Exhibit 10.31

 

THIS AGREEMENT is made this 28th day of November 2005

 

BETWEEN:

 

(1)                                  19 RECORDINGS LIMITED of 33 Ransome’s Dock,
35-37 Parkgate Road, London SW11 4NP (“19”) and

 

(2)                                  19 TV LIMITED OF 33 Ransome’s Dock, 35-37
Parkgate Road, London SW11 4NP (“19 TV”) and

 

(3)                                  SIMCO LIMITED trading as SYCO MUSIC of
Bedford House, 69-79 Fulham High Street, London SW6 3JW (“Syco”) and

 

(4)                                  CKX UK HOLDINGS LIMITED of 100 New Bridge
Street, London EC4V 6JA (“CKX”) and

 

(5)                                  19 ENTERTAINMENT LIMITED of 33 Ransome’s
Dock, 35-37 Parkgate Road, London SW11 4NP (“19 Entertainment”).

 

(6)                                  SONY BMG MUSIC ENTERTAINMENT (UK) LIMITED
of Bedford House, 67-69 Fulham High Street, London SW6 3JW (“Sony BMG”).

 

WHEREAS:

 

(A)                              19 TV is the owner and creator of the Idol
Format and 19 are entitled to acquire the exclusive recording services of the
Artists and have agreed to grant to Syco options to acquire or to allow
Nominated Labels to acquire rights in and to certain Artists on the terms set
out herein.

 

(B)                                Syco is the owner and creator of the X Factor
Format and has agreed to grant to 19 TV an interest and ownership participation
in the X Factor Format on the terms set out herein.

 

NOW IT IS AGREED as follows:-

 

1.                                       BACKGROUND.

 

It is acknowledged that pursuant to an agreement between 19 and Ronagold Limited
(“Ronagold”) dated 8th February 2002 as the same has been varied and amended
(“the Ronagold Agreement”) 19 has granted to Ronagold the right to acquire
rights in and to Artists taking part in the first four (4) Idol Series in the UK
and to designate the US Licensee in respect of the first four (4) Idols
Series in the USA and accordingly the rights granted hereunder relate to the
Artists taking part in Idols Series subsequent thereto.

 

2.                                       UNITED STATES OF AMERICA (“USA”).

 

2.1                                 It is acknowledged that there have been four
(4) Idol Series previously made and broadcast in USA. Ronagold appointed RCA
Records as the US Licensee for the first four (4) Idols Series in USA and RCA
Records rights for further

 

Series have now expired.  The fifth Idol Series (being the first in respect of
which rights are granted to Syco hereunder) may sometimes be referred to herein
as “American Idol 5” (and subsequent Idol Series in USA may be referred to as
American Idol 6, American Idol 7, American Idol 8 and American Idol 9).

 

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2.2                                 19 hereby grants to Syco an exclusive
irrevocable option to acquire American Idol Record Rights for American Idol 5
and to require 19 to appoint a Nominated Label to be the US Licensee in relation
to American Idol 5. Syco hereby exercises such option.

 

2.3                                 Subject to clause 2.21 below, 19 agrees to
enter into an agreement in the form of the USA Licence with a Nominated Label
for the Winning Artist of American Idol 5. 19 agrees to execute and Syco and
Sony BMG agree to procure that the relevant Nominated Label will execute such
USA Licence promptly following the final episode of American Idol 5.

 

2.4                                 Subject to clause 2.21 below, 19 agrees to
enter into an agreement in the form of the USA Licence with a Nominated Label
for any or all of the Finalists of American Idol 5 other than the Winning
Artist. The procedure for selection of the Nominated Label identifying the
Finalist concerned and entering into the relevant USA Licence shall be as set
out in clause 2.19 below.

 

2.5                                 If Simon Cowell performs his services as a
judge in American Idol 6, 19 hereby grants to Syco an exclusive irrevocable
option to acquire American Idol Record Rights for American Idol 6 and to require
19 to appoint a Nominated Label to be the US Licensee in relation to American
Idol 6. Syco shall have the right to exercise Syco’s option by written notice to
19 at any time prior to the date thirty (30) days alter the first programme of
American Idol 6 is transmitted in USA.

 

2.6                                 Subject to clause 2.21 below, if Syco
exercises its option pursuant to clause 2.5 above. 19 agrees to enter into an
agreement in the form of the USA Licence with a Nominated Label for the Winning
Artist of American Idol 6. 19 agrees to execute and Syco and Sony BMG agree to
procure that the relevant Nominated Label will execute such USA Licence promptly
following the final episode of American Idol 6.

 

2.7                                 Subject to clause 2.21 below if Syco
exercises its option pursuant to clause 2.5 above, 19 agrees to enter into an
agreement in the form of the USA Licence with a Nominated Label for any or all
of the Finalists of American Idol 6 other than the Winning Artist. The procedure
for selection of the Nominated Label, the identity of the Finalist concerned and
the execution of the relevant USA Licence shall be as set out in clause 2.19
below.

 

2.8                                 If Simon Cowell performs his services as a
judge in American Idol 7, 19 hereby grants to Syco an exclusive irrevocable
option to acquire American Idol Record Rights for American Idol 7 and to require
19 to appoint a Nominated Label to be the US Licensee in relation to American
Idol 7. Syco shall have the right to exercise Syco’s option by written notice to
19 at any time prior to the date thirty (30) days after the first programme of
American Idol 7 is transmitted in USA.

 

2.9                                 Subject to clause 2.21 below, if Syco has
exercised its option pursuant to clause 2.8 above, 19 agrees to enter into an
agreement in the form of the USA Licence with a Nominated Label for the Winning
Artist of American Idol 7. 19 agrees to execute and Syco and Sony BMG agree to
procure that the relevant Nominated Label will execute such USA Licence promptly
following the final episode of American Idol 7.

 

2.10                           Subject to clause 2.21 below, if Syco has
exercised its option pursuant to clause :2.8 above, 19 agrees to enter into an
agreement in the form of the USA Licence with a Nominated Label for any or all
of the Finalists of American Idol 7 other than the Winning Artist. The procedure
for selection of the Nominated Label, the identity of the Finalist

 

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concerned and the execution of the relevant USA Licence shall be as set out in
clause 2.19 below.

 

2.11                           If Simon Cowell performs his services as a judge
in American Idol 8, 19 hereby grants to Syco an exclusive irrevocable option to
acquire American Idol Record Rights for American Idol 8 and to require 19 to
appoint a Nominated Label to be the US Licensee in relation to American Idol 8.
Syco shall have the right to exercise Syco’s option by written notice to 19 at
any time prior to the date thirty (30) days after the first programme of
American Idol 8 is transmitted in USA.

 

2.12                           Subject: to clause 2.21 below, if Syco has
exercised its option pursuant to clause 2.11 above, 19 agrees to enter into an
agreement in the form of the USA Licence with a Nominated Label for the Winning
Artist of American Idol 8. 19 agrees to execute and Syco and Sony BMG agree to
procure that the Nominated Label will execute such USA Licence promptly
following the final episode of American Idol 8.

 

2.13                           Subject to clause 2.21 below, if Syco has
exercised its option pursuant to clause 2.11 above, 19 agrees to enter into an
agreement in the form of the USA Licence with a Nominated Label for any or all
of the Finalists of American Idol 8 other than the Winning Artist. The Procedure
for selection of the Nominated Label, the identity of the Finalist and the
execution of the relevant USA Licence shall be as set out in clause 2.19 below.

