Document:

Exhibit 10.15

 

Portions of
this exhibit have been omitted pursuant to a request for confidential treatment
filed with the Securities and Exchange Commission. The omissions have been
indicated by (“***”), and each page containing confidential information is
footnoted with the phrase “FOIA Confidential Treatment”. The omitted text has
been filed separately with the Securities Exchange Commission.

 

As of May 15, 2003

 

VIA MESSENGER

 

Mr. Ira Kurgan

Executive Vice President

Fox Broadcasting Co.

10201 West Pico Blvd.

Executive Building 100

Rm. 4570

Los Angeles, CA 90035

 

Re:          American Idol Re-Negotiation

 

Dear Ira:

 

This will confirm that Fox, 19 Television and FremantleMedia have
agreed to modify certain terms of the parties’ agreement in connection with “American
Idol” (“AI”), as follows:

 

I.                                         License
Term:  A perpetual exclusive license
term (“Term”) in the U.S. and its territories and possessions.  During the Term, Fox will have a right of
first negotiation/last refusal to license for U.S. broadcast any non-scripted
television programs substantially featuring the AI brand or contestants who
appear in their roles as American Idols, or such programs that are “based
substantially on the series and format” as defined in the prior AI agreement.

 

II.                                     AI 2 Payments:
Subject to 19 and Fremantle’s execution of this agreement (as approved in form
by Fox) and receipt of appropriate invoices, Fox shall promptly pay
19/Fremantle the following sums due in connection with AI2:

 

A.                                   Ratings Bonus:
Calculated per current deal on *** hours for AI 3.  If fewer than *** are produced, Fox may
offset the difference between the amount paid and the amount based on actual
hours produced against any monies owed 19/Fremantle.

 

B.                                     Ranking Bonus:
$*** per hour if ranked number *** in the 18-49 demo, or $*** per hour if
ranked ***, calculated on *** hours for AI 3. 
If fewer than *** hours are produced, Fox shall have same offset right
as above.

 

*** FOIA Confidential Treatment

 

 

C.                                     Production
Savings: Fox will allow 19/Fremantle to retain all production underages, which
shall be calculated after Fox bears all breakage to be mutually approved by
19/Fremantle and Fox.

 

D.                                    Fox will pay
directly to 19 and to Fremantle each their respective halves or A.  and B.  above.  Fox shall pay the entire sum in C.  above to Fremantle.

 

III.                                 AI 3 and Subsequent
Cycles:

 

A.                                   Episodic Order:
Initial order for AI 3 and each subsequent cycles
(i.e.  AI 4, AI 5,
etc.)  shall be *** hours.  The contractual minimum order shall be ***
hours, reducible to *** hours if 19/Fremantle and Fox mutually agree that the
relevant cycle has fewer than 10 finalists.  
However, 19/Fremantle hereby approve a total of *** hours per
cycle.  Each cycle shall have ten
finalists unless, following good faith consultation with Fox l9/Fremantle and
Fox agree that twelve finalists are preferable, based on the quality of the ten
finalists.  Each cycle shall have no more
than three specials, subject to III.C.  below.  l9/Fremantle
shall have reasonable creative approval on the content of the specials, and
prior meaningful consultation on how the series episodes shall be
expanded.  No more than one cycle per
broadcast season.

 

B.                                     License Fee:  Flat, non-auditable $*** per hour, pro-rata
increases/decreases, plus auditable breakage pre-approved by Fox (e.g.  judges, hosts, auditions, and the breakage
categories, such as judges and auditions approved for AI 2, and the host
category to the extent Fox approves such breakage for AI 3 or subsequent
cycles).  The executive producer fee is
deemed to be $*** for AI 3.  ***% cumulative increases in each subsequent cycle.

 

C.                                     Extended and
Additional Episodes:

 

1.                                       Extended/additional
episodes and specials in excess of the pre-approved total hours set forth in
III.A.  above may be ordered and produced
only if approved in writing by Simon Fuller or Chrissie Harwood on behalf of
19, and by Cecile Frot-Coutaz on behalf of FremantleMedia (or a designated
substitute of which Fox is given prior written notice).  (Email from these individuals is acceptable
written approval.)  19/Fremantle shall
notify Fox of its decision in a timely manner. 
For between *** and *** hours, 19/Fremantle may withhold their approval
only for reasonable creative reasons or for concerns of diluting or otherwise
harming the franchise.  19/Fremantle may
not withhold approval on grounds they want additional compensation.  Hours in excess of *** may be ordered only if
19/Fremantle approve such additional hours in writing by the individuals
identified above; said approval may be withheld for any reason in 19/Fremantle’s
sole discretion.

