**Exhibit 10.31**

 

**THIS AGREEMENT**ismade this 28th day of November 2005

 

**BETWEEN:**

 

(1)**                                  19RECORDINGS LIMITED**of 33 Ransome’s Dock, 35-37 Parkgate Road, London SW114NP (“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 ofBedford House, 69-79 Fulham High Street, London SW6 3JW (“Syco”) and

 

(4)                                  **CKX UK HOLDINGS LIMITED**of 100 New Bridge Street, LondonEC4V 6JA (“CKX”) and

 

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

 

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

 

**WHEREAS:**

 

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

 

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

 

**NOW IT IS AGREED as follows**:-

 

1.                                       **BACKGROUND.**

 

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

 

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

 

2.1                                 Itis acknowledged that there have been four (4) Idol Series previouslymade and broadcast in USA. Ronagold appointed RCA Records as the US Licenseefor the first four (4) Idols Series in USA and RCA Records rights forfurther

 

Series havenow expired.  The fifth Idol Series (beingthe first in respect of which rights are granted to Syco hereunder) maysometimes be referred to herein as “American Idol 5” (and subsequent Idol Series inUSA may be referred to as American Idol 6, American Idol 7, American Idol 8 andAmerican Idol 9).

 

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2.2                                 19hereby grants to Syco an exclusive irrevocable option to acquire American IdolRecord Rights for American Idol 5 and to require 19 to appoint a NominatedLabel to be the US Licensee in relation to American Idol 5. Syco hereby exercisessuch option.

 

2.3                                 Subjectto clause 2.21 below, 19 agrees to enter into an agreement in the form of theUSA 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 relevantNominated Label will execute such USA Licence promptly following the finalepisode of American Idol 5.

 

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

 

2.5                                 IfSimon Cowell performs his services as a judge in American Idol 6, 19 herebygrants to Syco an exclusive irrevocable option to acquire American Idol RecordRights for American Idol 6 and to require 19 to appoint a Nominated Label to bethe US Licensee in relation to American Idol 6. Syco shall have the right toexercise Syco’s option by written notice to 19 at any time prior to the datethirty (30) days alter the first programme of American Idol 6 is transmitted inUSA.

 

2.6                                 Subjectto clause 2.21 below, if Syco exercises its option pursuant to clause *2.5*above. 19 agrees to enter into anagreement in the form of the USA Licence with a Nominated Label for the WinningArtist of American Idol 6. 19 agrees to execute and Syco and Sony BMG agree toprocure that the relevant Nominated Label will execute such USA Licencepromptly following the final episode of American Idol 6.

 

2.7                                 Subjectto 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 aNominated Label for any or all of the Finalists of American Idol 6 other thanthe Winning Artist. The procedure for selection of the Nominated Label, theidentity of the Finalist concerned and the execution of the relevant USALicence shall be as set out in clause 2.19 below.

 

2.8                                 IfSimon Cowell performs his services as a judge in American Idol 7, 19 herebygrants to Syco an exclusive irrevocable option to acquire American Idol RecordRights for American Idol 7 and to require 19 to appoint a Nominated Label to bethe US Licensee in relation to American Idol 7. Syco shall have the right toexercise Syco’s option by written notice to 19 at any time prior to the datethirty (30) days after the first programme of American Idol 7 is transmitted inUSA.

 

2.9                                 Subjectto clause 2.21 below, if Syco has exercised its option pursuant to clause 2.8above, 19 agrees to enter into an agreement in the form of the USA Licence witha Nominated Label for the Winning Artist of American Idol 7. 19 agrees to executeand Syco and Sony BMG agree to procure that the relevant Nominated Label willexecute such USA Licence promptly following the final episode of American Idol7.

 

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

 

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

 

2.11                           IfSimon Cowell performs his services as a judge in American Idol 8, 19 herebygrants to Syco an exclusive irrevocable option to acquire American Idol RecordRights for American Idol 8 and to require 19 to appoint a Nominated Label to bethe US Licensee in relation to American Idol 8. Syco shall have the right toexercise Syco’s option by written notice to 19 at any time prior to the datethirty (30) days after the first programme of American Idol 8 is transmitted inUSA.

 

2.12                           Subject:to clause 2.21 below, if Syco has exercised its option pursuant to clause 2.11above, 19 agrees to enter into an agreement in the form of the USA Licence witha Nominated Label for the Winning Artist of American Idol 8. 19 agrees toexecute and Syco and Sony BMG agree to procure that the Nominated Label willexecute such USA Licence promptly following the final episode of American Idol8.