 

2.14                           If Simon Cowell performs his services as a judge
in American Idol 9, 19 hereby grants to Syco an exclusive irrevocable option to
acquire American Idol Record Rights for American Idol 9 and to require 19 to
appoint a Nominated Label to be the US Licensee in relation to American Idol 9.
Syco shall have the right to exercise Syco’s option by written notice to 19 at
any time within thirty (30) days after the first programme of American Idol 9 is
transmitted in USA.

 

2.15                           Subject to clause 2.21 below, if Syco has
exercised its option pursuant to clause 2.14 above, 19 agrees to enter into an
agreement in the form of the USA Licence with a Nominated Label for the Winning
Artist of American Idol 9. 19 agrees to execute and Syco and Sony BMG agree to
procure that the Nominated Label will execute such USA Licence promptly
following the final episode of American Idol 9.

 

2.16                           Subject to clause 2.21 below, if Syco has
exercised its option pursuant to clause 2.14 above, 19 agrees to enter into an
agreement in the form of the USA Licence with a Nominated Label for any or all
of the Finalists of American Idol 9 other than the Winning Artist. The procedure
for selection of the Nominated Label, the identity of the Finalist and the
execution of the relevant USA Licence shall be as set out in clause 2.19.

 

2.17                           For the purposes hereof “Nominated Label” shall
be a Label nominated as follows:-

 

2.17.1                  in respect of the Winner of the Idol Series in question
19 shall select and nominate the identity of the Label to be Nominated Label for
the Winner in accordance with the procedure set out in sub-clause 2.18;

 

2.17.2                  in respect of a Finalist other than a Winning Artist 19
shall select and nominate the identity of the Label for the particular Finalist
in accordance with the procedure set out in sub-clause 2.19;

 

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2.17.3                  in respect of Compilation Recordings the identity of the
Label shall be selected by Syco in accordance with clause 3.3.

 

2.17.4                  for the avoidance of doubt each Nominated Label must be
a Label (as hereafter defined);

 

2.18                           Prior to selecting the Label to be the Nominated
Label for a Winning Artist 19 shall (as soon as reasonably practical and in any
event prior to reaching the stage of the last 5 Finalists of each Idols Series)
contact Labels in good faith and shall be entitled to be contacted by Labels to
determine each Label’s interest in being the Nominated Label. 19 agrees to
consult the Labels and attend meetings with executives from the Labels. 19 shall
make its selection of the Nominated Label for the Winning Artist of the
Series in question by notice in writing to Syco within 7 days after transmission
in USA of the final episode of that Series. 19 shall act reasonably and in good
faith in exercising its right of selection and shall take into account the
‘genre’ or style of music of the Winning Artist concerned and of the interested
Labels and shall not seek to persuade any Label to vary the financial provisions
of the USA Licence for the benefit of 19 (but if any Label of their own volition
offers more favourable provisions 19 shall not be in breach of this obligation
(and similarly Syco and Sony BMG shall not be in breach of clause 2.20 by
preventing such actions)). If 19 does not make its selection within 14 days
after the transmission in USA of the final episode of the Series concerned then
the RCA Label shall be deemed to have been selected by 19 and shall be the
Nominated Label for the Winning Artist from that Series.

 

2.19                           Prior to selecting the label to be the Nominated
Label for any Finalist other than a Winning Artist 19 shall contact Labels and
shall be entitled to be contacted by Labels to determine each Label’s interest
in being a Nominated Label for the Finalist concerned. 19 agrees to consult the
Labels and attend meetings with executives from the Labels. Interested Labels
which wish to become the US Licensee for any Finalist shall declare their
interest in such Finalist by notice from the Label to 19 at any time up to 7
days after the transmission in USA of final episode of the Series concerned
PROVIDED THAT upon if expiry of such seven (7) day period no Label has declared
its interest 19 shall promptly notify Syco in writing that such period has
expired and the said seven (7) day period shall be extended so that interested
Labels may declare their said interest to become US Licensee in respect of a
particular Finalist within five (5) business days from 19’s said notice. 19
shall make its selection of the Nominated Label for each Finalist from those
Labels formally declaring their interest within 21 days after the final episode
of the Series concerned. 19 shall act reasonably and in good faith in exercising
its right of selection and shall take into account the “genre” and style of
music of the Finalist concerned and the interested Labels and shall not seek to
persuade any Label to vary the financial provisions of the USA Licence for the
benefit of 19 (but if any Label of their own volition offers more favourable
provisions 19 shall not be in breach of this obligation (and similarly Syco and
Sony BMG shall not be in breach of clause 2.20 by preventing such actions)). If
19 fails or refuses to make its selection within such time period then Syco
shall be entitled to nominate and select the Label to be the Nominated Label in
place of 19. If only one Label declares an interest in a Finalist, 19 shall
select that Label as Nominated Label. If no Label declares an interest in the
Finalist concerned

 

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19 shall be free to licence recordings by that Finalist to a third party subject
to the matching rights procedure herein.

 

2.20                           Syco and Sony BMG agrees that each Label shall be
free to contact 19 in relation to Winning Artists and Finalists of each
Series of American Idol in respect of which Syco exercises an option pursuant to
clauses 2.2, 2.5, 2.8, 2.11 and 2.14 above. Syco and Sony BMG further agree that
they will act in good faith and not frustrate 19’s freedom to select and
nominate.

 

2.21                           For the purposes of this clause 2 Simon Cowell
shall be treated as having performed his services as a judge if he completes
filming the First Stage Television Programmes in the relevant series of American
Idol. If Simon Cowell fails to so complete the filming of the First Stage
Television Programmes in respect of a series of American Idol by reason of Simon
Cowell’s neglect or default then 19’s obligation to enter into a USA Licence
with a Nominated Label for the Winning Artist or any Finalist from such
Series shall immediately cease and Syco, and the Nominated Label or Labels shall
have no rights in relation to Winning Artists, Finalists or Compilation Albums
from such Series. If Simon Cowell fails to so complete the filming of the First
Stage Television Programmes for reasons other than his neglect or default
(including without limitation for reasons of his illness or incapacity) then he
shall be deemed to have so completed his services and Syco’s rights hereunder in
respect of such Series of American Idol shall remain in full force and effect.

 

2.22                           Following selection of a Nominated Label for any
Finalist pursuant to clause 2.19 19 and the Nominated Label in question shall
promptly thereafter execute a separate licence agreement in respect of each such
Finalist in the form of the USA Licence (and 19 shall deliver to the Nominated
Label a signed inducement letter in agreed form) save for the following
amendments:-

 

(a)                                  clause 1.2 – “Artist” shall mean the
relevant Finalist

 

(b)                                 clause 6.1.1(a) – the advance in respect of
the First Contract Period shall be £400,000 in lieu of £500,000 if the Finalist
was placed second in the Competition and shall be £300,000 in lieu of £500,000
if the Finalist was placed third to last (inclusive) in the Competition;

 

(c)                                  clause 6.1.1(a) – the advance reduced in
accordance with sub-clause (b) above shall be payable as to fifty percent (50%)
thereof within seven (7) days after delivery to the Nominated Label in question
of the inducement letter signed by the Artist as to fifty percent (50%) thereof
within seven (7) days after the later of Delivery to the Nominated Label in
question of the Recording Commitment for the First Contract Period or delivery
to the Nominated Label in question of the inducement letter signed by the
Artist;

 

(d)                                 clause 35 will be deleted and the Nominated
Label in question will not use the logo from the Series unless otherwise agreed
but can use the name of the Series in associated marketing;

 

(e)                                  the Nominated Label in question will pay
the reasonable legal costs of the lawyer appointed to advise the Finalists on
the form of recording agreement and inducement letter.