 

*** FOIA Confidential Treatment

 

 

2.                                       For each hour
produced in excess of the initial order of *** hours, Fox shall pay
19/Fremantle a premium license fee, which shall equal the flat license fee
described above plus the following:

 

a.                                       ***: hours: ***%
of the executive producer fee and format fee;

 

b.                                      ***: ***% of the
executive producer and format fees;

 

c.                                       ***: ***% of the
executive producer and format fees;

 

d.                                      ***: ***% of the
executive producer and format fees.

 

3.                                       Additionally,
for each hour in excess of *** hours produced in AI 3 or subsequent cycles, Fox
shall pay 19/Fremantle an “excess hour fee” equal to the ratings and ranking
bonuses for the immediately preceding cycle. 
Such “excess hour fee” shall be due after broadcast of the applicable
hour, payable 10 business days after receipt of appropriate invoice.

 

D.                                    Ratings/Ranking
Bonuses:  If the average 18-49 rating
for all episodes in an order (including specials) reaches the following levels,
Fox shall pay ratings and ranking bonuses as follows:

 

1.                                       Ratings bonuses
for AI 3 and subsequent years shall increase ***% each cycle on a cumulative
basis.  All other terms of such bonus
shall be per the prior AI Agreement.

 

2.                                       A ranking bonus
of $*** per hour if in *** in the 18-49 demo; or $*** per hour if ranked *** in
the 18-49 demo; or $*** per hour if in top *** in the 18-49 demo.  Ranking is the average during the regular
September-May season as defined in Attachment “A”.

 

3.                                       If any episode
is re-run by FBC, l9/Fremantle shall receive bonuses equal to *** of the
original bonus for that episode, regardless of the rating for the rerun
episode.

 

4.                                       Within ten
business days of receipt of appropriate invoice, Fox shall pay the total
ratings and ranking bonuses due for a season promptly after broadcast of the
final episode of that season, subject only to a pick-up for the following
season.  The bonus shall be calculated on
the number of broadcast hours 19/Fremantle pre-approved for the following
season.  Fox shall have the right to
offset as set forth in paragraphs II.A. and II.B. above.

 

E.                                      AI Promotion:  Fox shall allow 19/Fremantle to do the
following promotion during each series order of AI 3 and subsequent cycles:

 

*** FOIA Confidential Treatment

 

 

1.                                       Per current
deal, ten seconds per episode of verbal mention of tour dates, venues and
ticket information per episode during the last five weeks of each cycle.  These ten seconds may now include tour
mentions during contestant interviews.

 

2.                                       Up to 15 seconds
of vertical scroll per episode listing tour dates and venues, and telephone
numbers for ticket purchase and concert information, during the last five weeks
of each cycle.  Additionally, for each
hour in excess of ***, 19/Fremantle may add a fifteen second scroll per episode
promoting any American Idol-branded items, 19/Fremantle and Fox shall mutually
determine which extended episodes and specials during the cycle shall contain
these additional fifteen second scrolls. 
In no event will there be more than 30 seconds of promotional time per
hour between the items in sub-paragraphs 1 and 2.

 

3.                                       Date, venue and
ticket information shall be listed on the idolonfox.com website.  The website shall also contain a hyperlink to
Ticketmaster.

 

4.                                       Promotional
ticket giveaways in episodes and on the website.  Any such ticket giveaways shall comply with
all relevant state laws, and FBC Standards and Practices for in-episode
giveaways, and 19 shall fully indemnify and hold harmless Fox and its
affiliates in connection with any claims or actions fit connection with such
giveaways.

 

F.                                      Subject to
appropriate invoice, payments shall be as follows:  the ratings and ranking bonuses due to
19/Fremantle per the prior AI Agreement and this agreement shall be paid ***%
to 19 and ***% to Fremantle.  Ancillary
revenues payable by Fox to 19/Fremantle shall be paid to each entity in
percentages as instructed by the parties. 
The license fee, breakage and other production-related out-of-pocket
costs shall be paid to Fremantle.

 

IV.                                 Fox Backend Participation:  Fox agrees to relinquish its participation in
all AI ancillary revenue streams retroactively and prospectively, i.e.  off-network
television distribution, merchandising, home video, recorded music, tours,
print and electronic publishing.  Fox shall
continued to participate in internet, sponsorship and
wireless revenues per the parties’ prior agreements.

