MDM Guidelines English Version

MDM Guidelines English Version Be advised that the original set of guidelines was written in German, that this translation is provided only for your convenience, that German legislation governs this set of guidelines, and that the German original only shall be legally binding. 1. General principles 1.1 Aim of the funding The aim of the funding is the development, maintenance and strengthening of the film, television as well as media culture and economy in Saxony, Saxony-Anhalt and Thuringia. The funding intends to contribute to the strengthening of the audio-visual sector in Germany and Europe. With that it will improve and ensure the economic power in the region of these three states of Saxony, Saxony-Anhalt and Thuringia. A special focus is put upon: Strengthening of film and media culture, improvement of media competence and with that helping to form cultural identity within the Central German region. Strengthening the performance of the companies of the film, television, as well as media culture economy, intensifying the settlement of businesses. Improvement and further development of the quality and competitiveness of film, television and media productions. Improvement of the economic power of these three German states in the media sector to ensure employment and training. Supporting the development of educational as well as childrens and young peoples oriented media products. 1.2 Objectives of the funding Preparation, production, distribution and presentation of film, television, video and other audio-visual media productions are funded if they are economically promising. Innovative new media productions and film marketing concepts may also be funded. The areas of funding may include the following: Script development Project development Production Combined production and distribution funding Distribution and sales Screening and presentation Special projects 1

1.3 Regional focus Funding Funding may apply to projects that are expected to have cultural or economic effect in Saxony, Saxony-Anhalt or Thuringia. The funding granted should be the minimum that is spent on film, television and media specifically in Saxony, Saxony-Anhalt and Thuringia in the realisation of the project. Exceptions can be made individually if another regional fund renounces the same amount of its regional focus in favour of the MDM. At least 20 percent may be spent in another country of the European Union. Companies which are legally associated with the MDR (Mitteldeutscher Rundfunk) shall co-operate with other regional companies in the realisation of MDM funded projects. The support of the MDM shall be mentioned appropriately at the presentation of the project. Attention has to be paid to positive effects on vocational training in the film and media sector. The premiere of supported projects should take place in Saxony, Saxony-Anhalt or Thuringia. 1.4 Clause of exclusion Projects that violate the constitution or laws; the right of personality; and ethical or religious feelings cannot be supported. Especially projects with pornographic content, glorifying violence or ones that are harmful to young people are excluded from funding. 2. Procedure 2.1 Applications The funding (loans or subsidies) is granted upon application. Applications have to be submitted to the MDM. Details on the materials to be submitted, their number and deadlines can be found in the application forms and MDM leaflets. The current and binding state may be looked up on the MDM's website. 2.2 Allocation The director of the MDM decides on the applications. An allocation committee advises him/her. In especially justified cases the supervisory board decides. The allocation of the funding can only be made within the range of the financial means of the MDM. There is no legal claim on the funding. The realisation of the project must not have started prior to the decision on the funding. Exceptions to this rule must be applied for separately and can be approved by the director in justified cases. 2.3 Loans and repayment The funding generally takes place in the form of loans dependent on success. Exceptions are referred to separately. 2.4 Accumulation of funds The funding of the MDM may be complemented by means of other funds, provided that the public funding ratio does not exceed 50 percent of the total production costs. The cultural film funds of the states of Saxony, Saxony- Anhalt and Thuringia as well as the Kuratorium Junger Deutscher Film Foundation belong to these funds. If higher limits are authorised according to European law, they apply to these guidelines as well. 2.5. Loss of funding eligibility If a project objectively commits a statutory offence or if a regulation of paragraph 1.4 is violated, the MDM is authorised to call in the loan without notice at any time. This bears the consequence of immediate repayment of the loan without limitations on profits. 2

