Document:

Exhibit 10.21

 

DATED 17 March, 2005

 

 

SIMON ROBERT FULLER

 

FULLER NOMINEES LTD

 

INGENIOUS VENTURES LTD

 

SPORTS ENTERTAINMENT ENTERPRISES, INC.

 

and

 

CKX UK HOLDINGS LIMITED

 

 

 

AGREEMENT

for the sale and purchase
of

the entire issued share
capital of

19 Entertainment Limited

 

 

 

Baker & McKenzie

 

London

Ref: TEDG/JTB/TAS

 

 

CONTENTS

 

	
  Clause

  	
   

  
	
   

  	
   

  	
   

  
	
  1.

  	
  Interpretation

  	
   

  
	
  2.

  	
  Sale and Purchase of
  Shares

  	
   

  
	
  3.

  	
  Consideration

  	
   

  
	
  4.

  	
  Completion

  	
   

  
	
  5.

  	
  Restrictive Covenants

  	
   

  
	
  6.

  	
  The
  Warrantors’ and Ingenious Warranties and Indemnity

  	
   

  
	
  7.

  	
  Purchasers’ Warranties

  	
   

  
	
  8.

  	
  Guarantee
  by CKX

  	
   

  
	
  9.

  	
  Time of the Essence

  	
   

  
	
  10.

  	
  Announcements

  	
   

  
	
  11.

  	
  Counterparts

  	
   

  
	
  12.

  	
  Further Assurance

  	
   

  
	
  13.

  	
  Variation, Waiver
  and Consent

  	
   

  
	
  14.

  	
  Rights and
  Remedies of the Parties

  	
   

  
	
  15.

  	
  Entire
  Agreement

  	
   

  
	
  16.

  	
  Default
  Interest

  	
   

  
	
  17.

  	
  Withholding and
  Grossing-Up

  	
   

  
	
  18.

  	
  Notices

  	
   

  
	
  19.

  	
  Costs

  	
   

  
	
  20.

  	
  Third Party Rights

  	
   

  
	
  21.

  	
  Continuing Effect

  	
   

  
	
  22.

  	
  Severability

  	
   

  
	
  23.

  	
  Liability and Release

  	
   

  
	
  24.

  	
  Assignment

  	
   

  
	
  25.

  	
  Currency
  Conversion and Euro/Substituted Lawful Currency

  	
   

  
	
  26.

  	
  Set
  Off

  	
   

  
	
  27.

  	
  Governing
  Law and Submission to Jurisdiction

  	
   

  
	
   

  	
   

  
	
  Schedule

  	
   

  
	
   

  	
   

  
	
  SCHEDULE 1

  	
   

  
	
  The Company, the Subsidiaries and the
  Sellers

  	
   

  
	
  Part 1: Details
  of the Company

  	
   

  
	
  Part 2: Details
  of the Subsidiaries

  	
   

  
	
  Part 3: Details
  of the Shareholding Companies

  	
   

  
	
  Part 4: The
  Sellers

  	
   

  
	
  Part 5: The
  Purchasers

  	
   

  
	
  SCHEDULE
  2

  	
   

  
	
  Part 1:
  Sellers’ Obligations at Completion

  	
   

  
	
  Part
  2: Sellers’ Further Obligations at Completion

  	
   

  
	
  Part 3:
  Purchasers’ Obligations at Completion

  	
   

  
	
  SCHEDULE
  3

  	
   

  
	
  Warranties

  	
   

  
	
  Part 1: General Warranties

  	
   

  
	
  Part 2: Employment
  Warranties

  	
   

  
	
  Part 3: IP & IT
  Warranties

  	
   

  
	
  Part 4: Pensions
  Warranties

  	
   

  
	
  Part 5: Property
  Warranties

  	
   

  
	
  Part 6: Tax Warranties

  	
   

  

 

 

	
  SCHEDULE 4

  	
   

  
	
  Ingenious Warranties

  	
   

  
	
  SCHEDULE 5

  	
   

  
	
  Limitations
  on the liability of the Warrantors under the Warranties

  	
   

  
	
  SCHEDULE 6

  	
   

  
	
  Purchasers’ Warranties

  	
   

  
	
  SCHEDULE 7

  	
   

  
	
  Limitations
  on the liability of the Purchasers under the Purchasers’ Warranties

  	
   

  
	
  SCHEDULE 8

  	
   

  
	
  Share Option Holders

  	
   

  
	
  SCHEDULE 9

  	
   

  
	
  Properties

  	
   

  
	
  Part
  1: Leasehold

  	
   

  
	
  Part
  2: Occupational Leases

  	
   

  
	
  Part
  3: Overseas Properties

  	
   

  
	
  SCHEDULE 10

  	
   

  
	
  Intellectual
  Property

  	
   

  
	
  Part
  1: Trade Marks

  	
   

  
	
  Part
  2: Pop Idol Trademarks

  	
   

  

 

 

DATE:  17 March 2005

 

PARTIES:

 

(1)                                  THE SEVERAL PERSONS whose respective names
and addresses are set out in column 1  of
part 4 of schedule 1 (together the “Sellers”);

 

(2)                                  CKX UK HOLDINGS LIMITED
a company incorporated under the laws of England and Wales with registered
number 5389449 and having its registered office at 100 New Bridge Street,
London EC4V 6JA (“CKXUK”); and

 

(4)                                  SPORTS ENTERTAINMENT
ENTERPRISES, INC a company incorporated in the state of Colorado and with its principal executive offices at 650 Madison Avenue, New York, New York 1022, USA (“CKX”, which expression shall include its successor if any).

 

RECITALS:

 

(A)                              The Sellers have agreed
to sell and CKX and CKXUK have agreed to purchase the Shares on the terms set
out in this agreement.

 

(B)                                CKXUK is a subsidiary of
CKX. CKX is a publicly traded US company and currently intends to merge with
and into CKX, Inc., a Delaware corporation, which will be its successor for all
purposes.

 

(C)                                Ingenious is the parent
company of Ingenious Ventures Limited, one of the Sellers under this agreement.

 

IT IS AGREED as follows:

 

1.                                      INTERPRETATION

 

1.1                                 Defined terms

 

In this agreement, the following words and expressions shall have
the following meanings:

 

“Accounting Date” means in relation
to any Financial Year of any member of the Group, the last day of that
Financial Year;

 

“Accounts” means in relation to any
Financial Year of any member of the Group:

 

(1)                                  the audited consolidated
balance sheet of the Group as at the Accounting Date in respect of that
Financial Year;

 

(2)                                  the audited consolidated
profit and loss account and cash flow statement of the Group in respect of that
Financial Year;

 

(3)                                  the audited balance
sheets of each member of the Group as at the Accounting Date in respect of that
Financial Year; and

 

(4)                                  the audited profit and
loss accounts and cash flow statements of each member of the Group in respect
of that Financial Year,

 

together in each case with all notes, reports and statements
required by law or Relevant Accounting Standards to be included in or annexed
to them;

 

“Business Day” means a day
(excluding Saturday) on which banks generally are open in the City of London
for the transaction of normal banking business;

 

4

 

“Beneficiary” means the beneficiary
of the Shares owned by Fuller Nominees;

 

“Beneficiary Guarantee Deed” means
the deed of guarantee in the agreed form between the Beneficiary and the
Purchasers;

 

“Beneficiary  Put and Call
Option Agreement” the lock-in and put and call option agreement in
the agreed form between the Beneficiary and CKX;

 

“CA85” means the Companies Act
1985;

 

“CHAPS” means the clearing houses
automated payment system or any other method of electronic transfer for
same-day value;

 

“CKX Group” means the group of
companies comprising CKX , any holding company from time to time of CKX and any
subsidiary of CKX (including, following Completion, any member of the Group) or
of any such holding company and “member of the CKX Group”
shall be construed accordingly;

 

“Claim” means any claim made by the Purchasers against any or all of the Sellers
under this agreement or the Tax Deed including in particular (but without
prejudice to the generality of the foregoing) any claim for breach of the
Warranties or under the Tax Deed;

 

“Companies Acts” means CA85, Part V
of the Criminal Justice Act 1993, the Companies Consolidation (Consequential
Provisions) Act 1985 and the Companies Act 1989;

 

“Company” means 19 Entertainment
Limited, a private company limited by shares and incorporated in England and
Wales, short particulars of which are set out in part 1 of schedule 1;

 

“Completion” means completion of
the sale and purchase of the Shares in accordance with clause 4;

 

“Completion Date” means the date
upon which Completion takes place;

 

“Confidential Information” means
know-how, trade secrets and other information of a confidential nature wherever
in the world enforceable (including, without limitation, all proprietary
technical and commercial information and techniques in whatever form held, such
as paper, electronically stored data, magnetic media film and microfilm or
orally);

 

“Consideration” means the sum of
the Initial Consideration, the Deferred Consideration, the total Option Share
Initial Consideration and the total Option Share Deferred Consideration;

 

“Continuing Director” means Simon Robert Fuller, being
one of the Directors;

 

“Continuing Director’s Employment Contract”
means the service agreement in the agreed form between the Company and Simon
Robert Fuller;

 

“Data Room” means the
data room maintained at and by the Sellers Solicitors (including replies to
enquiries supplied to the Purchaser or its advisers by or on behalf of the
Sellers);

 

“Deferred Consideration” means the
amount of £17,630,879 payable in accordance with clause 3.4;

 

“Deferred Consideration Payment Date”
means the earlier of (i) the 30th day after the accounts of the
Group for the Financial Year ended 30 June 2005 have been completed and
audited in accordance with Part VII of the CA85 (unless such day is not a
Business Day in which case it shall be the next Business Day after such 30th
day) and (ii) 30 December 2005;

 

5

 

“Deferred Consideration Shares”
means such number (if any) of shares of common stock in CKX to be issued
pursuant to clause 3.4;

 

“Deferred Issue Price”
means the average closing price per share of common stock in CKX quoted on Nasdaq
calculated based on the 5 Trading Days prior to the Deferred Consideration
Payment Date;

 

“Directors” means the persons
listed as directors of the Company and each Subsidiary in parts 1 and 2 of
schedule 1;

 

“Disclosed” means fairly disclosed
to an appropriate level of detail by the Disclosure Letter (in the case of the
Warrantors) or by the Purchasers’ Disclosure Letter (in the case of the
Purchasers) as the case may be and “Disclosure”
shall be construed accordingly;

 

“Disclosure Letter” means the letter
in the agreed form of the same date as this agreement (including the contents
of any schedule or appendix thereto) from the Warrantors to the Purchasers
together with all documents annexed to it;

 

“Encumbrance” means any Security
Interest, Pre-emption Right, restriction, assignment, hypothecation, or any
other interest, equity or other right of any person, or any agreement or
arrangement to create any of the same and “Unencumbered”
shall be construed accordingly;

 

“Equity Offering”
means any public sale or offering of equity securities in CKX in excess of
US$40,000,000;

 

“Escrow Account” means a separate
interest bearing account to be opened by the Escrow Agent in the circumstances
specified in clause 3.8(c) to hold the Escrow Deposit;

 

“Escrow Agent” means such Escrow
Agent as shall be jointly agreed upon by the Warrantors and the Purchasers or,
if no such Escrow Agent is agreed between the parties within 5 Business Days of
such appointment being required under clause 3.8, such Escrow Agent shall be such
person as shall be appointed by the President for the time being of the Law
Society in England and Wales on the application of either the Purchasers or the
Warrantors;

 

“Existing Ingenious Consulting Agreement”
means the consulting agreement entered into between 19 Entertainment Limited
(then called 19 Management Limited) and Ingenious Media Consulting Limited on
15 August 2001;

 

“Financial Year” shall be construed
in accordance with s223 CA85;

 

“Fuller” means Simon Robert Fuller
of 19 The Mall, East Sheen, London SW14 7EN;

 

“Fuller Compromise Agreement” means
the compromise agreement, in agreed form, between Fuller and the Company;

 

“Fuller Nominees” means Fuller
Nominees Limited , a company incorporated under the laws of England and Wales
with registered number 4264633 and having its registered office at Hanover
House, 14 Hanover Square, London W1S 1HP;

 

“Fuller  Put and Call
Option Agreement” the lock-in and put and call option agreement in
the agreed form between Fuller and CKX;

 

“Group” means the group of
companies comprising the Company and the Subsidiaries and “member of
the Group” shall be construed accordingly;

 

“Ingenious Consulting Agreement”
means the new consulting agreement in the agreed form between Ingenious Media
Consulting Limited and the Company;

 

6

 

“Ingenious Group” means Ingenious,
its subsidiaries and holding companies and the subsidiary undertakings of such
holding companies from time to time, all of them and each of them as the
context admits;

 

“Ingenious” means Ingenious
Ventures Limited, a company incorporated under the laws of England and Wales
with registered number 4018420 and having its registered office at 12 New
Fetter Lane, London EC4A 1AG as manager of the Ingenious Ventures Limited
Partnership;

 

“Ingenious Warranties” means the
warranties given by Ingenious in Clause 6 and Schedule 4;

 

“Initial Consideration” means the
amount of £59,706,899 and the Initial Consideration Shares;

 

“Initial Consideration Shares”
means the number of shares of common stock in CKX calculated in accordance with
clause 3.2;

 

“Intellectual Property” means
rights in and in relation to Confidential Information, trade marks, service
marks, trade and business names, logos and get up (including any and all goodwill
associated with or attached to any of the same), domain names, patents,
inventions (whether or not patentable), designs, copyrights (including, without
limitation, rights in software), database rights, semi-conductor topography
rights, utility models and all rights or forms of protection having an
equivalent or similar nature or effect anywhere in the world, whether
enforceable, registered, unregistered or registrable (including, where
applicable, all renewals, extensions and applications for registration) and the
right to sue for damages for past and current infringement (including passing
off and unfair competition) in respect of any of the same;

 

“Intra-Group Guarantees” means all
guarantees, indemnities, counter-indemnities and letters of comfort of any
nature whatsoever (1) given to any third party by any member of the Group in
respect of a liability of the Sellers and/or as the context may require (2)
given to any third party by the Sellers in respect of a liability of any member
of the Group;

 

“Intra-Group Indebtedness” means
all borrowing or indebtedness in the nature of borrowing (including any
indebtedness for monies borrowed or raised under any bank or third party
guarantee, acceptance credit, bond, note, bill of exchange or commercial paper,
letter of credit, finance lease, hire purchase agreement, forward sale or
purchase agreement or conditional sale agreement or other transaction having
the commercial effect of borrowing and all finance, loan and other obligations
of a kind required to be included in the balance sheet of a company or other
entity pursuant to UK Relevant Accounting Standards) outstanding between any
member of the Group on the one hand and any of the Sellers and the Ingenious
Group on the other hand;

 

“Issue Price” means US$16.48, being
the average closing price per share of common stock in CKX quoted on Nasdaq
calculated based on the 5 Trading Days prior to the date of this agreement;

 

“Last Accounting Date” means 30
June 2004;

 

“Last Accounts” means the Accounts
of the Company in respect of the Financial Year ended on the Last Accounting
Date a true copy of which is annexed to the Disclosure Letter;

 

“Losses” includes, in
respect of any matter, event or circumstance, all demands, claims, actions,
proceedings, damages, payments, fines, penalties, losses (including direct,
indirect 

 

7

 

and consequential), costs (including legal costs), expenses
(including taxation), disbursements or other liabilities in any case of any
nature whatsoever;

 

“Management Accounts” means the
unaudited balance sheet of the Company and the unaudited consolidated balance
sheet of the Group as at 31 January 2005 and the unaudited profit and loss
account of the Company and the unaudited consolidated profit and loss account
of the Group for each of the monthly periods from 1 July 2004 to 31 January
2005 inclusive in the agreed form;

 

“Moral Rights” means the rights of
an author of a copyright literary, dramatic, musical or artistic work or a
director of a copyright film (“Work”) to be
identified as the author or director (as the case may be) of the Work, not to
have Work subjected to derogatory treatment and not to have a Work falsely
attributed to him as the author or director (as the case may be) in each case
wherever in the world enforceable;

 

“Nasdaq” means the National Market
System of The Nasdaq Stock Market Inc;

 

“Non-compete Agreement” means the
agreement, in the agreed form, relating to certain non-compete restrictions to
be entered into between Fuller and CKX;

 

“Option Shares” means the ordinary
shares of £0.01 in the share capital of the Company to be issued upon exercise
of the Share Options;

 

“Option Share Deferred Consideration”
means the aggregate deferred consideration payable to Share Option Holders
calculated in accordance with clause 3.6;

 

“Option Share Initial Consideration”
means the aggregate initial consideration payable to Share Option Holders
calculated in accordance with clause 3.5;

 

“Pearson Agreement” means the
agreement between 19 TV Limited and Pearson Television Operations B.V. (now known as Fremantle Media Operations BV) dated 6 July 2001 and
which has been assigned by Fremantle Media Operations B.V. to Fremantle Media
Limited as subsequently amended;

 

“Planning Acts” means the Town and
Country Planning Act 1990, the Planning (Listed Buildings and Conservation
Areas) Act 1990, the Planning (Hazardous Substances) Act 1990, the Planning
(Consequential Provisions) Act 1990 and the Planning and Compensation Act 1991
and any amendment or substitution of such act from time to time and the Rules,
Regulations and Orders made under them or continued by them as they apply from
time to time;

 

“Pre-emption Right”
means any right to acquire, option, right of first refusal or other right of
pre-emption or any agreement or legally binding arrangement to create any of
the same;

 

“Proceedings” means any
proceedings, suit or action arising out of or in connection with this
agreement;

 

“Properties” means the property or
properties short particulars of which are set out in schedule 9;

 

“Purchasers” means CKX and CKXUK;

 

“Purchasers’ Disclosure
Letter” means the letter in the agreed form of the same date as this
agreement (including the contents of any schedule or appendix thereto) from the
Purchasers to the Sellers together with all documents annexed to it;

 

8

 

“Purchasers’ Senior Management” means each of Robert F.X. Sillerman, Howard Tytel, Tom
Benson, Mitchell Slater and Kraig Fox

 

“Purchasers’ Solicitors” means
Baker & McKenzie of 100 New Bridge Street, London EC4V 6JA;

 

“Purchasers’ Warranties” the
warranties given by the Purchasers in clause 7 and schedule 6;

 

“Relevant Contracts”
means (i) the Pearson Agreement; (ii) the agreement dated 22 April 2002 as subsequently
amended between Fox Broadcasting Company, Fremantle Media North America, Inc.
and 19 TV Limited relating to the production by Fremantle Media North America
Inc. and the licensing by Fremantle Media North America Inc. and 19 TV Limited
of episodes of American Idol; and (iii) the agreement dated 8 February 2002
between 19 Recordings Limited and Ronagold Limited as amended by notices
relating to specific territories and the amendment agreement and settlement
agreement dated 14 October 2004;

 

“Registration Rights Agreement”
means the registration rights agreement, in the agreed form, between CKX,
Fuller and Fuller Nominees;

 

“Relevant Accounting Standards”
means, in relation to any Accounts or Management Accounts or any balance sheet
or profit and loss account of any company or other entity, any of the following
in force on the relevant Accounting Date or the date of those Management
Accounts, such balance sheet or profit and loss account, namely any applicable
Statement of Standard Accounting Practice, Financial Reporting Standard, Urgent
Issues Task Force Abstract or Statement of Recommended Practice issued by the
UK Accounting Standards Board (or any successor body) or any committee of it or
body recognised by it and, to the extent that any member of the Group is not
required to comply with any of the foregoing, the relevant accounting standards
applicable to that member of the Group;

 

“SEC” means the Securities and
Exchange Commission;

 

“Security Interest”
means any mortgage, charge, pledge, lien, title retention, sale and leaseback
arrangement or any other agreement or arrangement having the effect of
conferring security;

 

“Sellers’ Solicitors” means
Harbottle & Lewis LLP of Hanover House, 14 Hanover Square, London, W1S 1HP;

 

“Senior Management” means each of
Simon Robert Fuller, Paul Nicholas Bedford, Patrick Anthony McKenna, Andrew
Ronald Stinson, Sanjay Wadhwani, Tom Manwaring and Charles Garland;

 

“Service Document” means a document
relating to or in connection with any Proceedings;

 

“Shares” means the entire issued
share capital of the Company as shown in part 1 of schedule 1;

 

“Share Options” means the options
granted under the Option Agreements entered into between the Company and the
Share Option Holders;

 

“Share Option Holders” means the
persons holding options over the unissued shares in the share capital of the
Company pursuant to the Share Options as listed at schedule 8;

 

“Share Option Exercise Form” means
the irrevocable option exercise form in the agreed form;

 

9

 

“Shareholding Companies” means
those companies whose names are listed in part 3 of schedule 1;

 

“Subsidiaries” means the companies
details of which are given in part 2 of schedule 1 and any reference to a
Subsidiary is a reference to any of them;

 

“Tax” has the meaning given to that
term in the Tax Deed;

 

“Tax Authority” has the meaning
given to that term in the Tax Deed;

 

“Tax Deed” means the deed relating
to Tax in the agreed form;

 

“Taxes Act” means the Income and
Corporation Taxes Act 1988;

 

“Trading Day” means a day on which
Nasdaq is open for the transaction of business;

 

“Transaction Documents” means this
agreement, the Tax Deed, the Disclosure Letter, the Purchasers’ Disclosure
Letter the Continuing Director’s Employment Contract, Fuller Compromise
Agreement, the Ingenious Consulting Agreement, the Fuller Put and Call Option
Agreement, the Beneficiary Put and Call Agreement, the Beneficiary Guarantee
Deed,  the Non-compete Agreement, the Registration
Rights Agreement and the Share Option Exercise Form;

 

“VATA” means the Value Added Tax
Act 1994;

 

“Warranties” means the warranties
given in clause 6 and schedule 3; and

 

“Warrantors” means Fuller and
Fuller Nominees.

 

1.2                                 Statutory provisions

 

All references to statutes, statutory provisions, enactments, EU
Directives or EU Regulations shall include references to any consolidation,
re-enactment, modification or replacement of the same, any statute, statutory
provision, enactment, EU Directive or EU Regulation of which it is a consolidation,
re-enactment, modification or replacement and any subordinate legislation in
force under any of the same from time to time except to the extent that any
consolidation, re-enactment, modification or replacement enacted after the date
of this agreement would extend or increase the liability of any party to
another under this agreement.

 

1.3                                 Holding company and
subsidiary

 

A company or other entity shall be a “holding
company” for the purposes of this agreement if it falls within
either the meaning attributed to that term in ss736 and 736A CA85 or the
meaning attributed to the term “parent undertaking”
in s258 CA85, and a company or other entity shall be a “subsidiary”
for the purposes of this agreement if it falls within either the meaning
attributed to that term in ss736 and 736A CA85 or the meaning attributed to the
term “subsidiary undertaking” in s258 CA85,
and the terms “subsidiaries” and “holding companies” are to be construed accordingly.

 

1.4                                 Agreed form

 

Any reference to a document in the “agreed form”
is to the form of the relevant document in the terms agreed between the Sellers
and the Purchasers prior to the execution of this agreement.

 

10

 

1.5                                 Recitals, schedules,
etc.

 

References to this agreement include the recitals and schedules
which form part of this agreement for all purposes.  References in this agreement to the parties,
the recitals, schedules and clauses are references respectively to the parties
and their legal personal representatives, successors and permitted assigns, the
recitals and schedules to and clauses of this agreement.

 

1.6                                 Meaning of references

 

Save where specifically required or indicated otherwise:

 

(a)                                  words importing one
gender shall be treated as importing any gender, words importing individuals
shall be treated as importing corporations and vice versa, words importing the
singular shall be treated as importing the plural and vice versa, and words
importing the whole shall be treated as including a reference to any part
thereof;

 

(b)                                 references to a person
shall include any individual, firm, body corporate, unincorporated association,
government, state or agency of state, association, joint venture or
partnership, in each case whether or not having a separate legal personality.  References to a company shall be construed so
as to include any company, corporation or other body corporate wherever and
however incorporated or established;

 

(c)                                  references to the word “include” or “including” (or
any similar term) are not to be construed as implying any limitation and
general words introduced by the word “other” (or any
similar term) shall not be given a restrictive meaning by reason of the fact
that they are preceded by words indicating a particular class of acts, matters
or things;

 

(d)                                 references to any
English statutory provision or legal term for any action, remedy, method of
judicial proceeding, legal document, legal status, court, official or other
legal concept, state of affairs or thing shall in respect of any jurisdiction
other than England be deemed to include that which most nearly approximates in
that jurisdiction to the English statutory provision or legal term or other
legal concept, state of affairs or thing;

 

(e)                                  any reference to “writing” or “written”
includes any method of reproducing words or text in a legible and
non-transitory form but, for the avoidance of doubt, shall not include e-mail;

 

(f)                                    references to “indemnify” and to “indemnifying”
any person against any Losses by reference to any matter, event or circumstance
includes indemnifying and keeping that person indemnified against all Losses
from time to time made, suffered or incurred as a direct or indirect
consequence of or which would not have arisen but for that matter, event or
circumstance;

 

(g)                                 references to “sterling” or “£” or “pounds” are to the lawful currency of the United Kingdom as
at the date of this agreement. 
References to “Euro” or “€” are to the single currency of the European Union
constituted by the Treaty on European Union; and

 

(h)                                 references to times of
the day are to that time in London and references to a day are to a period of
24 hours running from midnight to midnight.

 

11

 

1.7                                 Headings

 

Clause and paragraph headings and the table of contents are
inserted for ease of reference only and shall not affect construction.

 

1.8                                 Connected persons

 

Section 839 Taxes Act is to apply to determine whether one person
is connected with another for the purposes of this agreement.

 

1.9                                 Awareness

 

(a)                                 Where any statement is
qualified by the expression “to the best of the knowledge of the Warrantors” or
“so far as the Warrantors are aware” or any similar expression, the Warrantors
shall be deemed to have knowledge of:

 

(i)                                     anything of which the
Warrantors have actual knowledge; and

 

(ii)                                      anything of which they
would have had knowledge had they made due and careful enquiry of the Senior
Management immediately before giving the statement.

 

(b)                                 Where any statement is
qualified by the expression “to the best of the knowledge of the Purchasers” or
“so far as the Purchasers are aware” or any similar expression, the Purchasers
shall be deemed to have knowledge of:

 

(i)                                     anything of which the
Purchasers have actual knowledge; and

 

(ii)                                  anything of which they
would have had knowledge had they made due and careful enquiry of the
Purchasers’ Senior Management immediately before giving the statement.

 

2.                                      SALE AND
PURCHASE OF SHARES

 

2.1                                 Sale and purchase of
Shares

 

(a)                                  Each Seller shall at
Completion sell (relying on the Purchasers’ Warranties and the other
obligations of the Purchasers under this agreement) and the Purchasers in the
proportions shown in column 2(a) of Part 4 of schedule 1 (relying on the
Warranties and Ingenious Warranties) and the other obligations of the Sellers
under this agreement) shall purchase the entire legal and beneficial ownership
in the Shares listed against that Seller’s name in column 2 of part 3 of
schedule 1 with the rights and subject to the restrictions attaching to those
Shares in the articles of association of the Company but otherwise free from
all Encumbrances.

 

(b)                                 Each Seller covenants
with the Purchasers that he/it has now and at all times up to and at Completion
shall have full power and the right to sell and transfer the legal and
beneficial title in the Shares listed against that Seller’s name in column 2 of
part 4 of schedule 1 on the terms set out in this agreement.

