. In the event of slate funding, the loan is repaid in part for each exploited project. 3.1.4 The repayment commitment usually expires five years after the final report is submitted to the agent. 3.2 Production Funding Medienboard may fund the production of full-length films (films with a running time of at least 79 minutes, or 59 minutes for children's films) and short films (films with a maximum running time of 15 minutes). Projects should be expected to produce a film which is worthy of funding based on the criteria of quality and cost effectiveness. Films may be allowed to fall short of the minimum running time in exceptional cases. 3.2.1 Producers may apply for this funding. 3.2.2 As a rule, a prerequisite for film production funding by Medienboard is a distribution contract guaranteeing the commercial exploitation of the film in German cinemas. An international distribution contract is usually necessary for documentaries. Exceptions can be made for the funding of short films. 3.2.3 Rules laid out in the Film Funding Law (FFG) and pursuant regulations of the Federal Film Board (FFA) determine whether the producer's fee and production costs can be reimbursed, unless otherwise determined. Special arrangements can be made in the case of international co-productions. 3.2.4 The funding amount is determined based on the German share of the funding package. 3.2.5 Equity Interest Producers applying for funding must as a rule show that they carry at least 30% of the German share of the funding package. This equity interest may be furnished through private resources and outside funds, guarantees, licences, success-related "reference" funds, film prize monies and own or third-party contributions. Within the equity interest, private resources and/or outside funds should make up at least 5% of the German share of the funding package. Exceptions apply for small and difficult films. 3.2.6 Loans are paid out in instalments corresponding to the documented progress of the production. 3.2.7 Repayment The loan is repaid from the film's exploitation proceeds at home and abroad. Distribution commissions are usually considered in accordance with the FFG. The applicant's recognised equity interest is, as a rule, preferentially repayable. After covering the preferential equity interest, as a rule, 50% of the revenues due to the applicant must be used to repay the loan. If other funding bodies have cofinanced the film, partial repayments may be agreed upon in proportion to the amounts of these other loans. If a lower preferential equity interest and/or repayment corridor has been agreed with another German funding body involved in the project, this also applies for repayment of the Medienboard loan. 6/10

3.2.8 The repayment commitment usually expires five years after the release date (for cinema films), ten years after the first broadcast for television films and five years after the first showing at a film festival for short films. A corresponding repayment period may be arranged for projects expecting longer periods of exploitation because of the rights situation of the producer. 3.2.9 Success-Related Loans The applicant may apply for a success-related loan within a time limit of three years from the start of the repayment period. A success-related loan is a new conditionally repayable loan to the subsidy recipient corresponding to the amount repaid from previous loans. The success-related loan shall be granted if the new project corresponds to the quality criteria, funding goals and funding policy of Medienboard. Success-related loans are to be utilised before any other loans. 3.2.10 Subsidised cinema films should have their premieres in Berlin or Brandenburg. This condition need not apply if the amount of funding received from Medienboard is less than that provided by the funding body of another State. 3.2.11 FFG provisions on release delays apply for licences of cinema films receiving funding. Medienboard can grant exceptions on the application of the producer. Medienboard will follow any decision by the FFA to grant an application to shorten the holdbacks. 3.2.12 Reversion of TV Rights The applicant must provide proof that the licensing contract with a public or private broadcaster sufficiently guarantees the filmmaker's retention of TV rights in accordance with FFG provisions and pursuant regulations. If the applicant has transferred TV rights for the German-speaking licence territory to a distributor in exchange for guaranteed royalties, these TV rights must revert to the applicant in accordance with FFG provisions and pursuant regulations. 3.2.13 Archive Copy The applicant is obliged to provide Medienboard with a free copy of the production receiving funding for archiving. The copy shall correspond to the original production format released, be in perfect working order and suitable for archiving. A film need not be supplied if the German Film Archive Foundation has already acquired a copy in the original production format. The German Film Archive Foundation shall acquire a VHS copy if the film benefited from other public funding sources and a print has therefore been given to the Federal Archive. Digital productions shall be provided to the German Film Archive Foundation in a format suitable for archiving purposes. 3.2.14 Funding of Television Films Medienboard may fund television films. The above rules for cinema film funding apply accordingly for the funding of television films to the extent that they are objectively relevant and that no other provisions apply For television productions, however, the subsidy may amount to a maximum of 30% of the German share of the funding package. Television films may be funded if production costs and quality are unusually high (e.g. "TV events") and if the funding can be expected to strengthen the Berlin-Brandenburg production scene in lasting fashion. As a rule, a prerequisite for a positive funding decision is that the project must be a coproduction between an independent producer with office or business premises in Germany and a television broadcaster. It must also be ensured that, in the 7/10