 

All other terms and conditions shall be pursuant to the parties’ prior
AI Agreement.  To the extent said
Agreement conflicts with the terms set forth herein, this letter agreement
shall govern.

 

As I am concurrently sending this to my clients and their counsel, I
must reserve their right to modify the foregoing.

 

*** FOIA Confidential Treatment

 

 

Please contact me immediately if the above is in any way inconsistent
with your understanding of the agreement. 
Otherwise, please execute this letter in the space provided below.  This letter shall constitute a firm and binding
agreement until such time, if any, as a more formal document is executed by all
parties.

 

	
   

  	
  Best
  regards,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Daniel J.
  Grover

  
	
   

  	
  CREATIVE
  ARTISTS AGENCY

  

 

 

AGREED TO AND ACCEPTED:

 

	
  Fox
  Broadcasting Company

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/

  	
   

  	
  Date:

  	
  8/15/03

  	
   

  
	
  FremantleMedia
  North America, Inc.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/

  	
   

  	
  Date:

  	
  8/14/03

  	
   

  
	
  19 TV
  Limited

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/

  	
   

  	
  Date:

  	
  26 August
  2003

  	
   

  
	
   

  	
   

  
	
  cc:

  	
  Simon Fuller

  	
   

  
	
   

  	
  Chrissie
  Harwood

  	
   

  
	
   

  	
  Andy Stinson

  	
   

  
	
   

  	
  Cecile
  Frot-Coutaz

  	
   

  
	
   

  	
  Mike Hobel,
  Esq.

  	
   

  
	
   

  	
  Lee Gabler

  	
   

  
	
   

  	
  Steve
  Lafferty

  	
   

  
	
   

  	
  Jeff Frasco

  	
   

  
	
   

  	
  Steve Smooke

  	
   

  
	
   

  	
  Alix HartleyExhibit 10.16

 

Portions of this exhibit have
been omitted pursuant to a request for confidential treatment filed with the
Securities and Exchange Commission. The omissions have been indicated by (“***”),
and each page containing confidential information is footnoted with the phrase “FOIA
Confidential Treatment”. The omitted text has been filed separately with the
Securities Exchange Commission.

 

	
   

  	
  From:

  	
  19 TV Limited

  
	
   

  	
  33 Ransomes Dock

  
	
   

  	
  35-37 Parkgate Road

  
	
   

  	
  London SW11 4NP

  
	
   

  	
   

  
	
  Pearson Television Operations BV

  	
   

  
	
  1 Stephen Street

  	
   

  
	
  London W1T 1AL

  	
   

  
	
   

  	
   

  
	
   

  	
  6 July 2001

  
				

 

Dear Sirs

 

Pop Idol/Idols

 

We write to confirm our agreement with you as follows:

 

1.                                       Definitions

 

In this agreement the following words or expressions shall have the
meaning set against them below:

 

	
  1.1

  	
   

  	
  “19 TV”

  	
   

  	
  19 TV Limited

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.2

  	
   

  	
  “Artist”

  	
   

  	
  a singer taking part in a Competition

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.3

  	
   

  	
  “Artist Merchandise”

  	
   

  	
  products bearing the name or likeness of a
  Winning Artist or Finalist and otherwise touching or concerning a Winning
  Artist or Finalist (excluding Programme Merchandise)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.4

  	
   

  	
  “Artist Sponsorship”

  	
   

  	
  advertising, endorsement or sponsorship
  using the name or likeness of a Winning Artist or Finalist

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.5

  	
   

  	
  “Competition”

  	
   

  	
  the competition forming part of the Series
  to find a Winning Artist in the Relevant Territory

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.6

  	
   

  	
  “Domain Names”

  	
   

  	
  domain names registered by 19 TV or Pearson
  including the Names or any names similar to the Names that may be registered

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.7

  	
   

  	
  “Finalists”

  	
   

  	
  the [ten] Artists reaching the final stages
  of the Competition in the Relevant Territory

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.8

  	
   

  	
  “Format”

  	
   

  	
  the television format “Pop Idol” or “Idols”
  created by 19

  

 

 

	
   

  	
   

  	
   

  	
   

  	
  TV and developed by 19 TV and Pearson

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.9

  	
   

  	
  “Format Fee”

  	
   

  	
  *** per cent (***%) of all gross monies
  (excluding VAT or similar sales tax) received by the Local TV Company from a
  broadcaster for the production and transmission of a Programme or Series
  based on the Format

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.10

  	
   

  	
  “Format Owners”

  	
   

  	
  19 TV and Pearson jointly

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.11

  	
   