 

2.2                                 Rights attaching to the
Shares

 

The Shares shall be sold together with all rights now or hereafter
attaching to them, including all rights to any dividend or other distribution
declared, made or paid after the date of this agreement.

 

12

 

2.3                                 Waiver of restrictions
on transfer

 

Each Seller hereby irrevocably waives and agrees to procure the
waiver of any restrictions on transfer (including rights of pre-emption) which
may exist in relation to the Shares or the Option Shares, whether under the
articles of association of the Company or otherwise.

 

2.4                                 Purchase of the Option
Shares

 

Each of the Sellers undertake to take all reasonable steps to
procure execution by the Share Option Holders of the Share Option Exercise
Forms in each case prior to Completion and each of the Purchasers undertake to
take all reasonable steps to procure execution of the Share Option Exercise
Forms in each case and agrees to acquire the Option Shares on the terms of the
Share Option Exercise Forms.

 

2.5                                 Sale of all the Shares
and Option Shares

 

The Purchasers shall not be obliged to complete the purchase of
any of the Shares and Option Shares unless the sale of all the Shares is
completed simultaneously in accordance with this agreement and the Option
Exercise Forms.

 

2.6                                 Title to the shares in
the Subsidiaries

 

Each Seller covenants with the Purchasers that the Shares
represent the entire issued and allotted share capital of the Company and the
Company is (or a Subsidiary is) the sole legal and beneficial owner of the
relevant shares in the issued share capital of each of the 19 TV Limited, 19
Merchandising Limited, 19 Recordings Limited and 19 Touring LLC free from all
Encumbrances.

 

3.                                      CONSIDERATION

 

3.1                                 Total price

 

The total price for the Shares to be paid by the Purchasers to the
Sellers and the Share Option Holders shall be the Consideration.

 

3.2                                 Calculation of Initial
Consideration Shares

 

The number of Initial Consideration Shares shall be such number of
shares of common stock in CKX as shall at the Issue Price have a value in
aggregate of £14,443,016 on the Completion Date.

 

3.3                                 Satisfaction of Initial Consideration

 

The Initial
Consideration shall be satisfied by the allotment and issue of the Initial
Consideration Shares by CKX to Fuller and Fuller Nominees in the proportions
set out in column 3 of part 4 of schedule 1 and the payment of £59,706,899 in
cash in the proportions shown in column 3 of part 4 of schedule 1 by the
Purchasers to the Sellers on the basis and to the extent indicated in column 3
of part 4 of schedule 1. No fraction of an Initial Consideration Share shall be
allotted or issued to the Sellers and the number of Consideration Shares shall
be rounded to the nearest whole number.

 

3.4                                 Calculation and satisfaction of Deferred Consideration

 

(a)                                  The Deferred Consideration shall be equal to £17,630,879 to be
satisfied by payment in cash (subject to clause 3.4(b) to (e) below) by the
Purchasers in the proportions shown in column 2(b) of part 5 of schedule 1 to
the Sellers in the proportions indicated in column 4 of part 4 of schedule 1 on
the Deferred Consideration Payment 

 

13

 

Date, 
PROVIDED THAT the Purchasers shall not have notified the
Sellers and/or Warrantors in writing of a Claim in good faith.  If by such time such a Claim shall have been
so notified, the provisions of clause 3.8 shall apply.

 

(b)                                 Fuller may, by notice in writing to the Purchasers
at least 5 Business Days before the Deferred Consideration Payment Date,
specify that the Deferred Consideration (but not some of it) due to Sellers
(other than Ingenious Ventures) should be satisfied by the allotment and issue
by CKX of such number of Deferred Consideration Shares at the Issue Price as
are equal to the total amount of the Deferred Consideration payable to the
Sellers (other than Ingenious Ventures) (the “Deferred
Share Notice”).  In which
event, the Purchasers may, in their absolute discretion, by notice in writing to Fuller
at least 2 Business Days prior to the Deferred Consideration Date, specify
that, notwithstanding the Deferred Share Notice, the Deferred Consideration due
to the Sellers (other than Ingenious Ventures) shall be settled in cash.  No fraction of a Deferred Consideration Share
shall be allotted or issued and the number of Deferred Consideration Shares
shall be rounded to the nearest whole number.

 

(c)                                  In the event that CKX has not, on or before 30 June 2005, completed
an Equity Offering, and Fuller shall not have elected to receive the Deferred
Consideration in the form of Deferred Consideration Shares in accordance with
clause 3.4(b) above, the Purchasers may, in their absolute discretion, by
notice in writing to the Sellers at least 2 Business Days prior to the Deferred
Consideration Payment Date, specify that the Deferred Consideration shall be
settled by the allotment and issue by CKX of such number of Deferred
Consideration Shares at the Deferred Issue Price as are equal to the total
amount of the Deferred Consideration payable to the Sellers (including
Ingenious), provided that any Deferred Consideration Shares received by the
Sellers in connection with this clause 3.4(c) shall be fully registered with
the SEC, (which rights shall be in addition to and not in replacement of the
rights set out in the Registration Rights Agreement) freely tradeable and shall
not be subject to the Fuller Put and Call Option Agreement or the Beneficiary
Put and Call Option Agreement.

 

(d)                                 If one or more of the Sellers (including Ingenious) holding in
excess of 50% of the Deferred Consideration Shares received under clause 3.4(c)
above intend to transfer in excess of 50% of such Deferred Consideration Shares
at any time before 1 January 2006, such Sellers (the ‘‘Selling Shareholders’’) shall, by the
notice in writing to the Purchasers, notify the Purchasers of such intention
and specify the number of such Deferred Consideration Shares they intend to
transfer (the “Sale Notice”).  The Purchasers may, within 5 Business Days of
receipt of a Sale Notice specify, by notice in writing to the relevant Seller
or Sellers, that they shall only sell such Deferred Consideration Shares
through the underwriting services of a reputable underwriting firm of the
Purchasers’ choice. All expenses, other than underwriting discounts and commissions relating
to the registration of any Deferred
Consideration Shares, incurred in connection with registrations, filings or qualifications
pursuant to clause 3.4(c) and (d), including, without limitation, all
registration, filing and qualification fees, printers’ and accounting fees,
fees and disbursements of counsel for CKX, and the reasonable fees and
disbursements of one counsel for the Sellers, shall be borne by CKX.

 

(e)                               In the event that the price per Deferred Consideration Share received
by the Selling Shareholders upon such a sale in accordance with Section 3.4(d)
above shall be less than the Deferred Issue Price, the Purchasers shall be
required, within ten (10) days following the date of such sale, to pay to the
Selling Shareholders, by delivery of cash an amount equal to the shortfall per
share in respect of each such Deferred Consideration Share.

 

14

 

3.5                                 Calculation of Option
Share Initial Consideration

 

The Option Share Initial Consideration shall be £4,798,701 and
such number of shares of common stock in CKX as shall at the Issue Price have a
value of £1,683,384 on the Completion Date.

 

3.6                                 Calculation of Option Share Deferred Consideration

 

The Option
Share Deferred Consideration shall be equal to £1,537,121.  The Option Share Deferred Consideration shall
be settled in cash or shares of common stock in CKX in accordance with and on
the same basis as the Deferred Consideration due to the Sellers (other than
Ingenious Ventures).

 

3.7                                 Satisfaction of the Option Share Initial Consideration and Option
Share Deferred Consideration

 

The Option
Share Initial Consideration and the Option Share Deferred Consideration shall
be satisfied in accordance with the terms of the Share Option Exercise Form
and, in the case of the cash element of such payments in such proportions as
shown in column 2(b) of part 4 of schedule 1.

 

3.8                                 Deferred Consideration settlement in the event of a Claim:

 

(a)                                  If a Claim is so notified and is settled or otherwise determined (as
defined below) prior to the Deferred Consideration Payment Date, there shall be
deducted pro-rata from the Deferred Consideration payable to the Seller(s) in
respect of whom the relevant Claim could have been made against an amount equal
to the amount of the Claim (as so settled or determined) in satisfaction of the
relevant liability or, if the aggregate amount of Deferred Consideration
payable to the Seller(s) in respect of whom the relevant Claim could have been
made against is less than the amount of the Claim (as so settled or
determined), the aggregate amount of the Deferred Consideration payable to the
Seller(s) in respect of whom the relevant Claim could have been made against
will be credited towards satisfaction of the relevant liability.

 

(b)                                 If a Claim is so notified prior to the Deferred Consideration
Payment Date but such Claim is not settled or otherwise determined prior to
such date, then within 10 Business Days of such date the Purchasers shall notify the relevant Sellers in writing of its good faith
estimate of the amount of such Claim such notice to be accompanied by the
written opinion of Counsel of not less than 10 years’ call to the effect that
the Purchasers have, in Counsel’s opinion, a valid basis for asserting the
Claim and have a reasonable prospect of succeeding on the Claim to the extent
of the amount so estimated or, if less, the amount stated in the opinion.  If no opinion is served within this time then
the Purchaser shall forfeit its entitlement to delay payment of the Deferred
Consideration to the relevant Seller(s) pursuant to this Clause 3.8.  Subject to receipt by the relevant Sellers of
such notice and opinion within such period, there shall be retained pro rata
from the Deferred Consideration an amount equal to the lesser of (i) the amount
so estimated or stated and (ii) the aggregate amount of the Deferred
Consideration payable to the Seller(s) in respect of whom the relevant Claim
could have been made against (the lesser of (i) and (ii), the “Escrow Deposit”).  The
balance, if any, (subject to any adjustments in accordance with clause 3.8(a)
above) shall be paid to the relevant Sellers pro rata to their entitlement to
the same on the Deferred Consideration Payment Date.

 

(c)                                  If a Claim is so notified prior to the Deferred Consideration
Payment Date but such Claim is not settled or otherwise determined prior to
such date, then on such date the Escrow Deposit shall be deposited by the Purchasers into the Escrow Account to be 

 

15

 

operated in accordance with clause 3.8(d)
below until such Claim or Claims is or are settled or otherwise determined.

 

(d)                                 The Purchasers and Sellers agree that:

 

(i)                                     No amount shall be released from the Escrow
Account except as provided in this clause 3.8. 
As soon as practicable after any Claim is
settled or otherwise determined (but in any event no more than 5 Business Days
thereafter), the Purchasers and Sellers shall instruct the Escrow Agent to
release the Escrow Deposit in accordance with clauses 3.8(d) and 3.8(e).

 

(ii)                                  Any bank or other charges arising on the Escrow
Account shall be charged to the Escrow Account.

 

(iii)                               Any interest or profit accruing to the Escrow
Account (subject to any deduction of tax at source and any bank or other charges
properly charged to the Escrow Account) shall be retained in the Escrow
Account.  Each time funds are paid out of
the Escrow Account such funds shall have added to them the corresponding
proportion of the interest and profit accrued to the Escrow Account (subject to
any deductions as above).

 

(iv)                              The Escrow Deposit shall be held by the Escrow Agent for the benefit of
the Sellers and the Purchasers and on the terms set out in this clause 3.8(d).

 

(v)                                 The Purchasers and Sellers shall direct the Escrow Agent to maintain
a ledger (the “Escrow Ledger”) setting forth (i) all income or other items earned on and
distributions from or other items charged against the Escrow Account and (ii)
with respect to any distribution pursuant to this agreement, the provision of
this agreement pursuant to which such distribution has been made.  The Purchasers and
Sellers shall each have access to the Escrow Ledger from time to time during
business hours.

 

(e)                                  On settlement or other determination of any such Claim there shall
be deducted from the Escrow Account an amount equal to the amount of the
Claim(s) (as so settled or determined) in satisfaction of the relevant
liability or, if the aggregate amount in the Escrow Account is less than the
amount of the Claim(s) (as so settled or determined), the total amount in the
Escrow Account shall be credited towards satisfaction of the relevant
liability.  Once all such Claims have
been settled or otherwise determined, any remaining balance (if any) of the
Escrow Account (subject to any adjustments in accordance with clause 3.8(a)
above) shall be paid to the relevant Seller(s) pro rata to their entitlement to
Deferred Consideration on the later of (i) the Deferred Consideration Date and
(ii) the earliest practicable Business Day after the date on which all such
Claims have been settled or otherwise determined.  In the event that a Deferred Share Notice
shall have been accepted by the Purchasers in accordance with clause 3.4(b),
such payment to the Sellers (other than Ingenious Ventures) shall be satisfied
by the issue of Deferred Consideration Shares in accordance with clause 3.4(b)
and after full satisfaction thereof the cash held in the Escrow Account in
respect of the payment of Deferred Consideration to such relevant Sellers shall
be released to the Purchasers.

 

(f)                                    For the avoidance of doubt nothing contained in this clause 3.8
shall prejudice the right of the Purchasers to recover against any Seller
in respect of any Claim (whether such Claim is made before or after the
Deferred Consideration Payment Date) otherwise than in accordance with the
provisions of this clause 3.8.

 

16

 

3.9                                 Off- Set of Initial
Consideration Shares and Deferred Consideration Shares

 

(a)                                  The Purchasers agree with
each of the Warrantors that if a Claim or Claims against either or both of the
Warrantors are settled or determined then upon written notice by the Warrantors (exercisable in their sole and absolute
discretion) to
the Purchasers within ten Business Days of the day the Claim is settled or
determined each of the Warrantors shall be entitled to satisfy the
Claim (as so settled or determined) in whole or in part
by transferring back to CKX for nil consideration such number of the Initial
Consideration Shares and the Deferred Consideration Shares (if any) (the “CKX Shares”) as will at the Issue Price satisfy the relevant liability or specified part thereof in respect
of the Claim PROVIDED THAT each of
the Warrantors may only give notice with respect to such transfer or transfers
of CKX Shares in respect of a total in aggregate of 25% of the number of CKX
Shares received by him. For the avoidance of doubt nothing in this clause
3.9(a) shall prejudice the right of the Purchasers to recover against the
Sellers for the balance of any Claim or in any respect to any further Claims
subject to the limitations set out in schedule 5 and clauses 3 or 6 of the Tax
Deed.

 

(b)                                 Completion of the
transfer of the CKX Shares referred to in clause 3.9(a)  above shall take place at the offices of CKX
at 650 Madison Avenue, New York, New York 1022, USA at 10 am (NY time) on the
date that is the third Business Day after the service of the relevant notice
under clause 3.9(a).

 

(c)                                  At completion, Mr Fuller
shall deliver or procure the delivery to CKX of:

 

(i)                                     a duly executed transfer
or transfers in respect of the relevant CKX Shares in favour of CKX or such
person(s) as the CKX may direct;

 

(ii)                                  the share certificate(s)
representing the relevant CKX Shares; and

 

(iii)                               such other documents as
may be necessary to enable CKX or its nominee(s) to obtain a good title to the
relevant CKX Shares.

 

(d)                                 If for any reason Mr
Fuller fails to comply with the provisions of clause 3.9(c), CKX may, as the
attorney of Mr Fuller, execute a transfer or transfers of the CKX Shares to CKX
or to its order and/or direct the registered holder of the CKX Shares to
transfer the same to CKX or to its order.

 

(e)                                  Notwithstanding anything to the contrary set
forth in this agreement or in any of the other Transaction Documents, any
transfer of CKX Shares by the Warrantors to the Company pursuant to this clause
shall be a permitted transfer and shall not be subject to any restrictions
hereunder or thereunder.

 

(f)                                    For the purposes of clauses 3.8 and 3.9, “settlement”
shall mean an agreement in writing signed by or on behalf of the relevant
Sellers and the Purchasers in respect of one or more relevant Claims and a “determination” shall mean a judgement of the Supreme Court
in England and Wales or other court of competent jurisdiction and “settled” and “determined”
shall be construed accordingly.

 

4.                                      COMPLETION

 

4.1                                 Timing

 

Completion shall take place immediately after the signing of this
agreement.

 

17

 

4.2                                 Location

 

Completion shall take place at the offices of the Purchasers’
Solicitors when all (but not some only) of the events detailed in this clause 4
shall occur.

 

4.3                                 Sellers’ obligations at
Completion

 

At Completion, the Sellers shall:

 

(a)                                  deliver (or cause to be
delivered) to the Purchasers the items listed in part 1 of schedule 2 (the
Purchasers receiving those items, where appropriate, as agent of the Company);
and

 

(b)                                 procure that all
necessary steps have been taken properly to effect the matters listed in part 2
of schedule 2 at board meetings of the Company and each member of the Group and
deliver to the Purchasers duly signed minutes of such board meetings.

 

4.4                                 Purchasers’ obligations
at Completion

 

At Completion, the Purchasers shall do or deliver (or cause to be
delivered) to the Sellers the matters or items listed in part 3 of schedule 2.

 

4.5                                 Receipt of funds and
stock certificates

 

The Sellers hereby confirm that the Sellers’ Solicitors are
irrevocably authorised by the Sellers to receive:

 

(a)                                  the payment of the cash
elements of the Initial Consideration and Deferred Consideration on the
Sellers’ behalf and the receipt by the Sellers’ Solicitors shall be an absolute
discharge for the Purchasers who shall not be concerned to see to the
application thereof or be answerable for the loss or misapplication of such
sum; and

 

(b)                                 the share certificates
in respect of the Initial Considerations Shares and Deferred Consideration
Shares allotted and issued to any of the Sellers.

 

4.6                                 Failure to complete

 

Without prejudice to any other remedies available to any party, if
the provisions of clause 4.3 or 4.4 (as the case may be) are not complied with
in any respect on the Completion Date, the other parties shall not be obliged
to complete the sale or purchase of the Shares or pay any of the Consideration
(as appropriate) and the other parties may in their absolute discretion (in
addition and without prejudice to any other right or remedy available to it) by
written notice to the party in default:

 

(a)                                  defer Completion by a period
of not more than 28 days to such other date as it may specify in such notice
(and so that the provisions of this clause 4.6 shall apply to Completion as so
deferred);

 

(b)                                 waive all or any of the
requirements contained or referred to in clause 4.3 or 4.4 (as the case) may be
at its discretion (and without prejudice to its rights under this agreement)
and proceed to Completion so far as practicable; or

 

(c)                                  terminate this agreement
without liability on its part.

 

18

 

4.7                                 Effect of termination

 

All rights and obligations of the parties shall cease to have
effect immediately upon termination of this agreement save that:

 

(a)                                  clauses which are
expressed to survive its termination or expiry, or which from their nature or
context it is contemplated that they are to survive termination (including,
without limitation, clauses 10,18, 19, 20 and 26); and

 

(b)                                 any provision of this
agreement necessary for its interpretation or enforcement

 

shall continue in force following termination of this agreement
(for whatever reason) and further save that termination of this agreement (for
whatever reason) shall be without prejudice to the respective rights and
liabilities of each of the parties accrued prior to such termination.

 

4.8                                 No Waiver

 

If, notwithstanding the occurrence of any fact, matter or event
which would otherwise give rise to a right to terminate this agreement under
this clause 4, any party proceeds to Completion, the fact that they have
proceeded to Completion shall not constitute a waiver of any right or
entitlement of that party to make any claim under the Transaction Documents.

 

5.                                      RESTRICTIVE
COVENANTS

 

5.1                                 Restrictions of Fuller

 

Fuller covenants with each of the Purchasers and the Company (with
the intention of assuring to the Purchasers the full benefit and value of the
goodwill and connections of the Group and as a constituent part of the
agreement for the sale of the Shares) that, except with the consent in writing
of the Purchasers or in the proper performance of his duties under the
Continuing Director’s Employment Contract:

 

(a)                                  for the period of two
years after Completion, he will not within any country in which the Company or
any of the Subsidiaries is carrying on business at Completion or in any Relevant
Territory at the date of this agreement as defined in the Pearson Agreement
either on his own account or in conjunction with or on behalf of any other
person, carry on or be engaged, concerned or interested, directly or
indirectly, whether as shareholder, director, partner, agent or otherwise, in
carrying on any business which competes with the business carried on by the
Company or any of the Subsidiaries at Completion (other than as a holder of
shares in a company carrying on such a business where the shareholding is for
investment purposes only and does not confer any control over the business in
question) save that Fuller shall not be in breach of any of the restrictions
set out in this clause 5.1(a) or 5.1(f) by reason of his continued involvement
as a shareholder and director of Popworld Limited provided that Fuller is not
involved in the management or oversight of Popworld Limited.

 

(b)                                 for the period of two
years after Completion, he will not, either on his own account or in
conjunction with or on behalf of any other person, interfere or seek to
interfere with the continuance of supplies to the Company or any of the
Subsidiaries from any person who shall at any time within the 12 months
preceding Completion have been a supplier of goods or services to the Company
or any of the Subsidiaries;

 

(c)                                  for the period of two
years after Completion, he will not, either on his own account or in
conjunction with or on behalf of any other person, solicit or entice away or
attempt to solicit or entice away from any member of the Group, offer
employment to or 

 

19

 

employ
any person who is at Completion or who was at any time during the period of
twelve months immediately preceding Completion employed in a managerial,
supervisory, technical or sales capacity by, or engaged as a consultant to, any
member of the Group and who remains so employed or engaged immediately prior to
the relevant breach of this clause 5.1(c) (whether or not such person would
commit a breach of contract by reason of leaving such employment or
engagement);

 

(d)                                 he will not at any time
hereafter make use of or disclose or divulge to any person (other than to
officers or employees of any member of the Group whose province it is to know
the same) any Confidential Information relating to any member of the Group
unless:

 

(i)                                     required by law or any
governmental or regulatory body in any jurisdiction; or

 

(ii)                                  the relevant information
was or becomes in the public domain (other than by reason of a breach of this
clause by Fuller);

 

(e)                                  if, in connection with
the business or affairs of any member of the Group, he shall have obtained
Confidential Information belonging to any third party under an agreement
purporting to bind any member of the Group which contained restrictions on
disclosure, he will not without the previous written consent of the Purchasers
and, if appropriate, the relevant third party at any time infringe such
restrictions;

 

(f)                                    he will not at any time
hereafter in relation to any trade, business or company use a trade name, trade
or service mark, design or logo including the words “19”, “Pop Idol” or
“Idol” or any words confusingly similar thereto in such a way as to be capable
of or likely to be confused with any trade name, trade or service mark, design
or logo used by any member of the Group at Completion (whether registered or
not); and

 

(g)                                 for the period of two
years after Completion, he will not be involved in or concerned in any
television programme or with any artist or artists selected as part of a
television programme which competes with the Format (as defined in the Pearson
Agreement).  For the purposes of this
clause 5.1(g), it is understood that a programme competes with the Format if it
involves a search for a recording and/or song writing artist (whether an
individual artist or a group of more than one) and the making of commercial
recordings by that artist(s) or exploitation of songs written by that artist(s)
or the signature of a recording and/or publishing agreement by that artist(s).

 

5.2                                 Restrictions of
Ingenious

 

Ingenious
covenants with each of the Purchasers’ the Company, each member of the Group
and any other of the CKX Group (with the intention of assuring to the
Purchasers the full benefit and value of the goodwill and connections of the
Group and as a constituent part of the agreement for the sale of the Shares)
that, except with the consent in writing of the Purchasers, they will not and
they will procure that no member of the Ingenious Group shall:

 

(a)                                  for the period of two years after Completion, produce on its own
account any television programme utilising creative elements which are
substantially similar to the Format;

 

(b)                                 for the period of two years after Completion directly invest on is
own account in any business which at such time it knows does or intends to
produce a television programme with elements substantially similar to the
Format;

 

20

 

(c)                                  for a period of two years after Completion, knowingly permit any entity,
in circumstances where it can control the relevant activities of that entity,
in which it has an interest from promoting its affiliation with the Ingenious
Group’s affiliation with the Company and/or the Format but, for the avoidance
of doubt, Ingenious may, for the purposes of publicising its prior investment
and advisory credentials, mention in any of its own publications the fact that
it has previously been an investor in or advisor to the Company and the names
of television programmes with which the Group has been involved, or any such
factual matter about the Company that is in the public domain (but such
publicity may not include without the prior written consent of the Purchasers
and the Company use of any of the trademarks in which any member of the Group
has an interest). In publicising Ingenious’ prior investment credentials,
Ingenious may make reference to the history of its investment in the Group, the
timing of its investment and exit, and the IRR realised on the exit;

 

(d)                                 at any time hereafter in
relation to any trade, business or company use a trade name, trade or service
mark, design or logo including the word “19”, “Pop Idol” or “Idol” or any word
confusingly similar thereto in such a way as to be capable of or likely to be
confused with any trade name, trade or service mark, design or logo of any
member of the Group (whether registered or not).

 

5.3                                 Severance

 

Each of the restrictions contained in clauses 5.1(a) to 5.1(g) and
5.2(a) to 5.2(d) is separate and severable an91d in the event of any such
restriction being determined to be unenforceable in whole or in part for any
reason, that unenforceability shall not affect the enforceability of the
remaining restrictions or (in the case of restrictions unenforceable in part)
the remainder of that restriction.

 

5.4                                 Modification of
restrictions

 

While the restrictions contained in this clause 5 are considered
by the parties to be reasonable in all the circumstances, it is recognised that
restrictions of the nature in question may fail for technical reasons and
accordingly it is hereby agreed and declared that if any of such restrictions
shall be adjudged to be void as going beyond what is reasonable in all the
circumstances for the protection of the interests of the Purchasers but would
be valid if part of the wording thereof were deleted or the periods thereof
reduced or the range of activities or area dealt with thereby reduced in scope,
the said restriction shall apply with such modifications as may be necessary to
make it valid and effective.

 

5.5                                 Exception from
restrictions

 

The restrictions contained in clause 5.1 shall be without
prejudice to performance by and shall not limit the restrictions on the
Continuing Director under the terms of agreements entered into pursuant to this
agreement.

 

5.6                                 Acknowledgement

 

The Purchaser
and Sellers each acknowledge that, as a result of certain business
activities of the Group, which activities represent a small percentage of the
overall turnover of the Group, members of the Group may be deemed a Competitive
Company as such term is defined in that certain Non-Compete Agreement
dated as of 10 April 2001 by and among Clear Channel Communications, Inc., SFX
Entertainment, Inc., FXM, Inc. and Robert F.X. Sillerman, and that, from the
Completion Date until 1 August 2005 (inclusive), each of CKX and Mr. Sillerman,
in accordance with the terms of such non-compete agreement, will limit its or
his involvement with respect to such minor business activities to the
supervision of the financial, tax, accounting and similar non-operational
aspects thereof. During such period, Fuller agrees 

 

21

 

to assume
responsibility for the oversight of all other areas related to such business
operations.

 

6.                                      THE WARRANTORS’
AND INGENIOUS WARRANTIES AND INDEMNITY

 

6.1                                 Warranties of the
Warrantors

 

(a)                                  Each of the Warrantors
warrants jointly and severally to the Purchasers that, except as Disclosed,
each of the statements set out in schedule 3 will at Completion be true and
accurate and for the purposes of the Warranties, references in schedule 3
to the Company shall be deemed to include a reference to each of the
Subsidiaries.

 

(b)                                 For the purposes of this
clause 6.1(b), references in schedule 3 to the Company shall be deemed to
refer only to the Shareholding Companies. 
Each of the Warrantors warrants jointly and severally to the Purchasers
that, so far as they are aware, each of the statements set out in
schedule 3 will at Completion be true and accurate.

 

6.2                                 Warranties of Ingenious

 

Ingenious warrants to the Purchasers that each of the statements
set out in schedule 4 will at Completion be true and accurate.

 

6.3                                 Reliance upon the
Warranties

 

The Warrantors and Ingenious acknowledge that the Purchasers have
entered into this agreement on the basis of and in reliance upon (among other
things) the Warranties and the Ingenious Warranties and have been induced by
them to enter into this agreement.

