the government of the hong kong special … · schedule 1 production budget schedule 2 ......

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Film Development Fund Scheme for Film Production Grant – Film Production Grant Agreement FPGA20180206

DATE__________20__

THE GOVERNMENT OF

THE HONG KONG SPECIAL ADMINISTRATIVE REGION

and

_____________(English Name of Grantee)___________

__________(Chinese Name of Grantee)______________

FILM DEVELOPMENT FUND SCHEME

FOR FILM PRODUCTION GRANT

FILM PRODUCTION GRANT AGREEMENT

“____________(Film Title)___________”

(Case No. ________________________)

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CONTENTS

Clause Heading Page

1. DEFINITIONS

2. MAIN ELEMENTS

3. GOVERNMENT GRANT, COMMENCEMENT AND TERM

4. CONSIDERATION

5. FINANCIAL AND BUDGETARY CONTROL

6. BALANCE OF THE AMOUNT PROVIDED BY FINANCIER(S)

7. CONDITIONS PRECEDENT

8. APPROVALS

9. PRODUCTION, COMPLETION AND DELIVERY

10. CREDITS

11. GRANTEE’S WARRANTIES, REPRESENTATONS AND UNDERTAKINGS

12. REPORTING AND ACCOUNTING PROCEDURES

13. PROCUREMENT

13A CORRUPT GIFTS AND PAYMENT OF COMMISSION

14. INSURANCES

15. INDEMINITY

16. INTELLECTUAL PROPERTY RIGHTS

17. FINAL CUT

18. DISPUTE RESOLUTION

19. EVENTS OF DEFAULT

20. TERMINATION

21. CONFIDENTIALITY

22. FORCE MAJEURE

23. CONFLICT OF INTEREST

24. MISCELLANEOUS

25. ARBITRATION AND MEDIATION

26. GOVERNING LAW

27. SAVINGS

28. CONTRACTS (RIGHTS OF THIRD PARTIES) ORDINANCE

SCHEDULE 1 PRODUCTION BUDGET

SCHEDULE 2 SYNOPSIS

SCHEDULE 3 DELIVERY MATERIALS

SCHEDULE 4 GOVERNMENT CREDIT REQUIREMENTS

APPENDIX A - INDUCEMENT LETTER

APPENDIX B - DRAWDOWN NOTICE

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FILM PRODUCTION FUNDING AGREEMENT

DATED this _________ day of ____________ 20__ BETWEEN: (1) THE GOVERNMENT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION OF

THE PEOPLE’S REPUBLIC OF CHINA as represented by the Head of Create Hong Kong of 40/F., Revenue Tower, 5 Gloucester Road, Wanchai, Hong Kong (“the Government”); and

(2) ______(English & Chinese names of Grantee)_________ (Certificate of Incorporation No:

_______________), a limited liability company incorporated and existing under the laws of Hong Kong and having its registered office at __________(Grantee’s address)_______________ (“Grantee”).

WHEREAS (1) The Film Development Fund Scheme for Film Production Grant (“Grant Scheme”) aims

to provide financial support for film productions with the objectives of encouraging more commercial investment in low-budget film productions with a production budget not exceeding HK$ 13million in order to increase the production volume of local films and nurture new film talents.

(2) The Grantee has applied for financial assistance under the Grant Scheme for the

Production, Completion and Delivery of the Film, and the Government has agreed to provide financial assistance to the Grantee, subject to and upon the terms and conditions of this Agreement.

NOW IT IS AGREED as follows: 1. DEFINITIONS

1.1 In this Agreement, unless the context otherwise requires or expressively provides otherwise, the

following terms shall have the following meanings: - “Accounting Records” means complete and accurate books and records and other documents and

materials relating to all income, expenditure, and liabilities in respect of the Production, Completion and Delivery of the Film (including the cash and bank books, the sales and purchases journals and the records for all transactions, including receipts, counterfoils, vouchers and other supporting documents);

“Agreement” means this agreement, including all Schedules and Appendices to this agreement and the Guide to Application, all of which shall form and be read as an integral part of this agreement;

“AO” means the Arbitration Ordinance (Cap. 341, Laws of Hong Kong);

“Associate” of any person means: (a) a Relative or partner of that person; or (b) a company one or more of whose company directors is in common with

one or more of the company directors of that person;

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“Associated Person” in relation to another person means: (a) any person who has Control, directly or indirectly over the other; or (b) any person who is Controlled, directly or indirectly, by another; or (c) any person who is Controlled by, or has Control over, a person at (a) or

(b) above;

“Audited Statement” means the final audited cost statement in respect the Film as more particularly described in Clause 12.4 and prepared in accordance with the relevant laws of Hong Kong and local generally accepted accounting principles (including the Accounting Standards and Accounting Guidelines as the Hong Kong Institute of Certified Public Accountants may issue and update from time to time) and duly audited, dated, signed and as certified as accurate by an Auditor;

“Auditor” means a certified public accountant (practising) within the meaning of section 2 of the Professional Accountants Ordinance (Cap. 50, Laws of Hong Kong) which is not in any way connected with the Film for conducting an audit in respect of the Film in accordance with the Clause 12;

“CO” means the Copyright Ordinance (Cap. 528, Laws of Hong Kong);

“Company Director” means any person occupying the position of company director by whatever name called and includes a de facto or shadow director of a company and any person in charge of the day to day management or operation of the Grantee;

“Completion” in relation to the Film, means the Film (being a drama, animation or documentary feature film) that is produced, completed and delivered in all respects for commercial distribution by distributors of the Film, and is ready for immediate commercial release to the public in the international markets, including Hong Kong commercial theatres;

“Conditions Precedent”

means the conditions precedent set out in Clause 7;

“Contributions” means all contributions and/or sponsorships and/or product placement , and all other contributions (whether in cash or in kind) given or to be given by any persons for the Production, Completion or Delivery of the Film (exclusive of the Financiers’ financial support as set out in Clause 6 and Government Grant as set out in Clause 3);

“Control”, “Controlled by”, “Controlling Interest”

1. means the power of a person (including any Associate or Associated Person), directly or indirectly (whether through one or more intermediaries or otherwise) to direct or influence or cause the direction or influence of the management, policies or affairs of another person in one or more of the following ways:

(a) by means of the holding of shares or interests or the possession of voting power in or in relation to that or any other person; or

(b) by virtue of powers conferred by any constitution, memorandum or articles of association, partnership, agreement or arrangement (whether legally enforceable or not) affecting that or any other person; or

(c) by virtue of holding office as a Company Director in that or any other person; or

(d) by any other means; 2. “influence” for the purpose of this definition includes the holding of

15% or more of the shares or interests or the possession of voting power in or in relation to any person referred to in (a) above;

“Delivery”

in relation to the Film, means the delivery of the physical items (including the Production Materials and Master Materials) of the Completed Film to distributor or sales agent for the commercial distribution, exhibition and exploitation of the Film to the public in the international markets;

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“Delivery Date” means the date listed as “Delivery Date of Completed Film” in Clause 2;

“Delivery Materials” means the materials set out in Schedule 3 to this Agreement;

“Drawdown Notice ” means the drawdown notice attached as Appendix B to this Agreement;

“Duly Certified” means a document certified as a true copy: (a) in a company's place of incorporation- (i) by an official of the government of that place to whose custody

the original of the document is committed; (ii) by a notary public practising in that place; (iii) by a lawyer practising in that place; (iv) by a professional accountant practising in that place; (v) by an officer of a court of law duly authorized by the law of that

place to certify documents for any judicial or other legal purpose; or

(vi) by a professional company secretary practising in that place; (b) in Hong Kong- (i) by a notary public practising in Hong Kong; (ii) by a solicitor practising in Hong Kong; (iii) by a certified public accountant (practising) within the meaning of

section 2 of the Professional Accountants Ordinance (Cap 50); (iv) by an officer of the court in Hong Kong who is authorized by law

to certify documents for any judicial or other legal purpose; (v) by a consular officer of the place of incorporation of the

company; or (vi) by a professional company secretary practising in Hong Kong; (c) by an officer of that company; or (d) by the authorized representative of that company;

“ECO” means the Employees' Compensation Ordinance (Cap. 282, Laws of Hong

Kong);

“EO” means the Employment Ordinance (Cap. 57, Laws of Hong Kong);

“Event(s) of Default” means any event set out in Clause 19 ;

“FCO” means the Film Censorship Ordinance (Cap. 392, Laws of Hong Kong);

“Film” means a colour 35mm (or such other format as shall be approved by Government) drama, animation or documentary feature film which feature length is not less than 80 minutes as set out in Clause 2 of this Agreement and the term “Film” where the context permits means a recording on any medium from which a moving image may by any means be produced and includes all literary, dramatic, artistic and musical material (including any commentary) incorporated into or synchronised with or otherwise forming part of the Film or produced for the purposes thereof and all sound recordings included in the soundtrack album of the Film and all excerpts from sound recordings or other films incorporated into the Film and all negative and positive materials produced in connection with the Film entitled “___(English Title)___” / ___“(Chinese Title)__”;

“Film Crew and Cast” means all film crew members and casts/participated performers directly or indirectly engaged by the Grantee for the Production, Completion or Delivery of the Film;

“Final Cut” means the last fine-tuning of the Film immediately following the Producer(s)’ and Film Director(s)’ acceptance and approval of the final edited version, wherein the sound (including but not limited to dialogues, music and sound effect) is mixed and the picture conformed and made ready for the commercial theatrical release;

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“Financier(s)” means any and all persons who provide financial support for the Production, Completion or Delivery of the Film (other than the Government and those persons who provide Contribution) as set out in Clauses 2 and 6;

“Force Majeure” means: (a) any supervening outbreak of war affecting Hong Kong (whether war be

declared or not), hostilities, invasion, acts of foreign enemies, rebellion, terrorism, revolution, military or usurped power, overthrow (whether by external or internal means) of the Government, civil war, riot, civil disturbance, civil commotion and acts of God; or

(b) any supervening epidemic outbreak in Hong Kong; or (c) any supervening catastrophic event which is similar to the foregoing; and which (1) is not caused or contributed to by the Grantee (including its

Associates and Associated Persons) or any of the Grantee’s, partners, employees, contractors, agent or volunteers (including their respective predecessors); and (2) prevent(s) the performance of the Grantee’s duties and obligations under this Agreement;

“Government Grant” shall have the meaning set out in Clause 3;

“Guide to Application” means the “Film Development Fund Scheme for Film Production Grant Guide to Application” issued by the Government in February 2016 (as may be amended, supplemented or replaced by the Government from time to time);

“HK$” means the Hong Kong Dollars, the lawful currency of Hong Kong;

“Hong Kong” means the Hong Kong Special Administrative Region of the People’s Republic of China;

“Income” means the Government Grant, Financier(s)’ financial support, Contributions (if any), Interest (if any) and all other income (if any) generated from the Film or other deliverables in relation to the Film;

“Inducement Letter” means an inducement letter in the form set out in Appendix A to be entered into by all the Producers, Film Directors and Screenwriters of the Film and delivered to Government;

“Insurance Policy” means any or all insurance policies referred to in Clause 14;

“Intellectual Property Rights”

means patents, trade marks, service marks, trade names, design rights, copyright, domain names, database rights, rights in know-how, new inventions, designs or processes and other intellectual property rights whether now known or created in future (of whatever nature and wherever arising), and in each case whether registered or unregistered and including applications for the grant of any such rights;

“Interest” means all interest on the Government Grant which has accrued or should have accrued to the Production Account;

“ICO” means the Insurance Companies Ordinance (Cap. 41, Laws of Hong Kong);

“Leading Cast(s)” means the persons listed as “Leading Cast(s)” in the Main Elements;

“Local Expenditures” means all actual expenditures for the Production, Completion or Delivery of the Film carried out in Hong Kong (including Recognized Local Expenditures) as listed and audited in the Audited Statement;

“Local Film Crew and Cast”

means those Film Crew and Cast who are Hong Kong permanent residents;

“Main Elements” means those main elements of the Film set out in Clause 2;

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“Master Materials” means all takes, masters, negatives, positives, video, sound and other materials and/or recordings created for the Production, Completion or Delivery of the Film, whether incorporated into the Film or not;

“MPFSO” means the Mandatory Provident Fund Schemes Ordinance (Cap. 485, Laws of Hong Kong);

“MWO” means the Minimum Wage Ordinance (Cap. 608, Laws of Hong Kong);

“OSHO” means the Occupational Safety and Health Ordinance (Cap. 509, Laws of Hong Kong);

“OSO” means the Official Secrets Ordinance (Cap. 521, Laws of Hong Kong);

“Overseas Expenditures”

means all actual expenditures for the Production, Completion or Delivery of the Film other than the Local Expenditures;

“Overspend” means all sums incurred in connection with the Production, Completion or Delivery of the Film in excess of the Production Budget Amount;

“Original Work(s) / Story of Real Person(s) / Story of Main Interviewee(s)”

means the original literary or dramatic or artistic work(s) (including name(s) and likeness(es) in relation to story of real person(s) / story of main interviewee(s).