 

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

 

2.14                           IfSimon Cowell performs his services as a judge in American Idol 9, 19 herebygrants to Syco an exclusive irrevocable option to acquire American Idol RecordRights for American Idol 9 and to require 19 to appoint a Nominated Label to bethe US Licensee in relation to American Idol 9. Syco shall have the right toexercise 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                           Subjectto clause 2.21 below, if Syco has exercised its option pursuant to clause 2.14above, 19 agrees to enter into an agreement in the form of the USA Licence witha Nominated Label for the Winning Artist of American Idol 9. 19 agrees toexecute and Syco and Sony BMG agree to procure that the Nominated Label willexecute such USA Licence promptly following the final episode of American Idol9.

 

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

 

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

 

2.17.1                  inrespect of the Winner of the Idol Series in question 19 shall select andnominate the identity of the Label to be Nominated Label for the Winner inaccordance with the procedure set out in sub-clause 2.18;

 

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

 

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2.17.3                  inrespect of Compilation Recordings the identity of the Label shall be selectedby Syco in accordance with clause 3.3.

 

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

 

2.18                           Priorto 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 stageof the last *5*Finalists of eachIdols Series) contact Labels in good faith and shall be entitled to becontacted by Labels to determine each Label’s interest in being the NominatedLabel. 19 agrees to consult the Labels and attend meetings with executives fromthe Labels. 19 shall make its selection of the Nominated Label for the WinningArtist of the Series in question by notice in writing to Syco within 7days after transmission in USA of the final episode of that Series. 19 shallact reasonably and in good faith in exercising its right of selection and shalltake into account the ‘genre’ or style of music of the Winning Artist concernedand of the interested Labels and shall not seek to persuade any Label to varythe financial provisions of the USA Licence for the benefit of 19 (but if anyLabel of their own volition offers more favourable provisions 19 shall not bein breach of this obligation (and similarly Syco and Sony BMG shall not be inbreach of clause 2.20 by preventing such actions)). If 19 does not make itsselection within 14 days after the transmission in USA of the final episode ofthe Series concerned then the RCA Label shall be deemed to have beenselected by 19 and shall be the Nominated Label for the Winning Artist fromthat Series.

 

2.19                           Priorto selecting the label to be the Nominated Label for any Finalist other than aWinning Artist 19 shall contact Labels and shall be entitled to be contacted byLabels to determine each Label’s interest in being a Nominated Label for theFinalist concerned. 19 agrees to consult the Labels and attend meetings withexecutives from the Labels. Interested Labels which wish to become the USLicensee for any Finalist shall declare their interest in such Finalist bynotice from the Label to 19 at any time up to 7 days after the transmission inUSA of final episode of the Series concerned PROVIDED THAT upon if expiryof such seven (7) day period no Label has declared its interest 19 shallpromptly 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 theirsaid interest to become US Licensee in respect of a particular Finalist withinfive (5) business days from 19’s said notice. 19 shall make its selectionof the Nominated Label for each Finalist from those Labels formally declaringtheir 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 selectionand shall take into account the “genre” and style of music of the Finalistconcerned and the interested Labels and shall not seek to persuade any Label tovary the financial provisions of the USA Licence for the benefit of 19 (but ifany Label of their own volition offers more favourable provisions 19 shall notbe in breach of this obligation (and similarly Syco and Sony BMG shall not bein breach of clause 2.20 by preventing such actions)). If 19 fails or refusesto make its selection within such time period then Syco shall be entitled tonominate and select the Label to be the Nominated Label in place of 19. If onlyone Label declares an interest in a Finalist, 19 shall select that Label asNominated 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 thirdparty subject to the matching rights procedure herein.

 

2.20                           Sycoand Sony BMG agrees that each Label shall be free to contact 19 in relation toWinning Artists and Finalists of each Series of American Idol in respectof which Syco exercises an option pursuant to clauses 2.2, 2.5, 2.8, 2.11 and2.14 above. Syco and Sony BMG further agree that they will act in good faithand not frustrate 19’s freedom to select and nominate.

 

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

 

2.22                           Followingselection of a Nominated Label for any Finalist pursuant to clause 2.19 19 andthe Nominated Label in question shall promptly thereafter execute a separatelicence agreement in respect of each such Finalist in the form of the USALicence (and 19 shall deliver to the Nominated Label a signed inducement letterin agreed form) save for the following amendments:-

 

(a)                                  clause1.2 – “Artist” shall mean the relevant Finalist

 

(b)                                 clause6.1.1(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 theCompetition and shall be £300,000 in lieu of £500,000 if the Finalist wasplaced third to last (inclusive) in the Competition;

 

(c)                                  clause6.1.1(a) – the advance reduced in accordance with sub-clause (b) aboveshall be payable as to fifty percent (50%)thereof within seven (7) days after delivery to the Nominated Labelin question of the inducement letter signed by the Artist as to fifty percent (50%) thereof within seven (7) daysafter the later of Delivery to the Nominated Label in question of the RecordingCommitment for the First Contract Period or delivery to the Nominated Label inquestion of the inducement letter signed by the Artist;

 

(d)                                 clause35 will be deleted and the Nominated Label in question will not use the logofrom the Series unless otherwise agreed but can use the name of the Series inassociated marketing;

 

(e)                                  theNominated Label in question will pay the reasonable legal costs of the lawyerappointed to advise the Finalists on the form of recording agreement andinducement letter.