3. Support of script and project development 3.1 Script development 3.1.1 Funding can be granted for the development of a script. This includes: - Production of screenplays - Dramaturgic consultation - Research (in especially justified cases) Eligible applicants are producers, authors and directors. A finished dialogue scene or, for documentary films, a detailed description and realisation concept of the project has to be added to the application. In general, the applicant, if he/she is not a producer him/herself, has to provide a declaration of intent by a producer, who intends to realise the respective project. 3.1.2 The loan shall not exceed EUR 25,000. The amount will be paid in instalments according to the terms of the contract on the loan. 3.1.3 The loan has to be paid back at the start of the realisation of the project or if the rights of the funded script are being sold. 3.1.4 The recipient of the funding is obliged to produce the film that is based on the respective script in Central Germany, as far as it is possible. If the recipient of the funding is not a producer, he/she is obliged to offer the funded project for production within six months after the payment of the last instalment, preferably to producers of the Central German region. There is no legal claim for further funding resulting from the funding of the script development. 3.1.5 If the funded project is not realised within three years after the payment of the last instalment, the rights to the script that were acquired with the funding will be transferred to the MDM. After repayment of the amount of the funding, the transfer of the rights to the funded script can be claimed by the funded person. 3.1.6 Funding can be granted for the development of a film marketing concept for scripts that have been funded and accepted by the MDM. Eligible for application are producers who can prove that an experienced marketing agency will be undertaking the concept development. The loan shall not exceed EUR 12,500 and has to be spent exclusively on the fees of the agency. The amount will be paid in instalments according to the terms of the contract on the loan. The loan has to be paid back at the start of the production. The application may be submitted at the same time as an application for script development. The director decides on the payment of the loan after the funded script has been accepted by the MDM. 3.2 Project development 3.2.1 Funding can be granted for the development of a project. This especially includes: Acquisition of the rights on scripts Dramaturgic consultation Research, Location and casting Further measures for preparing productions. For multimedia projects this especially includes: Acquisition of the rights on image and sound footage Research Production of a demo version To be considered for funding, MDM requires a concept for film marketing; expenses for the concept may not exceed 12,500. The concept must be prepared by an experienced film marketing agency or an experienced distributor and contain a comprehensive market analysis and a plan for distribution. In addition, the concept must contain an outline of the measures planned and calculated within the production scheme on the one hand and the distribution scheme on the other hand. Eligible for applications are producers and multimedia developers who are in the position to ensure qualified realization of the project. 3

3.2.2 The loan may not exceed 100,000, including the film marketing concept. The amount will be paid in instalments according to the terms of the contract on the loan. 3.2.3 A screenplay or, for documentary films, a detailed description and realisation concept of the project, for multimedia projects, a project description, a detailed calculation and a first marketing concept have to be added to the application. 3.2.4 The funding should be spent in Central Germany, as far as it is possible. The recipient of the funding is obliged to produce the funded project in Central Germany, as far as it is possible. There is no legal claim for further funding resulting from the funding of the project development. 3.2.5 The loan has to be paid back at the start of production. The details of repayment for multimedia projects are fixed in the contract on the loan. 3.2.6 If the funded project is not realised within two years after the payment of the last instalment, the transferable rights that were acquired with the funding will be transferred to the MDM. After repayment of the amount of the funding, the transfer of the rights to the funded project can be claimed by the funded person. 3.3 Package funding 3.3.1 Funding can be granted for the development of several projects. Eligible for application are producers and multimedia developers, who contribute to the development of the economy of media culture in Saxony, Saxony- Anhalt and Thuringia and who are in the position to ensure qualified realisation of the project. 3.3.2 The loan shall not exceed EUR 150,000. The amount will be paid in instalments according to the terms of the contract on the loan. 3.3.3 The funding should be spent in Central Germany, as far as it is possible. The recipient of the funding is obliged to produce the funded projects in Central Germany, as far as it is possible. There is no legal claim for further funding resulting from the funding. 3.3.4 The relevant part of the loan must be repaid once the shooting for a project within the funded package has started. In individual cases, a different repayment method may be agreed upon if extraordinary reasons are present. The details of repayment for multimedia projects are specified in the loan contract. 