“PAO” means the Powers of Attorney Ordinance (Cap. 31, Laws of Hong Kong);

“PBO” means the Prevention of Bribery Ordinance (Cap.201, Laws of Hong Kong);

“PDPO means Personal Data (Privacy) Ordinance (Cap. 486, Laws of Hong Kong);

“Post-Production” in relation to the Film, means the performance of all post-production services, acts, matters or things including looping, dubbing, voice-overs, retakes, trick shots, optical soundtracks, foreign language versions, cover shots, added scenes and reshooting for the Film for producing the Film to the point of Completion of the Film required by the Government under this Agreement;

“Potential Event of Default”

means any condition, event or act which would become, with the passage of time, the giving of notice or the making of any determination under this Agreement, an Event of Default;

“Pre-Production” in relation to the Film includes screenplay-locking; setting up production schedule; location scouting; identifications and preparations of set construction, prop and wardrobe, and special effects (if any); and reading through Screenplay with cast, film director and other interested parties.

“Principal Photography”

means the phase of film production in which the Film is filmed based on the Screenplay, with the Film Crew and Cast on set and cameras rolling;

“Production” in relation to the Film, means the performance of all implementation/production services, acts, matters or things during Pre-Production, Principal Photography and Post-Production in accordance with the Production Schedule for implementing/producing the Film to the point of Completion of the Film required by the Government under this Agreement;

“Production Account” means the production account(s) established for the Production, Completion or Delivery of the Film and subject to the terms of the bank mandate, details of which are set out in Clause 3.4;

“Production Budget” means the Production budget for the Film approved by the Government attached at Schedule 1;

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“Production Budget Amount”

means the Production Budget Amount set out in Clause 2 of the Main Elements;

“Production Costs” means all production and operating costs, fees and expenditures actually incurred by Grantee under this Agreement in accordance with the Production Budget and Production Schedule in respect of the Production, Completion and Delivery of the Film, and (subject to Clause 3) which is either covered by the Production Budget Amount or which are sums incurred in connection with the Production, Completion or Delivery of the Film in excess of the Production Budget Amount, including the remunerations for Film Crew and Cast, fees and expenses, general and administrative expenses, equipment costs, expendable supplies and parts costs for the Production, Completion or Delivery of the Film;

“Production Materials”

means any costumes, props, equipment, goods, materials, software and other tangible or intangible assets or properties acquired, produced, hired or leased for the Production, Completion or Delivery of the Film;

“Production Schedule” means the Production Schedule for the Film listed in Clause 2 of Main Elements (including the shooting schedule in relation to the Film submitted to the Government, subject to such modifications or additions as may be required by the Government from time to time);

“Recognized Local Expenditures”

shall have the meaning set out in Clause 3.1;

“Relative” means the spouse, parent, child, brother or sister of the relevant person, and, in deducing such a relationship, an adopted child shall be deemed to be a child both of the natural parents and the adopting parent and a step child to be a child of both the natural parent and of any step parent;

“Screenplay” means a creative work, in which scene descriptions of movements, actions and expressions and dialogues of the characters are narrated and written by screenwriter(s) for a drama or animation or documentary feature film, as listed as “Screenplay” in Clause 2;

“Screenwriter(s)” means the Screenwriter as set out in the Main Elements;

“Underspend” means the amount by which the aggregate actual Production Costs of the Film listed and audited in the Audited Statement is less than the Production Budget Amount.

1.2 In this Agreement, unless the context otherwise requires:-

(a) headings and sub-headings are for convenience only and do not affect the interpretation of this Agreement;

(b) references to a clause or a schedule or an appendix are references to a clause of or a schedule or an appendix to this Agreement and include all amendments;

(c) a reference to any statute, order, regulation or other similar instrument shall be construed as a reference to the same as it may have been, or may from time to time be, amended, modified, substituted, re-enacted or replaced (whether before or after the date of this Agreement) and including all subsidiary legislation from time to time made under it;

(d) references to a person includes any individual, any form of body corporate, unincorporated association, firm, partnership, joint venture, consortium, association, organization or trust (in each case whether or not having a separate legal personality);

(e) where words or expressions are defined in this Agreement, such words or expressions extend to their grammatical variations and cognate expressions;

(f) words denoting the singular shall include the plural and vice versa;

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(g) any reference to a party of this Agreement includes any person deriving title from that party and any of its replacements, successors or permitted assignees (as the case may be);

(h) all references to dollars are references to Hong Kong dollars; (i) the words “include” and “including” shall be construed without limitation to the words

following; and (j) all references to “any” shall be construed to mean “any and all”.

1.3 Except as expressly provided otherwise, all obligations to be performed by the Grantee under this

Agreement shall be performed at the cost and expense of the Grantee. 1.4 If there is any inconsistency, ambiguity, repugnance or conflict between (i) Clauses 1 to 28 and

the Schedules and Appendices of this Agreement and (ii) the Guide to Application, Clauses 1 to 28 and the Schedules and Appendices of this Agreement shall prevail.

1.5 Except as expressly provided otherwise, all obligations to be performed by the Grantee under this

Agreement shall be performed at the cost and expense of the Grantee. 2. MAIN ELEMENTS

Film: “(English Title)” / “(Chinese Title)” Production Budget Amount: HK$ _________________ Synopsis: An original synopsis by ____________ ,

received by the Government on ________(including all amendments, additions and polishes thereto as required by the Government) as set out in Schedule 2;

Screenplay: An original Screenplay by ____________ , received by the Government on ________(including all amendments, additions and polishes thereto as required by the Government);

Screenwriter(s): _________________ Original Work(s) / Story of Real Person(s) / Story of Main Interviewee(s) on which the Film is based:

_________________

Film Director(s): _________________ Producer(s): _________________ Co-Producer(s): _________________ Executive Producer(s): _________________ Leading Cast(s): Drama- Leading Actor(s) _________________ Leading Actress(es) _________________ Animation- Leading Male Voice Over(s) _________________ Leading Female Voice Over(s) _________________ Documentary - Leading Male Artiste(s) in

dramatic part (if any) _________________

Leading Female Artiste(s) in dramatic part (if any)

_________________

Host(s) / Commentator(s) _________________ Main Interviewee(s) _________________ Financier(s): _________________ Contingency: _________________ Duration: between _____ minutes and _____ minutes Aspect Ratio: _________________ Format: _________________ Shooting Location(s):

_________________

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Film Certificate: Certificate for Public Exhibition in Hong Kong under FCO

Production Schedule: Pre-Production: from_________________ to ______________ Principal Photography: from_________________ to_______________ Post-Production: from_________________ to_______________ Completion Date of Rough Cut: _________________ Completion Date of Final Cut: _________________ Delivery Date of Completed Film: _________________ The Grantee shall not make any changes to any of the Main Elements without the prior written approval of the Government.

3. GOVERNMENT GRANT, COMMENCEMENT AND TERM 3.1 In consideration of Grantee undertaking to Produce, Complete and Deliver the Film to the

satisfaction of the Government and to comply with other terms and conditions of this Agreement and subject always to satisfaction of the Conditions Precedent, the Government shall provide a provisional sum of HK$_____________ to the Grantee for the Production, Completion and Delivery of the Film, provided that subject to Clause 3.6, the final and actual amount of Government Grant provided by the Government will be (i) 20% of ‘the Production Costs of the Film as listed and audited in the Audited Statement approved by the Government less Contributions’, (ii) the amount of the provisional Government Grant, or (iii) the sum of the Recognized Local Expenditure, whichever is the least (“Government Grant”). The Government Grant shall be used to cover the following Recognized Local Expenditures only and for no other purposes: 3.1.1 the remuneration for the Local Film Crew and Cast (excluding the

expenditures/costs/allowances/rewards/any form of pecuniary awards for the presented company/companies, presenter(s), Financier(s), Executive Producer(s), Producer(s), Co-Producer(s), Leading Actor(s) and Actress(es) (drama), Leading Male and Female Voice Over(s) (animation), Leading Male and Female Artiste(s) in dramatic part (documentary), Host(s)/Commentator(s) and Main Interviewee(s) (documentary) of the Film) and any person holding any right or share or having any interest in the Film; and

3.1.2 the Local Expenditures other than all remuneration for the Local Film Crew and Cast and expense for the production and delivery of the Delivery Materials.

Notwithstanding anything provided to the contrary in this Agreement, all Contributions in relation to the above Clauses 3.1.1 and 3.1.2 shall not be regarded as Recognized Local Expenditures and the Government reserves the ultimate right in the allocation of the Government Grant.

3.2 Subject to earlier termination as provided in this Agreement, this Agreement shall commence on

the execution date of this Agreement and shall expire after the Government’s written confirmation that all Delivery Materials set out in Schedule 3 are acceptable to the Government; the amount payable to the Grantee under Clause 3.5.4 has been fully paid; and all amount (if any) which shall be repaid by the Grantee to the Government under Clause 3.6 has been fully repaid to the Government or such earlier or later date as may be specified by the Government in writing.

3.3 The Grantee shall commence the Production, Completion and Delivery of the Film on the

commencement date of Pre-Production of the Film set out in Clause 2 and the Film shall not be deemed to have Produced, Completed and Delivered to the satisfaction of the Government until the Government has confirmed in writing that all Delivery Materials set out in Schedule 3 are acceptable to the Government.

3.4 The parties agree that the details of the Production Account for the Film are as follows: ____(name of Bank)______, __________(Bank’s address)___________ Account Number: _______________________

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Account Signatories: ___________________ 3.5 Subject to the Grantee’s Production, Completion and Delivery of the Film to the satisfaction of

the Government and the Grantee’s compliance with other terms and conditions of this Agreement, the Government shall disburse the Government Grant to Grantee in four phases:- 3.5.1 Phase one: HK$_____________, 15% (fifteen percent) of the provisional Government

Grant referred to in Clause 3.1 will be disbursed after the signing of this Agreement by the parties and the satisfaction of the Conditions Precedent;

3.5.2 Phase two: HK$_____________, 35% (thirty-five percent) of the provisional Government Grant referred to in Clause 3.1 will be disbursed after the commencement of Principal Photography of the Film in accordance with Clause 2;

3.5.3 Phase three: HK$_____________, 25% (twenty-five percent) of the provisional Government Grant referred to in Clause 3.1 will be disbursed within 18 months after the execution of this Agreement by the parties and Government’s acceptance of a copy of DVD or Blu-ray disc containing the Hong Kong theatrical release vision of the Completed Film with feature dialogue, music and sound effect tracks, and subtitles and credit (as part of the Delivery Materials listed in Clause 1 of Schedule 3); and

3.5.4. Phase four: after the Grantee’s compliance with Clause 11.1.3 and the Government has confirmed in writing that all Delivery Materials are acceptable to the Government, the Government will determine the final and actual amount of the Government Grant in accordance with Clauses 3.1 and 3.6, and disburse the remaining amount of the Government Grant (if any) determined in accordance with Clauses 3.1 and 3.6.

