Template Offer Letter and Standard Terms of Business For

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Template Offer Letter and Standard Terms of Business For Short Film Production
Investments

OFFER LETTER

DATE

Producer Name
Producer Address
Letter of Offer

SUBJECT TO CONTRACT

Dear [Individual Producer name(s)]

RE:    "[Title]"  Project Number [ ]

We are pleased to confirm the offer by Scottish Screen ("SS"), subject to contract, to
invest in the short film presently titled "[project name]" ("the Film"), based on the draft
screenplay dated [           ] written by [        ] ("the Screenplay") on Scottish Screen's
Standard Terms of Business ("Standard Terms") which are attached hereto and included
herein by reference) and on the special terms and conditions set out below and subject
always to the execution of a Funding Agreement with SS ("the FA"):-

1.     Main Elements

Production Company("the Producer");
Individual Producer(s):
Co-Producer(s):
Director(s):
Writer(s):
Principal Cast:
Script:
Budget:
Production Schedule:
Running time:
Shooting Ratio:
Shooting Format:
Delivery Format:
Delivery Date:

SS to have prior written approval of any changes to the above. Elements are only
approved where stated.

2.     SS Funding

X by way of an Equity Investment ("the SS Equity Funding") in accordance with a
cashflow schedule to be approved by SS.
3.     Other Finance (Subject to paragraph 2 above)

1.
2.
3.
4.
5.
                      TOTAL OTHER FINANCE

As per SS standard terms of business (to be set out in the FA) the Producer must make
suitable arrangements (by hedging, insurance or otherwise) to provide for currency
fluctuations in order to meet the Budgeted Cost and any currency gains shall be paid into
the Production Account.

SS to have approval over all other finance and the terms thereof. Finance is not
approved unless stated.

No Distributor and/or Sales Agent has yet been appointed to the project. The terms of
the appointment of the Distibutor and/or Sales Agent will be subject to the approval of
SS. SS shall have approval over "ask" /"take" estimates for the Sales Agents Territory.
SS shall have approval over any sale by the Sales Agent at below pre-approved "take"
prices.

The Producer acknowledges that it is a condition of funding that the Producer uses
his/her best endeavours to secure a UK theatric release of the Film on terms acceptable
to Scottish Screen.

The terms of the appointment of a Distribution Agreement will be subject to the approval
of SS. The producer shall ensure that in the Distribution Agreement (and UK TV
broadcaster if know) that there is incorporated therein a customary holdback (to be
approved by SS) against television exploitation of the Film in the UK so as to maximise
the theatrical and videogram revenues for the Film.]

4.     Specific Conditions

5.      Recoupment
From the Net Receipts, the Producer shall be entitled to recoup deferrals (if any and
subject to prior written approval by Scottish Screen) prior to any split of proceeds from
distribution income and Scottish Screen shall be entitled to share net proceeds from all
Distribution income to the level of their investment. Scottish Screen shall receive 40% of
Net Receipts and the Producer shall receive 60%. All other equity investors will recoup
from the Producer's share of 60%.

6.      Conditions Precedent
This offer is subject to

       (i)            SS approval of script
       (ii)           SS approval of director(s), individual producer(s), all key cast and
                      key crew
       (iii)          SS approval of Budget, Production Schedule and Production
                      Cashflow
       (iv)           SS approval of the terms of the Sales Agency Agreement, the UK
                      Distribution Agreement and UK Broadcaster Agreement (if
                      applicable)
       (v)            SS approval of the financing structure and all agreements relating
                      thereto and related security documentation
       (vi)           Evidence of clear chain of title to the Producer and principal
                      Artist's Agreements, Director and Producer Agreements             and
                      HOD Agreements together with all related documentation
       (vii)          Completion of all financing and distribution/pre-sale agreements
                      (where appropriate)
       (viii)         Production Insurance approved by SS
       (ix)           SS approval of producers fees
        (x)           The Film will be capable of qualification as a British film (under the
                      Films Act 1985 (as amended) or through satisfaction of the
                      requirements of a relevant UK co-production treaty).

7.     Press Release
The Producers shall not issue any press release nor make any public announcements
regarding the Producer's or SS's involvement in this transaction without the prior written
approval of SS. SS shall not issue a press release regarding the Producer's or SS's
involvement in this transaction without the prior written approval of the Producers

8.      Review
SS's offer of investment is subject to review in 6 months from the effective date of this
Offer Letter (being [date]) if you have not closed financing for the project nor commenced
principal photography. At such time the offer will be extended by a minimum 3 months or
a maximum 6 months

In the event of a conflict between the terms of this Offer Letter and the Standard Terms,
the terms of this Offer Letter shall prevail

We are delighted to be working with you on this project. If you wish to accept this offer
you must do so within 7 days of receipt by signing and returning to me the attached
duplicate letter and Documentation Checklist.

Once we have received all the required documents and information (set out in the
Standard Terms of Business), our external lawyer and our Business Affairs Executive
will draft a long form Production Finance Agreement. If you have any queries, please
contact Business Affairs.

Yours sincerely


Anita Cox
Business Affairs Executive
Agreed by



.............................   ..................................
X                               Dated
For and on behalf of
Producer
Scottish Screen
Short Film Production Investment
Standard Terms of Business

These Standard Terms of Business ("Standard Terms") form part of, and should be read
in conjunction with any offer letter ("Offer Letter") issued by SS.

1.      Main Elements
Scottish Screen shall have approval over all Main Elements. Approval to be given in
writing and there shall be no changes to any Main Element without Scottish Screen's
prior written approval.

Main Elements are: Production Company, Individual Producer(s), Co-Producer(s),
Director(s), Writer(s), Principal Cast, Script, Budget, Production Schedule, Running time,
Shooting Ratio, Shooting Format, Delivery Format and Delivery Date.

2.     Scottish Screen Investment
The Scottish Screen Investment shall be advanced by way of an equity investment in
accordance with a Scottish Screen approved Cashflow Schedule.

3.      Other Finance
The Producer shall procure the provision of all other finance required to produce and
deliver the Film. Scottish Screen shall have approval over the identity and business
terms of all other financiers and finance for the Film.

4.      Copyright/Rights
The producer will assign to Scottish Screen the entire copyright to hold. Following and
subject to completion of the Film and Delivery and due performance by the Producer of
its obligations, Scottish Screen will reassign the entire copyright to the Producer.
Scottish Screen will reserve the non-exclusive licence to the Festival Screening Rights
for a period of two years from Delivery. For the avoidance of doubt Scottish Screen's
Festival Screening Rights contain a right to exhibit not an obligation to exhibit.

In the event other financiers seek a share of copyright then Scottish Screen will take a
share of the copyright and all other rights in the Film pro-rata to the level of its
investment in relation to other equity investors as security for repayment and will re-
assign such share to the Producer on repayment of the SS Equity Funding.

5.      Approvals
Scottish Screen will have approval rights over all key creative, finance and distribution
elements including (without limitation): Main Elements (as set out in Paragraph 1); all
drafts of the Script including final shooting script; chain of title; all heads of department
and key crew members; unit publicist (if applicable); production accountant; composer;
soundtrack album agreement; music supervisor; final cut; production schedule; cashflow
schedule; laboratory; completion guarantor (if applicable); sales agent and agreements
including commissions expenses (and all sales below minimum sales estimates);
financing costs; distributors and agreements; other investors and agreements and
collection agent (if applicable).
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