Source: Merill Lynch, Industry Overview 1995-2006

Merill Lynch: Monte Carlo Simulations INPUT

T H E P R O B L E M S

Source: Merill Lynch, Industry Overview 1995-2006

Merill Lynch: Monte Carlo Simulations RESULT

SLATE OFFILMS

SINGLEFILMS

T H E P R O B L E M S

Source: DyerData, Industry Indie Performance Survey 2006 - 2012

“Single films packaged by top

producers failed to recoup 30%

of the time, and in total lost 45%

of investor’s assets.“ --DyerData analysis

Geneva Media: Monte Carlo Simulation 2006-12

T H E P R O B L E M S

Source: DyerData, Industry Slate Performance Survey 2006 - 2012

Geneva Media: Monte Carlo Simulation 2006-12

“Studio slates failed to recoup

20% of the time, and lost 35%

of investor’s assets.“ --DyerData analysis

T H E P R O B L E M S

Top Total Gross Library Avg. BO #1 Picture Gross

1 Steven Spielberg $6,463.0 63 $102.6 E.T.$435.

1

2 Kathleen Kennedy $5,387.0 57 $94.5 E.T.$435.

1

3 Stan Lee $4,817.3 26 $185.3 The Avengers$623.

4

4 Jerry Bruckheimer $4,600.0 41 $112.2 Dead Man's Chest$423.

3

5 Frank Marshall $4,510.7 54 $83.5 Indiana Jones 4$317.

1

6 Brian Grazer $4,004.0 60 $66.7 The Grinch$260.

0

7 Roger Birnbaum $3,859.3 76 $50.8 Bruce Almighty$242.

8

8 Scott Rudin $3,792.0 79 $48.0 True Grit$171.

2

9 Kevin Feige $3,703.4 19 $194.9 The Avengers$623.

4

10 Joel Silver $3,457.8 64 $54.0 The Matrix Reloaded$281.

6

11 Avi Arad $3,397.7 21 $161.8 Spider-Man$403.

7

12 George Lucas $3,393.9 21 $161.6 The Phantom Menace$474.

5

13 Thomas Tull $3,138.7 22 $142.7 The Dark Knight$534.

9

14 Gary Barber $3,110.8 67 $46.4 Bruce Almighty$242.

8

15 John Lasseter $3,066.6 17 $180.4 Toy Story 3$415.

0

16 Neal H. Moritz $2,857.9 41 $69.7 I Am Legend$256.

4

17 Ian Bryce $2,756.1 17 $162.1 Spider-Man$403.

7

18 Arnon Milchan $2,746.8 81 $33.9 Mr. & Mrs. Smith$186.

3

19 Ryan Kavanaugh $2,547.4 51 $49.9 Little Fockers$148.

4

20 Jack Giarraputo $2,545.4 33 $77.1 Big Daddy$163.

5

21 David Heyman $2,505.2 13 $192.7 Harry Potter / Deathly Hallows (P2)

$381.0

Box Office Mojo’s Top Independent Producers by Worldwide Box Office Gross

T H E P R O B L E M S

Box Office Mojo’s Top Independent Producers by Worldwide Box Office Gross

MANY NEW FINANCIERS IN THE

“TOP 20” HAD NO PRODUCTIONEXPERIENCE PRIOR TO SECURING

THEIR SLATE CAPITAL

MANY ARE STILL BORROWINGMONEY BECAUSE THEIR MODELS

NEVER ACTUALLY WORKEDFOR THEM… OR FOR INVESTORS

T H E P R O B L E M S

T H E C A S E S T U D Y

In simple terms, how does CAIC work?

Cast and crews are bonused a salary

The salaries “double” state film tax credits

A “restriction” is placed on each salary bonus

Restrictions removed at break even, or year 10

This provides loan collateral and liquidity

CAIC also insures a cast and crew’s

families (from disability and death)

Srvs. Credits $ 125,000,000

Picture Sub. $ 125,000,000

Labor Credit $ 125,000,000

Canada $ 50,000,000

PreSale $ 75,000,000

C.V. = $ 500,000,000

Liquid Cash = $1,000,000,000

$1B FUND

$500,000,000 $500,000,000Negative Cost Insurance Cost

CAIC

$2B FACE

AMOUNTS

$500MCASH

VALUES

$500,000,000Negative Cost

Fund spend:$500,000,000Negative Cost

Studio spend:

$1B SLATE

25% Profits 75% Profits

100% break-even for bank or equity facility

Retain F. A. + $2,000,000,000 ( $2B OF FAMILY INSURANCE STAYS IN-FORCE)

Hit films? C.V. $ 500,000,000 ( FAMILIES AND FUND RUNNERS RETAIN $500M )