3.3.5 If none of the funded projects is realised within three years after the payment of the last instalment, the transferable rights that were acquired with the funding will be transferred to the MDM. After repayment of the amount of the funding, the transfer of the rights to the funded projects can be claimed by the funded person. 4. Production funding 4.1. General principles 4.1.1 Funding in form of a loan can be granted for the production of a project. Eligible for application are producers and multimedia producers who are in the position to ensure qualified realisation of the project. The production of television projects especially may be funded if the project is distinguished by a particular programme quality and it is suitable for the international market or is produced with European co-partners respectively. 4.1.2 Projects of the following areas may be funded particularly: Up-and-coming Children and young people Multimedia 4

The regulations of paragraph 4.1.3, 4.1.4 (in regard to commercialisation respectively) and 4.1.6 may vary. 4.1.3 A screenplay, a list of all crew and cast members, a calculation meeting industry standards, a financing plan, an outline of slated shooting locations as well as a return flow plan must be attached to the application. In addition, a film marketing concept must be submitted unless the project is a short film or a low budget production with a budget of under 1 million. Applicant may file a request with MDM's director to waive the film marketing concept. The concept must be prepared by an experienced film marketing agency or an experienced distributor and contain a comprehensive market analysis and a plan for distribution. In addition, the concept must contain an outline of the measures planned and calculated with relevance for production and distribution. If no film marketing concept exists at the time of the application, MDM may, upon scrutinizing the documents mentioned above, recommend that applicant apply for funding not to exceed 12,500 in order to obtain such concept before submitting his or her application for production funding. Instead of the screenplay, a description and visualization of the project has to be added for multimedia projects. It must be stated in detail, what share of the production costs will be spent in Thuringia, Saxony-Anhalt or Saxony. The submitted calculation must also show in detail the respective focus of what is required according to the guidelines of other financial contributors involved. Declarations of intent or binding contracts on the placement of the project must be submitted with the application, clearly stating which rights remain with the producer. For European and international co-productions an overall budget and a calculation of the German share of the coproduction must also be included. 4.1.4 The payment requires proof of the overall budget of the project and the submission of binding contracts on the distribution. The costs have to be calculated accordingly. The payment of the loan takes place in instalments according to the proven progress of the production. The applicant must prove sufficient customary insurance of the image and sound footage before the call of the first instalment of the loan. The acceptance for funding expires if the overall budget has not been proved after nine months from the date of the granting. Exceptions for extensions can be made upon written request. 4.1.5 The applicant has to contribute to his film project with an appropriate equity ratio that is independent from funding loans. With international co-productions, the production costs of the German producer are the basis for the calculation of the equity ratio. This applies respectively to films that are produced in collaboration with a broadcasting company. The equity ratio that is independent from funding loans can be provided by: Internal resources (by bank confirmation of verifiable balances or resources which have been lent to the producer as a loan with unconditional duty of repayment). Deferred fees as well as personal contributions. They can only be considered in their customary monetary value and only up to 25 percent of the calculated production costs. (Personal contributions are contributions that are provided by the producer within the project, i.e. in the areas of production supervision, direction, acting or photography). Also included are rights of the producer to his own works that are used for the project, such as novels, screenplays and soundtracks. For multimedia projects these are contributions by the producer: for example in the fields supplying of equipment; own software; deferred fees. Distribution and sales guarantees Television and video licences as well as shares of licences, as far as they can be contributed directly during the production of the film. Film funds and earmarked prizes and awards cannot be considered for the equity ratio. 4.1.6 The applicant is obliged to pay off the loan from the profits he is entitled to, yielded from the funded film. This obligation arises at the latest after the covering of the MDM approved equity ratio (internal and outside resources with unconditional duty of repayment, deferred fees) of the producer and ends after complete repayment of the amount of the funding or after the repayment period fixed in the contract on the loan respectively. Prizes and awards will not be considered as profits. In the contract on the loan, the MDM may also arrange different terms of repayment, such as renouncement of the acceptance of internal resources, a repayment scheme or a share on the profits. If the film has been supported by different funding institutions, the repayment shall occur according to the respective shares of funding. If a lower priority and/or repayment scheme is arranged with another funding institution that is participating in supporting the film, the arrangements will also apply for these guidelines. 5