 

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3.                                       USA COMPILATION RECORDS

 

3.1                                 19 has no obligation to make or release
Compilation Recordings featuring the Finalists from any of American Idol 5,
American Idol 6, American Idol 7, American Idol 8 or American Idol 9.

 

3.2                                 In the event that 19 wish to release (or
authorise the release of) Compilation Recordings in respect of a particular
Idols Series 19 shall serve notice on Syco no earlier than seven (7) days after
transmission in the USA of the first programme following selection of all of the
Finalist in the relevant Idol Series and not later than six (6) weeks prior to
transmission in the USA of the last programme in the relevant Idol
Series confirming the following:-

 

(a)                                  that 19 intends to make and release
Compilation Recording(s) and the number of such Compilation Recordings to be
made (e.g. Single or EP or Album);

 

(b)                                 19’a bona fide estimate of the recording
costs and the producer advances to be incurred by 19 in making the Compilation
Recording(s) (‘which the parties do not intend should exceed $375,000 in respect
of a compilation album and other costs incurred or to be incurred that 19
requires the Label to fund pursuant to clause 4 of the USA Compilation Licence;

 

(c)                                  the advance required by 19 pursuant to
clause 1 of the USA Compilation Licence, which shall be an amount equal to 70%
of the amount credited to 19 as 19’s share of US Net Profits from sales of the
immediately preceding American Idol Compilation Album and associated Compilation
Recordings during the period of 12 months from initial USA release of such
Album, subject to a minimum of $200,000 and a maximum of $400,000;

 

(d)                                 the bona fide amount payable directly to the
Finalists by way of advances against royalties in respect of the Compilation
Recordings;

 

(e)                                  the proposed release date(s);

 

(f)                                    the proposed track listing(s) [not to
exceed fourteen (14) tracks].

 

3.3                                 Syco shall select and nominate the Label
(which shall be one (1) of RCA/J, Arista, Columbia or Epic) to be the Nominated
Label for the purpose of exploitation of such Compilation Recordings and such
Nominated Label shall have and 19 hereby grants to such Nominated Label an
exclusive irrevocable option to release such Compilation Recordings which 19
wish to release. The Nominated Label (or, at Syco’s discretion, Syco on behalf
of the Nominated Label) shall exercise its option by notice in writing to 19
within twenty one (21) days of receipt of the notice from 19 described in clause
3.2. In the event that (Svco or) the Nominated Label shall exercise such option
the Nominated Label and 19 shall promptly thereafter enter into and execute the
USA Compilation Licence.

 

3.4                                 For the avoidance of doubt, no additional
advances or royalties will be payable by the Nominated Label in respect of
making or exploitation of Compilation Recordings other than pursuant to the USA
Compilation Licence (for example, the Nominated Label will not be obliged to pay
any advances and/or royalties for such recordings to any broadcaster or under
any Licence Agreement entered into in respect of the Winning Artist

 

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or any other Finalist in respect of whom an option had been exercised hereunder
save in respect of royalties payable to 19 for a Winning Artist or Finalist
under a USA Licence if the Compilation Recording concerned is released on that
Artist’s records.

 

3.5                                 19 warrants that it shall (if it intends to
make Compilation Recordings) procure that it shall obtain the necessary rights
from the Finalists so as to be able to make and exploit Compilation Recordings.

 

3.6                                 For the avoidance of doubt, the Nominated
Label shall in relation to any Compilation Recordings to which it acquires
rights hereunder (i) refer to the title of the Idol Series in question on the
packaging of records embodying the same and in all promotional and marketing
materials therefor and (ii) incorporate the Idol Series logo on the packaging of
all records embodying such Compilation Recordings and in all promotional and
marketing materials therefor. Inadvertent failure to comply with the foregoing
shall not constitute a breach of this agreement.

 

4.                                       UNITED KINGDOM (“UK”).

 

4.1                                 It is acknowledged that there have been two
(2) Idol Series previously made and broadcast in UK (“Pop Idol 1” and “Pop Idol
2”) and accordingly rights hereunder shall not commence until after two
(2) further Idol Series (“Pop Idol 3” and “Pop Idol 4”) have been broadcast (it
being acknowledged that rights in such Idol Series have been granted to Ronagold
pursuant to the Ronagold Agreement).

 

4.2.1                        If Ronagold has exercised its option pursuant to
the Ronagold Agreement in respect of Pop Idol 3 and Pop Idol 4 and provided that
Simon Cowell performs his services as a judge in the Qualifying Pop Idol
Series concerned (as defined in clause 4.6)) 19 hereby grants to Syco separate
independent consecutive exclusive irrevocable options to enter into agreements
with 19 in the form of the UK Licence with each of the Winning Artists of each
Qualifying Pop Idol Series in UK.

 

4.3.1                        19 shall send written notice to Syco confirming the
following in respect of each Qualifying Pop Idol Series in the UK:

 

(a)                                  the identity of the Local TV Company for
the UK;

 

(b)                                 Television Rights have been granted to the
Local TV Company pursuant to an agreement between [Fremantle Media] and the
Local TV Company (as evidenced by a letter from [Fremantle Media] confirming the
same if available);

 

(c)                                  the TV channel or TV channels on which the
relevant Idol Series is to be broadcast in the UK;

 

(d)                                 the minimum number of guaranteed episodes
and the proposed times and dates of transmission; and

 

(e)                                  any material changes to the Idol Format
(such as the number of Finalists) for the UK.

 

Such notice shall be sent as soon as the relevant information is available to 19
PROVIDED THAT 19 shall in any event send Syco details of any of the above
information (or any information relevant thereto) as and when it arises

 

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irrespective of whether or not any formal agreement in respect of the Television
Rights has been concluded.

 

4.3.2                        Each option shall be exercised by Syco by notice in
writing to 19 within thirty (30) days of receipt of the notice referred to in
clause 4.3.1 above PROVIDED THAT if 19 fail to serve such notice prior to ninety
(90) days prior to the date of the first transmission in the UK of the first
programme in the Idol Series in question Syco shall at any time thereafter be
entitled (but not obliged) by notice in writing to 19 to deem such notice as
having being served.

 

4.4                                 In the event that Syco exercises its option
pursuant to clause 4.2.1 above in respect of a particular Idol Series then
subject to Simon Cowell performing his services as a judge in the Idol
Series concerned 19 and Syco shall execute the UK Licence in relation to the
Winning Artist of such Idol Series promptly after the final episode of such Idol
Series.

 

4.5                                 In the event that Syco exercises its option
pursuant to clause 4.2.1 above in respect of a particular Idol Series then
subject to Simon Cowell performing his services as a judge in the Idol
Series concerned 19 hereby grants to Syco separate independent exclusive
irrevocable options to enter into agreements with 19 in the form of the UK
Licence (as amended by clause 4.7) in respect of each of the Finalists other
than the Winning Artist for the Idol Series in question. Each option shall be
exercised by Syco by notice in writing to 19 within thirty (30) days after the
final programme of the Idol Series in question is transmitted in UK.

 

4.6                                 For the purposes of this clause 4 Simon
Cowell shall be treated as having performed his services as a judge if he
completes filming the First Stage Television Programmes in the relevant
Qualifying Pop Idol Series. If Simon Cowell fails to so complete the filming of
the First Stage Television Programmes in respect of a Qualifying Pop Idol
Series by reason of Simon Cowell’s neglect or default then 19’s obligation to
enter into a UK Licence with Syco of the Winning Artist or any Finalist shall
immediately cease and Syco, shall have not rights in relation to Winning
Artists, Finalists or Compilation Albums from such Series. If Simon Cowell fails
to so complete the filing of the First Stage Television Programmes for reasons
other than his neglect or default (including without limitation for reasons of
illness or incapacity) then he shall be deemed to have so completed his services
and Syco’s rights hereunder in respect of such Qualifying Pop Idols Series shall
remain in full force and effect.

