If the completion guarantor needs to pay for completion of a film, then it will be entitled to recoup its contribution to the production costs from the first proceeds of exploitation of the film. Once the completion guarantor has paid back the bank or primary financier of the film, then it will be in a position to recoup any monies (including interest) advanced by it.
If the completion guarantor takes over the production it is entitled to an assignment of all the agreements relating to the film. This will include amongst others the production bank account and any distribution agreements.
In a completion guarantee there are certain exclusions that the completion guarantor will not be obligated to pay for. These will include:
• the cost of certain delivery items which are not mandatory under the delivery schedule or set out in the definition of Delivery Materials of the guarantee;
• the cost of legal fees, interest and other finance fees that are not specifically stated;
• in some circumstances the completion guarantee will only cover those costs that are required to actually finish and deliver the film to a specific distributor. For example, it will not be responsible for certain distribution expenses such as censorship or exhibitor requirements or perhaps making a foreign language version of a film, which would include dubbing or sub-titling. If the completion guarantor decides not to deliver the film, then its liability will be limited to the amount set out as the Strike Price.
Completion guarantees are also drafted so that the guarantor will not have certain responsibilities. Matters that are excluded include the following:
• defects in the chain of title. The completion guarantor will require an Errors and Omissions Policy to cover any potential problems with the underlying rights, copyright or screenplay for the film;
• the artistic quality of the film;
• for extra costs, such as obtaining a certificate from the British Board of Film Classification or the Motion Picture Association of America;
• the cost of cutting, re-editing, re-recording or perhaps making cover shots for a television version of the film;
• additional delivery items.
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