  	
  “Gross Receipts”

  	
   

  	
  gross monies received by or credited to 19
  TV or Pearson (as appropriate) from exploitation of the relevant rights
  including (without limitation) any contributions by third parties to
  expenditure in relation to such rights

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.12

  	
   

  	
  “Local Management Company”

  	
   

  	
  the person, firm or corporation with whom
  the Winning Artist or Finalist in the Relevant Territory enters into a
  Management Agreement

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.13

  	
   

  	
  “Local Record Company”

  	
   

  	
  the person, firm or corporation with whom
  the Winning Artist or Finalist in the Relevant Territory enters into a
  Recording Agreement

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.14

  	
   

  	
  “Local Merchandising and Sponsorship
  Company”

  	
   

  	
  the person firm or corporation with whom
  the Winning Artist or Finalist in the Relevant Territory enters into a
  Merchandising and Sponsorship Agreement

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.15

  	
   

  	
  “Local TV Company”

  	
   

  	
  the person firm or corporation authorised
  to make Programmes or a Series in the Relevant Territory

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.16

  	
   

  	
  “Management Agreement”

  	
   

  	
  an agreement for the worldwide management
  of the career of the Winning Artist in a Relevant Territory

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.17

  	
   

  	
  “Masters”

  	
   

  	
  sound recordings featuring the Winning
  Artist released in the Relevant Territory upon which 19 Recordings Limited
  receives a royalty payment from the record company or any other entity
  undertaking the distribution of records

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.18

  	
   

  	
  “Merchandising and Sponsorship Agreement”

  	
   

  	
  an agreement for the exclusive worldwide
  right to use the name and likeness of the Winning Artist in a Relevant
  Territory for advertising, endorsement, merchandising and sponsorship

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.19

  	
   

  	
  “Names”

  	
   

  	
  “Pop Idol”, “Idols” and any other name
  approved by 19 TV and Pearson used in the Relevant Territory in connection
  with Programmes or a Series

  

 

*** FOIA Confidential Treatment

 

2

 

	
  1.20

  	
   

  	
  “Net Advance”

  	
   

  	
  the gross advance received by 19 Recordings
  in respect of Masters after the deduction of:-

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  1.20.1  VAT;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  1.20.2  advances paid to the Winning
  Artist;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  1.20.3  advances to producers, mixers or
  remixers;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  1.20.4  recording costs;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  1.20.5  video costs;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  1.20.6  tour support;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  1.20.7             reserves in relation to royalties
  payable to the Winning Artist or producers, mixers or remixers;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  1.20.8             other payments to third parties in relation
  to the Masters or any record embodying the Masters

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.21

  	
   

  	
  “Net
  Receipts”

  	
   

  	
  Gross Receipts
  after the deduction of:-

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  1.21.1  VAT or other sales taxes forming
  part of Gross Receipts;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  1.21.2  out of pocket expenses
  reasonably incurred by 19 TV or Pearson (as appropriate) in relation to
  exploitation of the relevant rights;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  1.21.3  payments required to be paid to
  third parties (for example to broadcasters) from the appropriate
  exploitation;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  1.21.4  (in relation to merchandising
  and sponsorship) costs of style guide, production of marketing materials and
  trade mark registration;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  1.21.5  (in relation to Websites)
  Pearson shall be entitled to:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (a)  recoup the
  budget for production of the core site agreed with 19 TV;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (b)  recoup the costs
  of versioning the core site to produce local Websites which costs may
  include, for the avoidance of doubt, a reasonable charge (approved by 19 TV)
  for the services of Pearson’s in-house web team in producing and operating
  the versioned Website;

  

 

3

 

	
   

  	
   

  	
   

  	
   

  	
  (c)  deduct
  commissions paid to third parties for services provided in generating
  revenues, such as advertising and sponsorship sales;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (d)  deduct third
  party costs, which may for the avoidance of doubt include a percentage of
  revenues paid to a third party in lieu of direct fees or services provided,
  such as hosting.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.22

  	
   

  	
  “Net Royalty”

  	
   

  	
  the gross royalty (expressed as a
  percentage of dealer price) payable to 19 Recordings Limited less the royalty
  (expressed as a percentage of dealer price) payable by 19 Recordings Limited
  to the Winning Artist, producers, mixers, remixers, Pearson and the
  broadcaster

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.23

  	
   

  	
  “Pearson”

  	
   

  	
  Pearson Television
  Operations BV

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.24

  	
   

  	
  “Pearson Associate”