 

4.7                                 In the event that Syco exercises its option
pursuant to clause 4.5 above in respect of any Finalist (or Finalists) then 19
and Syco shall promptly thereafter execute a separate licence agreement in
respect of each such Finalist in the form of the UK Licence (and 19 shall
deliver to Syco a signed inducement letter in agreed form) save for the
following amendments:-

 

(a)                                  clause 1.2 – “Artist” shall mean the
relevant Finalist in respect of whom Syco has exercised its option;

 

(b)                                 clause 6.1.1(a) – the advance in respect of
the First Contract Period shall be £400,000 in lieu of £500,000 if the Finalist
was placed second in the Competition and shall be £300,000 in lieu of £500,000
if the Finalist was placed third to tenth (inclusive) in the Competition;

 

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(c)                                  clause 6.1.1(a) – the advance reduced in
accordance with sub-clause (b) above shall be payable as to 50% thereof within
seven (7) days after delivery to Syco of the inducement letter executed by the
relevant Finalist and as to fifty percent (50%) thereof within seven (7) days
after the later of Delivery to Syco of the Recording Commitment for the First
Contract Period or delivery to Syco of the inducement letter executed by the
relevant Finalist;

 

(d)                                 clause 35 will be deleted and Syco will not
use the logo from the Series unless otherwise agreed but can use the name of the
Series in associated marketing.

 

4.8                                 UK COMPILATION RECORDINGS

 

4.8.1                        19 has no obligation to make Compilation Recordings
featuring the Finalists from Idols Series in the UK.

 

4.8.2                        In the event that 19 wish to release (or authorise
the release thereof) Compilation Recordings in respect of a particular Idols
Series 19 shall serve notice on Syco no earlier than seven (7) days after
transmission in the UK of the first programme following selection of all of the
Finalists in the relevant Idol Series and not later than six (6) weeks prior to
transmission in the UK of the last programme in the relevant Idol
Series confirming the following:-

 

(a)                                  that 19 intends to make and release
Compilation Recording(s) and the number of such Compilation Recordings to be
made (e.g. Single or EP or Album);

 

(b)                                 19’a bona fide estimate of the recording
costs and the producer advances to be incurred by 19 in making the Compilation
Recording(s) (which the parties do not intend should exceed £25,000 per track in
aggregate);

 

(c)                                  the bona fide amount payable directly to
the Finalists by way of advances against royalties in respect of the Compilation
Recordings;

 

(d)                                 the proposed release date(s);

 

(e)                                  the proposed track listing(s);

 

(f)                                    the proposed date for delivery of
masters.

 

4.8.3                        Syco shall have and 19 hereby grants to Syco an
exclusive irrevocable option to release such Compilation Recordings which 19
wish to release Syco shall exercise their option by notice in writing to 19
within twenty one (21) days of receipt of the notice from 19 described in clause
4.8.2. In the event that Syco shall exercise such option Syco and 19 shall
promptly thereafter enter into and execute the UK Compilation Licence.

 

4.8.4                        For the avoidance of doubt, no additional advances
or royalties will be payable by Syco in respect of making or exploitation of
Compilation Recordings other than pursuant to the UK Compilation Licence (for
example, Syco will not be obliged to pay any advances and/or royalties for such
recordings to any broadcaster or under any Licence Agreement entered into in
respect of the Winning Artist or any other Finalist in respect of whom Syco has
exercised its option) save in respect of royalties payable to 19 for a Winning
Artist or Finalist under a UK Licence if the Compilation Recording concerned is
released on that Artist’s records.

 

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4.8.5                        19 warrants that it shall (if it intends to make
Compilation Recordings) procure that it shall obtain the necessary rights from
the Finalists so as to be able to make and exploit Compilation Recordings.

 

4.8.6                        For the avoidance of doubt, Syco shall in relation
to any Compilation Recordings to which it acquires rights hereunder (i) refer to
the title of the Idol Series in question on the packaging of records embodying
the same and in all promotional and marketing materials therefor and
(ii) incorporate the Idol Series logo on the packaging of all records embodying
such Compilation Recordings and in all promotional and marketing materials
therefor. Inadvertent failure to comply with the foregoing shall not constitute
a breach of this agreement.

 

5.                                       MATCHING RIGHTS.

 

5.1                                 In the event that Syco does not exercise any
option in respect of any Finalist in the UK or exercise an option in respect of
any Compilation Recordings pursuant to clause 4.8.3 or in the event that a
Nominated Label does not declare any interest in any Finalist or exercise an
option in respect of any Compilation Recordings then 19 shall be free to enter
into an agreement with a third party to exploit recordings by such Finalist or
such Compilation Recordings (as applicable) SAVE THAT 19 shall not enter into an
agreement with a third party on Material Terms less favourable (to 19):-

 

5.1.1                        than those contained in the UK Licence as amended
by clause 4.7 (in respect of a Finalist in the UK);

 

5.1.2                        than those contained in the USA Licence as amended
by clause 2.22 (in respect of a Finalist in USA);

 

5.1.3                        than those contained in the UK Compilation Licence
in respect of Compilation Recordings in respect of Idol Series in the UK;

 

5.1.4                        than those contained in the USA Compilation Licence
in respect of Compilation Recordings in respect of Idol Series in USA;

 

without granting to The Applicable Party (as hereafter defined) a matching right
in respect of any less favourable offers as follows:-

 

5.2                                 If 19 receives any offer from a third party
which it wishes to accept then 19 shall send a copy of such offer or offers
(“the Offer Notice”) to the Applicable Party. For the purposes hereof “The
Applicable Party” shall mean Syco if the offer in question relates to the UK
Licence or the UK Compilation Licence and a Label selected by Syco if the offer
in question relates to the USA Licence or the USA Compilation Licence.

 

5.3                                 Within fourteen (14) days of receipt of the
Offer Notice (“the Offer Notice Period”) The Applicable Party shall be entitled
to match the Material Terms of such offer (“the Matching Right”) in which event
19 and The Applicable Party shall be deemed to have entered into a fully binding
agreement upon the terms of the UK Licence or USA Licence or UK Compilation
Licence or USA Compilation Licence (as applicable) as amended by the Material
Terms set out in the Offer Notice and any other terms and conditions agreed
between The Applicable Party and 19. For the avoidance of doubt, in the event
that The Applicable Party elects to exercise the Matching Right, The Applicable
Party shall not be obliged to agree terms which are not Material Terms. Having
notified 19 that it elects to

 

10

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exercise the Matching Right 19 shall immediately inform any and all third
parties with whom they have been negotiating and shall desist from any further
discussions with any such third parties.

 

5.4                                 If The Applicable Party does not notify 19
that it wishes to exercise the Matching Right or notifies 19 in writing that it
does not wish to exercise the Matching Right then 19 shall be entitled to enter
into the agreement with the third party on terms no less favourable to 19 than
those set out in the Offer Notice.

 

5.5                                 If in accordance with the procedure set out
above 19 enters into an agreement with a third party 19 shall forthwith upon
signature of any agreement send a fully signed copy of such agreement together
with any and all agreements related to collateral thereto to The Applicable
Party.

 

5.6                                 If 19 does not conclude an agreement with
the third party upon terms no less favourable to 19 than those contained in the
Offer Notice 19 shall not be entitled to grant the rights to any other person
unless 19 again offers to The Applicable Party a Matching Right as provided in
5.2 above.