The amount of Recognized Local Expenditures shall be calculated based on the actual amount of Local Expenditures listed in the Audited Statement as approved by the Government. The Government Grant shall be credited by the Government into the Production Account in accordance with Clauses 3.1, 3.4 and 3.5 and other terms and conditions set out in this Agreement. The Grantee shall issue a Drawdown Notice to the Government at least 5 (five) days before each instalment of the Government Grant is provided.

3.6 Notwithstanding anything provided to the contrary in this Agreement, the amount of

Government Grant will be adjusted in the circumstances below:- 3.6.1 if there is any Underspend and the total actual amount of Recognized Local

Expenditures is lower than the amount of provisional Government Grant referred to in Clause 3.1 and 20% of ‘Production Costs less Contributions’ respectively, the amount of Government Grant will be reduced to the total actual amount of Recognized Local Expenditures; and the Phase four instalment amount of Government Grant referred to in Clause 3.5.4 will be the difference between the sum of the instalment amounts of Government Grant paid to the Grantee in Phases one, two and three as set out in Clauses 3.5.1, 3.5.2 and 3.5.3 and the total actual amount of Recognized Local Expenditures. If the sum of the instalment amounts of Government Grant paid to the Grantee in Phases one, two and three as set out in Clauses 3.5.1, 3.5.2 and 3.5.3 is more than the total actual amount of Recognized Local Expenditures, the Grantee shall immediately repay the surplus amount to the Government within 7 (seven) working days of receipt of a written notice from the Government; or

3.6.2 if there is any Underspend and 20% of ‘Production Costs less Contributions’ is lower than the amount of provisional Government Grant referred to in Clause 3.1 and the total actual amount of Recognized Local Expenditures respectively, the amount of Government Grant will be reduced to 20% of the ‘Production Costs less Contributions’; and the Phase four instalment amount of Government Grant referred to in Clause 3.5.4 will be the difference between the sum of the instalment amounts of Government Grant paid to the Grantee in Phases one, two and three as set out in Clauses 3.5.1, 3.5.2 and 3.5.3 and 20% of the actual ‘Production Costs less Contributions’. If the sum of the instalment amounts of Government Grant paid to the Grantee in Phases one, two and three as set out in Clauses 3.5.1, 3.5.2 and 3.5.3 is more than 20% of the ‘Production Costs less Contributions’, the Grantee shall

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immediately repay the surplus amount to the Government within 7 (seven) working days of receipt of a written notice from the Government; or

3.6.3 if there is any Underspend and the provisional Government Grant referred to in Clause 3.1 is lower than the total actual amount of Recognized Local Expenditures and 20% of ‘Production Costs less Contributions’ respectively, the amount of the Government Grant will be equal to the provisional Government Grant referred to in Clause 3.1; and the Phase four instalment amount of Government Grant referred to in Clause 3.5.4 will be the difference between the sum of the instalment amounts of Government Grant paid to the Grantee in Phases one, two and three as set out in Clauses 3.5.1, 3.5.2 and 3.5.3 and the provisional Government Grant referred to in Clause 3.1; or

3.6.4 if (i) there is any Overspend; (ii) the Production Costs (inclusive of Overspend) are within HK$13 million; (iii) the Overspend is approved and acceptable to the Government and (iv) if the total actual amount of the Recognized Local Expenditures is lower than the amount of provisional Government Grant referred to in Clause 3.1 and 20% of ‘Production Costs less Contributions’ respectively, the amount of Government Grant will be reduced to the total actual amount of Recognized Local Expenditures; and the Phase four instalment amount of Government Grant referred to in Clause 3.5.4 will be the difference between the sum of the instalment amounts of Government Grant paid to the Grantee in Phases one, two and three as set out in Clauses 3.5.1, 3.5.2 and 3.5.3 and the total actual amount of Recognized Local Expenditures. If the sum of the instalment amounts of the Government Grant paid to the Grantee in Phases one, two and three as set out in Clauses 3.5.1, 3.5.2 and 3.5.3 is more than the total actual amount of the Recognized Local Expenditures, the Grantee shall immediately repay the surplus amount to the Government within 7 (seven) working days of receipt of a written notice from the Government; or

3.6.5 if (i) there is any Overspend; (ii) the Production Costs (inclusive of Overspend) are within HK$13 million; (iii) the Overspend is approved and acceptable to the Government; and (iv) 20% of ‘Production Costs less Contributions’ is lower than the amount of provisional Government Grant referred to in Clause 3.1 and the total actual amount of Recognized Local Expenditures respectively, the amount of the Government Grant will be equal to 20% of ‘Production Costs less Contributions’; and the Phase four instalment amount of Government Grant referred to in Clause 3.5.4 will be the difference between the sum of the instalment amounts of Government Grant paid to the Grantee in Phases one, two and three as set out in Clauses 3.5.1, 3.5.2 and 3.5.3 and 20% of ‘Production Costs less Contributions’. If the sum of the instalment amounts of the Government Grant paid to the Grantee in Phases one, two and three as set out in Clauses 3.5.1, 3.5.2 and 3.5.3 is more than 20% of ‘Production Costs less Contributions’, the Grantee shall immediately repay the surplus amount to the Government within 7 (seven) working days of receipt of a written notice from the Government; or

3.6.6 if (i) there is any Overspend; (ii) the Production Costs (inclusive of Overspend) are within HK$13 million; (iii) the Overspend is approved and acceptable to the Government; and (iv) the provisional Government Grant referred to in Clause 3.1 is lower than the total actual amount of Recognized Local Expenditures and 20% of ‘Production Costs less Contributions’ respectively, the amount of the Government Grant will be equal to the provisional Government Grant referred to in Clause 3.1; and the Phase four instalment amount of Government Grant referred to in Clause 3.5.4 will be the difference between the sum of the instalment amounts of Government Grant paid to the Grantee in Phases one, two and three as set out in Clauses 3.5.1, 3.5.2 and 3.5.3 and the provisional Government Grant referred to in Clause 3.1; or

3.6.7 if there is any Overspend leading to the Production Costs exceeding HK$13 million (regardless of whether or not ‘Production Costs less Contribution’ is less than HK$13 million, it will be considered as an Event of Default for the purposes of this Agreement in accordance with Clause 19.

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4 CONSIDERATION 4.1 In consideration of the Government agreeing to provide the Government Grant or any part

thereof for the Film in accordance with this Agreement, the Grantee shall: 4.1.1 Produce, Complete and Deliver the Film in accordance with this Agreement and any

requirement or directives relating to the Film as may from time to time be prescribed by the Government in writing;

4.1.2 submit the requisite documents and reports (including but not limited to call sheets, daily reports, costs reports and Accounting Records) and the Audited Statement to the Government in accordance with this Agreement;

4.1.3 grant the licences in respect of the Intellectual Property Rights to the Government, its authorized users, assigns and successors-in-title in accordance with this Agreement; and

4.1.4 comply with other terms and conditions of this Agreement. 5 FINANCIAL AND BUDGETARY CONTROL 5.1 The Grantee shall use the Income solely and exclusively for the Production, Completion and

Delivery of the Film in accordance with this Agreement. 5.2 The Government will not:

5.2.1 make or be liable for any payment in excess of the Government Grant; or 5.2.2 reimburse any expenditure incurred by the Grantee (a) before the commencement date

of the Pre-Production of the Film set out in Clause 2 or (b) after the date of the Grantee’s finalization of the actual Production Costs listed in the Audited Statement.

If the Grantee reasonably foresees that the final Production Costs of the Film may exceed the Production Budget Amount by whatever amount, the Grantee shall immediately inform the Government in writing.

5.3 The Government accepts no liabilities for any deficits or shortfall arising from or relating to the

Film. The Government will not consider any application for supplementary grants or extension of the funding period for the Film under the Grant Scheme.

5.4 Notwithstanding anything provided to the contrary in this Agreement, the Grantee shall:-

5.4.1 procure or be responsible for providing the sum which is equal to the difference between the aggregate actual Production Costs listed and audited in the Audited Statement as approved by the Government and the Production Budget Amount for the Production, Completion and Delivery of the Film; and

5.4.2 be responsible for all deficits or shortfall arising from or relating to the Production, Completion and Delivery of the Film and the Government shall not be responsible for such in any event (including any occurrence of any Underspend or Overspend).

5.5 The Grantee shall keep the Production Account and keep separate the Government Grant from

other monies belonging to the Grantee. All withdrawals from the Production Account shall only be made by the Grantee’s authorized signatory whose appointment has been notified by the Grantee to the Government in writing at least 14 (fourteen) working days before the effective date of such authorized signatory’s appointment. The Grantee shall notify the Government of any intended change of authorized signatory of the Production Account in writing at least 14 (fourteen) working days before such change takes effect.

5.6 All monies related to the Film, including but not limited to Income, shall be reflected in the

Production Account of the Film and Accounting Records referred to under Clause 12. 5.7 If the Grantee fails to pay any sum pursuant to any provision of this Agreement when due

(whether legally or formally demanded or not and both before and after judgment), the Grantee shall, without prejudice to any rights or remedies of the Government under this Agreement or

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otherwise, pay interest at the rate of 2 (two) percent per annum above the average of the prevailing best lending rates quoted by the note-issuing banks in Hong Kong to accrue on a daily basis in a year of 365 calendar days from the date immediately following the due date until the date of actual payment in full.

5.8 Without prejudice to any rights or remedies that the Government may have under this

Agreement or at law, the Government may take any action as it thinks fit including claiming as a civil debt any sum (including any interest payable) which may become due and payable by the Grantee pursuant to this Agreement. The Grantee shall indemnify and keep indemnified the Government against any cost, expense, loss or liability (including legal expenses) suffered or incurred by the Government in recovering any amount due and payable by the Grantee to the Government pursuant to this Agreement. The foregoing indemnity provision shall survive the termination, expiration or completion of this Agreement (howsoever occasioned) and shall continue in full force and effect notwithstanding such termination, expiration or completion.

6 BALANCE OF THE AMOUNT PROVIDED BY FINANCIER(S) 6.1 Subject to Clause 6.2, the Grantee shall procure the Financier(s) to provide financial support

for the Film below:

(“insert name of Financier A”) ____ % of the

Production Budget Amount HK$___________

And

(“insert name of Financier B”) ____ % of the

Production Budget Amount HK$___________

Total Amount of financial support provided by Financier(s)

100 % of the Production Budget Amount

HK$___________

6.2 Regardless of (a) whether there is any change of the amount of Government Grant, or any delay

of payment of the Government Grant, or any Underspend or Overspend (subject to Clauses 3.1 and 3.5 and the adjustments pursuant to Clause 3.6); or (b) the occurrence of any other circumstances, the Grantee shall, and shall ensure that the Financier(s) and other persons (if any) will, make up the deficit or shortfall arising from or relating to the Production, Completion and Delivery of the Film.

7 CONDITIONS PRECEDENT 7.1 The Government’s commitment to provide any or all Government Grant is subject to fulfilment

of all of the following conditions: 7.1.1 the Grantee’s delivery to and approval by the Government of the original duly signed

Inducement Letters by all the Film Directors, Producers and Screenwriters in respect of the Film; and

7.1.2 the execution of this Agreement by both parties to this Agreement. 7.2 The Grantee acknowledges that no Government Grant will be provided to the Grantee or

credited to the Production Account prior to the satisfaction of all the Conditions Precedent and therefore if the Grantee proceeds with the Production, Completion or Delivery of the Film before fulfilment of all the Conditions Precedent, then it is doing so at its own risk.

7.3 The Grantee and the Government hereby acknowledge and agree that the Government shall not be under any obligation to provide any additional grant for the Production, Completion or Delivery of the Film, or any monies over and above the Government Grant.