If the film facility breaks even, the fund keeps $1,000,000,000

M.G.A. = $75M to $ 95,000,000

C A S E S T U D Y (Studio Financing Facility)

100% SAFETYregardless ofbox office or

ancillary sales

C A S E S T U D Y (Studio Financing Facility)

FUND’s TOTAL OUTLAY IS $1,000,000,000

(25% incentive returns $250mm in tax credits)

FUND’s TRUE SPENDING IS $750mm

(50% allocated to protect the cast / crew / investors)

STUDIO'S TOTAL OUTLAY IS $500mm STUDIO'S ACTUAL COST IS $500mm

(studio incurs FULL AMOUNT - NO tax credit)

RESULT:   FUND INVESTS……...$750mm

              STUDIO INVESTS……$500mm

STUDIO SPENDS  50% LESS THAN THE FUND

STUDIO KEEPS  50% MORE THAN THE FUND

T H E C A S E S T U D Y

Who profits from the CAIC structure?

States/provinces’ workers/businesses profit

Stars and cast members have golden handcuffs

Extras and crew member’s families are protected

Net film revenues are pure profit to the investors

CAICs earn tax-free accumulations and interest

Profits are enhanced by the state tax credits

At breakeven families/fund keep all gains

T H E C A S E S T U D Y

The Crew♀♂ ♀♂ ♀♂ ♀♂♀♂ ♀♂ ♀♂ ♀♂

$

TAX FREE

CASHTO FAMILY

The Funding Entity:Pension Funds, V.C.s Hedge Funds, Banks,

Private Equity, but NOT a film studio!

Film Company

Film Company

FIilm Company

Film Company

The Funder$ $ $ $ $ $ $ $ $$ $ $ $ $ $ $ $ $

$

CollateralProtection

Media Mitigation Holdings, LP

(162 Bonus REBA)

Who owns the CAIC --so it qualifies as deductible?

The Funder$ $ $ $ $ $ $ $ $$ $ $ $ $ $ $ $ $

$

TAX NEUTRAL

CASH TO FUNDER

T H E G E N E V A S T R U C T U R E

The Crew♀♂ ♀♂ ♀♂ ♀♂♀♂ ♀♂ ♀♂ ♀♂

Hedge Fund

Major Bank

Film Studio

TV Network

Investors Payee Players Participants

Cast / Crew

CV(Cash Values)

CAIC(UL Policy)

IRS 83(b)

ERISA

MediaMitigation LPpays premiums

and holdsCV assignment

FilmCompany

LP

General Partnership (2%)Investors (1%) and Film Co. (1%)

LPs capital contribution (98%)Cast / Crew swap bonus for equity

Cast / Crew’s Families

Film Company LP

Funds Bonus

Salary

UL Ownershipalways remainswith Cast/Crew

Film Company LP can pay 162 Bonus to Media Mitigation, LP

General Partners have CV collateral and deduct premium costs(because insurance is not purchased to cover loans, is owned by Cast and Crew, and qualifies for UL film credit reimbursements).

Insurance face amounts (death benefits) are paid to the Film Company, and after filming, to; the families,their heirs, assigns, a dynasty or a family living trust.

Cast and Crew receive a bonus (this earns tax credits from US film incentives for salary). Bonus is pledged as equity in exchange for valuable consideration in limited partnership interests in Media Mitigation Holdings, LLC (this acts as a capital contribution for LP interests). Media Mitigation LP applies for individual UL policies and pays the premiums from capital contributions. Cast and Crew are individual UL policyowners (who initially choose to make the death benefit payable to the Film Company), thereby making all individual UL premiums deductible (i.e., not salary or bonus, not owned by Media Mitigation LP, not used for loan collateral, not used for buy-sell purposes, not owned by key people or majority owners). The Cast and Crew’s capital contribution to the LP offsets the economic benefit of the premiums paid.

T H E G E N E V A S T R U C T U R E

CAIC HAVE BECOME THE MOST COMMONLY UTILIZED

“LIQUID ASSET” FOR ALL FORTUNE 1000

CORPORATIONS PROVIDING “INSURED RISK” NQDB PLANS

COMPANY CO.’s CAPITAL VALUE CAIC (LIQUID CASH) % OF CAIC

Tribune Media $ 0 US $ 119,000,000 US 2.130%

Washington Mu $ 0 US $ 5,072,000,000 US 3.125%

Wachovia $ 0 US $ 14,575,000,000 US 3.475%

JPMorgan Chase $ 481,500,000,000 US $ 10,050,000,000 US 3.545%

Citibank Group $ 72,500,000,000 US $ 4,579,000,000 US 5.863%

Wal-Mart $ 193,400,000,000 US $ 13,090,000,000 US 6.768%

Comerica Bank $ 10,000,000,000 US $ 1,073,000,000 US 10.073%

First Republic $ 34,4000,000,000 US $ 701,672,000 US 2.095%

U.S. COMPANIES HAVE USED CAIC FOR 50 YRS!