 

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3.                                       **USA COMPILATION****RECORDS**

 

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

 

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

 

(a)                                  that19 intends to make and release Compilation Recording(s) and the number of suchCompilation Recordings to be made (e.g. Single or EP or Album);

 

(b)                                 19’abona fide estimate of the recording costs and the producer advances to beincurred by 19 in making the Compilation Recording(s) (‘which the parties donot intend should exceed $375,000 in respect of a compilation album and othercosts incurred or to be incurred that 19 requires the Label to fund pursuant toclause 4 of the USA Compilation Licence;

 

(c)                                  theadvance 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’sshare of US Net Profits from sales of the immediately preceding American IdolCompilation Album and associated Compilation Recordings during the period of 12months from initial USA release of such Album, subject to a minimum of $200,000and a maximum of $400,000;

 

(d)                                 thebona fide amount payable directly to the Finalists by way of advances againstroyalties in respect of the Compilation Recordings;

 

(e)                                  theproposed release date(s);

 

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

 

3.3                                 Sycoshall 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 ofexploitation of such Compilation Recordings and such Nominated Label shall haveand 19 hereby grants to such Nominated Label an exclusive irrevocable option torelease such Compilation Recordings which 19 wish to release. The NominatedLabel (or, at Syco’s discretion, Syco on behalf of the Nominated Label) shallexercise its option by notice in writing to 19 within twenty one (21) days ofreceipt of the notice from 19 described in clause 3.2. In the event that (Svcoor) the Nominated Label shall exercise such option the Nominated Label and 19shall promptly thereafter enter into and execute the USA Compilation Licence.

 

3.4                                 Forthe avoidance of doubt, no additional advances or royalties will be payable bythe Nominated Label in respect of making or exploitation of CompilationRecordings other than pursuant to the USA Compilation Licence (for example, theNominated Label will not be obliged to pay any advances and/or royalties forsuch recordings to any broadcaster or under any Licence Agreement entered intoin respect of the Winning Artist

 

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

 

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

 

3.6                                 Forthe avoidance of doubt, the Nominated Label shall in relation to anyCompilation Recordings to which it acquires rights hereunder (i) refer tothe title of the Idol Series in question on the packaging of recordsembodying the same and in all promotional and marketing materials therefor and (ii) incorporatethe Idol Series logo on the packaging of all records embodying suchCompilation Recordings and in all promotional and marketing materials therefor.Inadvertent failure to comply with the foregoing shall not constitute a breachof this agreement.

 

4.                                       **UNITED KINGDOM (“UK”)**.

 

4.1                                 Itis acknowledged that there have been two (2) Idol Series previouslymade and broadcast in UK (“Pop Idol 1” and “Pop Idol 2”) and accordingly rightshereunder shall not commence until after two (2) further Idol Series (“PopIdol 3” and “Pop Idol 4”) have been broadcast (it being acknowledged thatrights in such Idol Series have been granted to Ronagold pursuant to theRonagold Agreement).

 

4.2.1                        IfRonagold has exercised its option pursuant to the Ronagold Agreement in respectof Pop Idol 3 and Pop Idol 4 and provided that Simon Cowell performs hisservices as a judge in the Qualifying Pop Idol Series concerned (asdefined in clause 4.6)) 19 hereby grants to Syco separate independentconsecutive exclusive irrevocable options to enter into agreements with 19 inthe form of the UK Licence with each of the Winning Artists of each QualifyingPop Idol Series in UK.

 

4.3.1                        19 shallsend written notice to Syco confirming the following in respect of eachQualifying Pop Idol Series in the UK:

 

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

 

(b)                                 TelevisionRights have been granted to the Local TV Company pursuant to an agreementbetween [Fremantle Media] and the Local TV Company (as evidenced by a letterfrom [Fremantle Media] confirming the same if available);

 

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

 

(d)                                 theminimum number of guaranteed episodes and the proposed times and dates oftransmission; and

 

(e)                                  anymaterial changes to the Idol Format (such as the number of Finalists) for theUK.

 

Such noticeshall be sent as soon as the relevant information is available to 19 PROVIDEDTHAT 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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irrespectiveof whether or not any formal agreement in respect of the Television Rights hasbeen concluded.