7.4 The Drawdown Notice shall be signed by the Grantee. The original receipts of all instalments of

the Government Grant paid to the Grantee in Phases one, two, three and four as set out in

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Clauses 3.5.1, 3.5.2, 3.5.3 and 3.5.4 submitted to the Government will not be returned to the Grantee. Without prejudice to any other rights or remedies which the Government may have, the Government shall be entitled to withhold payment of the Government Grant or any part thereof if: 7.4.1 in the Government’s sole opinion, the Film is no longer viable or has substantially

deviated from the Main Elements, the Production Budget or the Synopsis in Schedule 2; 7.4.2 the Grantee fails to provide any information or documents to the Government in

accordance with this Agreement; 7.4.3 the Grantee has failed, or is in the Government’s sole opinion likely to fail to meet the

scope or scale of the Film as stipulated in the Main Elements, the Production Budget, the Synopsis in Schedule 2 or any other provisions of this Agreement and fails to provide justifications which are acceptable to the Government;

7.4.4 any Delivery Materials submitted by the Grantee or any part of the Film Produced, Completed or Delivered by the Grantee is not acceptable to the Government;

7.4.5 there is a claim or allegation or the Government having reasonable grounds to believe that any Delivery Materials, any part of the Film, and/or any documents or materials submitted by the Grantee to the Government under this Agreement infringes or may infringe any Intellectual Property Rights, performer’s rights and/or moral rights of any person;

7.4.6 any of the data, facts or information represented to and/or provided by the Grantee to the Government about the Film, or the Government Grant is incomplete, incorrect, untrue, inaccurate or misleading;

7.4.7 any receipt, invoice, certificate or final account or other document submitted by the Grantee for claiming payment of the Government Grant is not acceptable to the Government, or any expense item in any of the aforesaid documents submitted by the Grantee is not eligible for the Government Grant;

7.4.8 the Government has reasonable grounds to believe that the Grantee is or will be liable to the Government under the indemnity clause for the loss or damage suffered by the Government; or

7.4.9 the withholding is required by any applicable law. 7.5. Unless otherwise agreed by the Government in writing, any expenditure incurred for or in

connection with the Production, Completion or Delivery of the Film by the Grantee on any matter not expressly or clearly listed in Production Budget shall be for the Grantee’s own account with no recourse to the Government, but shall be included as part of the Production Costs of the Film.

8. APPROVALS

8.1. The Grantee shall obtain the Government’s written approval for the following:-

8.1.1 any change to any of the Main Elements at least 7 (seven) days before any such change takes place;

8.1.2 all records of the Hong Kong theatrical release of the Film for (at least 5 (five) shows in 7 (seven) consecutive days) and the related supporting documentary evidence relating thereto, as set out in Schedule 3;

8.1.3 the Audited Statement referred to in Clause 12.4 and Schedule 3; and 8.1.4 the Final Cut of the Film as set out in Clauses 9.3 and 17.

8.2. If the Grantee fails to observe Clause 8.1 or the Grantee’s application for the Government’s approval under Clause 8.1 is rejected by the Government, subject to Clause 22, the Government may by written notice to the Grantee terminate this Agreement with immediate effect.

9. PRODUCTION, COMPLETION AND DELIVERY

9.1 The Grantee shall Produce, Complete and Deliver the Film in accordance with the terms and

conditions of this Agreement.

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9.2 The cost for Production, Completion or Delivery of the Delivery Materials will be met from the

Production Budget. The Grantee shall deliver the Delivery Materials to the Government in accordance with the time frame set out in Schedule 3. The ownership of the Delivery Materials will be vested in the Government.

9.3 The Government, its authorized users, assigns and successors-in-title may, at all reasonable

times, with reasonable prior notice to the Grantee, visit studios or shooting locations to observe the Production, Completion or Delivery of the Film and require the Grantee to arrange screening of any footages and cuts including Final Cut of the Film.

9.4 The Government may require the Grantee to provide clear and complete information with

respect to any matters relating to the Production, Completion or Delivery of the Film. For this purpose, the Grantee shall, if so requested, arrange for the Producer(s), Film Director(s), or any other person under the Grantee’s control or involved in the Production, Completion or Delivery of the Film, to attend meeting(s) with the Government.

10. CREDITS

10.1 The Government will receive (a) credit in the form set out in section A of Schedule 4 (or such

other form as the Government may specify from time to time) on all copies of the Film; and (b) billing blocks in the form set out in section B of Schedule 4 (or such other form as the Government may specify from time to time) in all advertising and promotional materials for the Film including posters, press releases, video sleeves and soundtrack album covers.

10.2 The Grantee shall submit a draft of all proposed credits to the Government for approval prior to including (a) such credits on any copy of the Film; and (b) billing blocks in all advertising and promotional materials.

10.3 The Grantee shall contractually require that all distributors (including all sales agents, sub-sales agents and sub-distributors) and any other third parties responsible for the marketing of the Film accord the Government the credits in accordance with Clause 10.1 without omission or alteration. No failure by any third party to accord such credit shall be deemed a breach of this Agreement by the Grantee provided that:- 10.3.1 in the event that the Grantee has knowledge that any breach is likely to occur, the

Grantee shall use best endeavours to prevent such breach; and 10.3.2 in the event of any breach, the Grantee shall use best endeavours to remedy such

breach within 30 (thirty) business days from the date of the breach. 11 GRANTEE’S WARRANTIES, REPRSENTATIONS AND UNDERTAKINGS

11.1 The Grantee warrants, represents, and undertakes with the Government that:

11.1.1 it will, at any time at the request of the Government, execute all documents and do all acts as may be necessary in order to vest, secure or enforce the rights in the Film which may be necessary to satisfy the terms and conditions of this Agreement;

11.1.2 the Film shall be made to a standard meeting the requirements of commercial films for theatrical release in accordance with the Screenplay, the Main Elements, the Production Schedule and the Production Budget, and the Grantee shall Produce, Complete and Deliver the Film in accordance with the terms and conditions of this Agreement; and the Film shall be: (a) fully synchronised as to dialogue, music and effects; (b) produced in the Chinese language unless the Government otherwise agrees; and (c) feature length, fully-edited, main and end-titled, and free from scratches and

blemishes; 11.1.3 the Completed Film shall be commercially released for at least 5 (five) shows in 7

(seven) consecutive days within twenty-four (24) months from the execution date of

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this Agreement; and the Grantee shall deliver reasonably satisfactory documentary evidence substantiating the same to the Government in accordance with Clause 2.2 of Schedule 3; and

11.2 The Grantee shall not issue or authorise the issue of any press release, public announcement or

advertising, promotional or other publicity material relating to the Film or this Agreement or any work done in connection with this Agreement or the Grantee’s or the Government’s involvement therein, or use (whether expressly or impliedly) the Government’s name or the name of any Government bureaux or departments thereof without the prior written approval of the Government, except pursuant to Grantee’s performance of its obligations under this Agreement and to the extent that the relationship between the Government and Grantee in relation to the Film is public knowledge.

11.3. The Grantee shall account for and pay over any Underspend to the Government within 7 (seven)

days after the Government’s approval of the Audited Statement. 11.4 The Grantee shall use its best endeavours to keep the percentage of the Local Expenditures in

accordance with the percentage of the Production Budget spent locally set out in Schedule 1. For avoidance of doubt, if the percentage of Local Expenditures of the Film stated and audited in the Audited Statement as approved by the Government is 15% lower than the percentage of the “Local” expenditures set out in the Production Budget in Schedule 1, it will be considered as an Event of Default for the purposes of Clause 19 of this Agreement.

11.5 The Grantee shall ensure that the Film is capable of obtaining a certificate for public exhibition

in Hong Kong under the FCO.

11.6 The Grantee hereby warrants and undertakes to the Government that:- 11.6.1 if the Grantee has received any Contributions for the Film, the Grantee shall promptly

inform the Government in writing after such receipt and provide all related information to the Auditor for the purpose of enabling proper preparation of the Audited Statement;

11.6.2 the Grantee is able to pay its debts as they fall due, is not insolvent and has not commenced negotiations with any one or more of its creditors with a view to the general readjustment or rescheduling of its indebtedness or made a general assignment for the benefit of or a composition with its creditors;

11.6.3 no actions or steps have been taken or legal proceedings have been started or threatened against the Grantee for its winding up, dissolution, insolvency, administration, reorganisation or reconstruction (whether by voluntary arrangement, scheme of arrangement or otherwise) or for the appointment of a receiver, administrator, administrative receiver, conservator, custodian, trustee or similar officer of the Grantee or of any or all of the Grantee’s assets or revenues;

11.6.4 the Grantee has full power, authority and capacity to enter into this Agreement and to perform all its obligations hereunder (including without limitation (i) the obligations under Clause 6 of this Agreement; and (ii) the grant of the relevant licences in respect of the Intellectual Property Rights to the Government in accordance with Clause 16 of the Agreement);

11.6.5 the Grantee has all the necessary authorizations and approvals in order to lawfully enter into and exercise its rights and perform its obligations under this Agreement;

11.6.6 the Grantee has obtained the consent of the Financiers to apply for the financial assistance under the Grant Scheme and to enter into this Agreement;

11.6.7 the obligations expressed to be assumed by the Grantee in this Agreement are legal and valid obligations binding on it and enforceable against it in accordance with the terms thereof.

The provisions of this Clause 11.6 shall survive the termination, expiration or completion of this Agreement (howsoever occasioned) and shall continue in full force and effect notwithstanding such termination, expiration or completion.

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11.7 The Grantee hereby warrants and undertakes to the Government that it shall:

11.7.1 serve as the single contact point to the Government throughout the term of this Agreement (whether or not it Produces, Completes or Delivers the Film jointly with another person);

11.7.2 Produce, Complete and Deliver the Film in such manner as set out in the Agreement and in any event no later than the Delivery Date;

11.7.3 Produce, Complete and Deliver the Film in a professional, impartial, timely and diligent manner and the Grantee and the Film Crew and Casts have all the necessary qualifications, ability, experience, skill and expertise to Produce, Complete and Deliver the Film on the terms and conditions set out in this Agreement;

11.7.4 cause all Income to be paid into the Production Account and to be kept therein until such Income are spent or paid or returned to the Government in accordance with this Agreement, and shall cause all payments relating to the Film to be paid out of the Production Account, and shall ensure that all receipts and payments in respect of the Film are properly and timely recorded;

11.7.5 not change the Production Budget, Synopsis, Main Elements or any part or parts thereof without the Government’s prior written consent;

11.7.6 carry out its duties and obligations in accordance with this Agreement and any requirements or directives relating to the Film as the Government may prescribe from time to time by the Government in writing;

11.7.7 ensure that all information supplied, and statements and representations made by or on behalf of the Grantee in relation to the Film or this Agreement is true, accurate and complete in all respects and is not misleading (whether by omission or otherwise);

11.7.8 forthwith notify the Government in writing upon its becoming aware of the occurrence of any Event of Default or any Potential Event of Default;

11.7.9 comply in all respects, including the giving of all necessary notices, the paying of all necessary fees and the obtaining of all necessary licences, consents and approvals, with the provisions of all legislation, regulations and by-laws applicable to the Film (including without limitation, the EO, the ECO, the MPFSO, the PDPO, the OSHO and the MWO and other legislation, regulations and by-laws pertaining to the health and safety of any persons who are or will be employed or engaged by the Grantee in relation to the Film or the carrying out of the Grantee's obligations under this Agreement);

11.7.10 at all times keep the Government properly informed and promptly provide all necessary advice, assistance and information as may be requested by the Government, its authorized users, assigns and successors-in-title from time to time;

11.7.11 upon the Government’s request, allow any person acting on behalf of the Government, its authorized users, assigns and successors-in-title to enter at all reasonable times into and upon any premises of or controlled by the Grantee where any documents or records pertaining to the Film is kept, or any part of the Film is being carried out, or any items arising from the Film is being experimented, manufactured, Produced, Completed, Delivered, displayed or stored by the Grantee for the purpose of inspection or copying or for verifying the accuracy of any information given by the Grantee to the Government and otherwise verifying that the Grantee has complied with its obligations under this Agreement;

11.7.12 attend and participate in meetings, public forums and other promotional or accountability activities as the Government may convene or upon the request of the Government;

11.7.13 immediately at its own expense take all remedial actions that may be required by the Government upon the Government’s request;

11.7.14 not advertise or hold itself out or represent itself as an agent, employee, servant or partner of the Government, or suggest or imply that the Government is in any way responsible for any of its acts and/or omissions and shall upon receiving request from the Government, withdraw or cease using any promotional or publicity material which the Government in its absolute discretion considers to be inappropriate or undesirable;

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and 11.7.15 upon the Government’s request, provide the Government with all such information

and documents relating to the Film Crew and Cast as the Government may request within 7 (seven) days of the Government’s request (or such longer period as the Government may agree in writing).