  	
   

  	
  a subsidiary of the RTL Group SA which is
  also a company in the group of companies providing the production businesses
  of the RTL Group falling under the responsibilities of the CEO of the RTL
  Production Businesses and, for the avoidance of doubt, specifically excluding
  any other company of the RTL Group, including any broadcasting company

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.25

  	
   

  	
  “Producer Margin”

  	
   

  	
  Pearson’s gross profit from production of
  any Programme or Series made for transmission in the United Kingdom (in
  calculating gross profit Pearson shall deduct all costs associated with the
  production of the Programme or Series including ***% overhead contribution in
  the United Kingdom

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.26

  	
   

  	
  “Programme”

  	
   

  	
  a television programme based on the Format

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.27

  	
   

  	
  “Programme Merchandise”

  	
   

  	
  products bearing, the Name(s) of a
  Programme or Series and developed from the Format, a Programme or Series such
  as books on the Programme or Series but excluding Video Rights and Artist
  Merchandise

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.28

  	
   

  	
  “Programme Sponsorship”

  	
   

  	
  third party sponsorship of Programmes or
  any Series but excluding Artist Sponsorship and on-air sponsorship

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.29

  	
   

  	
  “Recording Agreement”

  	
   

  	
  the exclusive recording agreement between
  the Local Record Company and the Winning Artist or Finalist for the Relevant
  Territory

  

 

*** FOIA Confidential Treatment

 

4

 

	
  1.30

  	
   

  	
  “Relevant Territory”

  	
   

  	
  the country or countries for which
  Television Rights are granted to a Local TV Company

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.31

  	
   

  	
  “Series”

  	
   

  	
  a Series of Programmes based on the Format

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.32

  	
   

  	
  “Telephony Rights”

  	
   

  	
  the right to select and receive income from
  a telecommunications company for such company providing premium rate phone
  lines for a Programme or Series in the Relevant Territory

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.33

  	
   

  	
  “Television Rights”

  	
   

  	
  the right to develop and produce and
  license others to develop and produce and arrange for the broadcast or other
  transmission of a Programme or a Series in the Relevant Territory on any and
  all platforms including (without limitation) any form of cable, terrestrial
  or satellite TV (whether analogue or digital transmission) whether free to
  air on any form of pay television [and for the avoidance of doubt any
  streaming of Programmes or Series by way of internet protocols or any other
  transmission protocol of any kind]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.34

  	
   

  	
  “Territory”

  	
   

  	
  the World

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.35

  	
   

  	
  “Trade Marks”

  	
   

  	
  the registered and unregistered trade marks
  in “Pop Idol”, “Idols” or any other Names

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.36

  	
   

  	
  “Video Rights”

  	
   

  	
  the right to make, distribute and sell
  mechanical audio-visual devices (including VHS and DVD) of a Programme or a
  Series in the Relevant Territory

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.37

  	
   

  	
  “Website”

  	
   

  	
  the official website for a Programme or
  Series in the Relevant Territory

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.38

  	
   

  	
  “Winning Artist”

  	
   

  	
  the winner of the Competition in the
  Relevant Territory

  

 

2.             Ownership

 

2.1           The Format shall be
owned by 19 TV and Pearson in the indivisible shares two thirds to 19TV and one
third to Pearson.  To the extent required
19 TV hereby irrevocably assigns to Pearson with full title guarantee such
share of the Copyright and other intellectual property rights in and to the
Format throughout the Territory for the full period of copyright (including all
renewals and extensions thereof).

 

2.2            The
Domain Names shall be owned by 19 TV and Pearson in the shares two thirds to 19
TV and one third to Pearson.

 

5

 

2.3            The Trade
Marks shall be owned by 19 TV and Pearson in the shares two thirds to 19 TV and
one third to Pearson.

 

2.4            The
ownership pursuant to 2.1, 2.2 and 2.3 above shall be as tenants in
common.  Neither party shall exploit or
sell its share of the Format except as provided herein.

 

3.             License
of Television Rights

 

3.1            The
Format Owners license to Pearson the sole and exclusive right to exploit the
Television Rights throughout the Territory. 
Pearson Television Productions Limited shall be the Local TV Company for
the United Kingdom and shall enter into an agreement with ITV Network Limited
for broadcast of the first Series in the United Kingdom in a form consistent
with the Letter of Intent attached as Exhibit ‘A’.  Pearson shall sub-licence Television Rights
to Local TV Companies approved by 19 TV. 
Pearson Associates are deemed approved by 19 TV.  Any Local TV Company not being a Pearson
Associate shall be deemed approved by 19 TV if the agreement with such company
guarantees the Programme or Series is to be broadcast on free to air TV.