 

4.3.2                        Eachoption 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 THATif 19 fail to serve such notice prior to ninety (90) days prior to the date ofthe first transmission in the UK of the first programme in the Idol Series inquestion Syco shall at any time thereafter be entitled (but not obliged) bynotice in writing to 19 to deem such notice as having being served.

 

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

 

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

 

4.6                                 Forthe purposes of this clause 4 Simon Cowell shall be treated as having performedhis services as a judge if he completes filming the First Stage TelevisionProgrammes in the relevant Qualifying Pop Idol Series. If Simon Cowell fails toso complete the filming of the First Stage Television Programmes in respect ofa Qualifying Pop Idol Series by reason of Simon Cowell’s neglect ordefault then 19’s obligation to enter into a UK Licence with Syco of theWinning Artist or any Finalist shall immediately cease and Syco, shall have notrights in relation to Winning Artists, Finalists or Compilation Albums fromsuch Series. If Simon Cowell fails to so complete the filing of the First StageTelevision Programmes for reasons other than his neglect or default (includingwithout limitation for reasons of illness or incapacity) then he shall bedeemed to have so completed his services and Syco’s rights hereunder in respectof such Qualifying Pop Idols Series shall remain in full force and effect.

 

4.7                                 Inthe event that Syco exercises its option pursuant to clause 4.5**abovein respect of any Finalist (or Finalists) then 19 and Syco shall promptlythereafter execute a separate licence agreement in respect of each suchFinalist in the form of the UK Licence (and 19 shall deliver to Syco a signedinducement letter in agreed form) save for the following amendments:-

 

(a)                                  clause1.2 – “Artist” shall mean the relevant Finalist in respect of whom Syco hasexercised its option;

 

(b)                                 clause6.1.1(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 theCompetition and shall be £300,000 in lieu of £500,000 if the Finalist wasplaced third to tenth (inclusive) in the Competition;

 

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(c)                                  clause6.1.1(a) – the advance reduced in accordance with sub-clause (b) aboveshall be payable as to 50% thereof within seven (7) days after delivery toSyco of the inducement letter executed by the relevant Finalist and as to fiftypercent (50%) thereof within seven (7) days after the later of Delivery toSyco of the Recording Commitment for the First Contract Period or delivery toSyco of the inducement letter executed by the relevant Finalist;

 

(d)                                 clause35 will be deleted and Syco will not use the logo from the Series unlessotherwise agreed but can use the name of the Series in associatedmarketing.

 

4.8                                 **UK COMPILATION RECORDINGS**

 

4.8.1                        19 has noobligation to make Compilation Recordings featuring the Finalists from Idols Series inthe UK.

 

4.8.2                        In theevent that 19 wish to release (or authorise the release thereof) CompilationRecordings in respect of a particular Idols Series 19 shall serve noticeon Syco no earlier than seven (7) days after transmission in the UK of thefirst programme following selection of all of the Finalists in the relevantIdol Series and not later than six (6) weeks prior to transmission inthe UK of the last programme in the relevant Idol Series confirming thefollowing:-

 

(a)                                  that19 intends to make and release Compilation Recording(s) and the number of suchCompilation Recordings to be made (e.g. Single or EP or Album);

 

(b)                                 19’abona fide estimate of the recording costs and the producer advances to be incurredby 19 in making the Compilation Recording(s) (which the parties do not intendshould exceed £25,000 per track in aggregate);

 

(c)                                  thebona fide amount payable directly to the Finalists by way of advances againstroyalties in respect of the Compilation Recordings;

 

(d)                                 theproposed release date(s);

 

(e)                                  theproposed track listing(s);

 

(f)                                    theproposed date for delivery of masters.

 

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

 

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

 

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

 

4.8.6                        For theavoidance of doubt, Syco shall in relation to any Compilation Recordings towhich it acquires rights hereunder (i) refer to the title of the Idol Series inquestion on the packaging of records embodying the same and in all promotionaland marketing materials therefor and (ii) incorporate the Idol Series logoon the packaging of all records embodying such Compilation Recordings and inall promotional and marketing materials therefor. Inadvertent failure to complywith the foregoing shall not constitute a breach of this agreement.

 

5.                                       **MATCHING RIGHTS**.