12 REPORTING AND ACCOUNTING PROCEDURES

12.1 The Grantee shall keep all Accounting Records and shall ensure that all Accounting Records are

prepared and maintained in accordance with the Companies Ordinance (Cap. 622, Laws of Hong Kong) and local generally accepted accounting principles.

12.2 The Grantee shall ensure that all Accounting Records demonstrate a true, up-to-date and

objective view of all transactions in respect of the Production, Completion and Delivery of the Film and the financial position of the Grantee.

12.3 Underspend, if any, in respect of the Film shall be held by Grantee on trust for the Government

absolutely and be paid to the Government in accordance with Clauses 3.5, 3.6.1 and 3.6.2. 12.4 The Grantee shall engage an Auditor and must allow the Auditor to access, take copies, inspect

and examine all Accounting Records relating to the Production, Completion and Delivery of the Film and render full cooperation to the Auditor for the purpose of conducting independent audit of the Film; and to prepare and deliver the Audited Statement to the Government within 24 (twenty-four) months from the execution date of this Agreement in accordance with Schedule 3. Notwithstanding anything provided herein, the Government and/the Commissioner for Audit and their respective authorized representatives shall have the right to conduct an independent audit in respect of the Film. The Audited Statement shall include the following: 12.4.1 all Income and expenditures (to be divided into two categories, i.e. ‘Local

Expenditures’ and ‘Overseas Expenditures’) relating to the Production, Completion and Delivery of the Film and a comparison of those sums with the Production Budget on an item by item basis;

12.4.2 confirmation that the copies of the Hong Kong permanent identity cards of the Local Film Crew and Cast of the Film have been examined;

12.4.3 confirmation that the certificates of incorporation (and certificates of change of names (if any)) of all companies issued by Companies Registry of HKSARG which relate to the Production, Completion or Delivery of the Film have been examined;

12.4.4 reconciliations of the Production Account; 12.4.5 details of the assets, liabilities and investments and provision of financial support by

the Financier(s), Government Grant by the Government and provision of Contributions relating to the Film;

12.4.6 details of Income including the Government Grant, Financier(s)’ financial support and Contributions (if any), Interest (if any) and all other income (if any) generated from the Film or other deliverables in relation to the Film;

12.4.7 all debtors and creditors relating to the Production, Completion and Delivery of Film and settlement of the related debts;

12.4.8 details of any Overspend or Underspend; 12.4.9 the comparison with the percentage of “Local” expenditure set out in the Production

Budget and the percentage of Local Expenditure as stated and audited in the Audited Statement as approved by the Government

12.4.10 interest accrued on sums standing to the credit of the Production Account; 12.4.11 any gain realised or loss incurred from foreign currency movements of Production

Account;

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12.4.12 fulfilment of the procurement requirements set out in Clause 13 of this Agreement; and

12.4.13 the balance of the Production Account. 12.5 The Grantee shall keep and maintain Accounting Records during the term of the Agreement and

for a minimum period of 7 (seven) years after the Government’s approval of the Audited Statement or the expiry or termination of the Agreement (whichever first occurs). The Government’s representatives (including the representatives of the Government’s authorized users, assigns and successors-in-title) may access to the Accounting Records of the Grantee for inspection, verification and copying from time to time upon giving reasonable notice to the Grantee.

12.6 Unless the Government agrees otherwise, the Grantee shall provide the Government with such

information as it reasonably requires in relation to the expenditures for the Production, Completion or Delivery of the Film including 3 (three) written cost reports in the following manner: 12.6.1 cost report in respect of Pre-Production within 30 (thirty) days after the completion

date of Pre-Production specified in Clause 2; 12.6.2 cost report in respect of Principal Photography within 30 (thirty) days after the

completion date of Principal Photography specified in Clause 2; and 12.6.3 cost report in respect of Post-Production within 30 (thirty) days after the completion

date of the Post-Production specified in Clause 2. 12.7. The Grantee shall ensure that cost reports referred to in Clause 12.6 shall be in such form as

may be required by the Government from time to time and shall contain a narrative showing movements since the last cost report, full explanations of any variances from the Production Budget in each cost area, and finance and expenditure statements (including but not limited to donations and sponsorships statements). The Grantee shall submit the cost reports to the Government for approval.

12.8. The Grantee shall submit to the Government the daily call sheets and daily reports during

Principal Photography in the manner as requested by the Government. 13. PROCUREMENT 13.1 With the objectives of ensuring openness, fairness and value for money, the Grantee shall

ensure that all purchases of goods and services of any value in relation to or for the purposes of the Production, Completion or Delivery of the Film are made on an open, arms’ length and competitive basis, in accordance with prudent commercial principles and only from suppliers who are not Associates or Associated Persons of the Grantee, unless the Government agrees otherwise. Without prejudice to the strict observance of these objectives and requirements, the Grantee shall adhere to the following additional procurement procedures and practices unless the Government agrees otherwise:- 13.1.1 for every procurement of goods or services or both in relation to or for the purposes of

the Production, Completion or Delivery of the Film whose aggregate value is more than HK$50,000 but not exceeding HK$500,000, the Grantee shall obtain quotations in writing from at least 2 (two) suppliers;

13.1.2 for every procurement of goods or services or both in relation to or for the purposes of the Production, Completion or Delivery of the Film whose aggregate value is over HK$500,000, an open tendering process shall be used by the Grantee.

The Grantee shall select the supplier that meets the procurement requirements and has submitted the lowest bid. If the lowest bid is not selected by the Grantee, full justifications must be given and properly recorded by the Grantee for subsequent auditing purpose by the Government. Fragmentation of orders or bids with the purpose or effect of avoiding the need to obtain quotations or abusing the open tendering process shall be absolutely prohibited.

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13.2 For every procurement of goods or services or both in relation to or for the purposes of the Production, Completion or Delivery of the Film, the unit cost of which is over HK$10,000, the Grantee shall make payment by cheque, bank transfer or visa card only.

13.3 All quotations and tendering documents in relation to or for the purposes of the Production,

Completion or Delivery of the Film and all bank statements, invoices and receipts in respect of the payment referred to in Clause 13.2 above shall be kept by the Grantee for a period of at least 7 (seven) years after the end of the Government’s financial year for the Government’s approval of the Audited Statement, or the expiry or termination of this Agreement, whichever occurs later, and shall be made available for inspection by the Government, the Director of Audit, the Commissioner of the Independent Commission Against Corruption and their authorized representatives at all reasonable times during the continuation of this Agreement and the abovementioned 7-year period.

13A. CORRUPT GIFTS AND PAYMENT OF COMMISSION 13A.1 The Grantee shall not:

(a) give or offer to give to any employee or agent of the Government any gift or consideration of any kind as an inducement or reward for doing or for having done or forborne to do any act in relation to the execution of this Agreement or any other Government contracts or for showing or forbearing to show favour or disfavour to any person in relation to this Agreement or any other Government contracts; or

(b) enter into this Agreement or any other Government contracts in connection with which commission has been paid or agreed to be paid by the Grantee or on its behalf, or to its knowledge.

13A.2 Any breach of Clause 13A.1 by the Grantee or by any person employed by it or acting on its

behalf (whether with or without the knowledge of the Grantee) or the commission of any offence under the PBO or under any law of a similar nature by the Grantee or by any person employed by it or acting on its behalf in relation to this Agreement or any other Government contracts shall entitle the Government to (a) terminate this Agreement by giving prior written notice to the Grantee in accordance with Clause 20; (b) recover from the Grantee all or any monies paid under this Agreement together with all administrative, legal and other expenditure accrued up to the date of repayment; and (c) hold the Grantee liable for any loss or damages which the Government may thereby sustain.

14. INSURANCES 14.1 Unless otherwise required by the Government, the Grantee shall effect and maintain the

following insurance policies from the commencement date of Pre-Production of the Film set out in Clause 2 with reputable insurance underwriters or companies authorized under the ICO : 14.1.1 Film Crew and Cast insurance; 14.1.2 insurance against loss during the Production, Completion or Delivery of the Film; 14.1.3 insurance against theft or destruction of any Master Materials or Production Materials; 14.1.4 general and automobile liability insurance; 14.1.5 public liability insurance; 14.1.6 the Grantee’s errors and omissions insurance (unless otherwise agreed by the

Government); and 14.1.7 such other types of insurance in such amounts which are generally accepted or entered

into internationally in the film industry and which the Government may request from time to time.

The Grantee shall ensure that the insurances referred to in sub-clauses 14.1.1 to 14.1.7 above shall have limits of liability of (a) not less than HK$25,000,000 in the aggregate (with no exclusions whatsoever unless approved by the Government in writing in advance) if the Production Budget does not exceed HK$7,500,000; and (b) not less than HK$35,000,000 in the

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aggregate (with no exclusion whatsoever unless approved by the Government) if the Production Budget exceeds HK$7,500,000.

14.2 If required by the Government, the Grantee shall ensure that the Government shall be named as

an additional insured party on all Insurance Policies in respect of the Film.

14.3 All Insurance Policies shall be issued by one or more insurance companies authorized to carry on the relevant insurance business under the ICO.

14.4 Under no circumstances whatsoever shall the Government be responsible for the premium

payable under the Insurance Policies or the premium payable for the renewal thereof.

14.5 The Grantee shall conform to the terms and conditions of all Insurance Policies and all reasonable requirements of the insurers in connection with the settlement of claims, the recovery of losses and the prevention of accident. The Grantee shall pay all premia by no later than the due date by which the premia must be paid to the insurer under the Insurance Policies. The Grantee shall not do or permit or suffer to be done any act or omission whereby any of the Insurance Policies shall be rendered void or voidable, or which would otherwise amount to a breach of any of the Insurance Policies. The Grantee shall bear the consequences of, and indemnify the Government in full from and against any loss and liability which may arise from, any failure of the Grantee to do so.

14.6 The Grantee shall, upon the Government’s request, promptly provide the following with the

Government for safe keeping during the term of this Agreement:- 14.6.1 the Insurance Policies; and 14.6.2 the receipt of payment of the current premium.

14.7 If any event occurs which could give rise to a claim on any of the Insurance Policies, the

Grantee must immediately notify the Government and the insurers and shall consult the Government regarding the settlement of any insured loss. The Grantee shall pursue any such claim promptly and do all things and take all such actions as may reasonably be expected of the Grantee in connection with the claim.

14.8 It is the sole responsibility of the Grantee to pay all compensation, costs and expenditures in

relation to any claim of any accident, injury, loss or damage from a third party incurred from the Production, Completion or Delivery of the Film. Under no circumstances shall the Government be held liable for any such claim.

15. INDEMNITY 15.1 The Government shall not be liable:

15.1.1 for any loss of or damage to any property suffered or incurred by the Grantee, the Film Crew and Cast or any other third parties; or

15.1.2 to the maximum extent permitted by law for any injury or death sustained by any of the Film Crew and Cast or any other third parties;

in each case arising from or in connection with this Agreement or the Film.