 

3.2           The Local TV Company
shall pay the Format Fee to the Format Owners in consideration of the licence
of Television Rights.  If the Local TV
Company is not a Pearson Associate, Pearson shall be entitled to retain ***% of
the Format Fee and shall pay to the Format Owners ***% of the Format Fee. The ***%
of Format Fee retained by Pearson shall be in consideration of Pearson selling
the Television Rights and supervising the quality of the production of
Programmes or Series by the Local TV Company.

 

3.3           Pearson shall pay to 19
TV ***% of the Producer Margin on all Programmes or Series made by Pearson for
transmission in the United Kingdom.

 

3.4           Pearson will account to
19 TV for *** of all Format Fees received by Pearson from Local TV Companies.

 

3.5           Pearson will procure
the following co-producer credit appears on the first or last roll credit (at
19 TV’s election) on all copies of any Programme or Series made for
transmission in the United Kingdom:

 

“Produced In
Association with 19 TV Limited or Co Produced by 19 TV Limited” (at 19 TV’s
election)

 

3.6           Pearson will procure
the following credits appear on all copies of Programmes in the first Series
made for transmission in the United Kingdom:

 

“Co-Executive Producers Richard Holloway and
Nigel Lythgoe”

 

“Associate Producer - Simon Fuller”

 

*** FOIA Confidential Treatment

 

6

 

3.7           Pearson will pay to 19
TV a fee of £*** for the services of Nigel Lythgoe as Executive Producer and a
fee of £*** for the services of Simon Fuller as Associate Producer.

 

3.8           19 TV will have the
right to select all musical compositions to be used in each Programme or Series
made for transmission in the United Kingdom or the United States of
America.  19 TV will have the right to
approve all musical compositions to be used in each Programme or Series made
for transmission outside the United Kingdom or USA (such approval not to be
unreasonably withheld). Pearson undertake to include such selection or approval
right in each licence of Television Rights. 
It is acknowledged musical compositions selected or approved have to be
cleared for use in the Programme or Series concerned.

 

4.             The
Competition

 

4.1           Each Local TV Company
shall be entitled to operate the Competition as part of the licence of
Television Rights.  The form of the
Competition is to take in each Relevant Country and (other than those set out
in 4.2 below) the prizes to be awarded to the Winning Artist shall be approved
by Pearson and 19 TV.

 

4.2           Each Local TV Company
will be required to enter into a TV Contract with each Finalist pursuant to
which each Finalist will:-

 

4.2.1                        enter into a Recording
Agreement with the Local Record Company;

 

4.2.2        enter
into a Merchandising and Sponsorship Agreement with the Local Merchandising and
Sponsorship Company in a form approved by Pearson and 19 TV;

 

4.2.3        enter
into a Management Agreement with the Local Management Company in a form
approved by Pearson and 19 TV;

 

4.2.4        agree
restrictions on that Artist’s appearances on television or ability to release
records for at least 3 months after transmission of the Programme or Series;

 

4.2.5        agree
to keep all aspects of the Programme or Series strictly confidential.

 

4.3           It is agreed that for
the United Kingdom:-

 

4.3.1        the
Local Record Company will be 19 Recordings Limited;

 

4.3.2        the
Local Merchandising and Sponsorship Company will be 19 Merchandising Limited;
and

 

4.3.3        the
Local Management Company will be 19 Management Limited.

 

4.4           It is agreed that for
the United States of America: -

 

*** FOIA Confidential Treatment

 

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4.4.1        the
Local Record Company shall be 19 Recordings Limited or its nominee;

 

4.4.2        the
Local Merchandising and Sponsorship Company shall be 19 Merchandising Limited
or its nominee;

 

4.4.3        the
Local Management Company shall be 19 Management Limited or its nominee.

 

4.5           It is agreed that for
each Relevant Territory outside the United Kingdom and the United States of
America:

 

4.5.1        the
Local Record Company shall be designated by 19 TV after consultation with
Pearson;

 

4.5.2        the
Local Merchandising and Sponsorship Company shall be a Pearson Associate or
such other company selected by mutual agreement between 19 TV and Pearson;

 

4.5.3        the
Local Management Company shall be selected by mutual agreement between 19 TV
and Pearson.

 

5.             Licence
of Programme Merchandise and Programme Sponsorship Rights

 

5.1           Pearson shall be
entitled to exploit Programme Merchandise in relation to Programmes or Series
made for transmission in the United Kingdom.