contracts between the producer and the television broadcaster, there is a fair division of rights between the producer and the broadcaster and the rights retained by the producer are clearly recognisable. 3.2.15 Newcomer Funding Special emphasis is placed on the funding and promotion of newcomers. In this context, in addition to funding for free projects, i.e. those produced without support from film academies, funding can be provided for two full-length graduation films yearly from each of the Berlin-Brandenburg region's two film academies, "dffb" and "HFF Konrad Wolf." Applicants should be experienced producers. Production companies whose partners or proprietors are current students at a film academy or an academy with a similar curriculum are not entitled to apply. Funding can only be provided if the project corresponds to Medienboard's quality criteria, if the project is accompanied by a written recommendation from the respective academy's rector as to its excellence and if it offers at least two students the possibility of making their graduation film, whereby at least one graduate must be a production student. Funding may be provided for short films in exceptional cases. 3.3 Distribution Funding Medienboard may fund distribution and marketing activities in Germany, as well as national and international presentations of cinema films, if this funding is in the particular film cultural or economic interest of Berlin-Brandenburg. 3.3.1 All distribution and world sales companies resident in Germany are entitled to apply. 3.3.2 As a rule, funding is provided for distribution advance costs for cinema films corresponding to the preliminary costs defined by Article 53 a Paragraph 1 FFG and pursuant regulations of the Federal Film Board. 3.3.3 The amount of subsidy is, as a rule, up to 50% of the documented distribution advance costs. The equity interest of the applicant must, as a rule, represent at least 50% of the distribution advance costs. 3.3.4 Modes of disbursement for the loan are defined in the loan contract. As a rule, the loan is paid out in two instalments. The first instalment is paid out after the joint signing if the contract and the fulfilment of all loan preconditions. The second instalment is paid out after the final report is presented and once the agent confirms in its report that the project does not fall short of the distribution advance costs recognised by Medienboard or the regional effect, and that the project is not overfinanced. 3.3.5 The loan is repaid from the film's exploitation proceeds due to the applicant, usually after covering the equity interest defined in the loan contract. 3.3.6 The repayment commitment usually expires five years after the release date. 3.3.7 Success-Related Loans The applicant may apply for a success-related loan within a time limit of three years from the start of the repayment period. A success-related loan is a new conditionally repayable loan to the subsidy recipient corresponding to the amount repaid from previous loans. The success-related loan shall be granted if the new project corresponds to the quality criteria, funding goals and funding policy of Medienboard. Success-related loans are to be utilised before any other loans. 8/10

3.3.8 FFG provisions on release delays apply for licences of cinema films receiving funding. Medienboard can grant exceptions on the application of the producer. Medienboard will follow any decision by the FFA to grant an application to shorten the holdbacks. 3.4 Theater funding 3.4.1 Medienboard funds cinemas by annually awarding film programme prizes to movie theaters resident in Berlin-Brandenburg which have shown an outstanding film programme in the past year. Applications for funding may be submitted by operators of cinemas in Berlin and Brandenburg which are in constant operation and which have been operating for at least two years. 3.4.2 Medienboard may provide funding in the form of non-repayable grants for extraordinary and/or innovative marketing measures by individual theaters, or based on contractual co-operations between cinemas. Applications may be submitted by individual cinema operators, by several cinema operators together in the event of co-operations or by third parties acting as authorised agents of the cinema operators. Funding may also be provided for measures which, in the context of an overall assessment, appear suitable to strengthen the competitiveness of Berlin- Brandenburg cinemas as a whole. In that case, the third parties bearing economic responsibility for executing the measure may apply for funding in addition to the persons mentioned above. In each case, the applicant must demonstrate an equity interest of at least 50% for the measure which is to be funded. 3.5 Funding of Innovative Audio-Visual Content Medienboard may fund audio-visual content for new modes of distribution (internet, mobile phones, etc.), as well as interactive audio-visual content. The prerequisite is that the projects must be expected to create a work worthy of funding based on the criteria of quality and cost effectiveness. Funding of innovative audio-visual content is provided in the form of development and production funding. 3.5.1 Developers and producers may apply. With the application, the applicant must include a detailed description of the measure, a detailed calculation and a comprehensive description of the exploitation concept. 3.5.2 As a rule, funding is provided in the form of conditionally repayable loans. Loans are repaid using revenues from the exploitation of rights to innovative audio-visual content. Care must be taken to ensure a fair division of rights in contracts between the applicant and exploiter, and to ensure that the rights retained by the applicant are clearly recognisable. After covering the preferential equity interest, as a rule, 50% of the revenues due to the applicant must be used to repay the loan. If other funding bodies have co-financed the project, partial repayments may be agreed upon in proportion to the amounts of these other loans. 3.5.3 Success-Related Loans The applicant may apply for a success-related loan within a time limit of three years from the start of the repayment period. A success-related loan is a new conditionally repayable loan to the subsidy recipient corresponding to the amount repaid from previous loans. The success-related loan shall be granted if the new project corresponds to the quality criteria, funding goals and funding policy of Medienboard. Success-related loans are to be utilised before any other loans. 9/10

3.6 Funding of Other Projects Medienboard may fund projects to strengthen the media industry in Berlin- Brandenburg. This includes measures boosting film and media culture and the film and media industry, particularly professionalization measures, audio-visual marketing schemes, broadcasting activities and measures for other audio-visual media products. 4. Entry into Force These Guidelines come into effect on January 1st, 2010. 10/10