 

5.7                                 In this clause 5 “Material Terms” shall
mean:

 

5.7.1                        in respect of agreements for Finalists in UK and
USA – term, territory, rights period, advances, royalties and product
commitment;

 

5.7.2                        in respect of agreements for Compilation Recordings
for Finalists in the UK - the term, territory, rights period, advances and the
profit share provisions and calculations giving the definition of “Profit” in
the UK Compilation Licence;

 

5.7.3                        in respect of agreements for Compilation Recordings
for Finalists in the USA - the term, territory, rights period, advances and the
profit share provisions and calculations giving the definition of “US Net
Profits” in of the USA Compilation Licence.

 

6.                                       19 AND 19 TV’S WARRANTIES AND
AGREEMENTS.

 

6.1                                 19 and 19 TV agree that they shall procure
in relation to each Idol Series in the UK and USA that the Local Television
Company shall require all contestants to sign an agreement (“the Form”) (a copy
of the form of which 19 shall supply to Syco and if requested by Syco in respect
of a particular Artist, 19 shall supply a copy of the actual signed agreement in
respect of such Artist) providing for:-

 

6.1.1                        each contestant to abide by the rules of the
Competition and any restrictions placed upon them by such rules (it being agreed
that the rules will require the final 50 contestants not to enter into a
recording agreement with a third party prior to the date three (3) months after
the final episode of the Series); and

 

6.1.2                        (as a pre-condition to being a Finalist for Idol
Series in UK and USA) each Finalist to enter into a recording agreement with 19
incorporating an obligation to enter into an inducement letter in the agreed
form with Syco in respect of a UK Licence and with the Nominated Label in
respect of a USA Licence;

 

6.2                                 19 shall not itself or through a third party
release any Compilation Recording unless and until Syco or the selected Label
(as applicable) shall have failed to

 

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exercise their option in respect thereof (subject to the matching rights of
clause 5) and in any event (even if Syco or the selected Label (as
applicable)fail to exercise their option and decline to exercise their matching
rights) 19 agree that:-

 

(a)                                  in the UK 19 shall procure that:-

 

(i)                                     no album comprising Compilation
Recordings (“Compilation Album”) in respect of a particular Idol Series shall be
released within the period commencing on the date three (3) months prior to and
ending on the date three (3) months after the proposed date of release by Syco
of an album embodying performances by the Winner of the applicable Idol
Series (upon request in writing from 19 Syco shall notify 19 of the proposed day
of release);

 

(ii)                                  no Compilation Album or single comprising
Compilation Recordings in respect of a particular Idol Series shall be released
within the period commencing on the date one (1) week prior to and ending on the
date one (1) week after the proposed date of release by Syco of a single
embodying performances by the Winner of the applicable Idol Series (upon request
in writing from 19, Syco shall notify 19 of the proposed date of release);

 

(b)                                 in the USA 19 shall procure that:-

 

(i)                                     no album comprising Compilation
Recordings (“Compilation Album”) in respect of a particular Idol Series shall be
released within the period commencing on the date three (3) months prior to and
ending on the date three (3) months after the proposed date of release by the
nominated Label of an album embodying performances by the Winner of the
applicable Idol Series (upon request in writing from 19 the Nominated Label
shall notify 19 of the proposed day of release);

 

(ii)                                  no Compilation Album or single comprising
Compilation Recordings in respect of a particular Idol Series shall be released
within the period commencing on the date one (1) week prior to and ending on the
date one (1) week after the proposed date of release by the nominated Label of a
single embodying performances by the Winner of the applicable Idol Series (upon
request in writing from 19 the Nominated Label shall notify 19 of the proposed
date of release);

 

(c)                                  the names and likenesses of Artists in
respect of whom Syco or the Nominated Label exercise their option pursuant to
this agreement shall not in the packaging and marketing of any Compilation
Recordings released by or on behalf of 19 or 19 TV be given more prominence than
the other artists featured thereon unless otherwise mutually agreed by 19 and
Syco or the Nominated Label in question (as applicable);

 

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6.3                                 19 and 19 TV further warrant and undertake
that:-

 

6.3.1                        they are and will remain entitled to enter into and
perform this Agreement and to grant Syco and the Nominated Labels the options
and rights set out above;

 

6.3.2                        they and 19 Entertainment and CKX shall and shall
procure that Simon Fuller and all companies within 19/CKX UK Holdings Limited
group of companies (collectively “the Group”) shall at 19’s cost do all things
necessary to perfect the grant to Syco of the options and rights set out above;

 

6.3.3                        neither 19 nor 19 TV nor any other entity within
the Group shall do anything inconsistent with any of Syco’s or any Nominated
Label’s rights hereunder;

 

6.3.4                        19 has agreed to pay a royalty (solely out of 19’s
share of royalties hereunder) to Fremantle Media Group in respect of recordings
by the Winning Artist;

 

6.3.5                        19 TV shall at Syco’s reasonable request use best
endeavours to procure that the Local Television Company in UK and USA shall
enforce the rules of the Competition and in particular the rule expressly
referred to in clause 6.1.1 above;

 

6.3.6                        19 shall obtain all necessary rights from the
Finalists so as to enable it to enter into and exercise the UK Licence and the
USA Licence in respect of any such Finalists in respect of whom rights are
acquired hereunder.

 

6.4                                 In consideration of Syco entering into this
agreement (it being acknowledged by CKX and 19 Entertainment that it is to their
benefit that it is so entered into by Syco) 19 and CKX and 19 Entertainment
hereby jointly and severally warrant that 19 is and shall remain the entity to
which Finalists in UK and USA shall grant recording rights sufficient to enable
19 to execute the UK Licence and US Licence and such rights shall not be
relinquished or assigned to any other person, firm, company or corporation.

 

7.                                       SIMON COWELL (“SC”).

 

7.1                                 Syco hereby agree to procure that SC shall
execute on the date hereof the letter set out in Schedule 4.

 

7.2                                 Syco warrants that it is entering into a
service agreement with Simon Cowell for a term expiring on 31st December 2010.
Such service agreement includes, inter alia:

 

7.2.1                        Simon Cowell’s exclusive services as an executive
producer or maker of television programmes;

 

7.2.2                        Simon Cowell’s exclusive services as a creative
music executive in the record industry (but excluding publishing).

 

8.                                       X FACTOR.

 

8.1                                 Syco is the creator and owner of the X
Factor Format.

 

8.12                           has entered into an agreement with Fremantlemedia
Worldwide Limited (“FWL”) dated 18th March 2004 in relation to television and
ancillary rights in and to the X Factor Format (“the X Factor Agreement”). A
copy of the X Factor Agreement is annexed hereto as Schedule 5. Where words in
this clause 8 are used with an upper case first letter then unless such words
are separately defined in this agreement they shall bear the meanings attributed
thereto in the X Factor Agreement.

 

13

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8.3                                 Syco hereby grants and assigns to 19 TV
during the Term (subject to clause 8.8.2 below) and subject to the other
provisions of this agreement:

 

8.3.1                        a one third (1/3) share of the copyright in the X
Factor Format in the world excluding USA;

 

8.3.2                        a one third (1/3) share of Syco’s share of the
copyright (if any) in the Programmes made during the Term in the world excluding
USA;

 

8.3.3                        a one third (1/3) share of Syco’s share of the
following monies received from FWL pursuant to the X Factor Agreement and
arising during the Term in respect of exploitation of the X Factor Format in the
world excluding USA:-

 

(a)                                  any Production Fee received by Syco
pursuant to and in accordance with clause 9;

 

(b)                                 Format fees pursuant to and in accordance
with clause 13;

 

(c)                                  Production licensing fees pursuant to and
in accordance with clause 14;

 

(d)                                 Syco’s share of net receipts in respect of
the exercise of Distribution Rights pursuant to and in accordance with clause
15;

 

(e)                                  Syco’s share of net receipts in respect of
exploitation of Merchandising Rights Interactive Rights or Video Rights (subject
to sub-clause (g) below) pursuant to and in accordance with clause 16;

 

(f)                                    Syco’s share of net receipts in respect
of exploitation of Telephony Rights pursuant to and in accordance with clause 17
(excluding for the avoidance of doubt any monies received by Syco in respect of
any Telephony exploitation of Syco/BMG Sony master recordings).