 

5.2           19 TV shall be entitled
to Programme Sponsorship rights in relation to Programmes or Series made for
transmission in the United Kingdom.

 

5.3           In each Relevant
Territory outside the United Kingdom Pearson or a Pearson Associate shall
exploit Programme Merchandise and Programme Sponsorship.  If Pearson or a Pearson Associate does not
wish to exploit such rights the identity of the third party to be granted such
rights shall be approved by 19 TV and the terms of such grant shall be approved
by 19 TV.

 

5.4           Pearson shall pay to 19
TV: -

 

5.4.1        ***%
of Net Receipts from exploitation of Programme Merchandise in the Programmes or
Series made for transmission in the United Kingdom;

 

5.4.2        ***%
of Net Receipts from exploitation of Programme Merchandise in Programmes or
Series made for transmission outside the United Kingdom;

 

5.4.3        ***%
of Net Receipts from exploitation of Programme Sponsorship in Programmes or
Series made for transmission outside the United Kingdom.

 

*** FOIA Confidential Treatment

 

8

 

5.5           19 TV shall pay to
Pearson ***% of Net Receipts from exploitation of Programme Sponsorship for
Programmes or Series made for transmission in the United Kingdom.

 

5.6           19 TV and Pearson shall
consult each other in relation to the negotiation of agreements with third
parties for Programme Sponsorship and Programme Merchandise.

 

5.7           Pearson acknowledge
that 19 TV may negotiate Programme Sponsorship agreements that include elements
of exploitation of Programme Merchandise or Internet Rights.  19 TV shall obtain Pearson’s approval (not to
be unreasonably withheld) of the contract and terms for such elements and the
Net Receipts from such elements will be divided in the appropriate shares
pursuant to this agreement.

 

6.             License
of Video Rights

 

6.1           The Video Rights for
Programmes or Series made for transmission in the United Kingdom and United
States of America are exclusively licensed to 19 TV.

 

6.2            The Video Rights for
Programmes or Series made for transmission in the Territory excluding the
United Kingdom and United States of America are exclusively licensed to
Pearson.

 

6.3            19 TV agree to pay to
Pearson ***% of Net Receipts from exploitation of Video Rights pursuant to 6.1
above.

 

6.4            Pearson agree to pay to
19 TV ***% of Net Receipts from exploitation of Video Rights pursuant to 6.2 above.

 

7.             Internet
Rights

 

7.1           Pearson will build all
Websites using the Domain Names at Pearson’s sole expense including the
building of the core site, versioning the core site for each Relevant Territory
and maintenance, updating and running costs for each Website.

 

7.2           The design of the core
site will be approved by 19 TV.

 

7.3           Pearson will pay to 19
TV ***% of Net Receipts from the operation of Websites.

 

8.             Telephony
Rights

 

8.1            Pearson
will have the exclusive right to exploit Telephony Rights throughout the
Territory.

 

8.2            Pearson
will pay to 19 TV ***% of Net Receipts from exploitation of Telephony Rights.

 

*** FOIA Confidential Treatment

 

9

 

9.             Winning
Artist Rights

 

9.1           19 TV agrees to procure
the payment to Pearson by 19 Recordings Limited or other Local Record Company
of a royalty of ***% of dealer price on records embodying Masters on the first
album or associated singles released by the Winning Artist (“First Album
Masters”) in the Relevant Territory.

 

9.2           19 TV agrees to procure
the payment to Pearson by 19 Recordings Limited or other Local Record Company
of a royalty on records embodying Masters (other than First Album
Masters).  The royalty will be ***% of
dealer price subject to 9.3 below.

 

9.3           The royalty payable to
Pearson pursuant to 9.2 above shall reduce pro rata if the Net Royalty payable
to 19 Recordings Limited is reduced from that payable on Masters embodied on
First Album Masters.

 

9.4           The royalties to
Pearson will be calculated and accounted on the same price and subject to the
same reductions, deductions and pro-rations as the royalty payable to 19
Recordings Limited by any record company or other entity undertaking the
distribution of records.  The royalties
will be paid to Pearson at the same time as the royalties payable to 19
Recordings Limited and will be subject to recoupment of advances to Winning
Artists, payments to producers, mixers or remixers, recording costs, video
costs, tour support and TV or radio advertising costs to the same extent as
recouped from the royalty payable to 19 Recordings.