15.2 The Grantee shall indemnify and keep indemnified each of the Government, its authorized users, assigns and successors-in-title fully and effectively indemnified against (a) all actions, claims (whether or not successful, compromised, settled, withdrawn or discontinued) and demands threatened, brought or established against the Government or any of its authorized users, assigns and successors-in-title and (b) all costs (including all legal fees and other awards, costs, payments, charges and expenses), losses, damage and liabilities suffered or incurred by the Government or any of its authorized users, assigns and successors-in-title, which in any case arise directly or indirectly in connection with, out of or in relation to: 15.2.1 a breach of the duty of confidence (whether under this Agreement or general law) by

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the Grantee, or any of its Company Directors, employees, agents and contractors (or any person acting on its or their behalf) (each a “Relevant Person”);

15.2.2 the use by the Grantee or any Relevant Person of any personal data in contravention of the PDPO;

15.2.3 any breach of this Agreement by the Grantee, regardless of whether such breach was caused by the Grantee or any Relevant Person;

15.2.4 the wilful misconduct, default, unauthorized act or wilful omission of the Grantee or a Relevant Person;

15.2.5 death, injury or property damage arising from or in connection with the Production or Completion or Delivery of the Film;

15.2.6 any allegation or claim that the design, development, production, use, modification, possession or operation of any materials in relation to the Production or Completion or Delivery of the Film, or any other materials or documents submitted by the Grantee to the Government or the exercise by the Government, its authorized users, assigns and successors-in-title of any rights granted under this Agreement infringes any Intellectual Property Rights, performers’ rights or moral rights of any persons.


16. INTELLECTUAL PROPERTY RIGHTS 16.1 It is the sole responsibility of the Grantee to ensure that it and the Film comply with the

intellectual property laws of Hong Kong. Under no circumstances shall the Government, its authorised users, agents, employees or sub-contractors be held liable for any infringement of Intellectual Property Rights caused by or relating to the Film or the implementation of the Film Development Fund or the Grant Scheme.

16.2 The Government, its authorized users, assigns and successors-in-title shall be entitled to use the

Delivery Materials, free of charge, for the purposes of promotion and development of the Grant Scheme, Hong Kong Film Development Council, Create Hong Kong and the Government and other non-profit-making purposes that the Government may specify. The Grantee shall, at its own cost and expense, grant for the benefit of the Government, its authorized users, assigns and successors-in-title an unconditional, irrevocable, non-exclusive, transferrable, sub-licensable, perpetual, royalty-free and world-wide licence to use (including doing any acts restricted by copyright set out under sections 22 to 29 of the CO) the Delivery Materials for the above purposes and by any means and in any manner. In relation to any parts of the Delivery Materials to which the Grantee is not empowered to grant the licence aforesaid, the Grantee undertakes to procure at its sole cost and expense the grant of such right for the benefit of the Government, its authorized users, assigns and successors-in-title by the Financiers and the relevant third party Intellectual Property Rights owners in respect of such parts of Delivery Materials to be granted prior to their use by the Grantee.

16.3 Except for any materials incorporated into the Delivery Materials, Master Materials and/or

Production Materials in respect of which any Intellectual Property Rights therein are vested in a third party, all Intellectual Property Rights in the Delivery Materials, Master Materials and/or Production Materials shall be and remain vested in the Grantee upon creation.

16.4 The Grantee, shall, at its own cost and expense and before the fixation and/or recording of any

performance(s) in relation to the Delivery Materials and all other materials, made, created, supplied or delivered by the Grantee in the performance of this Agreement, obtain all the consent and clearance from the performer(s) as may be necessary for such fixation and/or recording of the performance(s) and for any use and exploitation of such fixation or recording, or copies thereof, by the Grantee and the Government, its authorized users, assigns and successors-in-title as contemplated by this Agreement. For the purpose of this clause, the terms “performance”, “performer” and “fixation” shall have the same meanings as those assigned to

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them in section 200 of the CO.

16.5 The Grantee shall irrevocably waive and undertake to procure at its own cost and expense all relevant authors and directors of the Delivery Materials (including the aforesaid materials in respect of which any Intellectual Property Rights therein are vested in a third party) to irrevocably waive all moral rights (whether past, present or future) in the respective items. Such waiver shall operate in favour of the Government, its authorized users, assigns and successors-in-title and shall take effect upon the grant of the relevant licence to the Government, its authorized users, assigns and successors-in-title, or upon each of the relevant performance is given (as the case may be).

16.6 The Grantee hereby warrants and undertakes to the Government that: 16.6.1 the Production, Completion and Delivery of the Film, the performance of this

Agreement by the Grantee, the creation, development or production of the Master Materials and the Production Materials, the provision of the Delivery Materials by the Grantee in accordance with this Agreement, or the use or possession by the Government, its authorized users, assigns and successors-in-title of the Delivery Materials and/or any other materials or documents submitted by the Grantee under this Agreement or any part thereof for any of the purposes contemplated by this Agreement does not and will not infringe any Intellectual Property Rights, performers’ rights or moral rights of any persons;

16.6.2 the exercise of any of the rights granted under this Agreement by the Government, its authorized users, assigns and successors-in-title will not infringe any Intellectual Property Rights, performer’s rights and/or moral rights of any persons; and

16.6.3 in respect of any material used by the Grantee in the performance of this Agreement and in respect of which any Intellectual Property Rights are vested in a third party, the Grantee shall have obtained the grant of all necessary licences for itself and its authorized users, and the Government, its authorized users, assigns and successors-in-title authorizing the use of such materials for any of the purposes contemplated by this Agreement.


17. FINAL CUT 17.1 The Grantee shall make all changes that the Government may require in order for the Film to

meet the requirements of the Office for Film, Newspaper and Article Administration (OFNAA) and secure a certificate for public exhibition in Hong Kong under the FCO and/or comply with any warranty, representation or other contractual specification relating to the Film and/or to conform to any legal advice received by the Government.

17.2 Notwithstanding Clause 17.1, the Government shall have a right of approval over the Final Cut of the Film with a view to ensuring that the Film is completed and is ready for theatrical release in commercial cinemas in Hong Kong.

18 DISPUTE RESOLUTON

18.1 The Grantee shall at its sole costs and expenses handle and resolve all disputes relating to or

arising from the Production, Completion or Delivery of the Film (“Disputes”). The Grantee shall immediately notify the Government of the Disputes that come to the former’s attention and the progress of resolution of the Disputes to the Government on a monthly basis thereafter. In case that the Grantee fails to resolve any Dispute within 30 (thirty) days of the date that it first comes to the Grantee’s attention and such Dispute will, in the Government’s reasonable opinion, render the Grantee unlikely to Produce, Complete or Deliver the Film or to theatrically release the Film in Hong Kong by its deadline set out in Clause 11.1.3, it will constitute an Event of Default for the purposes of this Agreement.

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18.2 The Grantee shall ensure that the costs and expenses in respect of handling and resolution of

Disputes are not, and shall not be, included in the Production Budget. The Government shall not be liable for any costs or expenses incurred by the Grantee for handling or resolving the Disputes nor reimburse the Grantee for any such costs or expenses in any event.

19 EVENTS OF DEFAULT 19.1 If any of the following events occur, it shall constitute an Event of Default for the purposes of

this Agreement: 19.1.1 the Grantee commits a breach of any provisions of this Agreement which shall not be

capable of being remedied, or a breach of a provision of this Agreement which is capable of being remedied, but the Grantee fails to remedy such breach within 7 (seven) days of receipt of a written notice from the Government, or the period as set out in such written notice, specifying the breach and requiring its remedy;

19.1.2 any of the Conditions Precedent set out under Clause 7 remain unsatisfied within 1 (one) month from the execution date of this Agreement or such later time as may be agreed by the Government;

19.1.3 any representation or warranty made by Grantee to the Government is untrue or becomes untrue or inaccurate;

19.1.4 the passing of any resolutions, the initiation of any proceedings, or the making of any order which may result in the winding up, dissolution, insolvency, administration, reorganization or reconstruction of the Grantee (other than a voluntary liquidation for the purpose of amalgamation or reconstruction which the Government has approved in advance), or the appointment of receiver, provisional liquidator, liquidator, administrator, administrative receiver, conservator, custodian, trustee or similar officer of the Grantee or over all or any of its assets, or the Grantee makes an assignment for the benefit of or composition with its creditors generally or threatens to do any of the above or any judgment is made against the Grantee or any similar occurrence under any jurisdiction that has a similar or analogous effect;

19.1.5 any judgment or order made against the Grantee is not complied with within 14 (fourteen) days from the issued date of such judgment or order or any execution, distress, sequestration or other process is levied or enforced upon or sued against any of the assets of the Grantee and is not discharged within 14 (fourteen) days from the date of such levy or enforcement or lawsuit;

19.1.6 the Grantee ceases or threatens to cease carrying on the whole or any material part of its business;

19.1.7 any Potential Event of Default occurs; 19.1.8 Control of the Grantee is acquired by any person not having Control of it as at the date

of this Agreement; 19.1.9 the Film is not Completed or Delivered by the Delivery Date; 19.1.10 the Film has not been theatrically released in Hong Kong in accordance with Clause

11.1.3; 19.1.11 any other event or series of events occurs (including any adverse change in the

business, assets or financial condition of the Grantee) which in the Government’s reasonable opinion is likely to materially and adversely affect the ability of the Grantee to perform all or any of its obligations in accordance with this Agreement;

19.1.12 the Grantee has abandoned this Agreement; 19.1.13 the Grantee persistently, flagrantly or wrongfully fails to comply fully or punctually

with its duties and obligations under this Agreement; 19.1.14 the Government has reasonable ground to believe that the Film is no longer viable or

the Film has substantially deviated from any of the Main Elements, Production Budget or Synopsis;

19.1.15 the Government sees it fit to terminate the Film in the public interest; 19.1.16 the Grantee has, without prior written consent of the Government, assigned,

transferred, subcontracted or otherwise disposed of or purported to assign, transfer,

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subcontract or otherwise dispose of the whole or any part of the Grant or any or all of its interests, rights, benefits or obligations in the Film and/or this Agreement to any third party;

19.1.17 any breach or Event of Default described in Clause 3.6.6, 8.2, 11.4, 13A or 18.1 occurs;

19.1.18 the Grantee engages in any conduct which is reasonably considered by the Government to be prejudicial to the Film;

19.1.19 the Grantee stops or suspends payment to its creditors generally, or is unable or admits its inability to pay debts generally as they fall due or is declared or becomes bankrupt or insolvent;

19.1.20 the Grantee fails to submit any Accounting Records, costs reports, call sheets, daily reports, Inducement Letters or any other document or information in accordance with this Agreement, or any of the data, facts or information represented to and/or provided by the Grantee to the Government about the Film or this Agreement is incomplete, incorrect, untrue, inaccurate or misleading;

19.1.21 there is claim or allegation or the Government having reasonable grounds to believe that the Production, Completion or Delivery the Film and/or the Grantee’s performance of this Agreement infringes or may infringe any person’s Intellectual Property Rights, performer’s rights or moral rights; or

19.1.21 if anything analogous or having substantially similar effect to any of the events specified in this Clause 19.1 happens under the laws of any applicable jurisdiction.

19.2 The Grantee shall immediately notify the Government in writing upon the happening of any

Event of Default or Potential Event of Default. 20 TERMINATION

20.1 Subject to Clause 22 below, the Government may at any time on the occurrence of any Event of

Default terminate this Agreement with immediate effect by giving written notice to the Grantee.