 

(g)                                 in the event that the applicable BMG SONY
and/or Syco affiliate in the territory concerned exercises its option in
relation to Video Rights pursuant to clause 7 of the X Factor Agreement then 19
shall be entitled to one third (1/3) of Syco’s deemed net receipts as set out in
clause 7 of the X Factor Agreement after payment to FWL in accordance with
clause 18(f) of the X Factor Agreement and calculated as set out therein.

 

8.3.4                        In the event that the X Factor Agreement terminates
and rights revert to Syco then Syco shall remain obliged to account or procure
the accounting to 19 TV of a commensurate share of income in respect of the X
Factor Format as set out herein in accordance with and subject to the terms
hereof.

 

8.4                                 Notwithstanding sub-clause 8.3 above or
anything to the contrary herein contained:

 

8.4.1                        the grant and assignment of rights to 19 TV
pursuant to clause 8.3 shall be subject always to the rights granted to FWL in
the X Factor Agreement and as between FWL and Syco and 19 TV FWL shall continue
to be entitled to act under and in accordance with the X Factor Agreement and
take the benefits and suffer the burdens thereunder as if there had been no
grant or assignment of rights to 19 TV;

 

8.4.2                        19 TV shall have no interest or entitlement whether
financial or otherwise in the Reserved Rights specified in clause 5 of the X
Factor Agreement (including

 

14

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Record Rights, Music Publishing Rights, Artist Merchandising Rights and Concert
Touring Rights) or in any other rights acquired by Syco in connection with the
artists or musicians who take part in any X Factor Series including without
limitation all or any rights acquired pursuant to recording agreements, music
publishing agreements, management agreements, live performing or touring
agreements, merchandising agreements, advertising or endorsement agreements,
rights representation agreements or other income participation agreements in
such artist’s or musicians’ activities in the entertainment industry or in any
other income not specified in sub-clause 8.3.3;

 

8.4.3                        19 TV shall have no interest or entitlement whether
financial or otherwise in the title music for the Programmes as referred to in
clause 6.

 

8.5                                 It is confirmed and agreed that packaging
fees incurred by Syco as referred to in clause 27 of the X Factor Agreement
shall be deducted off the top before calculating 19 TV’s entitlement hereunder
in the same manner as they are deducted in calculating Syco’s entitlement under
the X Factor Agreement.

 

8.6                                 Notwithstanding the grant and assignment to
19 TV of rights in and to the X Factor Format and in the Programmes 19 TV
confirms and agrees that it shall have no right by reason of acquiring such
rights to veto or prevent or hinder or delay the exploitation of the X Factor
Format and the X Factor Series throughout the world which shall continue to be
exploited in accordance with the terms of the X Factor Agreement SAVE THAT 19 TV
shall be entitled to a reasonable approval over the terms of licensing the
Format in countries where the Format has not yet been licensed subject to the
following conditions:-

 

8.6.1                        19 TV shall have no right of approval over the sale
or licensing of programmes made and transmitted in one (1) country for broadcast
or transmission in another country;

 

8.6.2                        such right of approval shall not be used to impede
or prevent or delay the exploitation of the X Factor Format or any X Factor
Series in any particular country;

 

8.6.3                        19 TV’s right of approval as aforesaid shall be
limited to those matters which remain within Syco’s control it being
acknowledged that Syco are unable to grant a right of approval over matters in
respect of which approval or control has already been granted to FWL pursuant to
the X Factor Agreement (or to broadcasters or other third parties pursuant to
the operation of the X Factor Agreement) whose rights shall operate in priority
over those granted to 19 TV hereunder.

 

8.7.1                        Syco agrees to account to 19 TV for monies due to
19 TV in accordance with this clause 8 within sixty (60) days of receipt of each
accounting received from FWL pursuant to the X Factor Agreement (and it is
acknowledged that Syco are accounted to quarterly by FWL).

 

8.7.2                        (a)                                  Unless within
four (4) years of the date on which an accounting has been made under clause
8.7.1 above 19 TV shall have notified Syco in writing of any bona fide
objections in respect thereof, 19 TV shall be deemed to have accepted the

 

15

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accuracy thereof which shall be final and binding upon 19 and not open to
dispute by 19 TV.

 

(b)                                 Syco agrees that 19 TV may (but not more
than once during any calendar year and only once with respect to any particular
accounting made by Syco) inspect examine and otherwise audit (“Audit”) Syco’s
books and records for the purposes of determining the accuracy of Syco’s
accountings hereunder. 19 TV shall not be entitled to Audit any records which do
not specifically relate to the exploitation of the X Factor Format in respect of
which a share of income is payable to 19 TV. All Audits shall be made during
regular business hours upon reasonable prior notice (not less than sixty (60)
days) and shall be conducted on 19 TV’s behalf by an independent chartered
accountant (“the Auditor”). Each examination shall be made at 19 TV’s own
expense at Syco’s regular place of business in the United Kingdom where such
books and/or records are maintained. 19 TV shall furnish Syco with a copy of
Auditor’s report promptly following the conclusion of the Audit if 19 TV intends
to make a claim based upon such Audit. If such Audit reveals an underpayment to
19 TV often percent (10%) of total income due hereunder during the period
covered by such Audit or ten thousand pounds (£10,000) whichever is the greater,
then Syco shall pay all reasonable audit costs (excluding accommodation, travel
and subsistence costs) of such Audit. 19 TV agrees that, for the avoidance of
doubt, neither the grant by Syco nor the exercise by 19 TV of any right of Audit
in connection with this Agreement shall, of itself, give rise to or be deemed to
be proof of debt.

 

(c)                                  19 TV may not engage the Auditor to Audit
when the Auditor is presently engaged in any other audit or inspection of Syco’s
(or its then current licensee’s) books and records of account in respect of
which any claim is still outstanding or is involved in the negotiation of a
settlement of such an audit or inspection on behalf of another person. In such
circumstances the applicable time period specified in clause (a) above shall be
suspended until the Auditor is not so engaged (but by no more than six
(6) months in any event). No person or firm shall be designated as the Auditor
if its remuneration is to be calculated wholly or partially by reference to the
amount of any discrepancy revealed by the Audit and/or the terms of any
settlement and/or the outcome of any proceedings arising out of the Audit. No
Audit may commence until the Auditor has executed an unconditional undertaking
to Syco in a form reasonably prescribed by Syco providing, inter alia, that the
Auditor shall treat as confidential all information regarding Syco’s affairs and
business which it may acquire in the course of the Audit and not to disclose the
same to 19 TV or to any third party save to the extent necessary to discharge
Auditor’s responsibilities to 19 TV in relation to the Audit.

 

8.8.1                        Upon expiry of the Term all rights granted to 19 TV
hereunder in respect of the X Factor Format and in the Programmes and the rights
deriving therefrom including without limitation:-

 

(a)                                  all rights of ownership and/or copyright;

 

(b)                                 all financial entitlements and any other
rights of a financial nature;

 

16

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(c)                                  all rights of approval and/or consultation

 

shall subject to the terms of sub-clause 8.8.2 automatically cease and determine
and all such rights shall automatically revert to Syco without further formality
save that in the event that Syco requires that any acts or things are done or
any documents are executed in order to give further effect to such cessation and
reversion of rights then 19 TV shall do such acts and things and sign all
necessary documents required by Syco so as to give effect to the above subject
always to the Power of Attorney Procedure applying in respect thereof.