 

5.1                                 Inthe event that Syco does not exercise any option in respect of any Finalist inthe UK or exercise an option in respect of any Compilation Recordings pursuantto clause 4.8.3 or in the event that a Nominated Label does not declare anyinterest in any Finalist or exercise an option in respect of any CompilationRecordings then 19 shall be free to enter into an agreement with a third partyto exploit recordings by such Finalist or such Compilation Recordings (asapplicable) SAVE THAT 19 shall not enter into an agreement with a third partyon Material Terms less favourable (to 19):-

 

5.1.1                        thanthose contained in the UK Licence as amended by clause 4.7 (in respect of aFinalist in the UK);

 

5.1.2                        thanthose contained in the USA Licence as amended by clause 2.22 (in respect of aFinalist in USA);

 

5.1.3                        thanthose contained in the UK Compilation Licence in respect of CompilationRecordings in respect of Idol Series in the UK;

 

5.1.4                        thanthose contained in the USA Compilation Licence in respect of Compilation Recordingsin respect of Idol Series in USA;

 

withoutgranting to The Applicable Party (as hereafter defined) a matching right inrespect of any less favourable offers as follows:-

 

5.2                                 If19 receives any offer from a third party which it wishes to accept then 19shall send a copy of such offer or offers (“the Offer Notice”) to theApplicable Party. For the purposes hereof “The Applicable Party” shall meanSyco if the offer in question relates to the UK Licence or the UK CompilationLicence and a Label selected by Syco if the offer in question relates to theUSA Licence or the USA Compilation Licence.

 

5.3                                 Withinfourteen (14) days of receipt of the Offer Notice (“the Offer Notice Period”)The Applicable Party shall be entitled to match the Material Terms of suchoffer (“the Matching Right”) in which event 19 and The Applicable Party shallbe deemed to have entered into a fully binding agreement upon the terms of theUK 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 Noticeand 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 toexercise the Matching Right, The Applicable Party shall not be obliged to agreeterms which are not Material Terms. Having notified 19 that it elects to

 

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

 

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

 

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

 

5.6                                 If19 does not conclude an agreement with the third party upon terms no lessfavourable to 19 than those contained in the Offer Notice 19 shall not beentitled to grant the rights to any other person unless 19 again offers to TheApplicable Party a Matching Right as provided in 5.2 above.

 

5.7                                 Inthis clause 5 “Material Terms”shall mean:

 

5.7.1                        inrespect of agreements for Finalists in UK and USA – term, territory, rightsperiod, advances, royalties and product commitment;

 

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

 

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

 

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

 

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

 

6.1.1                        eachcontestant to abide by the rules of the Competition and any restrictionsplaced upon them by such rules (it being agreed that the rules willrequire the final 50 contestants not to enter into a recording agreement with athird party prior to the date three (3) months after the final episode ofthe Series); and

 

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

 

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

 

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

 

(a)                                  inthe UK 19 shall procure that:-

 

(i)                                     noalbum comprising Compilation Recordings (“Compilation Album”) in respect of aparticular Idol Series shall be released within the period commencing onthe date three (3) months prior to and ending on the date three (3) monthsafter the proposed date of release by Syco of an album embodying performancesby the Winner of the applicable Idol Series (upon request in writing from19 Syco shall notify 19 of the proposed day of release);

 

(ii)                                  noCompilation Album or single comprising Compilation Recordings in respect of aparticular Idol Series shall be released within the period commencing onthe date one (1) week prior to and ending on the date one (1) weekafter the proposed date of release by Syco of a single embodying performancesby the Winner of the applicable Idol Series (upon request in writing from19, Syco shall notify 19 of the proposed date of release);

 

(b)                                 inthe USA 19 shall procure that:-

 

(i)                                     noalbum comprising Compilation Recordings (“Compilation Album”) in respect of aparticular Idol Series shall be released within the period commencing onthe date three (3) months prior to and ending on the date three (3) monthsafter the proposed date of release by the nominated Label of an album embodyingperformances by the Winner of the applicable Idol Series (upon request inwriting from 19 the Nominated Label shall notify 19 of the proposed day ofrelease);

 

(ii)                                  noCompilation Album or single comprising Compilation Recordings in respect of aparticular Idol Series shall be released within the period commencing onthe date one (1) week prior to and ending on the date one (1) weekafter the proposed date of release by the nominated Label of a single embodyingperformances by the Winner of the applicable Idol Series (upon request inwriting from 19 the Nominated Label shall notify 19 of the proposed date ofrelease);

 

(c)                                  thenames and likenesses of Artists in respect of whom Syco or the Nominated Labelexercise their option pursuant to this agreement shall not in the packaging andmarketing of any Compilation Recordings released by or on behalf of 19 or 19 TVbe given more prominence than the other artists featured thereon unlessotherwise mutually agreed by 19 and Syco or the Nominated Label in question (asapplicable);

 

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

 

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

 

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

 

6.3.3                        neither19 nor 19 TV nor any other entity within the Group shall do anythinginconsistent with any of Syco’s or any Nominated Label’s rights hereunder;

 

6.3.4                        19has 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                        19TV shall at Syco’s reasonable request use best endeavours to procure that theLocal Television Company in UK and USA shall enforce the rules of theCompetition and in particular the rule expressly referred to in clause6.1.1 above;

 

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

 

6.4                                 Inconsideration of Syco entering into this agreement (it being acknowledged byCKX and 19 Entertainment that it is to their benefit that it is so entered intoby Syco) 19 and CKX and 19 Entertainment hereby jointly and severally warrantthat 19 is and shall remain the entity to which Finalists in UK and USA shallgrant recording rights sufficient to enable 19 to execute the UK Licence and USLicence and such rights shall not be relinquished or assigned to any otherperson, firm, company or corporation.