20.2 On the expiry, completion or termination of this Agreement, this Agreement shall cease to have any further force and effect and no further grants will be made available to the Grantee, but without prejudice to: 20.2.1 the Government’s rights, claims or remedies under this Agreement or otherwise at law

against the Grantee (including the right to claim for repayment of all or any monies paid under this Agreement to the Grantee together with all administrative, legal and other costs and expenses accrued up to the date of repayment) arising from antecedent breaches of this Agreement by the Grantee (including any breach(es) which entitle(s) the Government to terminate this Agreement);

20.2.2 the rights, claims or remedies which have accrued to a party prior to the expiry, completion or termination of this Agreement; and

20.2.3 the continued existence and validity of those provisions which are expressed to survive the expiry, completion or termination of this Agreement or which in their context appropriately survive the expiry, completion or termination of this Agreement and any provisions of this Agreement necessary for the interpretation or enforcement of this Agreement (including Clauses 5.8, 11.1.1, 11.6, 11.7, 12.1, 12.2, 12.5, 12.6, 13.3, 15.2, 16, 20.2, 20.3, 21, 23.1, 25, 26, 27 and 28).

20.3 If the Government terminates this Agreement pursuant to Clause 20.1 above, then without

prejudice to any of the Government’s other rights and remedies, the Grantee shall:- (a) repay immediately to the Government all sums provided by the Government to the

Grantee under or in relation to this Agreement up to the date of repayment together with all administrative, legal and other costs and expenses and Interest accrued up to the date of repayment; and

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(b) upon the Government’s request, immediately assemble or compile (as the case may be) in an intelligible and orderly manner and deliver all or any materials relating to the Film and/or this Agreement to the Government.

20.4 Notwithstanding anything provided to the contrary in this Agreement, if at any time, the

Government has reason to believe that any term, condition or undertaking of this Agreement has been breached, the Government reserves the right not to terminate this Agreement but to withhold any further payment of the Grant and require the Grantee to refund forthwith all or any part of the Government Grant that has been paid to the Grantee together with all administrative, legal and other costs and expenses and Interest accrued up to the date of repayment.

21 CONFIDENTIALITY 21.1 The Government, its authorized users, assigns and successors-in-title have the right to make use

of or disclose any information provided by or on behalf of the Grantee in connection with the Film or this Agreement for any purposes contemplated by this Agreement, including without limitation for performing its obligations or exercising its rights under this Agreement, the operation of the Grant Scheme, conducting credit checks, statistics and research, arranging publicity of the Grant Scheme and/or the Film and monitoring and evaluating the Film.

21.2 The Grantee shall treat as confidential the contents of this Agreement, all information,

documents, materials and all other data (including without limitation any personal particulars, records and personal data (as defined in the PDPO) and materials of any nature (in or on whatever media)) accessible by the Grantee under this Agreement or which the Government has for the purposes of or in the course of performing this Agreement disclosed, supplied, made available or communicated to the Grantee. The restrictions on disclosure contained in this Clause 21.2 shall not apply to: 21.2.1 the disclosure of any information which is or becomes public knowledge (other than

as a result of a breach of this Clause 21 by the Grantee); or 21.2.2 the disclosure of any information in circumstances where such disclosure is required

by law, or pursuant to any order of a court or arbitral authority of competent jurisdiction; or

21.2.3 the disclosure of any information to the Grantee’s Associates, Associated Persons, Company Directors, employees, contractors and agents who have a need to know such information for the performance or enforcement of this Agreement or the Grantee’s legal or other professional advisers for the purpose of seeking legal or professional advice, provided that prior to any such release or disclosure, the Grantee shall ensure that such Grantee’s Associates, Associated Persons, Company Directors, employees, contractors, agents and legal and other professional advisers are under a legally binding duty of confidentiality to the Grantee in respect of such information (whether by contract or pursuant to the capacity of the recipient); or

21.2.4 the disclosure of any information with the prior written consent of the Government. 21.3 The Grantee hereby agrees that it will use the confidential information described in Clause 21.2

solely for performing this Agreement and that it will not, at any time whether during or after the completion, expiry or termination (howsoever occasioned) of this Agreement, use or allow to be used the same for any other purposes without the Government’s prior written consent.

21.4 The Grantee undertakes (a) to take all necessary security measures at its own cost for the

protection of the information, documentation, materials and data which it is obliged by Clause 21.2 to keep secret and treat as confidential; and (b) upon prior notice given by the Government to the Grantee, to provide the Government with such information, documentation, materials and data as required by the Government and to grant the Government, its authorized users, assigns and successors-in-title access to the Grantee's premises (including any premises owned, rented or controlled by the Grantee, its Associates, Associated Persons, Company Directors,

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employees, agents or contractors) to ascertain that all security measures required under this Agreement are in place and are implemented.

21.5 The Grantee shall ensure that each of its Associates, Associated Persons, Company Directors,

employees, contractors, agents and any other persons, who are in any way involved in the Film or any work in connection with this Agreement, are aware of and comply with the provisions of this Clause 21, the PDPO and the OSO.

21.6 The Grantee shall procure each of the Grantee’s Associates, Associated Persons, Company Directors, employees, contractors, agents and any other persons, who are in any way involved in the Film or any work in connection with this Agreement to whom any confidential information is to be disclosed, to sign a separate legally binding confidentiality agreement (in a form prescribed by the Government) if so requested by the Government.

21.7 The Grantee shall immediately notify the Government of any complaint, breach of confidence, the PDPO or the OSO or possible information leakage in relation to any confidential information described in this Clause 21. The Grantee shall give the Government all reasonable assistance in connection with any proceedings which the Government may institute pursuant to any provisions of this Clause 21.

21.8 The provisions of this Clause 21 shall survive the termination, expiration or completion of this Agreement (howsoever occasioned) and shall continue in full force and effect notwithstanding such termination, expiration or completion.

22 FORCE MAJEURE

22.1. A party prevented by an event or events of Force Majeure is entitled to be excused from

performance of the obligations under this Agreement for so long as such event or events shall continue. The party so prevented shall as soon as possible give notice in writing to the other party of the occurrence of the event of Force Majeure.

22.2. Should performance by the Grantee of its obligations under this Agreement be prevented by

Force Majeure for 28 (twenty-eight) days (either consecutive or in the aggregate) or longer, the Government shall be entitled, at the expiration of such period, to terminate this Agreement by not less than 14 (fourteen) days’ notice in writing to Grantee and in which case, Clause 20.2 shall apply and upon the Government’s request, the Grantee shall immediately pay to the Government such amounts paid by the Government in respect of the Film which, in the Government’s sole opinion, has not been Produced, Completed or Delivered.

22.3 Subject to Clause 22.2, in the event that performance of obligations under this Agreement is

delayed by Force Majeure, the parties shall diligently endeavour to achieve expeditiously the normal pursuit of this Agreement and to make up for the time lost. The Delivery Date shall be extended by the number of days of delay actually caused by such event of Force Majeure unless a different extension shall be agreed between the parties. In all other respects, the obligations of the parties under this Agreement shall be unaffected.

23. CONFLICT OF INTEREST 23.1 The Grantee shall, during the continuation of this Agreement and for six months thereafter:

23.1.1 ensure that it (including its Associates and Associated Persons), the Film Crew and Cast of the Film, and each of its Company Directors, employees, agents, contractors, consultants and other personnel and their respective Associates and Associated Persons, shall not undertake any service, task or job or do anything whatsoever for or on behalf of the Grantee or any third party (other than in the performance of this Agreement) which conflicts, or which may be seen to conflict, with the Grantee’s

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duties to the Government under this Agreement unless and to the extent the Government permits otherwise and before giving such permission, the Government has been fully informed by the Grantee, in a timely fashion of all the circumstances in which the permission is sought; and

23.1.2 immediately notify the Government in writing of all or any facts which may reasonably be considered to give rise to a situation where the financial, professional, commercial, personal or other interests (whether actual or potential, direct or indirect) of the Grantee, or any Film Crew and Cast of the Film, or any of the Grantee’s Company Directors, employees, agents, contractors, consultants and other personnel, or any of their respective Associates or Associated Persons, conflict or compete, or may conflict or compete, with the Grantee’s duties to the Government under this Agreement.

23.2 The Grantee shall notify the Government in writing immediately upon knowing of any financial,

professional, commercial, personal or other interests (whether actual or potential, direct or indirect) that the Grantee, or the Film Crew and Cast of the Film, or any of the Grantee’s Company Directors, employees, agents, contractors, consultants and other personnel, or any of their Associates or Associated Persons may have in, or of any association or connection which the Grantee or the aforesaid persons may have with, any person, product, service or equipment proposed or recommended to be acquired or procured or acquired or procured by the Grantee under this Agreement.

23.3 The Grantee shall ensure that each of its Associates and Associated Persons, each of the Film

Crew and Cast of the Film, each of the Grantee’s Company Directors, employees, agents, contractors, consultants and other personnel and their respective Associates and Associated Persons shall keep themselves informed and shall inform the Grantee and keep it informed regularly of all facts which may reasonably be considered to give rise to a situation where the financial, professional, commercial, personal or other interests of such persons, conflict or compete, or may conflict or compete, with the Grantee’s duties to the Government under this Agreement.

23.4 Prior written approval from the Government shall be sought if the Grantee intends to provide

any equipment, goods, service, or carry out any other task or activity by itself which will result in the receipt of any amount of the Government Grant by it.

24. MISCELLANEOUS

24.1 The Grantee undertakes to execute all documents and do all such acts as may be reasonably

required by the Government in order to perfect, protect or enforce any rights granted to the Government or otherwise arising under this Agreement, including all rights arising under Clause 20 above, and, if the Grantee fails so to do within 14 (fourteen) days of receipt of a notice from the Government, the Government shall have the right to do so in the name and on behalf of Grantee for which purposes the Grantee hereby irrevocably appoints the Government as its lawful attorney and the Grantee hereby undertakes and warrants that it will confirm and ratify all of the actions of the Government pursuant to this Clause 24.1 and such authority and appointment shall take effect as an irrevocable appointment pursuant to the PAO.

24.2 Nothing contained or implied in this Agreement or in the arrangement contemplated by it is intended or shall create a partnership, joint venture or association of any kind between the parties hereto and, save as expressly provided in this Agreement, neither party shall enter into or have authority to enter into any engagement or make any representation or warranty on behalf of, or pledge the credit of or otherwise bind or oblige the other party hereto. Nothing contained or implied in this Agreement shall be so construed as to constitute either party to be the agent of the other.

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24.3 No failure or delay by either party in exercising any right or remedy available to it under this Agreement at law or in equity (“such right or remedy”) shall operate as a waiver of such right or remedy. Nor shall any single or partial exercise of any such right or remedy preclude any other or further exercise thereof. Nor shall any failure to exercise, or delay in exercising, or single or partial exercise of, any such right or remedy preclude the exercise of any other right or remedy. Further, the rights and remedies of each party herein contained shall be cumulative and not exclusive of any other rights or remedies provided by law or in equity.

24.4 Any notice required to be given under this Agreement shall be in writing, addressed to the

recipients at the following addresses: Grantee At the address set out at the head of this Agreement For the attention of: _____________ Fax no.: (852) ______________ The Government At the address set out at the head of this Agreement For the attention of: Senior Executive Officer (Film Development) Email address: [email protected] Fax no.: (852) 2594 5905

24.5 This Agreement constitutes the entire agreement between the parties in relation to the provision

of the Grant by the Government to the Grantee and supersedes all prior agreements (whether oral or in writing), understandings or arrangements between them in relation to the subject matter hereof. The parties confirm that they have not entered into this Agreement upon the basis of any statements, undertaking, warranties or representations that are not expressly stated in this Agreement.

24.6 Subject to the provisions of this Agreement, no variation or addition to any terms or conditions

of this Agreement shall be valid unless made in writing and signed by each of the parties to this Agreement.

24.7 If any provision of this Agreement or its application to any circumstances shall, to any extent,

be invalid, illegal or unenforceable, the remaining part of this Agreement and the application of that provision to other circumstances shall not be affected thereby, and each provision of this Agreement shall be valid and enforceable to the fullest extent as permitted by law.