 

8.8.2                        Notwithstanding sub-clause 8.8.1 above Syco agree
that in respect of Programmes created during the Term (“Term Programmes”) and
ongoing Distribution Rights and Video Rights and Interactive Rights and
Merchandising Rights and Telephony Rights relating directly and identifiably to
such Term Programmes then Syco shall remain obliged to continue to account to 19
in respect of Syco’s share of monies received from FWL pursuant to the X Factor
Agreement in respect of exploitation thereof in the world excluding the USA
notwithstanding that it arises or is received after the Term.

 

8.9                                 In the event that a USA version of the X
Factor Format is produced in USA (“the USA Series”) during the Term Syco
confirms and agrees that it shall have no objection to 19 TV co-producing the
USA Series with the USA production company which has the right to produce the
USA Series (“the USA Production Company”) PROVIDED THAT 19 TV and the USA
Production Company are able to agree satisfactory terms between them to so
co-produce the same and this arrangement shall be at the sole cost of 19 TV and
the USA Production Company and at no cost to Syco. Syco makes no warranty that
the USA Production Company shall agree to so co-produce the USA Series with 19
TV but Syco shall do nothing to prevent such arrangement happening in the event
that 19 TV and the USA Production Company can agree terms between them at no
cost to Syco.

 

8.10.1                  It is acknowledged that the X Factor Format contains
(inter alia) the following differences to the Idol Format:-

 

(a)                                  the Idol Format involves only individual
artists aged between 16 and 28 (save in certain countries where the age limit in
respect of Series prior to the date hereof has been higher where such age limit
shall in such country (only) apply in lieu of 28) whereas the X Factor Format is
open to individuals of any age and groups of any age who are subsequently
divided into three (3) categories of contestants comprising:-

 

(i)                                     solo artists 24 years of age and
younger;

 

(ii)                                  solo artists over 24 years of age;

 

(iii)                               groups;

 

(b)                                 the Idols Format involves solely a
competition between the artists whereas the X Factor Format involves a
competition between the judges with each judge being assigned to a specific
category of artist and being responsible for and “mentoring” each artist within
such category;

 

17

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(c)                                  the X Factor Format involves each judge
reducing their category of artists to a more limited number chosen by the judges
by way of “boot camp” and/or “home visit”;

 

(herein referred to as “the X Factor Characteristics”).

 

8.10.2                  Syco warrants and agrees that Syco shall not and shall
not authorise the removal of the X Factor Characteristics from programmes based
on the X Factor Format without 19 TV’s prior written consent (PROVIDED THAT
nothing shall prevent Syco from varying the details or particulars of any of the
X Factor Characteristics so long as the Characteristic remains in a meaningful
form). Notwithstanding the aforesaid it is acknowledged that Syco has 1icensed X
Factor to Fox Broadcasting Company for the USA and that during the term of that
licence Fox shall have the right to remove the X Factor Characteristics (or any
of them) if original episodes of American Idol cease to be broadcast in the USA
by Fox Broadcasting Company or otherwise.

 

8.10.3                  19 TV and 19 Entertainment and CKX hereby jointly and
severally warrant and agree that that they shall not and shall procure that any
third party licensed to exploit the Idol Format shall not include the X Factor
Characteristics (or any variation or permutation or adjustment thereof) in any
programmes based on the Idol Format without Syco’s prior written consent.

 

9.                                       THE PROCEEDINGS.

 

9.1                                 Reference is made to the proceedings in the
Chancery Division (Intellectual Property) of the High Court of Justice under
case number HCO4CO2878 between: 19 TV Limited (“the Claimant”) and
FremantleMedia Limited, Simon Cowell and Syco Limited (trading as Syco TV)
(together “the Defendants”).

 

9.2                                 As a condition precedent to this agreement
becoming effective, a settlement agreement and an order of dismissal between the
Claimant and the Defendants in an agreed form shall be executed on the date
hereof.

 

10.                                 DEFINITIONS.

 

The following words or expressions shall have the meanings set against them
below:-

 

10.1                           “Artist”: a singer taking part in a Competition.

 

10.2                           “Competition”: the competition to select a
Winning Artist which forms part of the Idol Series in the UK or USA.

 

10.3                           “Finalists”: the number of Artists reaching the
final stage of the Competition in the UK or USA (which is anticipated to be 10
in the UK and 12 in USA) and such other Artists in respect of whom 19 enter into
recording agreements.

 

10.4                           “Idol Format”: the television format “Pop Idol”
or “Idols” or “American Idol” created by 19 TV Limited and developed by 19 TV
Limited and Fremantle Limited or any format derived therefrom.

 

10.5                           “American Idol Record Rights”: shall mean the
exclusive right (by means of being the exclusive licensee in accordance with
this agreement) to exploit recordings by Finalists of the Idol Series in
question.

 

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10.6                           “Local TV Company”: the person, firm or
corporation authorised to make an Idol Series in the UK and USA.

 

10.7                           Intentionally Deleted.

 

10.8                           Intentionally Deleted.

 

10.9                           “Label” shall mean each label entity or division
wholly owned by Sony BMG Music Entertainment Group in the USA from time to time
including Arista, Columbia, Epic, J Records, Jive, LaFace, RCA, RCA Victor, RLG
Nashville, Sony Music Nashville, Sony Urban Music, Provident Integrity and
Verity.

 

10.10                     “Idol Series”: a series of television programmes based
on the Idol Format comprising a separate Competition.

 

10.11                     “Television Rights”: the right to develop and produce
and arrange for broadcast or other transmission of an Idol Series.

 

10.12                     “Winning Artist”: the winner of the Competition in the
UK or USA.

 

10.13                     “Term” shall mean a period commencing or the date of
transmission of the first episode of the second X Factor Series in the UK namely
31st August 2005 and expiring on whichever is the earlier of:-

 

10.13.l               the date of transmission of the last programme of American
Idol 9 or

 

10.l3.2               the date of first transmission of the last programme of
American Idol 5, American Idol 6, American Idol 7 or American Idol 8 in which SC
has performed his services as a judge (as defined in clause 2.21) prior to
failing to perform his services as a judge (as defined in clause 2.21) on the
next successive Idols Series for reasons of his neglect or default (for the
avoidance of doubt illness or incapacity shall not constitute neglect or
default);

 

10.13.3            the date of first transmission of the last programme of
American Idol 5, American Idol 6, American Idol 7 or American Idol 8 in which SC
has performed his services as a judge (as defined in clause 2.21) prior to Fox
Broadcasting Company ceasing to approve SC as a judge or the loan out agreement
between Fox Square Productions Inc., and American Idol Productions Inc., coming
to an end for any other reason;

 

10.13.4            the date of first transmission of the last programme of
American Idol 5, American Idol 6, American Idol 7 or American Idol 8 in which SC
has performed his services as a judge (as defined in clause 2.21) prior to SC
serving written notice confirming that he is permanently ceasing to render his
services as a on-screen judge for American Idol.

 

10.14                     “X Factor Format”: shall mean the television format “X
Factor” created by Syco.

 

10.15                     “X Factor Series”: shall mean a series of television
programmes based on the X Factor Format.