 

7.                                       **SIMON COWELL (“SC”)**.

 

7.1                                 Sycohereby agree to procure that SC shall execute on the date hereof the letter setout in Schedule 4.

 

7.2                                 Sycowarrants that it is entering into a service agreement with Simon Cowell for aterm expiring on 31stDecember 2010. Such service agreement includes, inter alia:

 

7.2.1                        SimonCowell’s exclusive services as an executive producer or maker of televisionprogrammes;

 

7.2.2                        SimonCowell’s exclusive services as a creative music executive in the recordindustry (but excluding publishing).

 

8.                                       **X FACTOR**.

 

8.1                                 Sycois the creator and owner of the X Factor Format.

 

8.12                           hasentered into an agreement with Fremantlemedia Worldwide Limited (“FWL”) dated18th March 2004in relation to television and ancillary rights in and to the X Factor Format (“theX 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 thenunless such words are separately defined in this agreement they shall bear themeanings attributed thereto in the X Factor Agreement.

 

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

 

8.3.1                        aone third (1/3) share of the copyright in the X Factor Format in the worldexcluding USA;

 

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

 

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

 

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

 

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

 

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

 

(d)                                 Syco’sshare of net receipts in respect of the exercise of Distribution Rightspursuant to and in accordance with clause 15;

 

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

 

(f)                                    Syco’sshare of net receipts in respect of exploitation of Telephony Rights pursuantto and in accordance with clause 17 (excluding for the avoidance of doubt anymonies received by Syco in respect of any Telephony exploitation of Syco/BMGSony master recordings).

 

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

 

8.3.4                        Inthe event that the X Factor Agreement terminates and rights revert to Syco thenSyco shall remain obliged to account or procure the accounting to 19 TV of acommensurate share of income in respect of the X Factor Format as set outherein in accordance with and subject to the terms hereof.

 

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

 

8.4.1                        thegrant and assignment of rights to 19 TV pursuant to clause 8.3 shall be subjectalways to the rights granted to FWL in the X Factor Agreement and as betweenFWL and Syco and 19 TV FWL shall continue to be entitled to act under and inaccordance with the X Factor Agreement and take the benefits and suffer theburdens thereunder as if there had been no grant or assignment of rights to 19TV;

 

8.4.2                        19TV shall have no interest or entitlement whether financial or otherwise in theReserved Rights specified in clause *5*ofthe X Factor Agreement (including

 

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Record Rights,Music Publishing Rights, Artist Merchandising Rights and Concert TouringRights) or in any other rights acquired by Syco in connection with the artistsor musicians who take part in any X Factor Series including withoutlimitation all or any rights acquired pursuant to recording agreements, musicpublishing agreements, management agreements, live performing or touringagreements, merchandising agreements, advertising or endorsement agreements,rights representation agreements or other income participation agreements insuch artist’s or musicians’ activities in the entertainment industry or in anyother income not specified in sub-clause 8.3.3;

 

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

 

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

 

8.6                                 Notwithstandingthe grant and assignment to 19 TV of rights in and to the X Factor Format andin the Programmes 19 TV confirms and agrees that it shall have no right byreason of acquiring such rights to veto or prevent or hinder or delay theexploitation of the X Factor Format and the X Factor Series throughout theworld which shall continue to be exploited in accordance with the terms of theX Factor Agreement SAVE THAT 19 TV shall be entitled to a reasonable approval overthe terms of licensing the Format in countries where the Format has not yetbeen licensed subject to the following conditions:-

 

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

 

8.6.2                        suchright of approval shall not be used to impede or prevent or delay theexploitation of the X Factor Format or any X Factor Series in anyparticular country;

 

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

 

8.7.1                        Sycoagrees to account to 19 TV for monies due to 19 TV in accordance with thisclause 8 within sixty (60) days of receipt of each accounting received from FWLpursuant to the X Factor Agreement (and it is acknowledged that Syco areaccounted to quarterly by FWL).