T H E G E N E V A S T R U C T U R E

JP MORGANHAS $481BADMITTEDASSETS &

$10B CAIC!

T H E G E N E V A S T R U C T U R E

COMERICAHAS $10BADMITTEDASSETS &$1B CAIC!

T H E G E N E V A S T R U C T U R E

CITIBANKHAS $72.5BADMITTEDASSETS &

$4.6B CAIC!

T H E G E N E V A S T R U C T U R E

What is the legal basis of the CAIC structure ?

IRS tax code 264(a)(1) – L&H cost deductions

Simple employee insurance benefit (162 Bonus)

Restrictive Executive Benefit Agreement (REBA)

Proven COLI and NQDC UL contract performance

IRS tax code 181 and 199 film tax deductions

US and Canadian theatrical film tax credits

T H E G E N E V A S T R U C T U R E

The Crew♀♂ ♀♂ ♀♂ ♀♂♀♂ ♀♂ ♀♂ ♀♂

The Funder$ $ $ $ $ $ $ $ $$ $ $ $ $ $ $ $ $

Who owns the CAIC --so it qualifies for perfection?

Media Mitigation Holdings, LLP

(3rd Party REBA)

CAIC

98% L.Partners

Crew exchanges bonus &Collateral Assignment

of the Cash Accumulationsfor a L.Partners’ interests

Policyowner

Major Bank

1% G.P. Owner

Film LP

Bank / Funder

G.P.s control theCollateral Assignment

and all Cash AccumulationA+ Insurer

$

$

1% G.P. Owner

1+1% G.P.

T H E G E N E V A S T R U C T U R E

A+ Insurer

Major Bank

C a s t and Crew

Labor & Serv Costs

Families

Slate Fund

Studio / Network

$

$ 35%- 65% Tax Credits!

$CAIC$$$$$$$$$$$$$$

$

$SAFETY!

50%

50%

Insurance Premium Costs

Film LP

Hedge Fund

T H E G E N E V A S T R U C T U R E

T H E G E N E V A S T R U C T U R E

How is a 162 Bonus structure offered to workers?

Agents & Managers

negotiate worker pay

Film, LP also

pays 162 Bonus

The lower level Cast & Crew

can decide to “PLAY” --or not

Family is

Protected

T H E G E N E V A S T R U C T U R E

How does a “Media Mitigation” protect the funders?

1% General Partner

controls cash values

Film, LP pays

Extra $50,000

Cast & Crew puts $50,000 in

Media Mitigation Holdings LP

$50,000 UL

Premium

T H E C A S E S T U D Y

STUDIO CO-PRODUCTION: CAICs ON 240 CREW MEMBERS (7 YEAR FUND TERM)

Fund Spends $24,000,000 and a Studio Spends $12,000,000

ATLC – Above-the-Line Cost (Salary for 240 cast/crew members plus perks) $12,000,000

BTLC – Below-the-Line Cost (for physical production, rentals, negative costs) $12,000,000

CAIC – Cash Accumulation Insurance Contracts (on 240 insured employees) $12,000,000 Total Production Spending ($36,000,000)

Studio’s Risk on Negative Costs ($12,000,000)

Investment Fund Risk on Negative Costs ($24,000,000)

Total Required for Investment Fund to Break Even $24,000,000

Recoupment from State Tax Credits (25% of film budget) $ 9,000,000

Guaranteed Cash Accumulation Insurance (CAIC) liquid cash reserves $ 6,330,000

Commissions Payable on Cash Accumulation Insurance Contracts $ 4,850,000

Foreign/Dom Distribution Revenues (Return of 10.75% of $36M budget) $ 3,870,000

Total Soft Money, CAIC Cash Values, Commissions, and Film Revenues $24,000,000

T H E C A S E S T U D Y

Cash Accumulation Policy, Non-MEC, Guaranteed UL: Male, age 35, non-smoker, standard

health risk.