24.8 (a) Save as provided in this Agreement (including sub-clause 24.8(b) below), the Grantee shall

not, either in a single transaction or in a series of transactions, whether related or not, assign, sell, lease, license, sub-license, delegate, transfer, charge, create interests, options or right of pre-emption in respect of or destroy or permit to lapse or expire or dispose of any of its interests, rights, benefits or obligations under this Agreement (whether in whole or in part).

(b) The Grantee may, subject to the approval of the Government, engage the services of independent contractors of its own to assist it to perform its obligations under this Agreement, provided that the Grantee: (i) shall not be relieved from any of its obligations under this Agreement by engaging

any such independent contractor and shall remain fully liable to the Government for the performance of such obligations;

(ii) shall remain liable for any act or omission of any such independent contractor as if such act or omission were its own; and

(iii) shall secure binding obligations from all such independent contractors so as to ensure that the Grantee complies with its obligations under this Agreement.

25. ARBITRATION AND MEDIATION 25.1 Any question, dispute or difference between the parties arising out or in connection with this

Agreement which is not resolved within 28 (twenty-eight) days from the first attempt to resolve the same may first be referred to mediation in accordance with the then current Hong Kong

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International Arbitration Centre Mediation Rules. 25.2 If the matter cannot be resolved by mediation or any party to this Agreement does not wish the

matter to be referred to mediation, any party may within 90 (ninety) days from the failure of the mediation or the refusal to mediate (as the case may be) require that the matter be referred to arbitration in accordance with and subject to the provisions of the AO. Any such reference shall be deemed to be a submission to arbitration within the meaning of the AO.

25.3 Subject to Clauses 25.4 and 25.5, the then current Hong Kong International Arbitration Centre

Domestic Arbitration Rules (“Arbitration Rules”) shall apply to any arbitration instituted in accordance with this Clause.

25.4 Notwithstanding any provision of the Arbitration Rules, the place of meetings and hearings in

the arbitration shall be Hong Kong unless the parties otherwise agree. 25.5 Article 20.1 of the Arbitration Rules shall be deleted and replaced by:-

“20.1 The arbitration proceedings are private and confidential between the parties and the arbitrator. No information relating to the arbitration shall be disclosed by any person without the written consent of each and every party to the arbitration. Notwithstanding the above, disclosures are permissible where disclosures:- (a) are necessary for enforcement of the arbitral award or any settlement agreement

between the parties; (b) are required by the parties’ auditors or for some legitimate business reason; (c) are required by law or an order of the courts of Hong Kong; or (d) are necessary for the making of claims against any third party or to defend a claim

brought by any third party.”

25.6 All provisions in Schedule 2 to the AO shall apply to any arbitration instituted in accordance with this Clause 25.

26. GOVERNING LAW

This Agreement shall be governed by and construed in accordance with the laws of Hong Kong.

27. SAVINGS

Nothing in this Agreement shall be taken to restrict, derogate from or otherwise interfere with any powers, discretions or duties, or the exercise or performance of any powers, discretions or duties, conferred or imposed by or under any law upon the Government, any Government bureau or department or any public officer or other person in the employ of the Government.

28. CONTRACTS (RIGHTS OF THIRD PARTIES) ORDIINANCE

The parties hereby declare that nothing in this Agreement confers or purports to confer on any third party any benefit or any right to enforce any term of this Agreement pursuant to the Contracts (Rights of Third Parties) Ordinance (Cap. 623, Laws of Hong Kong).

Film Develo

opment Fund Scheme for Filmm Production Gr

SC

PRODU

rant – Film Prod

CHEDULE

UCTION BU

duction Grant A

1

UDGET

Agreement FPGA

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A20180206

Film Develoopment Fund Scheme for Filmm Production Grrant – Film Prodduction Grant AAgreement FPGA

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A20180206

Film Develoopment Fund Scheme for Filmm Production Grrant – Film Prodduction Grant AAgreement FPGA

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A20180206

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SCHEDULE 2

SYNOPSIS

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SCHEDULE 3 DELIVERY MATERIALS

The Grantee shall deliver the following items (the cost of which must be contained in the Production Budget for the Film) to the Government by the respective due dates set out below: 1. On or Before the Delivery Date 1.1 Film and Video Materials:

1.1.1 two (2) copies of DVD or Blu-ray Disc containing the Hong Kong theatrical

release version of the Completed Film with feature dialogue, music and sound effect tracks, and subtitles and credit; and

1.1.2 one (1) copy of DVD or Blu-ray Disc containing trailer and/or making-of of the Film.

1.2 Publicity Materials:

1.2.1 two (2) copies of the Film posters;

1.2.2 one (1) copy of the master set of production stills taken from the Film on CD Rom;

1.2.3 an electronic press kit (including interviews with Leading Cast(s) and other persons connected with the Film) (if available); and

1.2.4 a written publicity pack (including production information, biographies of the Leading Actor(s) and Actress(es) (drama), Leading Male and Female Voice Over(s) (animation), Leading Male and Female Artiste(s) in dramatic part (documentary), Host(s)/Commentator(s) and Main Interviewee(s) (documentary), Producer(s), Film Director, Screenwriter(s) and other main Film Crew and Casts, interviews with actors/actresses and other persons connected with the Film, feature stories and news releases).

2. Within twenty-four (24) months from the execution date of this Agreement

2.1 the certificate for public exhibition in Hong Kong under the FCO in respect of the Film;

2.2 all records of the Hong Kong theatrical release of the Film for (at least 5 (five) shows in 7 (seven) consecutive days) and the related supporting documentary evidence relating thereto; and

2.3 the Audited Statement in respect of the Film.

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0 of 41


APPENDIX A INDUCEMENT LETTER

(for Producer / Film Director / Screenwriter) Date: To: The Government of the Hong Kong Special Administrative Region c/o The Head of Create Hong Kong 40/F, Revenue Tower, 5 Gloucester Road, Wanchai, Hong Kong Attn: Executive Officer (Film Development) Dear Sir/Madam

“____(Film Title)___” (the “Film”) As one of the Conditions Precedent under Clause 7 of the Film Production Grant Agreement (the “Agreement”) between you and ______(Name of Grantee)______ (“Grantee”) relating to the Film in which the screenplay is written by ____(Name of Screenwriter)_____ and in consideration of your payment of HK$1(one) (if demanded), I hereby: 1. warrant that I have read and understood the Agreement *〔that I am a ［Company Director〕［

Shareholder〕] of the Grantee which is a company incorporated in and validly existing under the laws of Hong Kong and consent and agree to the execution and delivery to you of the Agreement;

2. warrant that the Grantee is and will at all times material to the Agreement be entitled to my services as “*Producer / *Film Director / *Screenwriter” of the Film and to grant to you the rights, consents and benefits granted to you under the Agreement and is the absolute owner of the products of my services;

3. warrant the truth of all matters as to which any representation or warranty on the part of the

Grantee is made or given in the Agreement; 4. undertake to render my services as *Producer / *Film Director / *Screenwriter of the Film in

accordance with the agreement I have entered into with _____(Name of Grantee)_____ (“Grantee”) dated _____. I further undertake to continue to be bound by and to duly perform and observe those terms of the Agreement requiring performance or compliance on my part;

5. undertake at all times to use my best endeavours to procure that the Grantee observes and performs

all its obligations under the Agreement; 6. irrevocably and unconditionally waive for the benefit of you, your successors-in-title and licensees,

with regard to the products of my services in relation to the Film the benefit of any provision of law known as “moral rights” (including without limitation any of my rights under Division IV of Part II of the CO (in particular, sections 89 and 92 thereof)) or any similar laws of any jurisdiction;

7. undertake to look solely to the Grantee for all compensation for my services in connection with the

Film or rendered under the Agreement; 8. undertake to continue to fulfil my obligations hereunder so long as you fulfil your obligations to

the Grantee and notwithstanding any breach by the Grantee of any of its obligations to me; 9. undertake that until the Completion and Delivery of the Film in accordance with the Agreement I

will not without your consent transfer, charge or dispose of any shares or other interest in the

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Grantee or resign any office with the Grantee or take any other steps which might diminish my ability to procure that the Grantee observes and performs all the terms and conditions of the Agreement; and

10. warrant that I have read and understood “Guide to Application - Film Development Fund Scheme

for Film Production Grant” (“Guide”) (in particular, paragraph 22 thereof) and hereby consent to the disclosure of my name by the Government to the public for the purposes provided in paragraph 22.1 of the Guide.

Yours faithfully ________________________________________ Name: ___(Name of Producer / Film Director / Screenwriter)____ (Hong Kong Identity Card Number: ___________) * Please delete if inapplicable.

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APPENDIX B DRAWDOWN NOTICE

From: _______________ (“Grantee”) To: The Government of the Hong Kong Special Administrative Region (“Government”) Date: Dear Sirs, Film Development Fund Scheme for Film Production Grant Film Production Grant Agreement dated and made between Grantee and the Government (“Film Production Grant Agreement”)

“_____________________” (“Film”) (Case No. _____________________)

Drawdown Notice for * the first instalment to be made * after the execution date of Film Production Grant Agreement and the satisfaction of the Conditions Precedent (as defined in the Film Production Grant Agreement) / * the second instalment to be made after the commencement date of Principal Photography of the Film in accordance with Clause 2 of Film Production Grant Agreement / * the third instalment to be made within 18 months after the execution date of this Agreement and after the Government’s written acceptance of a copy of DVD or Blu-ray disc containing the Hong Kong theatrical release version of the Completed Film with feature dialogue, music and sound effect tracks, subtitles and credit (as part of the Delivery Materials listed in Clause 1 of Schedule 3 of the Film Production Grant Agreement)/ * the last instalment of the Government Grant to be made after the Grantee’s compliance with Clause 11.1.3 and the Government has confirmed in writing that all Delivery Materials are acceptable to the Government We refer to the Film Production Grant Agreement, and hereby give notice that we wish to draw ___________ % of the provisional Government Grant representing a sum of HK$ _______ in accordance with Clause 3 of the Film Production Grant Agreement / * the last instalment of the Government Grant determined in accordance with Clause 3.5.4 of the Film Production Grant Agreement (i.e. HK$__________) . This notice is irrevocable. The proceeds of this drawdown are to be used exclusively for the purposes specified in, and in accordance with the terms of, the Film Production Grant Agreement. The proceeds of this drawdown shall be credited to the Production Account provided in Clause 3.4 of the Film Production Grant Agreement, details of which are reproduced below for ease of reference:-

__________, Account Number: ____________________ Account Signatories: ____________________

We confirm that:-

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(a) the Grantee’s representations, warranties and undertakings set out in the Film Production Grant Agreement, repeated with reference to the facts and circumstances subsisting at the date of this notice, remain true and correct in all material aspects;

(b) no Event of Default has occurred which remains unwaived or unremedied or would result from the making of this drawdown;

(c) the amount and timing of this drawdown is in accordance with Clause 3 of the Film Production

Grant Agreement; and (d) simultaneous with the issue of this Drawdown Notice, we are requesting the Financiers to

disburse funds for financing the Production, Completion and Delivery of the Film with a view for ensuring compliance with Clause 6 of the Film Production Grant Agreement.

Terms defined in the Film Production Grant Agreement have the same meanings when used in this notice, unless indicated otherwise. * Please delete as appropriate. For and on behalf of

(name of Grantee)

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SIGNATURE PAGE

SIGNED BY )

Mr Wellington FUNG )

Assistant Head of Create Hong Kong (2) )

for and on behalf of THE GOVERNMENT OF THE )

HONG KONG SPECIAL ADMINISTRATIVE REGION )

in the presence of :

(Witness’s signature)

Name :

Address : 40/F., Revenue Tower, 5 Gloucester Road, Wanchai, Hong Kong

SIGNED BY )

)

)

)

for and on behalf of ___________ ) (signature(s) of Grantee’s authorized signatory(ies))

____________________________ )

)

)

)

(Grantee’s Chop)

in the presence of :

(Witness’s signature)

Name :

Address :

the government of the hong kong special … · schedule 1 production budget schedule 2 ......

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