4.1.7 The applicant is obliged to provide a digital copy or a film copy of the funded production for the archives of the MDM as well as twelve VHS copies/data media and PR material for publication (including at least ten different pictures) at his own cost. 4.1.8 In justified cases of exception, a feature or television film that has not been funded by the MDM so far may receive a conditionally repayable loan for post-production. The shooting must have been finished as a requirement. Beside the application documents that are necessary for production funding, the producer has to submit screening samples. It has to be explained why the applied measure improves the placement of the film. 4.1.9 Repaid amounts of funded loans are at the disposal of the producer for the preparation or production of a new project for a maximum of three years, starting from the date of the first repayment of the loan. The grant occurs on the basis of an application for funding according to the valid guidelines and the examination and approval of the director once more as a conditionally repayable loan. If the approval is not given, the means remain with the MDM. 4.2. Placement of feature films and television productions 4.2.1 To protect the rights to individual distribution stages, any funded feature film or any part thereof must not be released on video or DVD in Germany or abroad in its German-language version or broadcast on TV or by other means before the following retention periods have expired. The retention period for video and DVD distribution lasts 6 months from the beginning of regular theater screenings in Germany. The retention period for distribution through near-video-on-demand, video-on-demand or pay-per-view schemes lasts 12 months after the first regular theater screening. The retention period for distribution through pay-per-channel schemes lasts 18 months after the first regular theater screening. The retention period for distribution through non-encoded TV programs lasts 24 months after the first regular theater screening. Applicant can file a request with the director to reduce the retention periods, which the director shall consider in light of whether this would put the overall success of a film in jeopardy. On application, the period for films that are produced in collaboration with a public or private broadcasting company can be reduced to six months, starting from the date of acceptance by the broadcasting company. If the FFA approves the application for the reduction of the retention period, the MDM will follow this decision. 4.2.2 The domestic television broadcasting rights for TV productions shall be limited to an appropriate period of time. In general, all other domestic and international rights of the distribution shall remain with the applicant. 4.2.3 The applicant has to ensure conditions on the transfer of television rights to a funded feature film which limit the domestic broadcasting rights to a maximum of seven years after the period of the cinema placement. Special agreements are made for encoded broadcasts. 4.3 Digitising 4.3.1 Funds for digitising productions that have already been supported with a loan by the MDM can be granted. 6

5. Combined Production and Distribution Funding 5.1 Eligible for funding are those marketing activities based on a marketing concept which are initiated during the production phase and which have interlocking and synergizing effects on production and distribution (preliminary distribution activities). The prospect of support for following measures of distribution can be held out. 5.2 Eligible persons are owners of distribution companies in conjunction with a producer or in some cases producers on their own. The application for funding of preliminary distribution activities must be submitted in conjunction with the application for production funding. The submitted film marketing concept must contain an outline of what activities are slated and calculated within the production scheme on the one hand and within the distribution scheme on the other hand. 5.3 If a producer has applied for funding for preliminary distribution activities, and if, by time the film shooting begins, he or she has not arrived at an agreement with the owner of a distribution company regarding a joint realization of a film marketing concept which is approved by MDM, he or she forfeits the funds approved for distribution. Article 6.2 still applies. 5.4 With respect to the distribution portion of the awarded funding, the owner of a distribution company becomes the contract party. He or she is also responsible for the use of the distribution funds. Disbursement details shall be specified in the lending agreement. 