 

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

 

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

 

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

 

(c)                                  19 TV may not engagethe Auditor to Audit when the Auditor is presently engaged in any other auditor inspection of Syco’s (or its then current licensee’s) books and records ofaccount in respect of which any claim is still outstanding or is involved inthe negotiation of a settlement of such an audit or inspection on behalf ofanother person. In such circumstances the applicable time period specified inclause (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 shallbe designated as the Auditor if its remuneration is to be calculated wholly orpartially by reference to the amount of any discrepancy revealed by the Auditand/or the terms of any settlement and/or the outcome of any proceedingsarising out of the Audit. No Audit may commence until the Auditor has executedan unconditional undertaking to Syco in a form reasonably prescribed by Sycoproviding, inter alia, that the Auditor shall treat as confidential allinformation regarding Syco’s affairs and business which it may acquire in thecourse of the Audit and not to disclose the same to 19 TV or to any third partysave to the extent necessary to discharge Auditor’s responsibilities to 19 TVin relation to the Audit.

 

8.8.1                        Uponexpiry of the Term all rights granted to 19 TV hereunder in respect of the XFactor Format and in the Programmes and the rights deriving therefrom includingwithout limitation:-

 

(a)                                  all rights ofownership and/or copyright;

 

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

 

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(c)                                  all rights ofapproval and/or consultation

 

shall subject to the terms of sub-clause 8.8.2 automatically cease anddetermine and all such rights shall automatically revert to Syco withoutfurther formality save that in the event that Syco requires that any acts orthings are done or any documents are executed in order to give further effectto such cessation and reversion of rights then 19 TV shall do such acts andthings and sign all necessary documents required by Syco so as to give effectto the above subject always to the Power of Attorney Procedure applying inrespect thereof.

 

8.8.2                        Notwithstandingsub-clause 8.8.1 above Syco agree that in respect of Programmes created duringthe Term (“Term Programmes”) and ongoing Distribution Rights and Video Rightsand Interactive Rights and Merchandising Rights and Telephony Rights relatingdirectly and identifiably to such Term Programmes then Syco shall remainobliged to continue to account to 19 in respect of Syco’s share of moniesreceived from FWL pursuant to the X Factor Agreement in respect of exploitationthereof in the world excluding the USA notwithstanding that it arises or isreceived after the Term.

 

8.9                                 Inthe event that a USA version of the X Factor Format is produced in USA (“theUSA Series”) during the Term Syco confirms and agrees that it shall have noobjection to 19 TV co-producing the USA Series with the USA productioncompany which has the right to produce the USA Series (“the USA ProductionCompany”) PROVIDED THAT 19 TV and the USA Production Company are able to agreesatisfactory terms between them to so co-produce the same and this arrangementshall be at the sole cost of 19 TV and the USA Production Company and at nocost to Syco. Syco makes no warranty that the USA Production Company shallagree to so co-produce the USA Series with 19 TV but Syco shall do nothingto prevent such arrangement happening in the event that 19 TV and the USAProduction Company can agree terms between them at no cost to Syco.

 

8.10.1                  It isacknowledged that the X Factor Format contains (inter alia) the followingdifferences to the Idol Format:-

 

(a)                                  the Idol Formatinvolves only individual artists aged between 16 and 28 (save in certaincountries where the age limit in respect of Series prior to the datehereof has been higher where such age limit shall in such country (only) applyin lieu of 28) whereas the X Factor Format is open to individuals of any ageand groups of any age who are subsequently divided into three (3) categoriesof contestants comprising:-

 

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

 

(ii)                                  solo artists over 24years of age;

 

(iii)                               groups;

 

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

 

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

 

(herein referred to as “the X FactorCharacteristics”).

 

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

 

8.10.3                  19 TV and 19Entertainment and CKX hereby jointly and severally warrant and agree that thatthey shall not and shall procure that any third party licensed to exploit the IdolFormat shall not include the X Factor Characteristics (or any variation orpermutation or adjustment thereof) in any programmes based on the Idol Formatwithout Syco’s prior written consent.

 

9.                                       **THE PROCEEDINGS**.

 

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

 

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

 

10.                                 **DEFINITIONS**.

 

The followingwords 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 inthe UK or USA.

 

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

 

10.4                           “IdolFormat”: the television format “Pop Idol” or “Idols” or “American Idol” createdby 19 TV Limited and developed by 19 TV Limited and Fremantle Limited or anyformat derived therefrom.

 

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

 

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

 

10.7                           IntentionallyDeleted.

 

10.8                           IntentionallyDeleted.

 

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

 

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

 

10.11                     “TelevisionRights”: the right to develop and produce and**arrange forbroadcast or other transmission of an Idol Series.