 

6.4                                 Disclosures

 

No letter, document or other communication (whether or not in
writing) shall be deemed to constitute a Disclosure unless it is expressly
incorporated in or annexed to the Disclosure Letter.

 

6.5                                 Warranties separate

 

Each of the Warranties and Ingenious Warranties shall be separate
and independent and, save as expressly provided to the contrary in this
agreement, shall not be limited by reference to or inference from any other
Warranty or anything in the Transaction Documents.

 

6.6                                 Information supplied to
the Warrantors and Ingenious

 

The Warrantors and Ingenious shall not be entitled to raise as a
defence to a claim by the Purchasers under any of the Transaction Documents the
fact that they had relied on information provided to them by any member of the
Group or any of their officers, employees, workers or agents (including advisers).

 

6.7                                 No claim against the
Group or employees

 

The Warrantors and Ingenious hereby irrevocably waive any and all
claims against each member of the Group and any of its officers, employees,
workers and, in connection only with the sale of the Shares, its agents
(including advisers) and undertake (if any claim is made against any of them in
connection with the sale of the Shares to the Purchasers) not to make any claim
against or seek any contribution from any such person (and undertake that no
other person claiming under or through them will make any such claim or seek
any such contribution).

 

22

 

6.8                                 Information to be
provided by the Warrantors and Ingenious

 

The Warrantors and Ingenious shall give to the Purchasers and
their advisers after Completion all such reasonable information and
documentation relating to each member of the Group which is in their possession
or control at the relevant time as the Purchasers shall reasonably require to
enable it to satisfy itself as to the accuracy and due observance of the
Warranties (in the case of the Warrantors) and the Ingenious Warranties (in the
case of Ingenious).

 

6.9                                 Limitation on liability
of the Warrantors under the Warranties.

 

The liability of the Warrantors and Ingenious in respect of any
claim under the Warranties shall be limited as set out in schedule 5 and the
liability of the Warranties in respect of any claim under the Warranties set
out in part 6 of Schedule 3 (in relation to Tax) shall be further limited by
clauses 3 and 6 of the Tax Deed.

 

6.10                           Warrantors Indemnity to
Purchasers

 

(a)                                  The Warrantors hereby covenant with and
undertake to indemnify the Purchasers, 
the Company and all members of the Group fully on demand for themselves
and as trustee for their respective successors in title, officers, directors,
employees and agents and to keep them indemnified against any and all
liabilities and Losses incurred, suffered or sustained by them or asserted
against them, or any or all of them arising directly or indirectly out of any
existing arrangement or agreement (whether legally binding or not) which may
exist with Nigel Lythgoe relating to the acquisition by him of any interest in
any of the issued or unissued shares in 19 TV Limited or options, warrants or
any other right to subscribe for or acquire any such shares or an interest in
any such shares. It is acknowledged that the Warrantors do not believe any such
agreement or arrangement exists.

 

(b)                                 No matter disclosed against any of the
Warranties or any other knowledge (actual or constructive) on the part of the
Purchasers and no investigation by or on behalf of the Purchasers shall
prejudice any claim made by the Purchasers or affect or reduce any liability
arising under the indemnity in clause 6.10(a).

 

7.                                      PURCHASERS’
WARRANTIES

 

7.1                                 Each of the Purchasers
warrants jointly and severally to the Warrantors (and to Ingenious in respect
of paragraphs 2, 3, 4 and 5 of schedule 6 only) that:

 

(a)                                  except as Disclosed by
the Purchasers’ Disclosure Letter, each of the statements set out in schedule 6
will at Completion be true and accurate; and

 

(b)                                 they have no actual
knowledge of any facts, matters or circumstances as at Completion which may
give rise to a Claim under any of the Warranties or Ingenious Warranties except
that they shall not be deemed to have any knowledge of any matter set out or
referred to in the documents in the Data Room (unless, in respect only of the
Warranties, such matter has been Disclosed).

 

7.2                                 Reliance upon the
Purchasers’ Warranties

 

The Purchasers acknowledge that the Sellers have entered into this
agreement on the basis of and in reliance upon (among other things) the
Purchasers’ Warranties and have been induced by them to enter into this
agreement.

 

23

 

7.3                                 Disclosures

 

No letter, document or other communication (whether or not in
writing) shall be deemed to constitute a disclosure against any of the
Purchasers’ Warranties unless it is expressly incorporated in or annexed to the
Purchasers’ Disclosure Letter.

 

7.4                                 Purchasers’ Warranties
separate

 

Each of the Purchasers’ Warranties shall be separate and
independent and, save as expressly provided to the contrary in this agreement,
shall not be limited by reference to or inference from any other Purchasers’
Warranty or anything in the Transaction Documents.

 

7.5                                 Limitation on liability
of the Purchasers under the Purchasers’ Warranties.

 

The liability of the Purchasers in respect of any claim under the
Purchasers’ Warranties shall be limited as set out in schedule 7.

 

8.                                      GUARANTEE BY CKX

 

8.1                                 Guarantee

 

CKX irrevocably and unconditionally:

 

(a)                                  guarantees to the Sellers punctual performance by
CKXUK of all CKXUK’s obligations under the Transaction Documents;

 

(b)                                 undertakes with the Sellers that:

 

(i)                                     whenever CKXUK does not pay any amount when due under
or in connection with the Transaction Documents, CKX shall immediately on
demand pay that amount as if it was the principal obligor; and

 

(ii)                                  whenever CKXUK fails to perform any other obligation
under the Transaction Documents, CKX shall immediately on demand perform (or
procure performance of) and satisfy (or procure the satisfaction of) that
obligation,

 

so that the same benefits are conferred on
the Sellers as he or it would have received if such obligation had been
performed and satisfied by CKXUK; and

 

(c)                                  undertakes with the Sellers to indemnify the Sellers
immediately on demand against any Losses suffered by the Sellers:

 

(i)                                     in consequence of CKXUK’s failure to perform any of
its obligations under the Transaction Documents;

 

(ii)                                  if any obligation guaranteed by CKXUK is or becomes
unenforceable, invalid or illegal.

 

The amount of the Losses shall be equal to
the amount which the Sellers would otherwise have been entitled to recover.

 

8.2                                 Continuing guarantee

 

This guarantee is a continuing guarantee
and will extend to the ultimate balance of sums payable by CKXUK under the
Transaction Documents, regardless of any intermediate payment or discharge in
whole or in part.

 

24

 

8.3                                 Reinstatement

 

If any payment by CKXUK and/or CKX or any
discharge given by the Sellers (whether in respect of the obligations of CKXUK
and/or CKX or any security for those obligations or otherwise) is avoided or reduced
as a result of insolvency or any similar event:

 

(a)                                  the liability of CKX shall continue as if the payment
or discharge and avoidance or reduction had not occurred; and

 

(b)                                 the Sellers shall be entitled to recover the value or
amount of that security or payment from CKXUK, as if the payment, discharge,
avoidance or reduction had not occurred.

 

8.4                                 Waiver of defences

 

The obligations of CKX under this clause 8
will not be affected by any act, omission, matter or thing which, but for this
clause 8.4, would reduce, release or prejudice any of its obligations under
this clause 8 including (without limitation and whether or not known to it or
the Sellers):

 

(a)                                  any time, waiver or consent granted to, or composition
with, CKXUK or any other person;

 

(b)                                 the release of CKXUK or any other person under the
terms of any composition or arrangement with any creditor of CKXUK;

 

(c)                                  the taking, variation, compromise, exchange, renewal
or release of, or refusal or neglect to perfect, take up or enforce, any rights
against, or security over assets of, CKXUK or other person or any
non-presentation or non-observance of any formality or other requirement in
respect of any instrument or any failure to realise the full value of any security;

 

(d)                                 any incapacity or lack of power, authority or legal
personality of, or dissolution or change to, the CKXUK or any other person or
to the members or status of CKXUK or any other person;

 

(e)                                  any amendment (however fundamental) or replacement of
any of the Transaction Documents or any other document or security;

 

(f)                                    any unenforceability, illegality or invalidity of any
obligation of any person under any of the Transaction Documents or any other
document or security; or

 

(g)                                 any insolvency or similar proceedings.

 

8.5                                 Change in status

 

The obligations of CKX under this clause 8
will remain binding upon it notwithstanding any change in the constitution of
any of CKXUK, CKX or the Sellers or their absorption in, amalgamation with or
merger into, or the acquisition of all or part of its or their undertaking by,
any other person.

 

8.6                                 Immediate recourse

 

CKX waives any right it may have of first
requiring the Sellers to proceed against or enforce any other rights or
security or claim payment from any person before claiming from CKX under this
clause 8.  This waiver applies
irrespective of any law or any provision of any of the Transaction Documents to
the contrary.

 

25

 

8.7                                 Appropriations

 

Until all amounts which may be or become
payable by CKXUK under or in connection with the Transaction Documents have
been irrevocably paid in full, the Sellers may:

 

(a)                                  refrain from applying or enforcing any other moneys,
security or rights held or received by the Sellers in respect of those amounts,
or apply and enforce the same in such manner and order as it sees fit (whether
against those amounts or otherwise) and CKX shall not be entitled to the
benefit of the same; and/or

 

(b)                                 hold in an interest-bearing suspense account any
moneys received from CKX or on account of CKX’s liability under this clause 8.

 

8.8                                 Deferral of CKX’s rights

 

Until all amounts which may be or become
payable by CKXUK under or in connection with the Transaction Documents have
been irrevocably paid in full, CKX will not exercise any rights which it may
have by reason of performance by it of its obligations under the Transaction
Documents:

 

(a)                                  to be indemnified by CKXUK;

 

(b)                                 to claim any contribution from any other guarantor of
CKXUK’s obligations under the Transaction Documents; and/or

 

(c)                                  to take the benefit (in whole or in part and whether
by way of subrogation or otherwise) of any rights of the Sellers under the
Transaction Documents or of any other guarantee or security taken pursuant to,
or in connection with, the Transaction Documents by the Sellers.

 

8.9                                 CKX to hold security on behalf of the Sellers

 

CKX undertakes to hold any security taken
from CKXUK in connection with this guarantee and indemnity in trust for the
Sellers pending discharge in full of all of CKX’s obligations under this clause
8 with respect to the Transaction Documents.

 

8.10                           Additional security

 

This guarantee and
indemnity is in addition to and is not in any way prejudiced by any other
guarantee or security now or subsequently held by the Sellers.

 

8.11                           Property Guarantee

 

In respect of the Lease of Unit 33 Ransomes Dock and the
Underlease of Unit 32 Ransomes Dock referred to in Schedule 9 (together “the Guaranteed Leases”) the Purchasers
shall within 90 days following Completion use reasonable endeavours to obtain
the full release of Fuller from his obligations under the guarantee provisions
of the Guaranteed Leases, including (if required) using reasonable endeavours
to provide a substitute guarantor or other security for the performance of the
tenant’s obligations under each of the Guaranteed Leases reasonably acceptable
to the landlord under each of the Guaranteed Leases PROVIDED THAT in the event
that and for so long as Fuller remains the guarantor or continues to have any
liability under either or both of the Guaranteed Leases then the Purchasers
shall fully and effectively indemnify and keep indemnified Fuller against all
losses claims actions costs liabilities damages and expenses incurred or
sustained by Fuller in respect of the period following Completion as a
consequence of any liability which arises after Completion and which Fuller has
in relation to him continuing as guarantor or having previously acted as
guarantor under the Guaranteed Leases.

 

26

 

9.                                      TIME OF THE
ESSENCE

 

9.1                                 Time shall not be of the essence of this agreement, either as
regards times, dates and periods specified in the agreement or as regards any
times, dates or periods that may by agreement between the parties be
substituted for any of them unless:

 

(a)                                  time is expressly stated to be of the essence in relation to that
obligation; or

 

(b)                                 one party fails to perform an obligation by the time specified in
this agreement and the other parties serve a notice on the defaulting party
requiring it to perform the obligation by a specified time and stating that
time is of the essence in relation to that obligation.

 

9.2                                 The provisions of clause 9.1 shall not apply to any claim relating
to the failure by the Purchasers to pay any Consideration when due and time for
payment of any of the Consideration shall be of the essence.

 

10.                                ANNOUNCEMENTS

 

10.1                           Prior approval of
announcements

 

Subject to the provisions of clauses 10.2, 10.3 and 10.4 below, no
disclosure or announcement relating to the existence or subject matter of this
agreement shall be made or issued by or on behalf of the Sellers or the
Purchasers or any member of the Ingenious Group or any member of the Group
without the prior written approval of the other parties (which approval may be subject
to reasonable conditions but shall otherwise not be unreasonably withheld or
delayed) provided that these restrictions shall not apply to any disclosure or
announcement if required by any law, applicable securities exchange,
supervisory, regulatory or governmental body provided further that any such
disclosure shall be consistent with any disclosure previously approved by the
other party and, if such disclosure includes a press release, such press
release shall first be subject to this clause 10.1.

 

10.2                           Announcement by CKX

 

Without limitation to clause 10.1, the parties agree that only CKX
shall have the right and be responsible for the preparation and release of an
announcement in the agreed form announcing the signing of this agreement.

 

10.3                           Disclosure in Form S-1
and other SEC filings

 

Nothing in this agreement shall prevent CKX from disclosing
information regarding the Group and its businesses, the terms of this
transaction and all other relevant information necessary for the Form S-1 and
any other SEC filings CKX is required to carry out either pursuant to this
transaction or any proposed offering of further equity in CKX.

 

10.4                           Notices to customers
etc.

 

Nothing in this agreement will prohibit CKX from making or sending
after Completion any announcement to a contract counter party, customer, client
or supplier of any member of the Group informing it that the Purchasers has
purchased the Shares.

 

10.5                           Consultation

 

Except in relation to clause 10.3 the party making the
communication shall use its reasonable endeavours to consult with the other
party in advance as to the form, content and timing of the communication.

 

27

 

11.                               COUNTERPARTS

 

This agreement may be executed in any number of counterparts and
by the parties to it on separate counterparts and each such counterpart shall
constitute an original of this agreement but all of which together constitute
one and the same instrument.  This
agreement shall not be effective until each party has executed at least one
counterpart.

 

12.                               FURTHER
ASSURANCE

 

Each of the parties agree to perform (or procure the performance
of) all further acts and things, and execute and deliver (or procure the
execution and delivery of) such further documents, as may be required by law or
as any other party may reasonably require, whether on or after Completion, to
implement and/or give effect to this agreement and the transaction contemplated
by this agreement and for the purpose of vesting in the parties the full
benefit of the assets, rights and benefits to be transferred to them under or
pursuant to this agreement.

 

13.                               VARIATION,
WAIVER AND CONSENT

 

13.1                           No variation or waiver
of any provision or condition of this agreement shall be effective unless it is
in writing and signed by or on behalf of each of the parties (or, in the case
of a waiver, by or on behalf of the party waiving compliance).

 

13.2                           Unless expressly agreed,
no variation or waiver of any provision or condition of this agreement shall
constitute a general variation or waiver of any provision or condition of this
agreement, nor shall it affect any rights, obligations or liabilities under or
pursuant to this agreement which have already accrued up to the date of
variation or waiver, and the rights and obligations of the parties under or
pursuant to this agreement shall remain in full force and effect, except and
only to the extent that they are so varied or waived.

 

13.3                           Any consent granted
under this agreement shall be effective only if given in writing and signed by
the consenting party and then only in the instance and for the purpose for
which it was given.

 

14.                               RIGHTS AND
REMEDIES OF THE PARTIES

 

14.1                           No failure or delay by
any party in exercising any right or remedy provided by law under or pursuant
to this agreement shall impair such right or remedy or operate or be construed
as a waiver or variation of it or preclude its exercise at any subsequent
time.  No single or partial exercise of
any right or remedy by any party shall preclude any other or further exercise
of such right or remedy or the exercise of any other right or remedy.

 

14.2                           The rights and remedies
of the parties under or pursuant to this agreement are cumulative, may be
exercised as often as the parties consider appropriate and are in addition to their
rights and remedies under general law.

 

14.3                           The rights and remedies
of the parties under this agreement shall not be affected, and none of the
parties’ liabilities under this agreement shall be released, discharged or
impaired, by:

 

(a)                                  Completion;

 

(b)                                 any failure to terminate
this agreement;

 

(c)                                  any event or matter
whatsoever which otherwise might have affected such rights and remedies other
than a specific and duly authorised written waiver or release by the
Purchasers;

 

28

 

(d)                                 subject to clause 7.1(b)
of this agreement, in the case of a liability of the Sellers or the Warrantors,
any investigation made by or on behalf of the Purchasers into the affairs of
any member of the Group; or

 

15.                               ENTIRE AGREEMENT

 

15.1                           Entire agreement

 

Subject to any terms implied by law, the Transaction Documents and
any other documents relating to the subject matter of any of the Transaction
Documents and dated the same date as this agreement together represent the
whole and only agreement between the parties in relation to their subject
matter and supersede any previous agreements (whether written or oral) between
all or any of the parties in relation to the subject matter of any such
document.

 

Each of the parties acknowledge that:

 

(a)                                  in entering into this Agreement they do not rely on any statement or
representation (in any case whether oral or written, express or implied and
whether negligently or innocently made) of any person (whether a party to this
Agreement or not) which is not expressly set out in this Agreement;

 

(b)                                 any remedy available to them for any misrepresentation or untrue
statement shall be a claim for breach of contract unless such misrepresentation
or untrue statement is made in the Agreement in which case any remedies for
misrepresentation will be unaffected; and

 

(c)                                  nothing in this Clause 15 shall operate to limit or exclude and
liability arising from any fraudulent or dishonest statement, act or omission.

 

16.                               DEFAULT
INTEREST

 

16.1                           If any parties which are
required to pay any sum under this agreement fail to pay any sum payable by
them under this agreement on the due date for payment (the “Defaulting Parties”), they shall pay interest on such sum
for the period from and including the due date up to the date of actual payment
(after as well as before judgement) in accordance with this clause.

 

16.2                           The Defaulting Parties
shall pay interest at the annual rate which is the aggregate of 4 per cent. per
annum and the base rate from time to time of National Westminster Bank Plc.

 

16.3                           Interest under this
clause 16 shall accrue on the basis of the actual number of days elapsed and a
365-day year and shall be paid by the Defaulting Parties on demand.  Unpaid interest shall compound monthly.

 

17.                               WITHHOLDING AND
GROSSING-UP

 

17.1                           Save as otherwise
permitted under the terms of this agreement, each party shall to the other
shall pay all sums payable by them under this agreement free and clear of all
deductions or withholdings unless the law requires a deduction or withholding
to be made.  Otherwise than in relation
to a payment of interest, if a deduction or withholding is so required the
paying party shall pay such additional amount as will ensure that the net
amount the payee receives equals the full amount which it would have received
had the deduction or withholding not been required.

 

17.2                           If any Tax Authority
brings any sum (except for the Consideration) paid by any party under or
pursuant to this agreement into charge to Tax, then the party liable to pay shall
pay such 

 

29

 

additional
amount as will ensure that the total amount paid, less the Tax chargeable on
such amount, is equal to the amount that would otherwise be payable under this
agreement.

 

18.                               NOTICES

 

18.1                           Save as otherwise
provided in this agreement, any notice, demand or other communication (“Notice”) to be given by any party under, or in connection
with, this agreement shall be in writing and signed by or on behalf of the
party giving it. Any Notice shall be served by sending it by fax to the number
set out in clause 18.2, or delivering it by hand to the address set out in
clause 18.2 and in each case marked for the attention of the relevant party set
out in clause 18.2 (or as otherwise notified from time to time in accordance
with the provisions of this clause 18). 
Any Notice so served by fax or hand shall be deemed to have been duly
given or made as follows:

 

(a)                                  if sent by fax, at the
time of transmission; or

 

(b)                                 in the case of delivery
by hand, when delivered,

 

provided that in each case where delivery by fax or by hand occurs
after 6 pm on a Business Day or on a day which is not a Business Day, service
shall be deemed to occur at 9 am on the next following Business Day.

 

References to time in this clause are to local time in the country
of the addressee.

 

18.2                           The addresses and fax
numbers of the parties for the purpose of clause 18.1 are as follows:

 

(a)                                  Fuller

Address:                                             c/o Andrew Stinson

33 Ransome’s Dock

35-37 Parkgate Road

London

SW11 4NP

 

Fax: +44 (0)20 7667 5100  +44 (0)20 7228 3649

 

For the attention of: Andrew Stinson

 

Copy to be sent (for information only) to:
Lisa Bennett and Colin Howes of Harbottle & Lewis LLP, Hanover House, 14
Hanover Square, London WIS 1HP (Fax: +44 (0)20 7667 5100)

 

(b)                                 Fuller Nominees

Address:                                             c/o Harbottle &
Lewis LLP

Hanover House

14 Hanover Square

London

WIS 1HP

 

Fax: +44 (0)20 7667 5100

 

For the attention of: Lisa Bennett/Colin
Howes

 

Copy to be sent (for information only) to:
Andrew Stinson, 33 Ransome’s Dock, 35-37 Parkgate Road, London SW11 4NF (Fax:
+44 (0)207 228 3649)

 

30

 

(c)                                  Ingenious

Address:                                             100 Pall Mall

London

SW1Y 5NQ

 

Fax: +44 (0)20 7024 3647

 

For the attention of: Patrick McKenna

 

(d)                                 CKX and CKXUK

Address:                                             650 Madison Avenue

                                                                                                New York

                                                                                                NY 10022

                                                                                                USA

 

Fax:                                                                           +1 212 319 6517

 

For the attention of: the General Counsel

 

A copy to be sent (for information only)
to James Burdett and Tim Gee at Baker & McKenzie, 100 New Bridge Street,
London EC4V 6JA. (Fax: +44 (0)20 7919 1999)

 

18.3                           A party may notify all
other parties to this agreement of a change to its name, relevant addressee,
address or fax number for the purposes of this clause 18, provided that such
notice shall only be effective on:

 

(a)                                  the date specified in
the notification as the date on which the change is to take place; or

 

(b)                                 if no date is specified
or the date specified is less than five Business Days after the date on which
notice is given, the date following five Business Days after notice of any
change has been given.

 

18.4                           In proving service it
shall be sufficient to prove that the envelope containing such notice was
properly addressed and delivered to the address shown thereon or that the
facsimile transmission was made and a facsimile confirmation report was
received, as the case may be.

 

18.5                           CKX hereby irrevocably
designates, appoints and empowers CKXUK as agent to receive for and on its
behalf service of process in any legal action, matter or proceedings with
respect to this agreement and any of the other Transaction Documents, service
on whom shall be deemed completed whether or not received by it.  CKX shall inform each of the other parties of
this agreement in writing of any change in the address of its process agent
within 5 Business Days of the date of any such change.  If such process agent ceases to have an
address in England, CKX hereby irrevocably agrees to appoint a new process
agent in England and to deliver to such parties within 5 Business Days a copy
of a written acceptance of appointment by its process agent.  Nothing contained in this agreement shall
however affect the right to serve process in any other manner permitted by law
or the right to bring proceedings in any other jurisdiction for the purposes of
the enforcement or execution of any judgement or other settlement in any other
courts.

 

19.                               COSTS

 

19.1                           Each of the parties
shall be responsible for its own legal, accountancy and other costs, charges
and expenses incurred in connection with the negotiation, preparation and
implementation of this agreement and any other agreement incidental to or
referred to in this agreement.

 

31

 

19.2                           Each Seller undertakes
to the Purchasers that neither the Company nor any member of the Group has paid
or will pay (in connection with the sale and purchase contemplated by this
agreement) any legal, accounting or other professional charges, fees, expenses
or commissions relating to the sale of the Shares including, without
limitation, any such costs incurred in connection with any investigation of the
affairs of the Group or the negotiation, preparation, execution and carrying
into effect of this agreement.

 

19.3                           Each Purchaser
undertakes to the Seller that neither the Company nor any member of the Group
has paid or will pay (in connection with the sale and purchase contemplated by
this agreement) any legal, accounting or other professional charges, fees,
expenses or commissions relating to the sale of the Shares including, without
limitation, any such costs incurred in connection with any investigation of the
affairs of the Group or the negotiation, preparation, execution and carrying
into effect of this agreement.

 

20.                               THIRD PARTY
RIGHTS

 

20.1                           Subject to the remaining
provisions of this clause 20, the Company, any member of the Group, any other
member of the CKX Group and any of their officers, employees, workers or agents
(including advisers) (“Third Parties”)
may enforce the terms and accordingly shall have the benefit of those
provisions in this agreement contained in clauses 5 and 6.11, which is, or is
stated to be, for their benefit subject to and in accordance with the
provisions of the Contracts (Rights of Third Parties) Act 1999.

 

20.2                           For the avoidance of
doubt, it is intended that (with respect to any breach by the Sellers of the
provisions identified in clause 20.1) 
Third Parties shall be entitled to seek to recover their own Losses
arising from such breach but without prejudice to the right of the Purchasers
to recover in its own right any Losses it may suffer or incur arising from such
breach.

 

20.3                           The parties may by
agreement terminate, rescind or vary the terms of this agreement (including
this clause 20) at any time and in any way without the prior consent of or
notice to any Third Party.

 

20.4                           Except as provided in
this clause 20 the Parties do not intend that any terms of this agreement shall
be enforceable by virtue of the Contracts (Rights of Third Parties) Act 1999 by
any person who is not a party to this agreement.

 

21.                               CONTINUING
EFFECT

 

Each provision of this agreement shall continue in full force and
effect after Completion, except to the extent that a provision has been fully
performed on or before Completion.

 

22.                               SEVERABILITY

 

If any provision of this agreement is held by a court of competent
jurisdiction to be illegal, invalid or unenforceable in any respect under the
law of any jurisdiction, then such provision shall (so far as it is invalid or
unenforceable) be given no effect and shall be deemed not to be included in
this agreement but without invalidating any of the remaining provisions of this
agreement.  Any provision of this agreement
held invalid or unenforceable only in part or degree will remain in full force
and effect to the extent not held invalid or unenforceable.  The parties shall then use all reasonable
endeavours to replace the invalid or unenforceable provision(s) by a valid and
enforceable substitute provision the effect of which is as close as possible to
the intended effect of the invalid or unenforceable provision.

 

32

 

23.                               LIABILITY AND
RELEASE

 

23.1                           Several liability of the
Sellers

 

Unless otherwise stated in this agreement, the obligations of the
Sellers under this agreement are several. 
If any liability of one or some but not all of the Sellers is, or
becomes, illegal, invalid or unenforceable in any respect, that shall not
affect or impair the liabilities of the other Sellers under this agreement.

 

23.2                           Release of Sellers and
Ingenious

 

Any liability of the Sellers and/or Ingenious to any person under
this agreement may in whole or in part be released, compromised or compounded
or time or indulgence given by that person in its absolute discretion as
regards any of the Sellers in respect of such liability without in any way
prejudicing or affecting that person’s rights against any other or others of
the Sellers and/or Ingenious under the same or like liability, whether joint or
several or otherwise, or any other person’s rights against any of them in any
respect.

 

23.3                           Joint and Several
Liability of the Purchasers

 

The obligations of the Purchasers under this agreement are joint
and several.  If any liability of one but
not both of the Purchasers is, or becomes illegal, invalid or unenforceable in
any respect, that shall not affect or impair the liabilities of the other
Purchaser under this agreement.