5.5 The following rule applies to repaid funds which form part of the loan approved for the distribution portion: The owner of the distribution company is entitled to 50% of the repaid funds, an amount he or she must commit to distribution activities, for a period of up to 3 years from the beginning of repayment. These distribution activities must involve big-screen films which receive production funding by MDM. The producer is entitled to 50% of the repaid funds, an amount he or she must commit to the production or development of new film projects. In both cases, the disbursement of these amounts is a new loan and as such depends on the director's evaluation and approval of a new application for funding in view of applicable guidelines. If the application is not approved, MDM retains the funds. 6. Support of distribution and sales 6.1 Support can be granted for measures of distribution and sales of film and media productions which are of special cultural or economic interest to the three German states and/or whose production has been funded by the MDM already. 6.2 Eligible for application are operators of distribution and sales companies, film and cinema associations, interest groups and the co-operations of theatres, as well as producers and multimedia producers in isolated cases. 6.3 The obligation of repayment of the loan arises after the covering of the approved distribution and predistribution costs in proportion to the profits the applicant is entitled to, and ends after complete repayment of the amount funded or after the repayment period which has been fixed in the contract on the loan. 6.4 The following rule applies to repaid funds which form part of the loan: Applicant is entitled to 50% of the repaid funds, an amount he or she must commit to distribution activities, for a period of up to 3 years from the beginning of repayment. These distribution activities must involve big-screen films which receive production funding by MDM. If the film in question has received production funding by MDM, the producer is also entitled to 50% of the repaid funds for the aforementioned period. This amount must be committed to the production of the development of new film projects. In both cases, the disbursement of these amounts is a new loan and as such depends on the director's evaluation and approval of a new application for funding in view of applicable guidelines. If the application is not approved, MDM retains the funds. 6.5 Support can be granted for respective measures to extend existing markets and to acquire new ones. 6.6 The funding awardee is required to submit a monthly evaluation report to MDM in the first 3 months after the first cinema screening in Germany. Afterward, semiannual evaluation reports are required. In addition, article 4.1.7 applies. 7

7. Support of screening, presentation and other projects 7.1 Loans or subsidies can be granted to promote screenings and presentations of German and European films and especially of projects which have been funded by the MDM. 7.2 The production of additional copies and repertoire copies for film theatres as well as the realisation of high quality presentations is supported. 7.3 Eligible for application are operators of cinemas and theatres in Saxony, Saxony-Anhalt and Thuringia, film and theatre associations as well as organisers of presentations respective to paragraph 7.4. Co-operating organisers shall be given preferential treatment. 7.4 In addition, presentations that extraordinarily point out innovations of the Central German media location can receive funding. These are film and media festivals, multimedia conferences, publications and databases, internet presentations and other forms of presentation where especially presentations are considered which pay attention to media pedagogy and media competence. Eligible for application are the respective organisers. Productions funded by the MDM and other productions from Central Germany have to be considered appropriately. 8. Support of education and training 8.1 Funding can be granted to media specific education and training. 8.2 Eligible for application are organisers of education and training measures who can provide a high degree of professionalism and media specific experience. Not eligible for application are governmental or communal organisations. 8.3 Young writers may receive support for attending screenplay courses. It has to be identified which course of a qualified organisation is going to be attended. The applicant has to submit an in-depth treatment and a detailed dialogue scene. The grant has to be paid back if the course was quit early or not finished properly. The same applies to other young professionals of other sections of the media business respectively. 9. Special regulations 9.1 The MDM may pay a part of the funding before the proof of the overall budget in especially justified cases, i.e. ensuring material for irretrievable events. 9.2 The director may come - on recommendation of the allocation committee and in agreement with the supervisory board, in special cases and for the purposes of the aims of the funding - to funding decisions which are divergent from these guidelines or not mentioned. The requirement is that they are projects that are proved to be in the special cultural or economic interest of the states of Saxony, Saxony-Anhalt and Thuringia in the fields of film and media. 10. Validity These guidelines will come into effect on July 2, 2004. 8