 

10.16                     “Qualifying Pop Idol Series”: shall mean each Idol
Series in the UK made during the Term but excluding the first four (4) Pop Idol
Series (from inception whether made prior to or after the date hereof) in UK
PROVIDED THAT if the Term expires in the middle of

 

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a particular Idol Series in the UK then if Simon Cowell has completed his
services in respect of the First Stage Television Programmes in such Idol
Series (as defined in clause 4.6) then such Idol Series shall be a Qualifying
Pop Idol Series.

 

10.17                     “Option Warning Procedure”: a procedure that applies
where expressly referred to herein where if on expiry of any period during which
Syco has the right to exercise an option Syco has neither exercised such option
nor notified 19 in writing that it does not wish to exercise such option. If the
Option Warning Procedure applies:-

 

(a)                                  19 must promptly notify Syco in writing
that the Company has not yet exercised its relevant option (“Option Warning”);

 

(b)                                 Syco may exercise its option at any time
before receiving the Option Warning or within five (5) business days of its
receipt of the Option Warning;

 

(c)                                  the relevant period of time to exercise the
option continues until Syco exercises its option or gives written notice to 19
that it does not wish to exercise its option or until the end of the five
(5) business day period referred to in (b) above (whichever occurs first).

 

10.18                     “UK Licence” shall mean an agreement in the form
annexed hereto as Schedule 2.

 

10.19                     “USA Licence” shall mean an agreement in the form
annexed hereto as Schedule 1.

 

10.20                     “UK Compilation Licence” shall mean any agreement in
the form annexed hereto as Schedule 3.

 

10.21                     “Compilation Recordings” shall mean recordings
(whether individual recordings containing performances by various different
artists or a collection of separate recordings by different artists) by
predominantly all of the Finalists of all particular Idol Series Intended for
release on record.

 

10.22                     “USA Compilation Licence” shall mean an agreement in
the form annexed hereto as Schedule 7.

 

10.24                     “the First Stage Television Programmes” shall mean
those programmes in each Idol Series commencing with the first programme in the
Series and ending with the programme immediately preceding the programme in
which the public start voting for the eviction/continued participation of the
Finalists.

 

10.25                     “US Licensee” shall mean the company exclusively
entitled to exploit recordings by Finalists of the Idol Series in question
pursuant to the USA License.

 

11.                                 SYCO’S AND SONY BMG’S WARRANTIES AND
AGREEMENTS

 

Syco and Sony BMG warrant and undertake that:-

 

11.1                           they are and will remain entitled to enter into
and perform this agreement;

 

11.2                           by no later than the date one (1) day after the
date of full execution hereof Sony MG shall own one hundred percent (100%) of
the shares in Syco.

 

12.                                 GENERAL.

 

12.1.1                  No party to this agreement shall subject to sub-clause
12.1.2 be entitled to assign this agreement to any third party other than:-

 

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(a)                                  to its holding company or its subsidiary or
associated company; or

 

(b)                                 to a person, firm or corporation acquiring
all of the party’s stock or assets.

 

For the purposes of this clause “holding company” and “subsidiary” shall have
the meanings set out in section 736 of the Companies Act 1985 and “associated
company” shall be a company which owns fifty percent (50%) or more of the
assignor or a company at least twenty five percent (25%) owned by a holding
company or subsidiary company of the assignor.

 

12.1.2                  Notwithstanding sub-clause 12.1.1 above:-

 

(a)                                  19 TV shall have the right to assign its
right to receive income pursuant to sub-clause 8.3.4 but shall have no right to
assign its share of copyright or its right to a share of the copyright in the
Format and the Programmes;

 

(b)                                 no assignment shall be made in contravention
of the provisions of clause 6.4.

 

12.2                           Each party shall indemnify the other in respect
of any loss, damage or cost (including reasonable legal costs) incurred by the
other as a result of a breach by the first party of any of the provisions of
this agreement. This indemnity shall be limited to payments made pursuant to a
court order or a settlement made with the prior consent of the indemnifying
party (such consent not to be unreasonably withheld or delayed).

 

12.3         All payments to 19 or 19 TV under this Agreement are exclusive of
VAT which shall where appropriate be paid to 19 or 19 TV in addition upon
receipt of a VAT invoice.

 

12.4                           All notices under this agreement shall be in
writing and shall be addressed as follows:

 

To:  19: 19 Recordings Limited, Unit 33 Ransome’s Dock, 35-37 Parkgate Road,
London SW11 4NP. Attention: Simon Fuller with a copy to Andy Stinson, 33
Ransome’s Dock, 3 5-37 Parkgate Road, London SW11 4NP.

 

To Syco: Simco Limited, Bedford House, 69-79 Fulham High Street, London SW63JW.
Attention: Chairman with a copy to SVP of Legal or Business Affairs, SONY BMG
Music Entertainment (UK) Limited at the same address and a copy to
Messrs. Russells of Regency House, 1/4. Warwick Street, London W1B 5W.

 

Or to such other address as may be notified in accordance with this clause.
Notices shall be sent by hand or by registered or recorded delivery and shall be
deemed given on the day of delivery (if by hand) or the day one (1) day after
the day of posting (if by registered or recorded delivery) PROVIDED THAT public
holidays and the period between the Friday prior to 25th December in each year
and the first working day of the subsequent year (inclusive) shall be excluded.

 

12.5.1                  The content and subject matter of this agreement is
confidential. No party to this agreement shall directly or indirectly release
any publicity or make any public: statements or disclose any information
whatsoever (save to professional advisors) with respect to the execution of this
agreement the terms or subject matter thereof or anything else in connection
with this agreement. Without prejudice to the generality of the foregoing the
parties agree that save as requited by law there shall be no press release or
other information released to the press or any other media without all of the
parties agreeing in writing the wording, form and nature of such disclosure. It
is acknowledged that there

 

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will be an agreed press release. The parties further agree that they shall not
make any statements or disclose any information contrary to that set out in the
said agreed press release.

 

12.5.2                  19 and 19 TV shall procure that 19’s Associates comply
and abide by the terms of this clause 12.5 “19’s Associates” shall mean Simon
Fuller and any firm, company or corporation forming part of the Group.

 

12.5.3                  Syco and Sony BMG shall procure that Syco’s Associates
comply and abide by the terms of this clause 12.5. “Syco’s Associates” shall
mean Simon Cowell and any firm, company or corporation forming part of the Sony
BMG Group of Companies.

 

12.6                           All agreements and obligations hereunder on the
part of 19 and 19 TV are and will remain joint and several.

 

12.7                           Each of the parties shall sign, execute and do
all such documents, deeds and act as may be necessary to give effect to the
provisions of this agreement.

 

12.8                           This agreement shall be governed by the laws of
England whose courts shall have exclusive jurisdiction.

 

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SIGNED

)

 

 

For and on behalf of

)

 

 

19 RECORDINGS LIMITED

)

 

/s/

 

in the presence of:-

)

 

Director

 

 

SIGNED

)

 

 

For and on behalf of

)

 

 

19 TV LIMITED

)

 

/s/

 

in the presence of:-

)

 

Director

 

 

SIGNED

)

 

 

For and on behalf of

)

 

 

SIMCO LIMITED

)

 

/s/

 

in the presence of:-

)

 

Director

 

 

SIGNED

)

 

 

For and on behalf of

)

 

 

CKX UK HOLDINGS LIMITED

)

 

/s/

 

in the presence of:-

)

 

Director

 

 

SIGNED

)

 

 

For and on behalf of

)

 

 

19 ENTERTAINMENT LIMITED

)

 

/s/

 

in the presence of:-

)

 

Director

 

 

SIGNED

)

 

 

For and on behalf of

)

 

 

SONY BMG MUSIC

)

 

/s/

 

ENTERTAINMENT LIMITED

)

 

Director

in the presence of:-

)

 

 

 

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