 

23.4                           Release of Purchasers

 

Any liability of the Purchasers to any person under this agreement
may in whole or in part be released, compromised or compounded or time or
indulgence given by that person in its absolute discretion as regards any of
the Purchasers in respect of such liability without in any way prejudicing or
affecting that person’s rights against any other or others of the Purchasers
and/or Ingenious under the same or like liability, whether joint or several or
otherwise, or any other person’s rights against any of them in any respect.

 

24.                               ASSIGNMENT

 

24.1                           Subject to clauses 24.2
and 24.3, no party shall be entitled to assign the benefit or burden of any
provision of this agreement without the prior written consent of each other
party.

 

24.2                           All or any of the
Purchasers’ rights under this agreement (including, without limitation, in
respect of the Warranties) may (notwithstanding any other provisions contained
in this agreement) be assigned or transferred by either or both of the
Purchasers to, or made the subject of a trust created in favour of:

 

(a)                                  any other member of CKX
Group (or by any such member to or in favour of any other member of CKX Group)
provided that if such assignee company leaves CKX Group, such rights are
assigned or transferred to or made the subject of a trust in favour of another
member of CKX Group; and/or

 

(b)                                 by succession upon a
merger with and into another member of the CKX Group; and/or

 

(c)                                  any person by way of
security for borrowings of CKX Group;

 

provided that such assignment shall not increase to any extent the
liability of any of the Sellers pursuant to any provision of this agreement or
any of the other Transaction Documents.

 

33

 

24.3                           The parties to this
agreement acknowledge, for the avoidance of doubt, that all of CKX’s rights and
obligations under this agreement and the other Transaction Documents will be
assumed by CKX, Inc. upon any merger of CKX with and into CKX, Inc. pursuant to
laws of the state of Delaware and that such merger is permitted by the clause
25.

 

25.                               CURRENCY
CONVERSION AND EURO/SUBSTITUTED LAWFUL CURRENCY

 

25.1                           Rate of exchange

 

For the purpose of converting amounts specified in one currency
into another currency where required, the rate of exchange to be used in
converting amounts specified in one currency into another currency shall be the
average closing mid-point rate for exchanges between those currencies quoted in
the Financial Times (London edition) for the 30 days for which that rate is so
quoted prior to the date of the conversion.

 

25.2                           Euro

 

If the United Kingdom becomes a participating member state for the
purposes of European Monetary Union and the Euro accordingly becomes the lawful
currency of the United Kingdom, then:

 

(a)                                  that shall not affect
the validity of the Transaction Documents or the rights and obligations of the
parties under them, nor shall it give any party the right to alter or terminate
any Transaction Document unilaterally; and

 

(b)                                 with effect from the
date on which it occurs, any amount referred to in any Transaction Document in
sterling shall be redenominated in Euros at the rate and in the manner
determined by the relevant legislation.

 

26.                               SET OFF

 

26.1                           Without prejudice to
clause 3.9, the Purchasers shall be entitled but not obliged at any time or
times to set off any liability of the Purchasers to any of Sellers in his or
its capacity as Seller and/or Warrantor (where applicable) (in each case
howsoever arising and whether any such liability is present or future,
liquidated or unliquidated and irrespective of the currency of its
denomination) against any liability of any of the Seller in any such capacity
to the Purchasers and may for such purpose convert or exchange any
currency.  Any exercise by the Purchasers
or either of them of their rights under this clause shall be without prejudice
to any other rights or remedies available to the Purchasers under this
agreement or otherwise.

 

26.2                           Each of the Sellers
shall be entitled but not obliged at any time or times to set off any liability
of that Seller to the Purchasers in their capacity as Purchasers (in each case
howsoever arising and whether any such liability is present or future,
liquidated or unliquidated and irrespective of the currency of its
denomination) against any liability of the Purchasers in any capacity to that
Seller and may for such purpose convert or exchange any currency.  Any exercise by that Seller or any of them of
their rights under this clause shall be without prejudice to any other rights
or remedies available to any of the Sellers under this agreement or otherwise.

 

27.                               GOVERNING LAW
AND SUBMISSION TO JURISDICTION

 

27.1                           Governing law

 

The construction, validity and performance of this agreement shall
be governed by the laws of England and Wales.

 

34

 

27.2                           Submission to
jurisdiction

 

The parties to this agreement irrevocably agree that the courts of
England and Wales shall have exclusive jurisdiction over any claim or matter
arising under or in connection with this agreement and that accordingly any
proceedings in respect of any such claim or matter may be brought in such
court.

 

The parties have
shown their acceptance of the terms of this agreement by executing it at the
end of the schedules.

 

35

 

SCHEDULE 2

 

Part 1:  Sellers’ Obligations at Completion

 

At Completion, the
Sellers and Ingenious shall deliver to the Purchasers:

 

1.                                       duly executed transfers
of all of the Shares and the Option Shares into the name of the Purchaser in
the proportions set out in column 2(b) of part 4 of Schedule 1 with the
relevant share certificates (or indemnities in respect thereof in the agreed
form);

 

2.                                       share certificates in
respect of all the issued capital in each of the Subsidiaries (or indemnities
in respect thereof in the agreed form);

 

3.                                       Share Option Exercise
Forms executed by each of the Share Option Holders and the Company;

 

4.                                       the title deeds to the
Properties;

 

5.                                       all the statutory and
other books (duly written up to, but not including, Completion) of the Company
and the Subsidiaries and their respective certificates of incorporation and
common seals in its possession;

 

6.                                       certified copies of any
powers of attorney under which any of the documents referred to in this
schedule is executed or evidence satisfactory to the Purchasers of the
authority of any person signing on behalf of the Sellers and any member of the
Ingenious Group;

 

7.                                       duly executed
irrevocable powers of attorney in the agreed form in respect of the Shares;

 

8.                                       an unconditional letter
of release from the Company’s bankers evidencing the release and discharge of
all guarantees and indemnities granted by the Company and any member of the
Group;

 

9.                                       duly executed releases
under seal, in the agreed form, releasing the Company and each of 19
Merchandising Limited, 19 TV Limited, Brilliant 19 Limited, 19 Recordings
Limited, 19 Productions Limited, 119 Management Limited, 19 Touring Limited,
Double Vision Film Limited, 19 Artist Tours Limited, Animal Beat Limited, S
Club Limited, 19 Loves Music Limited, Shy Records Limited and 19 Brands Limited
from the charge created by the debentures dated 3 July 2003 between each
of the above and National Westminster Bank PLC together with forms 403a duly
completed and sworn in respect of the same;

 

10.                                 a duly executed release
under seal, in the agreed form, releasing the Company and each Subsidiary from
any liability whatsoever (whether actual or contingent) which may be owing to
the Sellers by the Company or the Subsidiaries at Completion;

 

11.                                 letters of resignation
in the agreed form from each of the Directors (other than the Continuing
Director) and the secretary of the Company and the directors and secretary of
each Subsidiary, such resignations to take effect from the close of the meeting
of the Board referred to in part 2 of this schedule 2.

 

12.                                 the Continuing Directors
Service Agreement duly executed by Fuller and the Company;

 

13.                                 the Fuller Put and Call
Option Agreement executed by Fuller;

 

14.                                 the Tax Deed duly
executed by each of the Warrantors;

 

15.                                 an executed deed of
termination, in the agreed form, of the Investment Agreement dated 15 August
2001 between Ingenious, Fuller, Fuller Nominees and the Company;

 

36

 

16.                                 the Ingenious Consulting
Agreement duly executed by the Company and Ingenious Media Consulting Limited;

 

17.                                 the Registration Rights
Agreement executed by Fuller;

 

18.                                 the Non-compete
Agreement executed by Fuller;

 

19.                                 the Beneficiary Put and
Call Option Agreement executed by the Beneficiary

 

20.                                 the Beneficiary
Guarantee Deed executed by the Beneficiary;

 

21.                                 an undertaking, in the
agreed form, from the Sellers’ Solicitors relating to the payment of the Option
Share Initial Consideration;

 

22.                                 a consent letter, in the
agreed form, from Deloitte & Touche LLP consenting to the inclusion of all
necessary financial information on the Group in CKX’s Form S-1

 

23.                                 a copy of a resolution
of the board of directors of Ingenious and Fuller Nominees Limited (certified
by a duly appointed officer as true and correct) authorising the execution of
and the performance by the Ingenious and Fuller Nominees Limited of each of
their respective obligations under this agreement and each of the other
documents to be executed by each of them;

 

24.                                 copies of all existing
bank mandates and statements of the balances of any bank accounts in the name
of the Company and of each member of the Group, as at the close of business on
the last Business Day before the Completion Date, together with a list of all
unpresented cheques and uncleared cheques which upon presentation or clearance
would be debited or credited to those accounts and the relevant cheque books;

 

37

 

Part 2:  Sellers’ Further Obligations at Completion

 

At Completion, the
Sellers and Ingenious shall:

 

1.                                       pay and shall procure
that all members of the Ingenious Group shall pay all Intra-Group Indebtedness
(if any) then owing by them to each member of the Group, whether due for
payment or not;

 

2.                                       release each member of
the Group from any Intra-Group Guarantees to which it is party.

 

3.                                       cause the Directors to hold a meeting of the
board of the Company and of each Subsidiary at which the Directors shall pass
resolutions in the agreed form to:

 

3.1                                 in the case of the Company only, approve the
registration of the Purchaser or its nominees as members of the Company subject
only to the production of duly stamped and completed transfers in respect of
the Shares;

 

3.2                                 appoint such persons as the Purchaser may
nominate as directors and secretary of the Company and of the relevant
Subsidiary;

 

3.3                                 approve and authorise the changing of the
address of the registered office of the Company and each of the Subsidiary to
100 New Bridge Street, London, EC4V 6JA;

 

3.4                                 do and perform any other business which may be
necessary or desirable to give full and valid effect to the sale and purchase
of the Shares or as the Purchasers may reasonably require

 

3.5                                 and the Sellers shall
furnish to the Purchasers on Completion duly signed minutes of all necessary
meetings

 

4.                                       Share Option Exercise
Forms executed by the Purchasers

 

38

 

Part 3:  Purchasers’ Obligations at Completion

 

At Completion, the
Purchasers shall:

 

1.                                       pay the cash elements of
the Initial Consideration and the total Option Share Initial Consideration by
CHAPS to the Sellers’ Solicitors’ account at National Westminster Bank plc
(Sort Code: 50-41-06 Account Number: 12465189 Swift Code: NWBK GB 2L);

 

2.                                       deliver to the Sellers
the Tax Deed duly executed by the Purchasers;

 

3.                                       deliver to Fuller the
Fuller Put and Call Option Agreement duly executed by CKX;

 

4.                                       deliver to Fuller the
Registration Rights Agreement executed by CKX.

 

5.                                       two Business Days
following Completion, deliver to the Sellers’ Solicitors a certificate or
certificates in definitive form and suitably legended and registered in the
name of each of Sellers receiving Initial Consideration Shares, representing
each of their Initial Consideration Shares.

 

6.                                       deliver to the Sellers
an extract of the resolutions of the board of directors of CKXUK and CKX
(certified in each case by a duly appointed officer as true and correct)
authorising the execution of and the performance by each of the Purchasers of
each of their respective obligations under this agreement and each of the other
documents to be executed by each of them.

 

7.                                       deliver to the Sellers a
copy of the press release to be issued by CKX upon Completion and publicly
filed with the SEC.

 

39

 

SCHEDULE 3

 

Warranties

 

Part 1: General Warranties

 

1.                                      INFORMATION

 

Quality of information

 

All information contained in Parts 1, 2 and 3 of Schedule 1
(Details of the Company, the Subsidiaries and Shareholding Companies) and
Schedules 9 (Properties) is true, complete and accurate in all material
respects and not misleading in any material respect.

 

2.                                      THE WARRANTORS

 

2.1                                 Power to contract

 

The Warrantors have full power and authority to enter into and
perform each of the Transaction Documents to which they are a party and each of
such Transaction Documents constitutes or will, when executed, constitute
binding obligations on the Warrantors in accordance with their terms, subject
to any principles of equity or insolvency law.

 

2.2                                 Authorisations

 

The Warrantors have obtained all applicable governmental,
statutory, regulatory or other consents, licences, waivers or exemptions
required to empower them to enter into and to perform their obligations under
the Transaction Documents.

 

2.3                                 Simon Fuller

 

So far as Fuller and Ingenious are aware, Fuller is not suffering
from any medical or other condition or disability nor is he affected by any
other circumstance which would materially impair his ability to perform his
duties as a full time senior executive of the Company.

 

3.                                      THE COMPANY

 

3.1                                 Duly constituted

 

The Company has been duly incorporated, is duly organised and is
validly existing under the laws of England and Wales.  The Company has all requisite corporate
powers and authority to own its assets and to conduct the business being
carried on by it at Completion.

 

3.2                                 Memorandum and articles

 

The copies of the memorandum and articles of association of the
Company which are attached to the Disclosure Letter are accurate, complete and
up-to-date in all respects and have attached to them copies of all resolutions
and agreements which are required to be so attached.  The Company has complied with its memorandum
and articles of association in all material respects and none of the activities,
agreements, commitments or rights of the Company is ultra vires or
unauthorised.

 

3.3                                 Statutory and other
books and records

 

(a)                                  The register of members
and all other statutory books of the Company have been properly kept and are up
to date and the register of members contains true and accurate records of all
matters required to be dealt with therein.

 

40

 

(b)                                 The Company has not
received any notice of any application or intended application under the
Companies Acts for rectification of the Company’s register.

 

(c)                                  All annual or other
returns in relation to the Company required to be filed with the Registrar of
Companies have been duly and properly filed.

 

(d)                                 The Company has complied
with all legal requirements relating to the issue of shares and other
securities.

 

(e)                                  The Company has complied
with the material requirements of all other statutes, regulations or laws
binding on it as to the keeping of records and filing of documents with any
other agency or authority and the conduct of its business and affairs
generally.

 

3.4                                 No records outside
Company’s control

 

The Company does not have any of its material records, systems,
controls, data or information recorded, stored, maintained, operated or
otherwise wholly or partly dependent on or held by any means (including any
electronic, mechanical or photographic process whether computerised or not)
which (including all means of access) are not under the exclusive ownership and
direct control of the Company.

 

3.5                                 All charges registered

 

All Security Interests granted to or by the Company have (if
appropriate) been registered in accordance with CA85 or comply with all
necessary formalities as to registration or otherwise in any foreign
jurisdiction.

 

3.6                                 Original documents in
possession of Company

 

All title deeds relating to the material assets of the Company and
an executed copy of all material agreements to which the Company is a party are
in the possession of the Company or the Company’s professional advisers.

 

3.7                                 Directors of the Company

 

The only directors of the Company are the persons listed as such
in the Disclosure Letter and no person is a shadow director (within the meaning
of s741 CA85) or an alternate or de facto director of the Company.

 

4.                                      SHARE CAPITAL

 

4.1                                 Shares allotted and fully
paid

 

All of the issued shares in the capital of the Company are validly
allotted and issued and fully paid or properly credited as fully paid.

 

4.2                                 Freedom from
Encumbrances

 

All unissued shares and any debentures or other securities of the
Company are free from and unaffected by any Encumbrance other than under its
articles or under an agreement between shareholders which has been Disclosed.

 

4.3                                 No options, etc.

 

Other than the Share Options as set out in Appendix 8, there are
in existence no rights to or options for the issue, allotment or transfer of
any loan or share capital of the Company nor 

 

41

 

any rights to convert any loan or share capital into share capital
or share capital of a different description.

 

4.4                                 Repayment, redemption
and capitalisation

 

The Company has not:

 

(a)                                  at any time repaid or
redeemed or agreed to repay or redeem any shares of its capital or in any way
effected any reduction of its issued share capital;

 

(b)                                 at any time purchased
its own shares.

 

4.5                                 Commissions

 

No person is entitled to receive from the Company any fee,
brokerage or commission in connection with the Transaction Documents or
anything contained in them.

 

4.6                                 Option Shares

 

The Option Shares will be allotted and issued fully paid and free
from and unaffected by any Encumbrance other than under the articles of the
Company or under an agreement between shareholders which has been Disclosed.

 

5.                                      CONNECTED BUSINESS

 

5.1                                 Interests in other
companies

 

Details of all shares or other securities held by the Company and
of any shares or other securities agreed to be acquired by the Company anywhere
in the world are set out in the Disclosure Letter.

 

5.2                                 No shareholders’
agreement

 

Save as Disclosed, the Company is not a party to any shareholders’
agreement or similar arrangement or agreement which purports to regulate,
control or otherwise affect the voting or disposition of its shares.

 

5.3                                 Relationship with
Ingenious

 

Details of all contractual arrangements under which services are
provided by Ingenious to any member of the Group (including as to fees payable)
are set out in the Disclosure Letter.

 

5.4                                 Permanent establishment
outside of jurisdiction of incorporation

 

The Company does not have any permanent establishment from which
it conducts business outside its jurisdiction of incorporation.

 

5.5                                 Warrantors not
interested in other related businesses

 

Save as Disclosed, the Warrantors are not at the date hereof
either on their own account or in conjunction with or on behalf of any person,
firm or company engaged, concerned or interested, directly or indirectly,
whether as shareholder, director, partner, agent or otherwise (save as the
holder of not more than 3% of the issued share capital of any company whose
shares are quoted on any public stock exchange where such holding is for
investment purposes only) in (i) any business of a similar nature to or
competitive with that carried on by the Company, or (ii) which has a close
trading relationship with the Company or (iii) the American Idol or Pop Idol TV
programmes in any territory in the world or (iv) a television 

 

42

 

programme which competes with the Format (as defined in the
Pearson Agreement)(for the purposes of this paragraph 5(a), it is understood
that a programme competes with the Format if it involves a search for a (i)
recording and/or song writing artiste (whether an individual artist or a group
of more than one) or (ii) a comedian or (iii) a dancer and the making of commercial
recordings by that artist(s), comedian or dance or exploitation of songs
written by that artist(s) or the signature of a recording and/or publishing
and/or broadcast agreement by that artist(s) or person.

 

5.6                                 No management of other
companies

 

Save for any member of the Group and any company listed in the
Disclosure Letter as being a company in which the Company has any shareholding,
the Company does not take part in or control the management of any other
company or business organisation other than performers, sportspersons, other
individuals with a public profile and any company or business organisation set
up in connection with their services or rights relating to their personalities,
names, services or creative activities.

 

6.                                      ACCOUNTING AND RECORDS

 

6.1                                 Accounting records

 

All the accounts, ledgers and other financial records of the
Company required to be kept by law and Relevant Accounting Standards have been
properly and accurately kept and all the material records and books of the
Company are in the possession of the Company.

 

6.2                                 Accounting reference
date

 

Under s224 CA85, the accounting reference date of the Company has
been, during the last five years, the date specified in schedule 1.

 

6.3                                 The Last Accounts

 

The Last Accounts:

 

(a)                                  give a view of the state
of affairs of the Group as at the Last Accounting Date and of its profits or
losses for the Financial Year ended on the Last Accounting Date which the
Directors generally and the Continuing Director individually believe is true
and fair;

 

(b)                                 make adequate provision
or reserve for all actual liabilities;

 

(c)                                  make, to the extent
required by Relevant Accounting Standards, appropriate provision or reserve for
(or note in accordance with all Relevant Accounting Standards) all contingent,
unquantified or disputed liabilities, all capital commitments and deferred Tax;

 

(d)                                 make, to the extent
required by Relevant Accounting Standards, appropriate provision or reserve for
all Tax in respect of all accounting periods ended on or before the Last Accounting
Date for which the Company and the Group was then or would at any time
thereafter become liable including (to that extent but otherwise without
limitation) Tax:

 

(i)                                     on or in respect of or
by reference to the profits, gains or income for any period ended on or before
the Last Accounting Date;

 

(ii)                                  in respect of any event
on or before the Last Accounting Date or provided for in the Last Accounts; and

 

43

 

(iii)                               in respect of
distributions declared, made or deemed to be made on or before the Last
Accounting Date or provided for in the Last Accounts; and

 

(e)                                  have, to the extent
appropriate for a group of companies growing and developing in the manner in
which the Group has grown and developed, been prepared in a manner consistent
with that used in preparing the Accounts for the Financial Year preceding the
Financial Year ended on the Last Accounting Date.

 

6.4                                 Accounts

 

The Accounts for each of the three Financial Years ended on the
Last Accounting Date:

 

(a)                                  comply with all the
requirements of CA85, all other relevant laws and all Relevant Accounting
Standards and in all other respects have been prepared in accordance with
generally accepted accounting practices in the United Kingdom;

 

(b)                                 are not affected by any
extraordinary or exceptional item, other than to the extent items are
categorised in those Accounts as extraordinary or exceptional, or by
transactions entered into otherwise than on normal commercial terms; and

 

(c)                                  were prepared under the
historical cost convention.

 

6.5                                 Valuation of fixed
assets

 

In the Last Accounts, each of the fixed assets is included at a
value no higher than its current market value and at a value which is net of
depreciation in accordance with the depreciation policy applied in the
preceding three Financial Years.

 

6.6                                 Work-in-progress

 

(a)                                  Work-in-progress

 

All work-in-progress valued in the Last Accounts was valued on the
lower of cost and the amounts which could in the circumstances existing at the
Last Accounting Date reasonably be expected to be realised in the normal course
of carrying on the business of the Company. There are no amounts of work in
progress in relation to abandoned projects.

 

(b)                                 Consistency

 

The method of valuing work-in-progress adopted in the Last Accounts
was the same as that adopted in the Accounts for each of the three Financial
Years preceding the Financial Year ended on the Last Accounting Date.

 

6.7                                 Bad debt provisions and
write-offs

 

The Last Accounts contain appropriate
provision for bad and doubtful debts.

 

6.8                                 Management Accounts

 

(a)                                  The Management Accounts
were prepared in accordance with the accounting policies of the Company to a
standard of detail appropriate for management accounts of a group of companies
of the size and nature of the Group and in a manner consistent with that
adopted in the preparation of its management accounts for all periods ended
during the twelve months prior to the Last Accounting Date.

 

44

 

(b)                                 Having regard to the level
of detail to which the Management Accounts were prepared, they are not
misleading in any material respect and neither materially overstate the value
of the assets nor materially understate the liabilities of the Group as at the
date to which they were drawn up and do not materially overstate the profits of
the Group in respect of the period to which they relate.

 

(c)                                  All work-in-progress
valued in the Management Accounts was valued on the lower of cost and the
amounts which could in the circumstances existing at 31 January 2005 reasonably
be expected to be realised in the normal course of carrying on the business of
the Company.

 

7.                                      POSITION SINCE
MANAGEMENT ACCOUNTS AND LAST ACCOUNTING DATE

 

Since 31 January 2005:

 

7.1                                 there has been no
material adverse change in the financial or trading position of the Group and
no event, fact or matter has occurred which is likely to give rise to any such
change, and there has been no damage, destruction or loss (whether or not
covered by insurance) affecting the same. For the purposes of this Warranty, a “material
adverse change” shall mean any change which would adversely affect the balance
sheet or gross income of the Group by at least £1,000,000 compared to the
position which would have obtained if the change had not taken place; the loss
of any opportunity is not to be regarded as a change for this purpose;

 

7.2                                 there has been no
interruption or material alteration in the nature, scope or manner of the
business of the Group as a whole which business has been carried on in the
ordinary and usual course of business so as to maintain it as a going concern;

 

7.3                                 the Company has not
changed the timescales within which it generally pays its creditors and no
material undisputed amounts are owed by the Company which are overdue for
payment by more than 60 days;

 

7.4                                 the Group has not repaid
or become bound or liable to pay any borrowing or indebtedness in advance of
its stated maturity excluding any recoupable advances made to members of the
group under any ordinary course contract (other than financing or banking type
contracts);

 

7.5                                 the Company has not,
except in the ordinary course of business, acquired, sold, transferred or
otherwise disposed of any material assets of whatsoever nature;

 

7.6                                 the Company has not
cancelled, waived, released, compromised, assigned or discontinued any material
debts or claims nor cancelled, waived, released, compromised, assigned or
discontinued any material rights other than in the ordinary course of its
business;

 

7.7                                 no contract, liability
or commitment (whether in respect of capital expenditure or otherwise) has been
entered into by the Company which is of an unusual nature and involved or would
be likely to involve an obligation of a material nature or magnitude (a
liability for expenditure in excess of £1,500,000 being regarded as material
for this purpose);

 

7.8                                  (except for any
dividends provided for in the Last Accounts) no dividends, bonuses or other
distributions have been declared, paid or made by the Company;

 

7.9                                 save for any of the
Share Options referred to in Schedule 8, no share or loan capital of the
Company has been allotted or issued or agreed to be allotted or issued nor has
any option or right thereover been granted;

 

7.10                           the Company has not
undergone any capital reorganisation or change in its capital structure;

 

45

 

7.11                           no resolution of the
members of the Company has been passed (whether in general meeting or
otherwise);

 

7.12                           the Company has so
conducted its affairs that, if a balance sheet were to be prepared as at the
Completion Date in a manner consistent in all respects with that adopted in the
preparation of the Last Accounts, the net assets of the Company and the Group
would be shown to be not materially less than those shown by the Last Accounts;

 

7.13                           there has been no
material increase or decrease in the levels of debtors or creditors or in the
average collection or payment periods for the debtors and creditors
respectively of the Group as a whole outside the range of levels or periods
normally experienced by the Group as a whole;

 

7.14                           no fees or other
payments have been made to any member of the Ingenious Group other than any
fees or payments payable pursuant to the terms of the Existing Ingenious
Consulting Agreement;

 

7.15                           there has been no
material reduction in the cash balances of the company from those set out in
the Management Accounts or any unusual and unplanned increase or decrease in
the level of work in progress of the Group;

 

7.16                           there have been no capital
injections from or forgiveness of debt by the Sellers or any member of the
Ingenious Group.

 

Since the last Accounting Date and up to 31 January 2005:

 

7.17                           there has been no
development or event which should have been reflected in the Management Accounts
but was not that has had or could reasonably be expected to have a material
adverse effect on the business of the Group. 
For the purposes of this Warranty, a “material adverse effect” shall
mean any event which would adversely affect the balance sheet or gross income
of the Group by at least £1,000,000 compared to the position which would have
been obtained if the event had not taken place.

 

8.                                      FINANCIAL MATTERS

 

In this Schedule 3, the word “Indebtedness”
means, in respect of any company or other entity, any borrowing or indebtedness
in the nature of borrowing (including any indebtedness for monies borrowed or
raised under any bank or third party guarantee, acceptance credit, bond, note,
bill of exchange or commercial paper, letter of credit, finance lease, hire
purchase agreement, forward sale or purchase agreement or conditional sale
agreement or other transaction having the commercial effect of a borrowing and
all finance, loan and other obligations of a kind required to be included in
the balance sheet of a company or other entity pursuant to Relevant Accounting
Standards);

 

8.1                                 All dividends lawful

 

All dividends and distributions declared, made or paid by the
Company at any time were, when declared, made or paid, in accordance with the
requirements of general law and the articles of association of the Company.

 

8.2                                 Borrowing

 

(a)                                  Banking and other
facilities

 

Details of and copies of all relevant documentation relating to
the Indebtedness of the Company are contained in the Disclosure Letter.

 

46

 

(b)                                 Borrowing within limits

 

The aggregate Indebtedness of the Company does not exceed any
maximum stipulated in any debenture, charge or other document binding on the
Company.

 

(c)                                  No factoring, etc

 

The Company has not factored any debts, or engaged in any
financing arrangements or arrangements having the commercial effect of
borrowing, not shown in the Last Accounts.