Guaranteed Values Illustrated (2.5%) Assumed Values Illustrated

(4.75%)Yr Age Expensed Accm Cash Face Amount Accm Cash Face Amount Premium Value Value (Death Benefit) Value Value (Death Benefit)

_____________________________________________________________________________________1 36 $50,000 45,787 37,523 1,497,006 $46,693 38,429 1,497,0062 37 0 44,981 28,454 1,497,006 46,894 30,367 1,497,0063 38 0 44,052 27,525 1,497,006 47,087 30,560 1,497,0064 39 0 42,966 26,439 1,497,006 47,205 30,678 1,497,0065 40 0 41,733 25,206 1,497,006 47,213 30,686 1,497,006_____________________________________________________________________________________ ( the death6 41 0 41,540 25,013 750,000 48,163 31,636 750,000 benefit is7 42 0 41,249 26,375 750,000 49,073 34,199 750,000 lowered8 43 0 40,836 27,614 750,000 49,930 36,709 750,000 in year 6) 9 44 0 40,274 28,706 750,000 50,719 39,150 750,000 10 45 0 39,546 29,630 750,000 51,425 41,509 750,000 11 46 0 38,633 30,369 750,000 52,070 43,806 750,000 12 47 0 37,528 30,917 750,000 52,631 46,020 750,000 13 48 0 36,254 31,296 750,000 53,119 48,161 750,00014 49 0 34,837 31,532 750,000 53,539 50,234 750,00015 50 0 33,241 31,589 750,000 53,893 52,241 750,000_____________________________________________________________________________________16 51 0 31,418 31,418 750,000 54,171 54,171 750,00017 52 0 29,309 29,309 750,000 54,368 54,368 750,00018 53 0 26,852 26,852 750,000 54,463 54,463 750,00019 54 0 23,991 23,991 750,000 54,424 54,424 750,000

POLICY IS A CONSUMER GRADE UL CONTRACT ISSUED BY STATE FARM INSURANCE OF ILLINOIS

STUDIO CO-PRODUCTION: CAICs ON 240 CREW MEMBERS (7 YEAR FUND TERM)

What does the structure achieve?

Protects media investors from loss

Helps increase capital at major studios

Provides true, film/TV slate, risk mitigation

Creates millions in new media spending

Provides loan collateral and liquidity

Protects the film’s cast and crew

T H E G E N E V A S T R U C T U R E

T H E G E N E V A S T R U C T U R E

25% to 35% tax incentives for financial service costs (including L&H and P&C insurance premiums and banking fees) from all qualified lenders or carriers that are commercially domiciled in over 20 states (GA, LA, IL, FL, NM, PA, CT, CA)

Productions in a number of U.S. states (and Canadian provinces) also offer: 25% to 65% qualified production labor credits; and an additional 2% to 12% additional labor incentives, or for filming in areas of economic impoverishment

T H E G E N E V A S T R U C T U R E

Source: Weiss Research, American and Canadian L&H Company ratings, May 2012

T H E G E N E V A S T R U C T U R E

Year

States with Film Incentive Program

Incentive Amounts

Offered

1999 and earlier

4 $2 million

2000 4 $3 million

2001 4 $1 million

2002 5 $1 million

2003 5 $2 million

2004 9$68

million

2005 15$129

million

2006 24$369

million

2007 33$489

million

2008 35$807

million

2009 40$1.247 billion

2010 40$1.396 billion

2011 37$1.299 billion

Source: Tax Foundation.org, Movie Production Incentives

US

T H E G E N E V A S T R U C T U R E

Year

States with Film Incentive Program

Incentive Amounts

Offered

1999 and earlier

4 $2 million

2000 4 $3 million

2001 4 $1 million

2002 5 $1 million

2003 5 $2 million

2004 9$68

million

2005 15$129

million

2006 24$369

million

2007 33$489

million

2008 35$807

million

2009 40$1.247 billion

2010 40$1.396 billion

2011 37$1.299 billion

Source: Tax Foundation.org, Movie Production Incentives

U.S. FILM TAX

INCENTIVE AMOUNTSARE STILLGROWING: $2B+ IN

2013.

US

T H E G E N E V A S T R U C T U R E

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T H E G E N E V A S T R U C T U R E

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T H E G E N E V A S T R U C T U R E

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T H E G E N E V A S T R U C T U R E

LO

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FL

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T H E G E N E V A S T R U C T U R E

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T H E G E N E V A S T R U C T U R E

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T H E G E N E V A S T R U C T U R E

• Geneva Media Holdings LLC: (a risk mitigation consulting firm established in California in 1989, and incorporated in 1994) 9171 Wilshire Blvd #670, Beverly Hills, CA (424) 666-8769

• We support accounting, financial, legal and tax advisors

• Offices; Beverly Hills, CA. Lake Forest, IL (100+ partners)

• We are top underwriters and experienced in working with:

– Media verticals (e.g., Tribune Media… etc., since 1978)

– Bell-Phillip TV (e.g., Y & R… CBS… etc., since 1989)

– Other key client work (e.g., Kohl’s… Pritzker’s… etc.)

– Advanced financial, tax, estate and NQDC planning

– Administration for COLI, BOLI, CAIC and key-man

T H E I N D U S T R Y L E A D E R S