 

9.5           19 TV agrees to procure
the payment to Pearson by 19 Recordings Limited or Other Local Record Company
of a pro rata share of any Net Advance received by 19 Recordings Limited.  The share shall be pro rata according to the
Net Royalty and the royalty payable to Pearson pursuant to 9.1 or 9.2 above (as
appropriate).

 

9.6           For the United Kingdom
and the United States of America, 19 Merchandising Limited and 19 Management
Limited shall be entitled to retain 100% of monies arising from the Artist
Merchandising and Sponsorship Agreements or Artist Management Agreements and
shall be under no obligation to account to Pearson or any Local TV Company for
any monies arising from exploitation of Artist Merchandise and Artist
Sponsorship rights or from management of Winning Artists.

 

9.7           For the Territory
outside the United Kingdom and United States of America, Pearson shall account
to 19 TV for ***% of monies received from the Local Merchandising and
Sponsorship Company or the Local Management Company. Pearson shall ensure that
the Local Merchandising and Sponsorship Company and the Local Management
Company shall be obliged to remit to Pearson at least ***% of such Company’s
net profits from rights in respect of the Winning Artist or Finalist.

 

9.8           19 TV agrees to procure
the payment to the broadcaster in the Relevant Territory of a royalty on First
Album Masters at the same rate and calculated on the same basis as the royalty
referred to in 9.1 above.

 

*** FOIA Confidential Treatment

 

10

 

10.           Distribution
of Finished Programmes

 

10.1          Pearson or a Pearson
Associate shall distribute all Programmes or Series produced.

 

10.2          Pearson shall account (or
shall procure that the Pearson Associate shall account) to the Format Owners
for ***% of revenues received after deduction “off the top” of a selling
commission of ***% of gross revenues, any share payable to a commissioning
broadcaster and any third party costs associated with the licence.

 

11.           Accounting
and Audit

 

11.1          Pearson will account to 19
TV for all sums due to 19 TV from Pearson as at 31 March, 30 June, 30 September
and 31 December in each year. Pearson will prepare reasonably detailed
accounting statements showing Gross Receipts and the calculation of Net
Receipts from Pearson’s (or Pearson’s associated company’s) exploitation of the
relevant rights.  Pearson will send such
statements to 19 TV within 45 days after each accounting date accompanied by
payment of sums shown to be due to 19 TV.

 

11.2          19 TV will account to
Pearson for all sums due to Pearson from 19 TV as at 31 March, 30 June, 30
September and 31 December in each year. 
19 TV will prepare reasonably detailed accounting statements showing
Gross Receipts and the calculation of Net Receipts from 19 TV’s exploitation of
the relevant rights.  19 TV will send
such statements to Pearson within 45 days after each accounting date
accompanied by payment of sums due to Pearson.

 

11.3          19 TV will have the right
to inspect Pearson’s (or Pearson’s associated company’s) books and records
insofar as they relate to the exploitation of rights in or production of
Programmes or Series.  Any such
inspection shall take place no more than once per year on reasonable prior
notice.

 

11.4          Pearson will have the
right to inspect 19 TV’s (or 19 TV’s associated company’s) books and records
insofar as they relate to the exploitation of rights in Programmes or
Series.  Any such inspection shall take
place no more than once per year on reasonable prior notice.

 

11.5          All payments from Pearson
to 19 TV or from 19 TV to Pearson are exclusive of VAT which shall be paid in
addition upon receipt of a valid VAT invoice.

 

12.           Consultation

 

Pearson and 19 TV shall at all times consult
each other in relation to the exploitation of their respective rights under
this agreement.

 

*** FOIA Confidential Treatment

 

11

 

13.           Miscellaneous

 

13.1         Either party may assign
this agreement and its rights in the Format to a parent, subsidiary or
associated company or to a person, firm or corporation purchasing all of that
party’s stock or assets.

 

13.2         The parties agree that
the provisions of this agreement are not intended to confer any rights of
enforcement on any third party.  The
Contracts (Rights of Third Parties) Act 1999 shall not apply to this Agreement
or to any of its provisions.

 

13.3          This agreement shall be
governed by and construed in accordance with the Laws of England and Wales and the
parties submit to the exclusive jurisdiction of the High Court of Justice in
England.

 

If the above correctly reflects your
understanding of our agreement please sign where indicated below.

 

	
  Yours faithfully

  	
  Accepted and Agreed

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Simon Fuller

  	
   

  	
   

  	
  /s/ 

  	
   

  
	
  for and on behalf of 19 TV Limited

  	
  for and on behalf of Pearson Television
  Operations BV

  
					

 

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