 

8.3                                 No liability to
affiliates or employees

 

There is no outstanding Indebtedness or liability (actual or
contingent) between the Company and the Sellers or any member of the Ingenious
Group or between the Company and any directors, officers or employees of the
Company or the Sellers or any member of the Ingenious Group (save for accrued
salary) or any relatives or controlled companies of any such persons and no
security for any such Indebtedness or liability has been given and remains
outstanding.

 

8.4                                 Grants

 

No act or transaction has been effected or agreed to be effected
by the Company or the Sellers including the sale of the Shares in consequence
of which:

 

(a)                                  the Company is or will
be liable to refund or repay the whole or part of any investment or other
grant, subsidy or allowance; or

 

(b)                                 any such grant, subsidy
or allowance for which application has been made by the Company will not be
paid or will be reduced.

 

8.5                                 No guarantees, etc.

 

There is not outstanding any agreement or arrangement which
establishes any guarantee, indemnity, suretyship, form of comfort or support
(whether or not legally binding):

 

(a)                                  given by the Company in
respect of the obligations or solvency of any person outside the Group;

 

(b)                                 given by any person
outside the Group in respect of the obligations or solvency of the Company; or

 

(c)                                  given by the Sellers or
any member of Ingenious Group in respect of any liability of the Company.

 

8.6                                 Debts owed to the
Company

 

There are no debts owing to the Company (by any entity other than
a member of the Group) other than trade debts incurred in the ordinary and
usual course of business which trade debts do not exceed £3,000,000 in
aggregate for the Group as a whole.

 

8.7                                 No deal bonus or finders
fee

 

There is not outstanding any agreement or arrangement, not has
there been any agreement or arrangement in the nature of a so-called finders
fee in relation to the proposed sale of the Company payable by or on behalf of
the Company or in the nature of a transaction related 

 

47

 

bonus or payment due to any director, employee or consultant of
the Company in relation to the proposed sale of the Company.

 

9.                                      CONTRACTUAL MATTERS

 

9.1                                 Effect of executing this
agreement

 

So far as the Warrantors are aware, the execution of and
compliance with the terms of this agreement will not:

 

(a)                                  result in a breach of or
give rise to any right of termination under the terms of any subsisting
agreement, arrangement or instrument binding on the Company;

 

(b)                                 cause the Company to
lose the benefit of any material contractual right, licence or privilege;

 

(c)                                  relieve any person of
any material contractual obligation to the Company or enable any person to
determine such obligation or any material contractual right or benefit enjoyed
by the Company or to exercise any material contractual right otherwise in respect
of the Company; or

 

(d)                                 result in any material
liability of the Company being created or increased;

 

(e)                                  prejudicially affect the attitude or actions of contract counter-parties,
clients, customers, suppliers and employees with regard to the Company.

 

9.2                                 Significant
counter-parties

 

(a)                                  Other than as
Disclosed no counter party on any contractual arrangements (including any
person connected in any way with any such party) accounts directly or
indirectly either for more than ten per cent. of the annual aggregate turnover
or for more than ten per cent. of the annual aggregate expenses of the Group
taken as a whole.

 

(b)                                 No loss of significant
counter-parties

 

No significant counter-party of the Company (that is to say a
contractual counter-party who contributes directly or indirectly to the Group
as a whole income representing more than ten per cent in value of turnover of
the Group as a whole or representing payments by the Group of more than ten per
cent in value of the costs of sale of the Group as a whole over any given
period of 12 consecutive months within the last five years prior to this
agreement) has, during the period of 12 months prior to this agreement, ceased
to trade with or indicated an intention to cease to trade with, the Company
either in whole or in part.  During the
period of 12 months prior to the date of this agreement, the terms of trade of
the Company with each significant counter-party (as defined above) have not
significantly changed to the detriment of the Company.  The Sellers are not aware that any cessation
or substantial reduction in trade or change in terms of dealing as described
above is likely after Completion.

 

9.3                                 Stand-alone business

 

The assets and rights of the Group as a whole and the facilities
and services to which the Company or any member of the Group has a contractual
right are all that have been necessary to operate the businesses of the Group
as it has been operated historically and as reflected
in the Accounts for the last 3 Financial Years including, without limitation, with
respect to the Company’s involvement in the Pop Idol and American Idol formats.

 

48

 

9.4                                 Relationships with key
partners

 

(a)                                  So far as the Warrantors
are aware, no direct or indirect statements (orally or in writing) have been
made to the Company or any of the Sellers regarding the intentions of Fox Broadcasting Company (or any affiliate or related party),
members of the FremantleMedia group, Ronagold Limited (or any member of the BMG
group), ITV plc (or any affiliate or related party) or any of on-air talent
(excluding contestants) of any of the Pop Idol or American Idol programmes
worldwide to (i) cease to continue their existing contractual relationship
(whether directly or indirectly) with the Group; (ii) no longer participate in
the relevant Pop Idol or American Idol programme or as far as the Sellers are
aware related arrangements; or (iii) materially adversely alter the terms on
which they operate with respect to the Group.

 

(b)                                 The Group has a happy relationship with David and Victoria Beckham
and, to the knowledge of the Warrantors (without having made specific enquiry
of David or Victoria Beckham), neither David nor Victoria Beckham intends or
seeks to alter the terms of their relationship with the Group.

 

9.5                                 Characteristics of
contracts

 

There is not outstanding any contract, liability or arrangement to
which the Company is a party or by which it is bound which:

 

(a)                                  is outside the ordinary
course of business of the Company;

 

(b)                                 currently commits the
Company to expenditure which is not capable of being funded out of the Group’s
existing levels of working capital;

 

(c)                                  requires expenditure of
in excess of £1million per year;

 

(d)                                 is otherwise than by way
of a bargain at arm’s length;

 

(e)                                  is one pursuant to which
the Company has sold or otherwise disposed of any company or business in
circumstances such that it remains subject to any liability (whether contingent
or otherwise) which is not fully provided for in the Last Accounts;

 

(f)                                    is a currency and/or
interest rate swap agreement, asset swap, future rate or forward rate
agreement, interest cap, collar and/or floor agreement or other exchange or
rate protection transaction or combination thereof or any option with respect
to any such transaction or any other similar transaction to which the Company
is a party; and

 

(g)                                 is a bid, tender,
proposal or offer entered into otherwise than in the ordinary course of
business of the Company which, if accepted, would result in the Company
becoming a party to any agreement or arrangement of a kind described in any of
paragraphs 9.5(a) to 9.3(d) above.

 

9.6                                 Nature of Relevant
Contracts

 

                                                The Relevant Contracts
are the only key framework agreements regulating the commercial arrangements
surrounding the America Idol and Pop Idol worldwide programmes.

 

9.7                                 Compliance with Relevant
Contracts

 

With respect to each of the Relevant Contracts:

 

49

 

(i)                                     the Company has duly
performed and complied in all respects with each of its material obligations
thereunder;

 

(ii)                                  there has been no
material delay, negligence or other default on the part of the Company and no
event has occurred which, with the giving of notice or passage of time, would
constitute a material default thereunder;

 

(iii)                               so far as the Warrantors
are aware, there are no grounds for rescission, avoidance, repudiation or
termination and the Company has not received any notice of termination; and

 

(iv)                              the Warrantors are not
aware of any of the other parties thereto is in material default or, so far as
the Warrantors are aware, is likely to become in material default thereunder.

 

9.8                                 Fox Arrangement

 

(a)                               The unsigned draft
agreement dated 22 April 2002 between Fox Broadcasting Company (“FBC”), Fremantle Media North America Inc. (“FMNA”) and 19 TV Limited (“19 TV”) relating to the production by FMNA
and 19 TV of episodes of American Idol, as amended by the letter agreement
dated as of May 15, 2003 between FBC, FMNA and 19 TV are the main framework
agreements between Fox, 19 TV and FMNA in relation to American Idol.  19 TV and FMNA have treated these framework
agreements as binding.

 

(b)                              Pursuant to the terms of
the agreements referred to above, in relation to American Idol 3 and subsequent
series of American Idol ordered by FBC, the flat non-auditable licence fee and
any format fees are paid by FBC to FMNA. 
19 TV and FMNA co-produce American Idol through American Idol
Productions Inc (“AIP”).  FMNA (through AIP) pays all costs of
production and other related expenses from the flat non-auditable licence fee
and format fees and then pays to 19 TV 50% of the amount leftover, with such
accounting normally being completed within 6 months after the end of the
Series.  FMNA and 19 TV share any
executive producer fees received from FBC in the proportions 40% to 19 TV and
60% to FMNA.  19 TV receives from FMNA
100% of any executive producer fees for the services of Nigel Lythgoe.  FBC pays direct to 19 TV and FMNA their
respective shares of ranking and rating bonuses.

 

9.9                                 Offers and tenders

 

No offer or tender issued by the Company and still outstanding is
or will be capable of giving rise to a contract merely by an order or
acceptance or other action by another party which would, once accepted, result
in the Company being committed to expenditure of £500,000 or more.

 

9.10                           Contracts - connected
persons

 

(a)                                  Save as Disclosed, there
is not outstanding any material agreement, arrangement or understanding
(whether legally enforceable or not) to which the Company is a party and in
which:

 

(i)                                     any current director of
the Company or any connected person is interested, whether directly or
indirectly (save for any service or employment agreement between the Company
and any such persons); or

 

(ii)                                  any of the Sellers or
any member of the Ingenious Group are interested.

 

50

 

(b)                                 Save as Disclosed, the
Company does not depend in any material respect upon the use of assets owned
by, or facilities or services provided by, the Sellers or any member of the
Ingenious Group, the cessation of which would materially adversely affect the
Company or the replacement of which would require material effort or
expenditure by the Company.

 

(c)                                  The Group’s profits or
financial position in each of the three financial years ended on the Last
Accounting Date have not been materially affected by any material agreement
which is not entirely of an arm’s length nature.

 

9.11                           Partnerships

 

The Company is not a member of, or party to, any partnership.

 

9.12                           Competition and fair
trading

 

(a)                                  There are no contracts
or obligations, agreements, arrangements or concerted practices involving the
Company and no practices in which the Company is or has been engaged which are
void, illegal, unenforceable, registrable or notifiable under or which
contravene any competition, anti-trust, anti-monopoly or anti-cartel
legislation or regulations in either the United Kingdom or the United States of
America, nor has the Company received any written threat or complaint or
request for information or investigation in relation to or in connection with
any such legislation or regulations.

 

(b)                                 The Company is not
subject to any order, judgment, decision or direction given by any court or
governmental or regulatory authority in any jurisdiction other than one
generally affecting the industries in which it operates, nor is it party to any
undertaking or assurance given to any such court or authority, in relation to
competition matters which is still in force.

 

9.13                           Vulnerable antecedent
transactions

 

So far as the Warrantors are aware, the Company has not at any
time in the two year period prior to Completion:

 

(a)                                  entered into any
transaction at an undervalue (within the meaning of s238 or s339 or s423
Insolvency Act 1986) with any other person;

 

(b)                                 been given any
preference (within the meaning of s239 or s340 Insolvency Act 1986) by any
other person; or

 

(c)                                  entered into any other
material transaction which is void or voidable (whether in whole or in part) or
received any benefit or acquired any asset which is or will be liable to be
returned or repaid (whether in whole or in part).

 

9.14                           Payments/political
donations

 

No act or transaction has been effected by or on behalf of the
Company involving the making or authorising of any payment, or the giving of
anything of value, to any government official, political party, party official
or candidate for political office for the purpose of influencing the recipient
in his or its official capacity in order to obtain business, retain business or
direct business to the Company or any other person or firm.

 

9.15                           Termination of
Investment Agreement

 

The parties to the deed of termination of the investment agreement
referred to in paragraph 15 of part 3 of schedule 2 are all the parties whose
consent is required to give the Company an 

 

51

 

effective release from its obligations under such agreement, and
to waive any claims against the Company thereunder.

 

10.                               ASSETS

 

10.1                           Title to physical assets

 

All of the material physical assets owned by the Company are the
sole, absolute property of the Company and there is not now outstanding any
Encumbrance over the whole or any part of any material physical assets of the
Company and none of the material physical assets now owned or used by the
Company is subject of any Encumbrance or any hire purchase, leasing, lease,
purchase or credit sale agreement.

 

10.2                           Possession and third
party facilities

 

(a)                                  All of the material
physical assets owned by the Company, or in respect of which the Company has a
right of use, are in the possession or under the control of the Company.

 

(b)                                 Where any material
physical assets are used but not owned by the Company or any facilities or
services are provided to the Company by any third party, there has not so far
as the Warrantors are aware occurred any event of default or any other event or
circumstance which would entitle any third party to terminate any agreement or
licence in respect of the provision of such facilities or services (or any event
or circumstance which with the giving of notice and/or the lapse of time and/or
a relevant determination would constitute such an event or circumstance).

 

11.                               LITIGATION

 

11.1                           No litigation

 

The Company is not engaged, either on its own account or vicariously,
in any suit, action, litigation, arbitration or tribunal proceedings or any
governmental investigations.  In addition
so far as the Warrantors are aware, the Company has not received notice of any
such suit, action, litigation, arbitration or tribunal proceedings or
governmental investigations which are pending or threatened, by or against the
Company.

 

12.                               INSOLVENCY ETC.

 

12.1                           Company not insolvent

 

The Company has not stopped payment, nor is it insolvent or deemed
unable to pay its debts within the meaning of s123 of the Insolvency Act 1986
other than immaterial debts being contested by appropriate action.

 

12.2                           No winding up

 

No order has been made, petition presented or meeting convened for
the purpose of considering a resolution for the winding up of the Company or
for the appointment of any provisional liquidator.  No petition has been presented for an
administration order to be made in relation to the Company, and no
administrator or receiver (including any administrative receiver) has been
appointed in respect of the whole or any part of any of the property, assets
and/or undertaking of the Company.

 

52

 

12.3                           No composition, etc.

 

No composition in satisfaction of the debts of the Company, or scheme
of arrangement of its affairs, or compromise or arrangement between it and its
creditors and/or members or any class of its creditors and/or members, has been
proposed, sanctioned or approved.

 

12.4                           No distress, etc.

 

No distress, distraint, charging order, garnishee order, execution
or other process has been levied or applied for in respect of the whole or any
part of any of the property, assets and/or undertaking of the Company.

 

12.5                           No disqualification

 

No person who now is, or who at any time within the last three
years was, a director or officer of the Company is, or at any material time
was, subject to any disqualification order under CA85, the Insolvency Act 1986
or the Company Directors Disqualification Act 1986.

 

12.6                           Analogous events

 

No events or circumstances analogous to any of those referred to
in the preceding paragraphs 12.1 to 12.5 have occurred in any jurisdiction
outside England and Wales.

 

12.7                           So far as the Warrantors
are aware, no circumstances exist which will give rise to the occurrence of any
events or circumstances described in the preceding paragraphs 12.1 to 12.6.

 

13.                               POWERS OF ATTORNEY

 

The Company has given no powers of attorney and no other authority
express, implied or ostensible which is still outstanding or effective to any
person to enter into any contract or commitment to do anything on its behalf
other than the authority of employees and officers to enter into contracts in
the ordinary course of their duties.

 

14.                               REGULATORY MATTERS

 

14.1                           Licences

 

(a)                                  The Company has obtained
all material licences, permissions, authorisations and consents required for
carrying on its business effectively in the places and in the manner in which
such business is now carried on.

 

(b)                                 The licences,
permissions, authorisations and consents referred to in paragraph 14.1(a) are
in full force and effect, are not subject to any unusual or onerous conditions
which would not ordinarily be present in such licences, permissions,
authorisations or consents, and have been complied with in all material
respects.

 

(c)                                  So far as the Warrantors
are aware, the Company has not received any notice that there are any
circumstances currently existing which indicate that any of the licences,
permissions, authorisations or consents referred to in paragraph 14.1(a) will
be suspended, cancelled or revoked or not renewed, in whole or in part, in the
ordinary course of events.

 

(d)                                This clause 14.1 shall
not refer to any licences, permissions, authorisations or consents which relate
to the Intellectual Property or to the Properties.

 

53

 

14.2                           Compliance with laws

 

(a)                                  The Company has
conducted its business and corporate affairs in accordance with its memorandum
and articles of association and in all material respects in compliance with all
applicable laws and regulations (whether of the United Kingdom or any other
jurisdiction).

 

(b)                                 The Company is not in
breach of any order, decree or judgement of any court or any governmental or
regulatory authority (whether of the United Kingdom or any other jurisdiction).

 

(c)                                  So far as the Warrantors
are aware, neither the Company nor any of its officers, agents or employees
during the course of carrying out duties for the Company has done or omitted to
do any act or thing, the commission or omission of which is a contravention of
any law or regulation (whether of the United Kingdom or any other
jurisdiction).

 

(d)                                 So far as the Warrantors
are aware, no commissions, discounts, rebates or other inducements, whether of
cash or in kind, have been given by the Company or its officers or employees
during the course of carrying out duties for the Company where the same are
capable of forming the basis of criminal prosecution of, or civil action
against, the Company or any of its officers or employees.

 

15.                               INSURANCE

 

15.1                           The Company has at all
times been adequately covered against accident, third party, public liability,
product liability and other risks normally covered by insurance and nothing has
been done or omitted to be done by or on behalf of the Company which would make
any policy of insurance void or voidable or enable the insurers to avoid the
same and there is no material claim outstanding under any such policy and the
Sellers are not aware of any circumstances which will give rise to such a claim
or (other than generally applicable market factors) result in a material
increase in the rate of any premium.

 

15.2                           All information
furnished in obtaining or renewing the Insurance Policies was correct and
accurate when given and any change in that information required to be given was
correctly given. The Company is not in default under any of those policies,
which are in full force and effect.

 

15.3                           There is set out in the
Disclosure Letter a summary of the Insurance Policies and copies of those
policies have been delivered with the Disclosure Letter and are true and
complete in all material respects.

 

15.4                           The Company has not
suffered any material uninsured losses nor waived any rights of material or
substantial value.

 

54

 

Part 2: Employment Warranties

 

1.                                      INTERPRETATION

 

In this part 2 of schedule 3, the following words and expressions
shall have the following meanings:

 

“Employees” means those persons
employed by the Company;

 

“Employment Law” means all and any
laws, common law, statutes, directives, regulations, notices, judgments,
decrees or orders, whether of the European Community or the United Kingdom or
any other relevant jurisdiction, relating to or connected with the employment
of employees and workers and/or their health and safety at work;

 

“Employment Liabilities” means all
Losses connected with or arising from any Employment Law;

 

“Senior Employee” means any
employee whose annual salary exceeds £75,000.

 

2.                                      TRADE UNION RECOGNITION

 

The Company does not recognise any trade union or other body
representing its Employees (or any of them) for the purpose of collective
bargaining or other negotiating purposes, nor has the Company done any act
which might be construed as recognition or received a request for recognition
of any such body and, so far as the Warrantors are aware, no such request is
pending.

 

3.                                      TRADE DISPUTES

 

No dispute, strike or other industrial action exists or is
threatened between the Company and a significant number or category of its
Employees or a trade union representing such Employees and no such dispute,
strike or other industrial action has occurred in the last 12 months.

 

4.                                      COMPLIANCES WITH
APPLICABLE LAW

 

The Company has complied with all material obligations imposed on
it by Employment Law, collective agreements, recognition agreements and all
material contractual obligations applying to the jurisdiction in which such
entity is incorporated or carries on business which are owed to or in respect
of its Employees.

 

5.                                      INFORMATION

 

5.1                                 The Disclosure Letter
contains:

 

(a)                                  the names and dates of
birth and commencement of employment of all persons who are at the Completion
Date Employees of the Company;

 

(b)                                 details of all the
remuneration paid and benefits (including, for the avoidance of doubt,
permanent health insurance) provided to or which the Company is bound to
provide to each of the Employees;

 

(c)                                  copies of the contracts
of Employment of each of the Senior Employees;

 

55

 

(d)                                 details of the terms on
which all individual consultants providing to the Company personal services
which are considered by the Warrantors to be materially significant in the
context of the businesses of the Group are engaged;

 

all of which information is true and complete in all material
respects.

 

5.2                                 There is no person other
than those listed in the Disclosure Letter who is employed in the business of
the Company other than the Employees.

 

5.3                                 No full time Senior
Employee is engaged for any material part of his usual working time in the
business of any company outside the Group.

 

6.                                      VARIATION OF TERMS OF
EMPLOYMENT

 

6.1                                 The Company is not involved in negotiations (whether with Employees
or any trade union or other Employees’ representatives) to materially vary the
terms and conditions of employment or engagement of any of its Employees,
directors or consultants, nor has it during the three months up to Completion
entered into any obligation nor made any representations, promises, offers or
proposals to any of its Employees, directors or consultants or to any trade
union or other Employees’ representatives concerning or affecting the terms and
conditions of employment or engagement of any of its Employees, directors or
consultants.

 

6.2                                 During the last three months, the Company has not
promised but failed to implement prior to Completion any salary review in
respect of any Employees.

 

7.                                      INCENTIVE SCHEMES

 

Save for the EMI Share Options, the Company has not introduced any
share incentive scheme, share option scheme or profit sharing, bonus,
commission or other such incentive scheme for any of its directors or Employees
which remains in effect.

 

8.                                      RESIGNATIONS

 

8.1                                 No Senior Employee or
director of the Company has resigned in the last 12 months.

 

8.2                                 The Company has not
received any notice of resignation from any director or Senior Employee that
has not expired.

 

8.3                                 During the last 6
months, the Company has not dismissed any employees nor is it under any
contractual or other obligation to change the term of service of any Senior
Employee.

 

9.                                      BENEFITS

 

The Company has discharged its obligations in full in relation to
salary, wages, fees, commission, bonuses, overtime pay, holiday pay, sick pay
and all other benefits and emoluments relating to its Employees, directors and
consultants in respect of all prior periods.

 

10.                               REDUNDANCIES

 

10.1                           The Company has neither
given notice of any redundancies to the Secretary of State or any other
appropriate body in any other jurisdiction nor started consultations with any
independent trade union or Employees’ representatives within the last 12 months
in relation to any of the Company’s Employees.

 

10.2                           The Company has not
adopted, whether informally or formally and whether in writing or otherwise,
any policy or practice of making redundancy payments in excess of statutory
minima nor has it historically made any such redundancy payments.

 

56

 

10.3                           The Company does not
have, either formally or informally and whether or not reduced to writing, any
custom or practice of implementing redundancies on a selective basis in
accordance with specific procedures, criteria or formulae.

 

11.                               CLAIMS

 

11.1                           No circumstances have
arisen or exist under which the Company will be required to pay damages or
compensation, or suffer any penalty or be required to take corrective action or
be subject to any form of sanction under Employment Law. The Company has not
received notice of any current, pending or threatened claims of any type against
the Company by any existing or former Employees or directors of the Company or
by any existing or former consultants to the Company.

 

11.2                           So far as the Warrantor
is aware no circumstances have arisen under which the Company is likely to be
required to pay damages for wrongful dismissal or breach of contract, to make
any contractual or statutory redundancy payment or make or pay any compensation
in respect of unfair dismissal, to make any other payment under any Employment
law or to reinstate or re-engage any former Employee.

 

12.                               GRIEVANCE PROCEDURES

 

No Employee has instituted any internal grievance procedure,
corporate information disclosure procedure or malpractice notification
procedure nor has any Senior Employee been the subject of disciplinary proceedings
in the last 12 months by reason of misconduct or suspected misconduct.

 

13.                               EFFECT OF COMPLETION

 

Other than in relation to the Share Options, Completion will not
give rise to the payment of any remuneration, payments or benefits (including
severance payments or benefits) or any enhancements or accelerations thereof to
any Employee whether in accordance with the standard terms and conditions of
employment of such Employee or otherwise or entitle any Employee to terminate
his employment without serving his full notice period.

 

14.                               CHARLES GARLAND AND
SIMON FULLER

 

For the purposes of this Warranty, “Statutory Employment Protection
Claim” means any claim under the Employment Rights Act 1996 (as amended), Sex
Discrimination Act 1975 (as amended), Equal Pay Act 1970 (as amended), Race
Relations Act 1976, Disability Discrimination Act 1995 (as amended), Transfer
of Undertakings (Protection of Employment) Regulations 1981 (as amended),
Working Time Regulations 1998 (as amended), Employment Relations Act 1999,
Art.141 of the EC Treaty, Equal Pay Directive No 75/117, other EU Directives,
Trade Union & Labour Relations (Consolidation) Act 1992 (as amended),
National Minimum Wage Act 1998, Public Interest Disclosure Act 1998, Data
Protection Act 1998, Part-Time Workers (Prevention of Less Favourable)
Treatment Regulations 2000, Fixed-Term Employees (Prevention of Less Favourable
Treatment) Regulations 2002, Employment Act 2002, Employment Equality (Religion
or Belief) Regulations 2003 and Employment Equality (Sexual Orientation)
Regulations 2003.

 

14.1                           Fuller has no claims or rights of action
(whether under statute, common law or otherwise) in any jurisdiction in the
world, howsoever arising, (including but not limited to contractual claims,
breach of contract including for breach of his Service Agreement dated 15
August 2001 and amendments thereto, tort and Fuller’s prospective entitlement
to bring any other Statutory Employment Protection Claim which could be brought
in an Employment Tribunal) against the Company or any Subsidiary, its or their
officers, employees or shareholders, arising from or connected with the
Executive’s current employment with the Company or any 

 

57

 

Subsidiary,
the termination thereof or any other matter concerning the Company or any
Subsidiary.

 

14.2                           Fuller has no claims against the Company, its
purchasers or successors in title, concerning his pension entitlement under his
Service Agreement dated 15 August 2001 or otherwise, and including any tax
liabilities or national insurance contributions that arise or may have arisen
in respect thereof.

 

14.3                           Charles Garland has no claims or rights of action (whether under
statute, common law or otherwise) in any jurisdiction in the world, howsoever
arising, (including but not limited to contractual claims, breach of contract
including for breach of his Service Agreement dated 15 August 2001 and
amendments thereto, tort and his prospective entitlement to bring any other
Statutory Employment Protection Claim which could be brought in an Employment
Tribunal) against the Company or any Subsidiary, its or their officers,
employees or shareholders, arising from or connected with the Executive’s
current employment with the Company or any Subsidiary, the termination thereof
or any other matter concerning the Company or any Subsidiary.

 

62

 

Part 3: IP & IT Warranties

 

1.              DEFINITIONS

 

In this part 3 of schedule 3, the following words and expression
shall have the following meanings:

 

“Company Systems” means the
computer and data processing systems and information and communications
technologies used in or for the business of the Company including hardware,
Software (whether proprietary or third party owned), networks, data storage
devices, printers, VDU’s, firmware, dedicated power supplies, cabling,
peripherals and associated documentation;

 

“Registered Intellectual Property”
means those Intellectual Property rights which have been applied for or which
are registered with any national or international registry, (including all
renewals, extensions and applications for registration) and which are owned by
the Company, for the avoidance of doubt, the Pop Idols trademarks are not
within this definition; and

 

“Pop Idol Trademarks” means all registered
Trade Marks in which any member of the Group has a two thirds beneficial
interest pursuant to the Pearson Agreement as set out in Part 2 of Schedule 10.

 

“Software” means any and all forms
of computer program, including, without limitation, applications and operating
systems and in each case whether in source, object or machine-readable form.