 

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

 

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

 

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

 

10.l3.2               thedate of first transmission of the last programme of American Idol 5,**American Idol 6, American Idol 7 orAmerican Idol 8 in which SC has performed his services as a judge (as definedin clause 2.21) prior to failing to perform his services as a judge (as definedin clause 2.21) on the next successive Idols Series for reasons of hisneglect or default (for the avoidance of doubt illness or incapacity shall notconstitute neglect or default);

 

10.13.3            the date of firsttransmission of the last programme of American Idol *5,*American Idol 6, American Idol 7 or American Idol 8 inwhich 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 loanout agreement between Fox Square Productions Inc., and American Idol ProductionsInc., coming to an end for any other reason;

 

10.13.4            the date of firsttransmission of the last programme of American Idol 5,**American Idol 6, American Idol 7 orAmerican Idol 8 in which SC has performed his services as a judge (as definedin clause 2.21) prior to SC serving written notice confirming that he ispermanently ceasing to render his services as a on-screen judge for AmericanIdol.

 

10.14                     “X FactorFormat”: 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                     “QualifyingPop Idol Series”: shall mean each Idol Series in the UK made during theTerm but excluding the first four (4) Pop Idol Series (from inceptionwhether made prior to or after the date hereof) in UK PROVIDED THAT if the Termexpires in the middle of

 

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

 

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

 

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

 

(b)                                 Sycomay exercise its option at any time before receiving the Option Warning orwithin five (5) business days of its receipt of the Option Warning;

 

(c)                                  therelevant period of time to exercise the option continues until Syco exercisesits option or gives written notice to 19 that it does not wish to exercise itsoption or until the end of the five (5) businessday 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                     “UKCompilation Licence” shall mean any agreement in the form annexed hereto as Schedule 3.

 

10.21                     “CompilationRecordings” shall mean recordings (whether individual recordings containingperformances by various different artists or a collection of separaterecordings by different artists) by predominantly all of the Finalists of allparticular Idol Series Intended for release on record.

 

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

 

10.24                     “the FirstStage Television Programmes” shall mean those programmes in each Idol Series commencingwith the first programme in the Series and ending with the programmeimmediately preceding the programme in which the public start voting for theeviction/continued participation of the Finalists.

 

10.25                     “US Licensee” shall mean thecompany exclusively entitled to exploit recordings by Finalists of the Idol Series inquestion 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                           theyare and will remain entitled to enter into and perform this agreement;

 

11.2                           byno later than the date one (1) day after the date of full execution hereofSony MG shall own one hundred percent (100%) of the shares in Syco.

 

12.                                 **GENERAL**.

 

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

 

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

 

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

 

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

 

12.1.2                  Notwithstandingsub-clause 12.1.1 above:-

 

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

 

(b)                                 noassignment shall be made in contravention of the provisions of clause 6.4.

 

12.2                           Eachparty shall indemnify the other in respect of any loss, damage or cost(including reasonable legal costs) incurred by the other as a result of abreach by the first party of any of the provisions of this agreement. Thisindemnity shall be limited to payments made pursuant to a court order or asettlement made with the prior consent of the indemnifying party (such consentnot to be unreasonably withheld or delayed).

 

12.3         All payments to 19 or 19 TV under thisAgreement are exclusive of VAT which shall where appropriate be paid to 19 or19 TV in addition upon receipt of a VAT invoice.

 

12.4                           Allnotices under this agreement shall be in writing and shall be addressed asfollows:

 

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

 

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

 

Or to suchother address as may be notified in accordance with this clause. Notices shallbe sent by hand or by registered or recorded delivery and shall be deemed givenon the day of delivery (if by hand) or the day one (1) day after the dayof posting (if by registered or recorded delivery) PROVIDED THAT publicholidays and the period between the Friday prior to 25th December in eachyear and the first working day of the subsequent year (inclusive) shall beexcluded.

 

12.5.1                  The content andsubject matter of this agreement is confidential. No party to this agreementshall directly or indirectly release any publicity or make any public:statements or disclose any information whatsoever (save to professionaladvisors) with respect to the execution of this agreement the terms or subjectmatter thereof or anything else in connection with this agreement. Withoutprejudice to the generality of the foregoing the parties agree that save asrequited by law there shall be no press release or other information releasedto the press or any other media without all of the parties agreeing in writingthe 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 theyshall not make any statements or disclose any information contrary to that setout in the said agreed press release.

 

12.5.2                  19 and 19 TVshall procure that 19’s Associates comply and abide by the terms of this clause12.5 “19’s Associates” shall mean Simon Fuller and any firm, company orcorporation forming part of the Group.

 

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

 

12.6                           Allagreements and obligations hereunder on the part of 19 and 19 TV are and willremain joint and several.

 

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

 

12.8                           Thisagreement shall be governed by the laws of England whose courts shall haveexclusive 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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