 

2.                                      INTELLECTUAL PROPERTY

 

2.1                                 General

 

Part 1 of schedule 10 contains a complete and accurate list of all
Registered Intellectual Property.

 

2.2                                 Registered Intellectual
Property

 

(a)                                  So far as the Warrantors
are aware, none of the Registered Intellectual Property used by the Company has
been wrongfully or unlawfully acquired by the Company.

 

(b)                                 So far as the Warrantors
are aware no Moral Rights have been asserted or are capable of being asserted
which could materially affect the use or value of any of the Company’s
Registered Intellectual Property and the Company has not received notice from
any third party that the Company is engaged in any activities which infringe
the Moral Rights belonging to any third party.

 

(c)                                  All fees which have
fallen due relating to the Registered Intellectual Property have been paid in
full.

 

(d)                                 All the Registered Intellectual
Property is free from Security Interests.

 

(e)                                  The material particulars
as to registration of (and applications to register) the Registered
Intellectual Property (including application and, where appropriate, renewal
dates) are set out in part 1 of schedule 10 and the Company is the sole
registered proprietor of the Registered Intellectual Property.

 

63

 

(f)                                    Neither the validity or
subsistence of the Registered Intellectual Property, nor the right, title and
interest of the Company in the Registered Intellectual Property, is the subject
of any current, pending or threatened challenge, claim or proceedings of which
the Company has received written notice (including for opposition,
cancellation, revocation or rectification) nor has it been in the last 6 years.

 

(g)                                 So far as the Warrantors
are aware the rights and the ability of the Company to use any Registered
Intellectual Property Rights will not be affected solely by reason of the
acquisition of the Shares by the Purchasers.

 

2.3                                 Pop Idol Trade Marks

 

(a)                                  So far as the Warrantors
are aware, the schedule of registered trade marks and applications for
registered trade marks relating to the Format (as defined in the Pearson
Agreement) which FremantleMedia Limited (or entities connected or affiliated to
such company) have registered pursuant to the terms of the Pearson Agreement as
sent to the Company by FremantleMedia Limited on 9 March 2005 set out in Part 2
of Schedule 10 is true and accurate in all material respects;

 

(b)                                 The Pearson Agreement
sets out all contractual terms agreed between the parties to such agreement in
relation to Trade Marks (as defined in the Pearson Agreement).

 

(c)                                  So far as the Warrantors are aware, none of the
Pop Idol Trademarks used by the Company has been wrongfully or or unlawfully acquired
by the Company.

 

(d)                                 The Company’s interest in the Pop Idol
Trademarks is free from Security Interests.

 

(e)                                  Neither the validity or subsistence of the Pop
Idol Trademarks, nor the right, title and interest of the Company in the Pop
Idol Trademarks, is the subject of any current, pending or threatened
challenge, claim or proceedings of which the Company has received written
notice (including for opposition, cancellation, revocation or rectification)
nor has it been in the last 6 years.

 

(f)                                    So far as the Warrantors are aware the rights
and the ability of the Company to use any Pop Idol Trademarks will not be
affected solely by reason of the acquisition of the Shares by the Purchasers.

 

2.4                                 Intellectual Property

 

(a)                                  The Company owns or has
authority to use all the Intellectual Property it requires to carry on its
business following Completion as such business has been carried on in the last
2 years.

 

(b)                                 Any persons who have
been commissioned by the Company to create, develop or invent any Intellectual
Property for the Company in connection with any ongoing projects of the Company
to which any value is attributed in the work in progress referred to in the
Last Accounts have entered into a written agreement with the Company which
obliges them to assign such Intellectual Property to the Company.

 

(c)                                  All existing Employees
have, as a matter of course, entered into a written agreement with the Company
which obliges them to assign to the Company any Intellectual Property created
by them whilst carrying out duties in the course of their employment with the
Company.

 

(d)                                 The Pop Idol Format (as
such term is defined in the Pearson Agreement) was independently created by
Fuller on behalf of the Company prior to 1999 and without 

 

64

 

reference to any
proposal submitted by Mr Alistair Curry or European Business Consultancy
Limited.

 

2.5                                 Infringement

 

(a)                                  Save as Disclosed,  no claim has been made by any third party
which alleges that the operations of the Company infringe or misuse or are
likely to infringe or misuse the Intellectual Property of a third party or
which otherwise disputes the right of the Company to use any Intellectual
Property owned or used by it.

 

(b)                                 No claim has been made
by the Company which alleges that a third party is infringing or misusing or is
likely to infringe or misuse the Registered Intellectual Property owned by the
Company. So far as the Warrantors are aware, no third party has served notice
on the Company of any circumstances which are likely to give rise to such a
claim.

 

(c)                                  Save as Disclosed, the
operations of the Company do not infringe or misuse nor are they likely to
infringe or misuse any Intellectual Property.

 

2.6                                 Nigel Lythgoe

 

Nigel Lythgoe’s arrangements and understandings with the Company
and the Group are completely and accurately set out in the documents relating
to him, copies of which are annexed to the Disclosure Letter and there are no
terms of such arrangements or understandings which have not been Disclosed.

 

3.                                      CONFIDENTIAL
INFORMATION

 

The Company has
not used any processes and is not engaged in any activities which involve the
misuse of any Confidential Information belonging to any third party, nor so far
as the Warrantors are aware does the Company otherwise have in its possession
or control any such Confidential Information without the licence or authority
or the relevant owner.

 

4.                                      INFORMATION
TECHNOLOGY

 

4.1                                 The Company Systems are
either owned by, or properly licensed or leased to the Company and there are no
circumstances of which the Warrantors are aware in which the ownership,
benefit, or right to use the Company Systems may be lost solely by virtue of
the acquisition of the Shares by the Purchaser. The Company Systems are covered
under current maintenance and support agreements, copies of which are
Disclosed.

 

4.2                                 The Company has taken
all reasonable steps to ensure that the Software used by the Company in the
carrying on of its business is free of any virus which would threaten the
ability of the Company to operate its normal business activities.

 

4.3                                 The Company Systems are
Date Compliant in all material respects. 
For the purposes of this paragraph 4.3 “Date Compliant” means the
ability of a computer system and/or related hardware and/or Software to be
unaffected, either in its performance or in its functionality, by any dates
(past, present and future) and in particular (but without prejudice to the
generality of the foregoing):

 

(a)                                  no value for current
date causes or will cause any interruption in operation;

 

(b)                                 date-based functionality
behaves and will behave consistently for all dates;

 

65

 

(c)                                  in all interfaces and
data storage, the century in any date is and will be specified either
explicitly or by unambiguous algorithms or inferencing rules; and

 

(d)                                 all leap years are and
will be recognised as a leap year.

 

5.                                      RECORDS

 

Adequate records, files and documents have been maintained, for
the prosecution or maintenance of all registrations and applications to
register the Registered Intellectual Property as well as all source codes,
tapes, indices, descriptive memoranda, original listings, development and
working papers, calculations and other documents or media necessary to prove
authorship and ownership of the Software owned by the Company and the records,
files and documents are in the possession of the Company or under its control.

 

6.                                      DATA PROTECTION

 

6.1                                 The Company has notified
or applied to notify itself under the Data Protection Act 1998 and any other
relevant data protection legislation having similar effect anywhere in the
world, details of which are Disclosed. The Company complies with all material
applicable data protection laws, guidelines and industry standards.

 

6.2                                 No notice or allegation
has been received by the Company from a competent authority alleging that the
Company has not complied with any applicable data protection laws.

 

6.3                                 The Company has not
received any written notice from any individual claiming from the Company
compensation for breaches of applicable data protection laws.

 

66

 

Part 4:
Pensions Warranties

 

1.                                      DEFINITIONS

 

In this part 4 of schedule 3, the following words and expressions
shall have the following meanings:

 

“Employee” means any past or
present officer or employee of the Company, including any person who is on
secondment overseas; and

 

“Pension Arrangements” means each
of the pension, retirement gratuity, life assurance and termination indemnity
schemes, plans or arrangements set out in the Disclosure Letter.

 

2.                                      DISCLOSURE OF PENSION
ARRANGEMENTS

 

Other than any mandatory government or social security pension
arrangements and the Pension Arrangements, there is no scheme, arrangement or
agreement to which the Company is a party or by which it is bound or under
which it has an obligation or liability (whether actual, contingent or
prospective) to contribute or to provide funding for the provision of life
assurance, retirement, death, disability or other like benefits (in the form of
a pension, lump sum, gratuity or otherwise) in respect of any Employee.

 

3.                                      INFORMATION RELATING
TO PENSION ARRANGEMENTS

 

Details of all material documentation which the Company is holding
in relation to Pension Arrangements have been Disclosed and the details of all
such Pension Arrangements which have been Disclosed are sufficient to enable
the Purchasers to ascertain benefits provided under each of the Pension
Arrangements in respect of the Employees and the value of such benefits.

 

4.                                      COMPLIANCE WITH
DOCUMENTATION

 

The Company and any persons having legal ownership of the Pension
Arrangements have complied with their respective material obligations under the
governing documentation of the relevant Pension Arrangement.

 

5.                                      COMPLIANCE WITH
LEGISLATION

 

Each of the Pension Arrangements complies with and has at all
times complied with the provisions of the relevant legislation and tax
requirements governing or applicable to that Pension Arrangement including (but
not limited to) Article 141 of the Treaty of Amsterdam (where applicable), the
local Tax Authority requirements, any collective agreements to which it or the
Employees are a party or subject, social security requirements and any statutory
and/or local governmental requirements.

 

6.                                      FUNDING

 

All amounts
due to or payable in respect of each of the Pension Arrangements or to any
insurance company or other relevant third party in connection with each of the
Pension Arrangements have been paid.

 

7.                                      DISPUTES

 

The Company is not a party to any ombudsman, litigation or
arbitration proceedings in respect of the Pension Arrangements or benefits
provided under the Pension Arrangements 

 

67

 

and the Company has not received written or oral notice of any
such ombudsman, litigation or arbitration proceedings which may be made against
the Company.

 

8.                                      DISCONTINUANCE

 

No plan, proposal or intention to amend or discontinue (in whole
or in part) any of the Pension Arrangements has been communicated to any
Employee nor has any act or event occurred which will give rise to a full or
partial discontinuance of any of the Pension Arrangements under applicable law.

 

9.                                      LIFE
INSURANCE

 

                                                All life insurance
arrangements set out in the Disclosure Letter are established under trust.

 

68

 

Part 5:
Property Warranties

 

1.                                      TITLE

 

1.1                                 The Properties comprise
all the land and premises owned or occupied or otherwise used by the Company
and all the estate, interest, right and title whatsoever of the Company in,
under, over or in respect of any land or premises and the descriptions set out
in schedule 9 are correct.  The Company
does not have any other interest in any other land or buildings other than the
Properties and the Company has not entered into any legally binding agreement
for the purchase of any such interest.

 

1.2                                 The documents of title
to the Properties are in the possession or under the control of the Company and
such documents are original documents or properly examined abstracts.

 

2.                                      ENCUMBRANCES

 

2.1                                 The Properties are free
and clear of all claims, Encumbrances, leases, tenancies, licences or other
rights of occupation, and other agreements affecting the same and the Company
has exclusive possession of the whole of the Properties.

 

2.2                                 The Properties are not
subject to any outgoings other than business and water rates, rent, insurance
and service charges and those outgoings referred to the Company’s leases of the
Properties.

 

2.3                                 As far as the Warrantor is aware there are no material covenants
restrictions burdens stipulations wayleaves easements grants conditions terms
rights or licences affecting the Properties listed at part 1 of Schedule 10
which are of an unusual or onerous nature or which have a material adverse
affect on the use of the Properties listed at part 1 of Schedule 10.

 

2.4                                 There are no material covenants restrictions burdens stipulations
wayleaves easements grants conditions terms rights or licences affecting the
Properties listed at part 3 of Schedule 10 which are of an unusual or
onerous nature or which have a material adverse affect on the use of the
Properties listed at part 3 of Schedule 10.

 

2.5                                 The Warrantors have not
received written notice that any covenants, restrictions, stipulations,
conditions and other terms affecting the Properties and the uses of the
Properties have not been duly observed and performed.

 

2.6                                 So far as the Warrantors
are aware, the Company has not received written notice of any outstanding
disputes, notices or complaints which affect the use of any of the Properties
for the purposes for which they are now used and which would prevent or impede
the Company from operating and carrying on the business currently carried out at
each of the Properties.

 

3.                                      PLANNING AND OTHER
STATUTORY OBLIGATIONS

 

So far as the
Warrantors are aware the Properties comply with statutes, regulations, bye-laws
and other relevant legislation with requirements as to fire precautions and
means of escape in case of fire.

 

4.                                       LEASEHOLD
PROPERTIES

 

4.1                                 Each of the Properties
is held under the lease details of which are set out in part 1 of schedule 9
and no licence or supplementary agreements and concessions have been entered
into or granted in respect of those leases as far as the Warrantors are aware.

 

4.2                                 There are outstanding
rent reviews.

 

69

 

5.                                      CONTINGENT
LIABILITIES

 

5.1                                 The Company has not at
any time assigned or otherwise disposed of any property, leasehold or
otherwise, in respect of which it has a continuing liability (contingent or
otherwise) for payment of rent and/or for any other liability.

 

5.2                                 The Company is not the
guarantor of or surety for any other party’s liability (contingent or otherwise)
for any obligations under any lease, tenancy, agreement or any other deed or
under any agreement relating to the assignment of any lease or tenancy.

 

6.                                       OCCUPATIONAL LEASES

 

All leases and tenancies and all agreements for leases and
tenancies granted by the Company (or any predecessor) in respect of the
Properties are correctly summarised in the particulars set out in part 2 of
schedule 9.

 

7.                                      INSURANCE

 

The Warrantors
have not received written notice that any current policies of insurance
relating to any of the Properties (including fixtures fittings and contents)
which have not been effected by the Company are not current and valid nor cover
the full reinstatement value thereof (including, where the relevant property is
let, loss of rent cover for a minimum of three years) and have not received
written notice that they are subject to any special or unusual terms or
restrictions or to the payment of any premium in excess of the normal rate for
policies of the same kind and where the Properties are insured by a landlord
under the terms of a lease as far as the Warrantors are aware the policy
conforms in all respects with the requirements of the relevant lease.

 

70

 

Part 6: Tax Warranties

 

1.                                      GENERAL

 

1.1                                 Provision or reserve (as
appropriate) has been made in the Last Accounts for (i)
all Tax for which the Company is liable or accountable (whether primarily or
otherwise) in respect of all income, profits or gains earned, accrued or
received on or before the Last Accounting Date or in respect of any Event
occurring on or before the Last Accounting Date and (ii) for all deferred Tax
assets and liabilities of the Company in accordance with generally accepted
accounting practice and all Relevant Accounting Standards.

 

1.2                                 The Company has made all instalment payments required by the
Corporation Tax (Instalment Payments) Regulations 1998 and all such instalment
payments were made on the basis of a reasonable estimate of the Company’s total
liability for the relevant accounting period.

 

1.3                                 Since the Last Accounting Date the Company has not incurred any
material expenditure which is not deductible for Tax purposes.

 

2.                                      COMPLIANCE

 

2.1                                 So far as the Warrantors are aware, all information, notices,
computations, claims, assessments (including self-assessments), registrations
and returns which ought to have been submitted have been punctually submitted
by or on behalf of the Company to the relevant Tax Authority and all
information, notices, computations claims, assessments (including
self-assessments), registrations and returns submitted are so far as the
Warrantors are aware complete and accurate and, in the case of information,
remain complete and accurate in all material respects, and are not and so far
as the Warrantors are aware nor are likely to be or become the subject of any
dispute.

 

2.2                                 The Company has not been subject to any
non-routine audit, investigation, discovery or access order by any Tax
Authority or any non-routine visit by any VAT or customs authority.

 

2.3                                 The Warrantors are aware of no dispute at the
date of this Agreement with any Tax Authority regarding:

 

(i)                                     the computation of any gains profits or losses
of the Company for the purposes of Tax;

 

(ii)                                  any liability or potential liability to Tax
(including interest or penalties) recoverable from the Company; or

 

(iii)                               the availability to the Company of any relief
from Tax.

 

2.4                                 The Company has not been a party to any scheme
or arrangement in respect of which the main purpose or one of the main purposes
was the avoidance of a liability to Tax.

 

2.5                                 No Tax Authority has
agreed to operate any special arrangement in relation to the Company other than
an arrangement which is wholly in accordance with a strict interpretation of
the relevant law, published statements of practice or published extra-statutory
concessions of a relevant Tax Authority.

 

3.                                      CAPITAL GAINS

 

3.1                                 The book value in or
adopted for the purposes of the Last Accounts as the value of each of the
assets of the Company on the disposal of which a chargeable gain or allowable
loss could 

 

71

 

arise does not exceed the amount deductible under s38 TCGA in
respect of each such asset.  So far as
the Warrantors are aware, no chargeable gain would (or would but for any
relief, allowance, deduction or credit other than amounts falling to be
deducted under s38 TCGA) arise on the disposal of any asset acquired by the
Company since the Last Accounting Date for a consideration equal to that paid
on its acquisition.

 

3.2                                 So far as the Warrantors
are aware, the Company has not disposed of or acquired any asset to or from any
person in circumstances such that ss17 or 18 TCGA apply to such disposal or
acquisition.

 

3.3                                 The value of the consideration for the acquisition of any asset
included in the Last Accounts or acquired after the Last Accounting Date is not
deemed for Tax purposes to have been reduced by reason of any claim made to
defer Tax whether in relation to that or any other asset.

 

4.                                      INTERNATIONAL

 

4.1                                 The Company is and
always has been resident for all Tax purposes only in the jurisdiction in which
it was incorporated and so far as the Warrantors are aware has never been
regarded as being resident for Tax purposes in a jurisdiction outside its
country of incorporation.

 

4.2                                 So far as the Warrantors
are aware, the Company is not liable to, and has at no time incurred any
liability to Tax in any jurisdiction other than the jurisdiction in which it
was incorporated.  So far as the Warrantors
are aware, the Company has never had a permanent establishment in any
jurisdiction other than in the jurisdiction in which it was incorporated.

 

4.3                                 The Company has not,
without the prior consent of HM Treasury, caused or permitted any such body
corporate as is referred to in Section 765 Taxes Act 1988 to enter into any
transaction specified therein, nor has it entered into a transaction of the
type referred to in Section 765A Taxes Act 1988 without fully complying with
the information reporting requirements prescribed therein.

 

5.                                      TRANSFER
PRICING

 

No Company has
paid any amount for goods, services, or business or financial facilities which
amount has been disallowed or so far as the Warrantors are aware will be
disallowed by any relevant Tax Authority under relevant transfer pricing
legislation nor has any Company received any amount for goods, services or
business or financial facilities which amount has been increased or so far as
the Warrantors are aware will be increased under relevant transfer pricing
legislation.

 

6.                                       GROUPS OF COMPANIES

 

Since the Last Accounting Date, the Company has not ceased to be a
member of a group of companies or undergone a change of control such that: (i) s179 TCGA; or (ii) paragraph 58 of Schedule 29 Finance Act 2002; or
(iii) ss111 or 113 Finance Act 2002; has effect in relation to any asset
of the Company.

 

7.                                       VALUE ADDED TAX

 

The Company is
a taxable person duly registered for the purposes of VAT and has complied in all material respects with all
statutory provisions, rules, regulations, orders and directives in respect of
VAT, has promptly submitted accurate returns and maintains full and accurate
VAT records and has not suffered any liability to any interest, forfeiture,
surcharge or penalty.  VAT has been duly paid or provision has been made in the Accounts for all
amounts of VAT for which the Company is liable.

 

72

 

8.                                      CLOSE COMPANIES

 

8.1                                 The
Company is not, nor has it ever been liable to make a payment to any Tax
Authority under the provisions of Sections 418 to 422 Taxes Act.

 

8.2                                 The Company has never made any transfer of the kind described in
Section 125 TCGA.

 

9.                                      INHERITANCE TAX AND GIFTS

 

9.1                                 So far as the Warrantors
are aware, there are not in existence any circumstances whereby any such power
as is mentioned in s212 Inheritance Tax Act 1984 could be exercised in relation
to any shares in, securities of or assets of the Company.

 

9.2                                 Neither the assets owned
by nor the shares of the Company are subject to an outstanding Inland Revenue
charge as defined in s237 Inheritance Tax Act 1984.

 

10.                               INTANGIBLES

 

10.1                           There are no assets held by the Company in respect of which it has
brought into account, or will before Completion be entitled to bring into
account, any debits under Schedule 29 FA 2002.

 

11.                               TRANSFER TAXES

 

11.1                           There is no instrument
which is necessary to establish the Company’s right or title to any asset which
is or may become liable to stamp duty (or any like duty or tax in a
jurisdiction outside the United Kingdom) which has not been duly stamped or
which would attract stamp duty, interest or penalties if brought within the
relevant jurisdiction.

 

11.2                           Any stamp, stamp duty land, documentary, securities or other
transfer Taxes which any Company is required to pay have been duly paid.

 

12.                               EMPLOYEES

 

12.1                           All income tax deductible and payable in respect of employee Tax
has, so far as it is required to be deducted, been deducted from all payments
made or treated as made by each Company and all amounts so due to be paid to
the relevant Tax Authority prior to Completion have been so paid, including all
Tax chargeable on benefits provided for directors, employees or former
employees of each Company or any persons required to be treated as such.

 

12.2                           Any expenditure that has been incurred or that has been agreed to be
incurred by the Company in remunerating employees, officers, ex-employees and
ex-officers of the Company, including any salaries, bonuses, emoluments and any
gratuitous payments paid to such persons, is or will, so far as the Warrantors
are aware, be deductible for Tax purposes.

 

12.3                           All deductions and payments required to be made under any Tax
legislation in respect of national insurance and social security contributions
(including employer’s contributions) have been so made.

 

12.4                           All payments by each Company to any person which are required to
have been made under deduction of Tax have been so made and each Company (if
required by law to do so) has accounted to the Tax Authority for the Tax so
deducted.

 

12.5                           The Company has not been granted any dispensations by any Tax
Authority relating to the taxation of its employees or the reporting of
benefits provided to such employees.

 

73

 

12.6                           Proper records have been maintained in respect of all such
deductions and payments in accordance with all applicable Tax legislation.

 

12.7                           The Inland Revenue have not amended any notice sent by the Company
giving details of options granted as Enterprise Management Incentive options (“EMI
Options”) under the provisions of Schedule 5, ITEPA 2003 (“Schedule 5”).

 

12.8                           No notice of enquiry was issued by the Inland Revenue to the Company
in relation to EMI Options granted by the Company.

 

12.9                           So far as the Warrantors are aware, the return of benefits forms
reporting benefits provided for directors, employees or former employees of the
Company have been correctly reported to the Inland Revenue.

 

74

 

SCHEDULE 4

 

Ingenious Warranties

 

1.1                                 Power to contract

 

Ingenious has full power and authority to enter into and perform
each of the Transaction Documents to which it is a party and each of the
Transaction Documents constitutes or will, when executed, constitute binding
obligations on Ingenious in accordance with their terms, subject to any
principles of equity or insolvency law.

 

1.2                                 Authorisations

 

Ingenious has obtained all applicable governmental, statutory,
regulatory or other consents, licences, waivers or exemptions required to
empower it to enter into and to perform its obligations under the Transaction
Documents.

 

1.3                                 Title to Shares

 

Ingenious the sole legal and beneficial owner of the
number of Shares set out against its name in part 3 of schedule 1 which are
free from and unaffected by any Encumbrance other than under the Articles of
the Company.

 

75

 

SCHEDULE 5

 

Limitations
on the liability of the Warrantors under the Warranties

 

1.                                      SCOPE

 

1.1                                 Save as otherwise
expressly provided in this schedule, the provisions of this schedule shall
operate to limit the liability of the Warrantors in respect of any claim under
the Warranties (including, for the avoidance of doubt, clause 6 and references
in this Schedule 5 to “claim” and “claims” shall be construed accordingly.)

 

1.2                                 Paragraphs 2.2, 2.3,
2.4, 5 and 6 of this Schedule 5 shall not apply to any claim under the
Warranties set out in part 6 of schedule 3 (relating to Tax).  Clauses 3 and 6  of the Tax Deed shall apply to claims under
the Warranties as set out in part 6 of schedule 3 as they apply to claims under
the Tax Deed.

 

1.3                                 All of the limitations
on the liability of the Warrantors contained in this schedule are subject to
paragraph 13 of this Schedule 5.

 

2.                                      LIMITATIONS OF
QUANTUM

 

2.1                                 The maximum aggregate
liability of the Warrantors in respect of all Claims including under the Tax
Deed shall not exceed the amount of the Consideration received by the Sellers
at the time the relevant claims are made and, for this purpose, any
Consideration satisfied by issue of shares of common stock of CKX shall be
treated as having the value attributed to it at the time the number of such
shares was calculated in accordance with this agreement.

 

2.2                                 The liability of each of
the Warrantors in respect of claims under paragraph 2 of part 1 of schedule 3
shall not exceed £69,155,057 in respect of Fuller and £7,702,504 in respect of
Fuller Nominees.

 

2.3                                 The liability of each of
the Warrantors in respect of all claims (other than with respect to paragraph 2
of part 1 of schedule 3) shall not exceed £89,798,253 in respect of Fuller and
£10,001,747 in respect of Fuller Nominees.

 

2.4                                 The liability of
Ingenious shall not exceed £22,942,439.

 

2.5                                 No liability shall
attach to the Warrantors in respect of any claim:

 

(a)                                  unless the loss
sustained which is the subject matter of the claim shall exceed £25,000; and

 

(b)                                 until the aggregate
amount of all claims for which they would, in the absence of this provision
2.8(b), be liable shall exceed £800,000 and in such event the Warrantors shall
be liable for the whole of such amount in respect of a claim under the
Warranties and not merely the excess over £800,000.

 

(Save in respect to paragraphs 14.1, 14.2 and 14.3 of part 2 of
schedule 3, where no limitations shall apply)

 

3.                                      TIME LIMITS

 

3.1                                 The Warrantors shall be
under no liability in respect of any claim unless notice of such claim giving
reasonable details of the relevant facts, matters or circumstances giving rise
to the claim (including an estimate of the amount of such claim if practicable
and without prejudice to any claim either Purchaser might actually make) shall
have been served upon the 

 

76

 

Warrantors by the Purchasers within 25 Business Days of
either of the Purchasers becoming aware that such facts, matters or
circumstances may give rise to a claim and:

 

(a)                                  in the case of a claim
under the Warranties (other than the Warranties set out in part 6 of schedule 6
(relating to Tax)) by no later than the second anniversary of the Completion
Date; and

 

(b)                                 in the case of a claim
under the Warranties set out in part 6 of schedule 6 (relating to Tax) by no
later than the seventh anniversary of the Completion Date.

 

3.2                                 Any claim notified in
accordance with Paragraph 3.1 of this Schedule and not satisfied, settled
or withdrawn shall be unenforceable against the Warrantors on the expiry of the
period of 9 months starting on the date of notification of the claim
unless proceedings in respect of such claim have been issued and served on the
Warrantors in accordance with the terms of this agreement.

 

4.                                      GENERAL

 

4.1                                 Neither of the
Purchasers shall be entitled to make any claim in respect of any facts, matters
or circumstances if such facts, matters or circumstances have been Disclosed in
this agreement and/or any of the other Transaction Documents or any other
letter, document or communication Disclosed pursuant to the Disclosure Letter.

 

4.2                                 The Warrantors shall not
be liable

 

(a)                                  in respect of any claim:

 

(i)                                     where the Purchasers had
actual knowledge of the facts, matters or circumstances which might give rise
to such claim at completion except that the Purchases shall not be deemed to
have any knowledge of any matter set out or referred to in the documents in the
Data Room (unless such matter shall have been Disclosed);

 

(ii)                                  if and to the extent
that such claim arises directly or indirectly from any voluntary act,
transaction or arrangement, in each case which is outside the ordinary course
of business of the relevant company at that time, after Completion by either of
the Purchasers, the Company or any member of the Group or any of their
respective directors, officers, employees or agents (other than a voluntary
act, transaction or arrangement carried out by Mr. Fuller or Mr. Charles
Garland without the authority of the relevant Group Company);

 

(iii)                               if and to the extent
that the claim arises directly or indirectly from any act, transaction or
arrangement, in each case which is outside the ordinary course of business of
the relevant company at that time, authorised by or carried out at the request
of either of the Purchasers;

 

(iv)                              to the extent that
either of the Purchasers have recovered under an indemnity against any loss or
damage suffered by arising out of such breach or claim under the terms of any
insurance policy of either of the Purchasers (net of any costs of such
recovery, including any increased premium payable as a result of such
recovery);

 

77

 

5.                                      CONDUCT OF CLAIMS

 

5.1                                 Subject to any obligations
that either of the Purchasers may have under any applicable policy of
insurance, if either of the Purchasers becomes aware that any claim has been
made against any member of the Group by a third party after Completion which is
likely to result in either of the Purchasers being entitled to make a claim
against the Warrantors by virtue of a breach of any Warranty the Purchasers
shall, and shall procure that any relevant member of the Group shall:

 

(a)                                  give notice of such
claim to the Warrantors as soon as reasonably practicable;

 

(b)                                 not make any admission
of liability, agreement or compromise with any person, body or authority in
relation thereto without, where practicable, having first notified the
Warrantors of its intention to do so (unless to so notify would be to the
material detriment of the Purchasers or either of them or any member of the CKX
Group);

 

(c)                                  take such action as the
Warrantors shall reasonably request to avoid, dispute, resist, compromise,
defend or mitigate any such claim (other than any claim the avoidance, dispute,
resistance, compromise, defence or mitigation of which would be likely to
materially adversely affect the goodwill of the business of the relevant member
of the CKX Group or any claim which seeks or in respect of which there has been
granted injunctive relief) (and subject to the relevant member of the Group
being entitled to employ its own legal advisers and being indemnified and
secured to its reasonable satisfaction by the Warrantors against all Losses
incurred in connection with such claim) provided that the Warrantors shall
jointly and severally indemnify and hold harmless all members of the CKX Group
against all Losses incurred by any of them arising from any action taken by any
member of the CKX Group at the request of the Warrantors pursuant to this
paragraph 5; and

 

(d)                                 consult as fully as is
reasonably practicable with the Warrantors as regards the conduct of any
proceedings arising out of such claim.

 

5.2                                 Notwithstanding the
preceding provisions of this Schedule, if at any time any of the Warrantors pay
to either of the Purchasers an amount in respect of any claim and either of the
Purchasers, the Company and/or any member of the Group subsequently becomes
entitled to recover from any third party any sum in respect of the facts,
matters or circumstances giving rise to the claim then the Purchasers shall or
shall procure that the Company and/or any member of the Group shall take all
necessary steps to enforce such recovery unless to do so would, in the opinion
of the Purchasers (acting reasonably) be to the material detriment of the
Company or any member of the CKX Group. 
If the Purchasers, the Company and/or any Group Company shall at any
time recover any sum from a third party which is referable to the facts, matters
or circumstances giving rise to any claim in respect of which any of the
Warrantors have paid any sum to either of the Purchasers then provided that
there are no outstanding claims or disputes between the Purchasers or either of
them and the Warrantors or either of them (or, if there are any such disputes
or claims, following the final adjudication or settlement of them):

 

(a)                                  if the amount paid by
the Warrantors in respect of the claim is more than the Sum Recovered, the
Purchasers shall immediately pay to the Warrantors the Sum Recovered; and

 

(b)                                 if the amount paid by
the Warrantors in respect of the claim is less than or equal to the Sum
Recovered, the Purchasers shall immediately pay to the Warrantors an amount
equal to the amount paid by the Warrantors;

 

78

 

For the purpose of this Clause “Sum
Recovered” means an amount equal to the total of the amount
recovered from the relevant third party plus any repayment, supplement or
interest in respect of the amount recovered from the person under Section 825
or 826 of ICTA less any tax computed by reference to the amount recovered from
the person payable by the Purchasers or the Warrantors in recovering the amount
from the third party and all costs payable by the Purchasers, the Company
and/or any member of the Group in making any such recovery.

 

6.                                      CHANGE IN LEGISLATION

 

No liability shall attach to any of the Warrantors in respect of
any claim to the extent that such claim would not have arisen (or the amount of
the claim would not have been increased) but for a change in legislation made
after the date hereof or a change in the interpretation of the law after the
date hereof (whether or not such change purports to be effective
retrospectively in whole or in part) or if such claim would not have arisen (or
the amount of the claim would not have been increased) but for any judgement
delivered after the date hereof.

 

7.                                      CONTINGENT AND
UNQUANTIFIABLE LIABILITIES

 

No liability shall attach to any of the Warrantors in respect of
any claim to the extent that the claim is based upon a liability which is
contingent only or is otherwise not capable of being quantified unless and
until such liability ceases to be contingent and becomes an actual liability or
becomes capable of being quantified, as the case may be, provided that this
paragraph shall not operate to avoid a claim made in respect of a contingent or
unquantifiable liability within the applicable time limits specified in
paragraph 3 of this schedule if the notice of such claim has been served before
the expiry of the relevant period (even if such liability does not become an
actual or quantifiable liability, as the case may be, until after the expiry of
such period).

 

8.                                      NO DOUBLE RECOVERY

 

8.1                                 The Warrantors shall not
be liable in respect of any claim if and to the extent that the loss occasioned
thereby has been recovered under the Tax Deed and they shall not be liable in
respect of any claim under the Tax Deed if and to the extent that such claim
has been recovered under the Warranties.

 

8.2                                 No member of the CKX
Group shall be entitled to recover damages or obtain payment, reimbursement,
restitution or indemnity more than once for the same Loss.

 

9.                                      PAYMENT OF CLAIM TO
BE IN REDUCTION OF CONSIDERATION

 

If any of the Warrantors pay any sum to either of the Purchasers
pursuant to a claim, that part of the Consideration received by such Warrantor
for the sale of its Shares shall be deemed to be reduced by the amount of such
payment.

 

10.                               WAIVER

 

Each of the Purchasers irrevocably and unconditionally waives any
right it may have to rescind this agreement.

 

11.                               SURVIVAL OF THESE
PROVISIONS

 

The provisions of this schedule 5 apply notwithstanding any other
provision of this agreement and will not be discharged or cease to have effect
in consequence of any termination or rescission of any other provisions of this
agreement.

 

79

 

12.                               MITIGATION NOT
AFFECTED

 

Nothing in this agreement shall affect the application of the common
law rules on mitigation in respect of any claim or any matter giving rise to a
claim.

 

13.                               FRAUD

 

None of the limitations on the liability of the Warrantors set out
in this schedule (whether as to the quantum of the claim, the time limit for
notification of the claim, the procedures or requirements for making a claim or
otherwise) shall apply to any claim against a Warrantor or Ingenious to the
extent that the liability of any of that Warrantor or Ingenious in respect of
that claim arises from fraud, wilful default, concealment, dishonesty or
deliberate non-disclosure on the part of any of that Warrantor or Ingenious.

 

80

 

SCHEDULE 6

 

Purchasers’ Warranties

 

1.                                      DEFINITIONS

 

In this schedule 6, the following words and expressions shall have
the following meanings:

 

“Capital
Stock” means, with respect to any Person, any and all shares,
interests, warrants, options, participations, rights to acquire or other
equivalents (however designated, whether voting or non-voting) in equity of
such Person, whether now outstanding or issued subsequent hereto, including,
without limitation, all series and classes of common stock and preferred stock;

 

“CKX Subsidiaries” means members of the CKX Group
(but excluding for all purposes of this schedule the Company and the Group;

 

“CKX Shares” means the Initial Consideration Shares and the
Deferred Consideration Shares (if any);

 

“Common Stock”
means the common stock, no par value, of CKX;

 

“Contribution
Agreement” means the Contribution and Exchange Agreement, dated as
of December 15, 2004, by and between CKX, RFX Acquisition LLC (“RFX”) and The Promenade Trust (the “Trust”);

 

“Exchange Act” means
the U.S. Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder, all as the same shall be in effect at the
time;

 

“Form 8-K” means that certain Form 8-K filed by the Company on
February 8, 2005, as amended by that certain Form 8-K filed by the Company on
February 11, 2005, but in each case excluding the financial statements included
therein and the exhibits attached thereto and any documents incorporated
therein by reference.

 

“Person”
means any individual, partnership, limited liability company, corporation,
joint venture, association, trust, unincorporated organization, government or
agency or political subdivision thereof or any other entity of whatever nature;

 

“Securities
Act” means the Securities Act of 1933, as amended, or any similar
federal statute and the rules and regulations promulgated thereunder, all as
the same shall be in effect at the time;

 

“Series A
Preferred Stock” means the Series A Convertible Redeemable Preferred
Stock, no par value, of CKX, having the number of votes per share equal to the
number of shares of Common Stock into which one share of Series A Convertible
Preferred Stock is convertible;

 

“Series B
Preferred Stock” means the Series B Convertible Preferred Stock, no
par value, of CKX;

 

“Series C
Preferred Stock” means the Series C Convertible Preferred Stock, no
par value, of CKX; and

 

“SOXA” means the U.S. Sarbanes-Oxley Act
of 2002 and the rules and regulations promulgated thereunder, all as the same
shall be in effect from time to time.

 

81

 

2.                                      ORGANIZATION, GOOD
STANDING AND QUALIFICATION

 

Each of the Purchasers is a corporation duly incorporated, validly
existing and, in the case of CKX, is in good standing under the laws of the
jurisdiction of its incorporation, and has all requisite corporate power and
authority to own its properties and to carry on its business as now conducted
and as currently proposed to be conducted after giving effect to the
consummation of the transactions contemplated by this agreement.

 

3.                                      AUTHORISATION

 

Each of the Purchasers has all requisite power and authority to
execute and deliver this Agreement and the other Transaction Documents to which
it is a party and to carry out and perform its obligations under this Agreement
and the Transaction Documents to which it is a party and to consummate the
transactions contemplated hereby and thereby. 
The execution and delivery of and the performance under this Agreement
and the Transaction Documents to which they are a party and the consummation of
the transactions contemplated hereby and thereby have been duly and validly
authorised by all necessary corporate action and any required stockholder
action on the part of each of the Purchasers. 
This Agreement and the Transaction Documents to which they are a party have
been duly executed and delivered by each of the Purchasers and are legal, valid
and binding obligations of each such Purchaser, enforceable against such
Purchaser in accordance with their respective terms, except as limited by (i)
status of limitation, lapse of time, bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance, and other laws of general application
affecting the rights of creditors generally or by general principles of equity
and (ii) laws relating to the availability of specific performance, injunctive
relief or other equitable remedies.  The
CKX Shares, when issued in compliance with the provisions of this Agreement,
will be duly authorised, validly issued, fully paid and nonassessable.  The CKX Shares will be free of any
Encumbrances, charges or liens other than those created by or imposed upon the
holders thereof through no action of the Purchaser, and the CKX Shares will be
free of restrictions on transfer, other than the restrictions on transfer under
the Transaction Documents and pursuant to applicable US federal and state
securities laws.

 

4.                                      ABSENCE OF DEFAULTS
AND CONFLICTS

 

The Purchasers and the CKX Subsidiaries are not in violation of
their respective articles of incorporation, memorandum of association,
certificate of formation, bylaws, operating agreement or other organizational
documents or in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any contract, agreement, lien,
indenture, mortgage, loan agreement, note, lease or other instrument to which
it is a party or by which it is bound, or to which either of the property or
assets of CKX or any of the CKX Subsidiaries is subject (collectively, the “Agreements and Instruments”), except where the violation
could not reasonably be expected to have a material adverse effect; and the
execution and delivery of and performance under this Agreement, the Transaction
Documents and any other Agreements and Instruments, and the consummation of the
transactions contemplated herein or therein (including without limitation the
issuance of the CKX Shares) and compliance by the CKX and the CKX Subsidiaries
with their respective obligations hereunder and thereunder, do not and will
not, whether with or without the giving of notice or passage of time or both,
conflict with or constitute a breach of or a default under, or result in the
creation or imposition of any Encumbrance upon any property or assets of the
Purchasers or any CKX Subsidiary pursuant to such Agreements and Instruments,
nor will such actions result in any violation of or require any notice, consent
or waiver or trigger any change of control provisions of the articles of
incorporation or formation, bylaws, operating agreement or other organizational
documents of CKX or any CKX Subsidiary or any applicable law, statute, rule,
regulation, judgment, order, writ or decree of any court or 

 

82

 

governmental authority having jurisdiction over CKX, any CKX
Subsidiary or any of their respective assets or properties.

 

5.                                      ABSENCE OF
PROCEEDINGS

 

There is no action, suit or
proceeding, claim, arbitration or investigation before or by any court,
arbitrator, arbitrational body or governmental authority, pending or so far as
the Purchaser Warrantors are aware, threatened in writing, against CKX or any
of the CKX Subsidiaries, or affecting any of the properties or assets of CKX or
the CKX Subsidiaries which individually or in the aggregate would have a
material adverse effect or relating to the transactions contemplated by this
Agreement or the other Transaction Documents. 
So far as CKX is aware, there is no action pending or threatened in
writing against any of its officers, directors or employees in connection with
such officer’s, director’s or employee’s relationship with, or actions taken on
behalf of the Purchasers.  None of CKX,
the CKX Subsidiaries or any of their respective assets or properties is subject
to the provisions of any order, writ, injunction, judgment, ruling, decision or
decree of any court, arbitrator, arbitrational body or governmental body which
would reasonably be expected to have a material adverse effect.

 

6.                                      CONSENTS

 

No governmental approval, consent or authorization or other
approval, consent or authorization is required on the part of CKX or any of the
CKX Subsidiaries in connection with the execution, delivery or performance of
this Agreement or the other Transaction Documents to which they are a party and
the transactions to be consummated hereby and thereby, other than filings
required to be made after the Completion under applicable federal and state
securities or “blue sky” laws (which filings will be made by the Purchasers in
accordance with such laws).

 

7.                                      CAPITALIZATION

 

7.1                                 The authorised, issued
and outstanding Capital Stock of the CKX as of the date hereof and is, and on
the Completion Date prior to the Completion will be as set forth in the
Purchasers’ Disclosure Letter, hereof under “Actual Capitalization.” All
outstanding shares of Capital Stock of CKX have been duly authorised and validly
issued and are fully paid and non-assessable.

 

7.2                                 The authorised, issued
and outstanding Capital Stock of CKX immediately after the Completion will be
as set forth in the Purchasers’ Disclosure Letter, hereof under “Pro Forma
Capitalization.”  All shares of Capital
Stock of CKX outstanding immediately after the Completion will be duly
authorised, validly issued, fully paid and non-assessable.

 

7.3                                 Other than as described
in the Form 8-K, CKX does not have outstanding any securities convertible into
or exercisable or exchangeable for any shares of its Capital Stock nor does it
have outstanding any rights to subscribe for or to purchase, or any options for
the purchase of, or any agreements providing for the issuance (contingent or
otherwise) of, or any calls, commitments or claims of any character relating
to, any of its Capital Stock or securities convertible into or exercisable or
exchangeable for any of its Capital Stock. Other than as described in the Form
8-K, no shares of CKX’s outstanding Capital Stock, or stock issuable upon
exercise or exchange of any outstanding options, warrants or rights, or other
stock issuable by CKX, are subject to any rights of first refusal or other
rights to purchase such stock (whether in favour of CKX or any other Person),
pursuant to any agreement or commitment of CKX. 
Except as described in the Form 8-K, CKX has no obligation to pay any
dividend on or make any distribution in respect of any Capital Stock.

 

83

 

7.4                                 Except as described in
the Form 8-K, there are no pre-emptive or other outstanding rights, options,
warrants, conversion rights, stock appreciation rights, redemption rights,
repurchase rights, agreements, arrangements, evidences of indebtedness or
commitments of any character, written or oral, under which CKX is or may become
obligated to issue or sell, or giving any Person a right to subscribe for or
acquire, or in any way dispose of any shares of the Capital Stock or other
equity interests, or any securities or obligations exercisable or exchangeable
for or convertible into any shares of the Capital Stock or other equity
interests of CKX, and no securities or obligations evidencing such rights are
authorised, issued or outstanding. 
Except as described in the Form 8-K, the outstanding Capital Stock of
CKX is not subject to any voting trust agreement or other agreement or
commitment restricting or otherwise relating to the voting, dividend rights or
disposition of such Capital Stock.  There
are no outstanding or authorised stock appreciation, phantom stock or similar
rights providing economic benefits based, directly or indirectly, on the value
or price of the stock or other equity interests of CKX.  Other than the transactions contemplated by
this Agreement and the Transaction Documents, there are no outstanding
obligations or other commitments of CKX to make any investment (in the form of
a loan, capital contribution or other obligation to provide funds) in, any
other Person.

 

7.5                                 Upon issuance thereof,
the CKX Shares will be free of any Encumbrances other than restrictions on
transfer under U.S. federal and state securities laws and the Transaction
Documents.  The CKX Shares will be duly
authorised, validly issued, fully paid and nonassessable, and owned by the
Sellers, free from Encumbrances other than restrictions on transfer under U.S.
federal and state securities laws and the Transaction Documents.

 

7.6                                 To the best of the
knowledge of CKX, with respect to all times prior to February 8, 2005, all of
the issued and outstanding shares of Capital Stock of CKX have been offered and
sold in compliance with applicable federal and state securities or “blue sky”
laws.  With respect to all times from and
after February 8, 2005, all of the issued and outstanding shares of Capital
Stock of CKX have been offered and sold in compliance with applicable federal
and state securities or “blue sky” laws. 
The offer, sale and issuance of the CKX Shares will be made in
compliance with all applicable federal and state securities or “blue sky”
laws.  Neither CKX nor any Person or
entity acting on its behalf has taken or will take any action which would
subject the offering, sale and issuance of the CKX Shares to the registration
requirements of the Securities Act.

 

7.7                                 Other than the rights of
holders of Common Stock, Series A Preferred Stock, Series B Preferred Stock and
Series C Preferred Stock, no Person has any rights to vote for the election of
members of the CKX’s Board of Directors.

 

8.                                      CERTAIN CHANGES OR
EVENTS

 

Save as Disclosed or in the SEC Reports or pursuant to this
transaction from and after February 8, 2005, (i) none of the Purchasers and the
CKX Subsidiaries have authorised or made any distributions, or declared or paid
any dividends, upon or with respect to any of its Capital Stock or other equity
interests, nor has the Purchasers or the CKX Subsidiaries redeemed, purchased
or otherwise acquired, or issued or sold, any of its Capital Stock or other
equity interests; (ii) none of the Purchasers and the CKX Subsidiaries have
entered into any material transaction, other than the other agreements related
hereto; (iii) none of the Purchaser and its CKX Subsidiaries have incurred any
indebtedness for borrowed money or made any loans or advances to any Person
which are individually in excess of $500,000 or in excess of $1,000,000 in the
aggregate; (iv) there has been no waiver by the Purchasers or any of the CKX
Subsidiaries of a material right or of a material debt owed to it; (v) none of
the Purchasers and the CKX Subsidiaries have failed to satisfy or discharge any
Encumbrance, other than in the ordinary course of business and would not
reasonably be expected to cause a material adverse effect; (vi) there has been
no material change in any compensation, 

 

84

 

arrangement or agreement with any employee, director, stockholder
or affiliate thereof; (vii) from and after February 8, 2005, none of the
Purchasers and the CKX Subsidiaries have made any loans to any executive
officer (as defined in Rule 3b-7 under the Exchange Act) or director of the
Purchasers or any of the CKX Subsidiaries; and (viii) there has been no
agreement or commitment by the Purchasers or any of the CKX Subsidiaries to do
or perform any of the acts described in this Section 8.

 

9.                                      FINANCIAL STATEMENTS
AND REPORTS

 

9.1                                 The Purchasers’ Disclosure Letter
has attached to it (i) the audited balance sheet of CKX as of December 31,
2003 and the related audited statements of income, changes in stockholders’
equity and cash flows for the fiscal year then ended (the “Audited Financial Statements”); and
(ii) the unaudited balance sheet of CKX as of September 30, 2004 and the
related audited statements of income, changes in stockholders’ equity and cash
flows for CKX for the nine-month period then ended (the “Interim Financial Statements,” together
with the Audited Financial Statements, the “Financial Statements”).  The Financial Statements
have been prepared by CKX in accordance with US GAAP, consistently applied, and
fairly present in all material respects the financial condition and results of
operations of CKX as of the dates thereof, and, with respect to the Interim
Financial Statements, subject to normal year-end adjustments that are not
material in amount or effect and the absence of footnotes and similar
presentation items therein.  Except as set forth in the Financial
Statements or Disclosed, CKX does not have any liabilities or obligations of
any nature (absolute, accrued, fixed, contingent or otherwise) required by US GAAP
to be set forth on a balance sheet of CKX, or disclosed in the notes thereto
or, even if not so required to be set forth or disclosed, that are material to
CKX.  Other than as set forth in the Financial Statements or as Disclosed,
CKX has no “off balance sheet arrangements” (as defined by item 303(a)(4) of
Regulation S-K promulgated by the SEC).

 

9.2                                 CKX has in place the “disclosure
controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) of the
Exchange Act) required in order for the principal executive officer and
principal financial officer of CKX to engage in the review and evaluation
process mandated by Section 302 of SOXA.  CKX’s “disclosure controls and
procedures” are reasonably designed to ensure that material information (both
financial and non-financial) relating to CKX required to be disclosed by CKX in
the reports that it files or submits under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the
rules and forms of the SEC, and that such information is accumulated and
communicated to CKX’s principal executive and principal financial officers, or
persons performing similar functions, as appropriate to allow timely decisions
regarding required disclosure and to make the certifications of the principal
executive officer and principal financial officer of CKX required by Section
302 of SOXA with respect to such reports.

 

10.                               SEC REPORTS

 

CKX has filed on a timely basis with the SEC
all forms, reports, schedules, registration statements, definitive proxy or
information statements and other documents required to be filed by CKX with
the SEC since January 1, 2001 (as they have been amended since the time of
their filing, and including any documents filed as exhibits thereto as well as
any Current Reports on Form 8-K that have been filed with or furnished to the
SEC, collectively, the “SEC Reports”).    With respect to each SEC Report (including,
without limitation, any financial statements or schedules included or
incorporated by reference therein) filed prior to February 8, 2004, to the best
of CKX’s knowledge, and with respect to each SEC Report (including, without
limitation, any financial statements or schedules included or incorporated by
reference therein) filed on or after February 8, 2004, each such SEC Report
complied in all material respects with the requirements of the Exchange Act and
the Securities Act that are or were applicable to such SEC Report, and none of
the SEC Reports contained when 

 

85

 

filed or
contains any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they were made, not misleading.

 

11.                               CONTRIBUTION AND
EXCHANGE AGREEMENT AND STOCK PURCHASE AGREEMENT

 

All of the
representations and warranties of (i) the Trust made in Article IV of the
Contribution Agreement and of CKX and RFX made in Article V of the Contribution
Agreement and (ii) of CKX made in Article 3 of the Stock Purchase Agreement, in
each case that are qualified as to materiality or a material adverse effect
were true and correct, and those not so qualified were true and correct in all
material respects as of the date first made and as of the closing contemplated
under each such agreement.  To the best
knowledge of CKX, each of such representations and warranties made by the Trust
with respect to, or otherwise related to, the Transferred Subsidiaries are true
and correct in all material respects as of the date hereof.  Neither CKX, RFX nor, to the best knowledge
of CKX, any of the other parties to the Contribution Agreement or Stock
Purchase Agreement were in material breach of any representation or warranty
made therein at the time made or as of the closing of the transactions
contemplated thereby and, to the best knowledge of CKX, no claim (or basis
thereof) in respect of the breach or inaccuracy of any such representations or
warranties has arisen.

 

12.                               CKXUK

 

                                                CKXUK is an indirect wholly owned
subsidiary of CKX.

 

13.                               FINANCING

 

                                                At the Completion, the Purchasers shall have available third party
financing for the payment of the Deferred Consideration.

 

14.                               EMPLOYMENT AGREEMENT

 

Subject to the approval of the Compensation Committee of the Board of
Directors of CKX, Inc., the definitive employment agreement entered into
between CKX and Robert F.X. Sillerman shall (i) provide for a term of not less
than five (5) years and (ii)  include
customary non-compete provisions which shall generally limit Mr. Sillerman’s ability to
purchase, invest or otherwise participate in any significant manner, in
investments, businesses and commercial operations in the media or entertainment
sectors, other than by or through CKX or its subsidiaries, except for certain
activities currently conducted by Mr. Sillerman and previously disclosed to
Sellers or as may be approved by the Board of Directors of CKX.

 

86

 

SCHEDULE 7

 

Limitations
on the liability of the Purchasers under the Purchasers’ Warranties

 

1.                                      SCOPE

 

1.1                                 Save as otherwise
expressly provided in this schedule, the provisions of this schedule shall
operate to limit the liability of the Purchasers in respect of any claim under
the Purchasers Warranties (including, for the avoidance of doubt, clause 7 and
references in this Schedule 7 to “claim” and “claims” shall be construed
accordingly.)

 

1.3                                 All of the limitations
on the liability of the Warrantors contained in this schedule are subject to
paragraph 13 of this Schedule 7.

 

2.                                      LIMITATIONS OF
QUANTUM

 

2.1                                 The maximum aggregate
liability of the Purchasers in respect of all claims shall not exceed the
amount of the Consideration received by the Sellers at the time the relevant
claims are made and, for this purpose, any Consideration satisfied by issue of
shares of common stock of CKX shall be treated as having the value attributed
to it at the time the number of such shares was calculated in accordance with
this agreement.

 

2.2                                 The liability of each of
the Purchasers shall not exceed the proportion of total Consideration paid by
each of them.

 

2.3                                 No liability shall
attach to the Purchasers in respect of any claim:

 

(a)                                  unless the loss
sustained which is the subject matter of the claim shall exceed £25,000; and

 

(b)                                 until the aggregate
amount of all claims for which they would, in the absence of this provision
2.4(b), be liable shall exceed £800,000 and in such event the Purchasers shall
be liable for the whole of such amount in respect of a claim under the
Purchasers’ Warranties and not merely the excess over £800,000.

 

3.                                      TIME LIMITS

 

3.1                                 The Purchasers shall be
under no liability in respect of any claim unless notice of such claim giving
reasonable details of the relevant facts, matters or circumstances giving rise
to the claim (including an estimate of the amount of such claim if practicable
and without prejudice to any claim any of the Sellers might actually make)
shall have been served upon the Purchasers by the Sellers within 25 Business Days
of any of the Sellers becoming aware that such facts, matters or circumstances
may give rise to a claim and by no later than the second anniversary of the
Completion Date; and

 

3.2                                 Any claim notified in
accordance with Paragraph 3.1 of this Schedule and not satisfied, settled or
withdrawn shall be unenforceable against the Purchasers on the expiry of the
period of 9 months starting on the date of notification of the claim
unless proceedings in respect of such claim have been issued and served on the
Purchasers in accordance with the terms of this agreement.

 

4.                                      GENERAL

 

4.1                                 None of the Sellers
shall be entitled to make any claim in respect of any facts, matters or
circumstances if such facts, matters or circumstances have been Disclosed in
this agreement and/or any of the other Transaction Documents or any other
letter, document or communication Disclosed pursuant to the Disclosure Letter.

 

87

 

4.2                                 The Purchasers shall not
be liable in respect of any claim: where the Sellers had actual knowledge of
the facts, matters or circumstances which might give rise to such claim at
completion

 

5.                                      CONDUCT OF CLAIMS

 

5.1                                 Subject to any
obligations any of the Sellers may have under any applicable policy of
insurance, if any of the Sellers becomes aware that any claim has been made
against any member of the CKX Group by a third party after Completion which is
likely to result in any of the Sellers being entitled to make a claim against
the Purchasers by virtue of a breach of any Purchasers’ Warranty the Sellers
shall:

 

(a)                                  give notice of such
claim to the Purchasers as soon as reasonably practicable;

 

(b)                                 not make any admission
of liability, agreement or compromise with any person, body or authority in
relation thereto without, where practicable, having first notified the
Purchasers of its intention to do so (unless to so notify would be to the
material detriment of the Sellers or any of them or any member of the Ingenious
Group);

 

(c)                                  take such action as the
Purchasers shall reasonably request to avoid, dispute, resist, compromise,
defend or mitigate any such claim (other than any claim the avoidance, dispute,
resistance, compromise, defence or mitigation of which would be likely to
materially adversely affect the goodwill of the business of the relevant Seller
or any claim which seeks or in respect of which there has been granted
injunctive relief) provided that the Purchasers shall jointly and severally
indemnify and hold harmless all the Sellers and members of the Ingenious Group
against all Losses incurred by any of them arising from any action taken by any
Seller at the request of the Purchasers pursuant to this paragraph 5; and

 

(d)                                 consult as fully as is
reasonably practicable with the Purchasers as regards the conduct of any
proceedings arising out of such claim.

 

5.2                                 Notwithstanding the
preceding provisions of this Schedule, if at any time any of the Purchasers pay
to any of the Sellers an amount in respect of any claim and either of the
Sellers or a member of the Ingenious Group subsequently becomes entitled to
recover from any third party any sum in respect of the facts, matters or
circumstances giving rise to the claim then the Sellers shall or shall procure
that any member of the Ingenious Group shall take all necessary steps to
enforce such recovery unless to do so would, in the opinion of the Sellers
(acting reasonably) be to the material detriment any member of the Ingenious
Group.  If the Sellers and/or any member
of the Ingenious Group shall at any time recover any sum from a third party
which is referable to the facts, matters or circumstances giving rise to any
claim in respect of which either of the Purchasers have paid any sum to any of
the Sellers then provided that there are no outstanding claims or disputes between
the Purchasers or either of them and the Sellers or any of them (or, if there
are any such disputes or claims, following the final adjudication or settlement
of them):

 

(a)                                  if the amount paid by
the Purchasers in respect of the claim is more than the Sum Recovered, the
Sellers shall immediately pay to the Purchasers the Sum Recovered; and

 

(b)                                 if the amount paid by
the Purchasers in respect of the claim is less than or equal to the Sum
Recovered, the Sellers shall immediately pay to the Purchasers an amount equal
to the amount paid by the Purchasers;

 

For the purpose of this Clause “Sum
Recovered” means an amount equal to the total of the amount
recovered from the relevant third party plus any repayment, supplement or
interest in 

 

88

 

respect of the amount recovered from the person under Section 825
or 826 of ICTA less any tax computed by reference to the amount recovered from
the person payable by the Purchasers or the Sellers in recovering the amount from
the third party and all costs payable by the Sellers and/or any member of the
ingenious Group in making any such recovery.

 

6.                                      CHANGE IN LEGISLATION

 

No liability shall attach to either of the Purchasers in respect
of any claim to the extent that such claim would not have arisen (or the amount
of the claim would not have been increased) but for a change in legislation
made after the date hereof or a change in the interpretation of the law after
the date hereof (whether or not such change purports to be effective
retrospectively in whole or in part) or if such claim would not have arisen (or
the amount of the claim would not have been increased) but for any judgement
delivered after the date hereof.

 

7.                                      CONTINGENT AND
UNQUANTIFIABLE LIABILITIES

 

No liability shall attach to either of the Purchasers in respect
of any claim to the extent that the claim is based upon a liability which is
contingent only or is otherwise not capable of being quantified unless and
until such liability ceases to be contingent and becomes an actual liability or
becomes capable of being quantified, as the case may be, provided that this
paragraph shall not operate to avoid a claim made in respect of a contingent or
unquantifiable liability within the applicable time limits specified in
paragraph 3 of this schedule if the notice of such claim has been served before
the expiry of the relevant period (even if such liability does not become an
actual or quantifiable liability, as the case may be, until after the expiry of
such period).

 

8.                                      NO DOUBLE RECOVERY

 

8.1                                 No Seller shall be
entitled to recover damages or obtain payment, reimbursement, restitution or
indemnity more than once for the same Loss.

 

9.                                      WAIVER

 

Each of the Sellers irrevocably and unconditionally waives any
right it may have to rescind this agreement.

 

10.                               SURVIVAL OF THESE
PROVISIONS

 

The provisions of this schedule 7 apply notwithstanding any other
provision of this agreement and will not be discharged or cease to have effect
in consequence of any termination or rescission of any other provisions of this
agreement.

 

11.                               MITIGATION NOT
AFFECTED

 

Nothing in this agreement shall affect the application of the
common law rules on mitigation in respect of any claim or any matter giving
rise to a claim.

 

12.                               FRAUD

 

None of the limitations on the liability of the Purchasers set out
in this schedule (whether as to the quantum of the claim, the time limit for
notification of the claim, the procedures or requirements for making a claim or
otherwise) shall apply to any claim against a Purchaser or Ingenious to the
extent that the liability of any of that Purchaser in respect of that claim
arises from fraud, wilful default, concealment, dishonesty or deliberate
non-disclosure on the part of any of Purchasers.

 

89

 

	
  SIGNED by)

  	
  )

  	
  /s/ Simon Fuller

  	
   

  
	
  SIMON ROBERT FULLER)

  	
  )

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SIGNED by)

  	
  )

  	
   

  	
   

  
	
  duly authorised for and on behalf)

  	
  )

  	
  /s/ Simon Fuller

  	
   

  
	
  of FULLER NOMINEES
  LIMITED)

  	
  )

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SIGNED by

  	
  )

  	
   

  	
   

  
	
  duly authorised for and on behalf)

  	
  )

  	
  /s/ Patrick Bradley

  	
   

  
	
  of INGENIOUS VENTURES
  LIMITED)

  	
  )

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SIGNED by  Howard Tytel

  	
  )

  	
   

  	
   

  
	
  duly authorised for and on behalf)

  	
  )

  	
  /s/ Howard Tytel

  	
   

  
	
  of SPORTS ENTERTAINMENT

  	
  )

  	
   

  	
   

  
	
  ENTERPRISES, INC.)

  	
  )

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SIGNED by   Howard Tytel

  	
  )

  	
   

  	
   

  
	
  duly authorised for and on behalf)

  	
  )

  	
  /s/ Howard Tytel

  	
   

  
	
  of CKX UK  HOLDINGS  LIMITED)

  	
  )

  	
   

  

 

90Exhibit 10.22

 

$109,000,000

 

BRIDGE LOAN CREDIT AGREEMENT

 

among

 

SPORTS ENTERTAINMENT ENTERPRISES, INC.,

 

a Colorado corporation,

 

CKX UK HOLDINGS LIMITED,

 

a company incorporated in England and Wales,

 

as Borrower,

 

The Several Lenders

 

from Time to Time Parties Hereto,

 

and

 

BEAR STEARNS CORPORATE LENDING INC.,

 

as Administrative Agent

 

Dated as of March 17, 2005

 

 

BEAR,
STEARNS & CO. INC., as Sole Lead Arranger

 

 

TABLE OF
CONTENTS

 

	
  SECTION 1. DEFINITIONS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1.1.

  	
   

  	
  Defined Terms

  	
   

  
	
  1.2.

  	
   

  	
  Other Definitional Provisions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2. AMOUNT AND TERMS OF BRIDGE
  COMMITMENTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.1.

  	
   

  	
  Bridge Commitments

  	
   

  
	
  2.2.

  	
   

  	
  Procedure for Bridge Loan Borrowing

  	
   

  
	
  2.3.

  	
   

  	
  Repayment of Bridge Loans

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3. GENERAL PROVISIONS
  APPLICABLE TO LOANS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3.1.

  	
   

  	
  Optional Prepayments

  	
   

  
	
  3.2.

  	
   

  	
  Mandatory Prepayments

  	
   

  
	
  3.3.

  	
   

  	
  Conversion and Continuation Options

  	
   

  
	
  3.4.

  	
   

  	
  Limitations on Eurodollar Tranches

  	
   

  
	
  3.5.

  	
   

  	
  Interest Rates and Payment Dates

  	
   

  
	
  3.6.

  	
   

  	
  Computation of Interest and Fees

  	
   

  
	
  3.7.

  	
   

  	
  Inability to Determine Interest Rate

  	
   

  
	
  3.8.

  	
   

  	
  Pro Rata Treatment and Payments

  	
   

  
	
  3.9.

  	
   

  	
  Requirements of Law

  	
   

  
	
  3.10.

  	
   

  	
  Taxes

  	
   

  
	
  3.11.

  	
   

  	
  Indemnity

  	
   

  
	
  3.12.

  	
   

  	
  Change of Lending Office

  	
   

  
	
  3.13.

  	
   

  	
  Replacement of Lenders

  	
   

  
	
  3.14.

  	
   

  	
  Evidence of Debt

  	
   

  
	
  3.15.

  	
   

  	
  Illegality

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 4. REPRESENTATIONS AND
  WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4.1.

  	
   

  	
  Financial Condition

  	
   

  
	
  4.2.

  	
   

  	
  No
  Change

  	
   

  
	
  4.3.

  	
   

  	
  Corporate Existence; Compliance with Law

  	
   

  
	
  4.4.

  	
   

  	
  Power; Authorization; Enforceable
  Obligations

  	
   

  
	
  4.5.

  	
   

  	
  No Legal Bar

  	
   

  
	
  4.6.

  	
   

  	
  Litigation

  	
   

  
	
  4.7.

  	
   

  	
  No
  Default

  	
   

  
	
  4.8.

  	
   

  	
  Ownership of Property; Liens

  	
   

  
	
  4.9.

  	
   

  	
  Intellectual Property

  	
   

  
	
  4.10.

  	
   

  	
  Taxes

  	
   

  
	
  4.11.

  	
   

  	
  Federal Regulations

  	
   

  

 

 

	
  4.12.

  	
   

  	
  Labor Matters

  	
   

  
	
  4.13.

  	
   

  	
  ERISA

  	
   

  
	
  4.14.

  	
   

  	
  Investment Company Act; Other Regulations

  	
   

  
	
  4.15.

  	
   

  	
  Subsidiaries

  	
   

  
	
  4.16.

  	
   

  	
  Use of Proceeds

  	
   

  
	
  4.17.

  	
   

  	
  Environmental Matters

  	
   

  
	
  4.18.

  	
   

  	
  Accuracy of Information, etc.

  	
   

  
	
  4.19.

  	
   

  	
  Security Documents

  	
   

  
	
  4.20.

  	
   

  	
  Solvency

  	
   

  
	
  4.21.

  	
   

  	
  Senior Indebtedness

  	
   

  
	
  4.22.

  	
   

  	
  Certain Documents

  	
   

  
	
  4.23.

  	
   

  	
  Foreign Assets Control Regulations and
  Anti-Money Laundering

  	
   

  
	
  4.24.

  	
   

  	
  Compliance with Financial Assistance Laws

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 5. CONDITIONS PRECEDENT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6. AFFIRMATIVE COVENANTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  6.1.

  	
   

  	
  Financial Statements

  	
   

  
	
  6.2.

  	
   

  	
  Certificates; Other Information

  	
   

  
	
  6.3.

  	
   

  	
  Payment of Obligations

  	
   

  
	
  6.4.

  	
   

  	
  Maintenance of Existence; Compliance

  	
   

  
	
  6.5.

  	
   

  	
  Maintenance of Property; Insurance

  	
   

  
	
  6.6.

  	
   

  	
  Inspection of Property; Books and Records;
  Discussions

  	
   

  
	
  6.7.

  	
   

  	
  Notices

  	
   

  
	
  6.8.

  	
   

  	
  Intellectual Property

  	
   

  
	
  6.9.

  	
   

  	
  Environmental Laws

  	
   

  
	
  6.10.

  	
   

  	
  Additional Collateral, etc.

  	
   

  
	
  6.11.

  	
   

  	
  Use of Proceeds

  	
   

  
	
  6.12.

  	
   

  	
  Further Assurances

  	
   

  
	
  6.13.

  	
   

  	
  UK Financial Assistance

  	
   

  
	
  6.14.

  	
   

  	
  Post-Closing Obligations

  	
   

  
	
  6.15.

  	
   

  	
  Warrants

  	
   

  
	
  6.16.

  	
   

  	
  Deferred Consideration

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 7. NEGATIVE COVENANTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  7.1.

  	
   

  	
  Financial Condition Covenants

  	
   

  
	
  7.2.

  	
   

  	
  Indebtedness

  	
   

  
	
  7.3.

  	
   

  	
  Liens

  	
   

  
	
  7.4.

  	
   

  	
  Fundamental Changes

  	
   

  
	
  7.5.

  	
   

  	
  Disposition of Property

  	
   

  
	
  7.6.

  	
   

  	
  Restricted Payments

  	
   

  
	
  7.7.

  	
   

  	
  Capital Expenditures

  	
   

  
	
  7.8.

  	
   

  	
  Investments

  	
   

  
	
  7.9.

  	
   

  	
  Optional
  Payments and Modifications of Indebtedness

  	
   

  
	
  7.10.

  	
   

  	
  Transactions with Affiliates

  	
   

  

 

 

	
  7.11.

  	
   

  	
  Sales and Leasebacks

  	
   

  
	
  7.12.

  	
   

  	
  Hedge Agreements

  	
   

  
	
  7.13.

  	
   

  	
  Changes
  in Fiscal Periods

  	
   

  
	
  7.14.

  	
   

  	
  Negative
  Pledge Clauses

  	
   

  
	
  7.15.

  	
   

  	
  Clauses
  Restricting Subsidiary Distributions

  	
   

  
	
  7.16.

  	
   

  	
  Lines of Business

  	
   

  
	
  7.17.

  	
   

  	
  Certain
  Amendments

  	
   

  
	
  7.18.

  	
   

  	
  Accounting Changes

  	
   

  
	
  7.19.

  	
   

  	
  Intellectual Property

  	
   

  
	
  7.20.

  	
   

  	
  Hazardous
  Substances

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 8. EVENTS OF DEFAULT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 9. THE AGENTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  9.1.

  	
   

  	
  Appointment

  	
   

  
	
  9.2.

  	
   

  	
  Delegation
  of Duties

  	
   

  
	
  9.3.

  	
   

  	
  Exculpatory
  Provisions

  	
   

  
	
  9.4.

  	
   

  	
  Reliance
  by Agents

  	
   

  
	
  9.5.

  	
   

  	
  Notice of Default

  	
   

  
	
  9.6.

  	
   

  	
  Non-Reliance on Agents and Other Lenders

  	
   

  
	
  9.7.

  	
   

  	
  Indemnification

  	
   

  
	
  9.8.

  	
   

  	
  Agent in Its Individual Capacity

  	
   

  
	
  9.9.

  	
   

  	
  Successor
  Administrative Agent

  	
   

  
	
  9.10.

  	
   

  	
  Agents Generally

  	
   

  
	
  9.11.

  	
   

  	
  The Lead Arranger

  	
   

  
	
  9.12.

  	
   

  	
  Withholding Tax

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 10. MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  10.1.

  	
   

  	
  Amendments and Waivers

  	
   

  
	
  10.2.

  	
   

  	
  Notices

  	
   

  
	
  10.3.

  	
   

  	
  No
  Waiver; Cumulative Remedies

  	
   

  
	
  10.4.

  	
   

  	
  Survival
  of Representations and Warranties

  	
   

  
	
  10.5.

  	
   

  	
  Payment
  of Expenses and Taxes

  	
   

  
	
  10.6.

  	
   

  	
  Successors
  and Assigns; Participations and Assignments

  	
   

  
	
  10.7.

  	
   

  	
  Adjustments; Set-off

  	
   

  
	
  10.8.

  	
   

  	
  Counterparts

  	
   

  
	
  10.9.

  	
   

  	
  Severability

  	
   

  
	
  10.10.

  	
   

  	
  Integration

  	
   

  
	
  10.11.

  	
   

  	
  GOVERNING LAW

  	
   

  
	
  10.12.

  	
   

  	
  Submission To Jurisdiction; Waivers

  	
   

  
	
  10.13.

  	
   

  	
  Acknowledgments

  	
   

  
	
  10.14.

  	
   

  	
  Releases of Liens

  	
   

  
	
  10.15.

  	
   

  	
  Confidentiality

  	
   

  
	
  10.16.

  	
   

  	
  WAIVERS OF JURY TRIAL

  	
   

  
	
  10.17.

  	
   

  	
  Delivery of Addenda

  	
   

  
	
  10.18.

  	
   

  	
  USA PATRIOT Act

  	
   

  

 

 

	
  SCHEDULES:

  
	
   

  	
   

  	
   

  
	
  1.1(a)

  	
   

  	
  Consolidated EBITDA Adjustment

  
	
  1.1(b)

  	
   

  	
  Permitted Indebtedness

  
	
  1.1(c)

  	
   

  	
  Permitted Liens

  
	
  4.4

  	
   

  	
  Consents, Authorizations, Filings and
  Notices

  
	
  4.15

  	
   

  	
  Subsidiaries

  
	
  4.19(a)

  	
   

  	
  UCC Filing Jurisdictions

  
	
  4.19(c)

  	
   

  	
  IP Filing Jurisdictions

  
	
  6.14

  	
   

  	
  Unsatisfied Conditions

  
	
  7.10

  	
   

  	
  Affiliate Transactions

  
	
   

  	
   

  	
   

  
	
  EXHIBITS:

  
	
   

  	
   

  	
   

  
	
  A-1

  	
   

  	
  Form of Guarantee and Collateral
  Agreement

  
	
  A-2

  	
   

  	
  Form of UK Debenture

  
	
  A-3

  	
   

  	
  Form of UK Charge Over Shares

  
	
  A-4

  	
   

  	
  Form of EPE Second Lien Collateral
  Agreement

  
	
  B

  	
   

  	
  Form of Compliance Certificate

  
	
  C

  	
   

  	
  Form of Closing Certificate

  
	
  D

  	
   

  	
  Form of Assignment and Assumption

  
	
  E-1

  	
   

  	
  Form of Legal Opinion of Paul,
  Hastings, Janofsky and Walker LLP

  
	
  E-2

  	
   

  	
  Form of Legal Opinion of Baker &
  McKenzie

  
	
  E-3

  	
   

  	
  Form of Legal Opinion of Greenberg
  Traurig, local counsel in Colorado

  
	
  F

  	
   

  	
  Form of Exemption Certificate

  
	
  G

  	
   

  	
  Form of Bridge Note

  
	
  H

  	
   

  	
  Form of Addendum

  
	
  I

  	
   

  	
  Form of Solvency Certificate

  
	
  J

  	
   

  	
  Subordination Provisions

  
	
  K

  	
   

  	
  Form of Intercreditor Agreement

  

 

 

BRIDGE LOAN CREDIT AGREEMENT, dated as of March 17, 2005, among
SPORTS ENTERTAINMENT ENTERPRISES, INC., a Colorado corporation (d/b/a CKX,
INC.) (“Holdings”), CKX UK HOLDINGS LIMITED, a company incorporated in
England and Wales with registered number 05389449 and a direct wholly owned
subsidiary of Holdings (the “Borrower”), the several banks and other financial
institutions or entities from time to time parties to this Agreement as lenders
(the “Lenders”), BEAR, STEARNS & CO. INC., as sole lead
arranger (in such capacity, the “Lead Arranger”), and BEAR STEARNS
CORPORATE LENDING INC., as administrative agent (in such capacity, the “Administrative
Agent”).

 

RECITALS

 

WHEREAS, on the Closing Date (as defined below) the Borrower intends to
acquire approximately 74.9% of the Capital Stock of 19 Entertainment Limited (a
company incorporated in England and Wales with registered number 01886042) (“19E”)
and Holdings intends to acquire approximately 25.1% of the Capital Stock of 19E
(such acquisitions together being the “Acquisition”);

 

WHEREAS, immediately following (and on the same day as) consummation of
the Acquisition, Holdings will transfer beneficial ownership of the Capital
Stock of 19E acquired in the Acquisition to the Borrower such that at close of
business on the Closing Date, 19E will, on the basis of beneficial ownership
only, be a Wholly Owned Subsidiary of the Borrower;

 

WHEREAS, the Acquisition will be effected pursuant to the Agreement, dated
as of March 17, 2005, among Simon Robert Fuller, Fuller Nominees Ltd.,
Ingenious Ventures Ltd., and Ingenious Media plc (collectively, the “Seller”),
Holdings and the Borrower (as the same may be amended from time to time in
accordance with the terms hereof, the “Acquisition Agreement”); and

 

WHEREAS, upon consummation of the Acquisition, all existing
indebtedness of 19E and its Subsidiaries owed to National Westminster Bank Plc
will be repaid in full and all Liens attaching in favor of National Westminster
Bank Plc thereunder will be discharged.

 

NOW, THEREFORE, in consideration of the foregoing premises and to
induce the Administrative Agent and the Lenders to enter into this Agreement
and to induce the Lenders to make their respective extensions of credit to the
Borrower hereunder, the parties hereto hereby agree as follows:

 

SECTION 1.  DEFINITIONS

 

1.1.          Defined
Terms.  As used in this
Agreement, the terms listed in this Section 1.1 shall have the respective
meanings set forth in this Section 1.1.

 

“Acquired Indebtedness”: 
Indebtedness of any Person substantially all of the Capital Stock or
other ownership interests of which is, or in respect of any business unit of
any Person, acquired after the Closing Date by Holdings or one of its
Subsidiaries in connection with a Permitted Acquisition, but only to the extent
such Indebtedness was outstanding prior to giving

 

1

 

effect to such Permitted Acquisition and was not incurred in
contemplation of or for purposes of consummating such Permitted Acquisition.

 

“Acquisition”:  as defined
in the recitals to this Agreement.

 

“Acquisition Agreement”: 
as defined in the recitals to this Agreement.

 

“Acquisition Documentation”: 
collectively, the Acquisition Agreement and all disclosure letters,
schedules, exhibits and annexes thereto and all side letters and agreements
affecting the terms thereof or entered into in connection therewith.

 

“Addendum”:  an
instrument, substantially in the form of Exhibit H, by which a Lender
becomes a party to this Agreement as of the Closing Date.

 

“Administrative Agent”: 
as defined in the preamble to this Agreement.

 

“Affiliate”:  as to any
Person, any other Person that, directly or indirectly, is in control of, is
controlled by, or is under common control with, such Person.  For purposes of this definition, “control” of
a Person means the power, directly or indirectly, either to (a) vote 5.0%
or more of the securities having ordinary voting power for the election of
directors (or persons performing similar functions) of such Person or (b) direct
or cause the direction of the management and policies of such Person, whether
by contract or otherwise.

 

“Agents”:  the collective
reference to the Lead Arranger and the Administrative Agent.

 

“Aggregate Exposure”: 
with respect to any Lender at any time, an amount equal to (a) until
the Closing Date, the aggregate amount of such Lender’s Bridge Commitments at
such time and (b) thereafter, the aggregate then unpaid principal amount
of such Lender’s Bridge Loans.

 

“Aggregate Exposure Percentage”: 
with respect to any Lender at any time, the ratio (expressed as a
percentage) of such Lender’s Aggregate Exposure at such time to the Aggregate
Exposure of all Lenders at such time.

 

“Agreement”:  this Bridge
Loan Credit Agreement, as amended, supplemented or otherwise modified from time
to time in accordance with the terms hereof.

 

“Applicable Margin”:  for
each Type of Loan, the rate per annum set forth under the relevant column
heading below:

 

	
   

  	
   

  	
  Eurodollar Loans

  	
   

  	
  Base Rate Loans

  	
   

  
	
  At all times
  on and after the Closing Date to, but not including, the second scheduled
  Interest Payment Date

  	
   

  	
  4.00

  	
  %

  	
  3.00

  	
  %

  
	
  At all times
  on and after the second scheduled Interest Payment Date to, but not
  including, the third scheduled Interest Payment Date

  	
   

  	
  5.00

  	
  %

  	
  4.00

  	
  %

  
	
  At all times
  on and after the third scheduled Interest Payment Date

  	
   

  	
  6.00

  	
  %

  	
  5.00

  	
  %

  

 

2

 

 

“Approved Fund”:  (a) a
CLO and (b) with respect to any Lender that is a fund which invests in
commercial loans, any other fund that invests in commercial loans and is
managed or advised by the same investment advisor as such Lender or by an
Affiliate of such investment advisor.

 

“Asset Sale”:  any
Disposition of Property or series of related Dispositions of Property
(excluding any such Disposition permitted by clause (a), (b) or (c) of
Section 7.5) that yields gross proceeds to any Group Member (valued at the
initial principal amount thereof in the case of non-cash proceeds consisting of
notes or other debt securities and valued at fair market value in the case of
other non-cash proceeds) in excess of $1,000,000.

 

“Assignee”:  as defined in
Section 10.6(b).

 

“Assignment and Assumption”: 
an Assignment and Assumption, substantially in the form of Exhibit D.

 

“Base Rate”:  for any day,
a rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal
to the greater of (a) the Prime Rate in effect on such day and (b) the
Federal Funds Effective Rate in effect on such day plus 0.50%.  For purposes hereof:  “Prime Rate” shall mean the rate of
interest per annum publicly announced from time to time by the Reference Lender
as its prime rate in effect at its principal office in New York City (the Prime
Rate not being intended to be the lowest rate of interest charged by the
Reference Lender in connection with extensions of credit to debtors).  Any change in the Base Rate due to a change
in the Prime Rate or the Federal Funds Effective Rate shall be effective as of
the opening of business on the effective day of such change in the Prime Rate
or the Federal Funds Effective Rate, respectively.

 

“Base Rate Loans”:  Loans
the rate of interest applicable to which is based upon the Base Rate.

 

“Benefited Lender”:  as
defined in Section 10.7(a).

 

“Board”:  the Board of
Governors of the Federal Reserve System of the United States (or any
successor).

 

3

 

“Borrower”:  as defined in
the preamble to this Agreement.

 

“Bridge Commitment”:  as
to any Lender, the obligation of such Lender, if any, to make a Bridge Loan to
the Borrower hereunder in a principal amount not to exceed the amount set forth
under the heading “Bridge Commitment” under such Lender’s name on such Lender’s
Addendum.  The original aggregate amount
of the Bridge Commitments is $109,000,000.

 

“Bridge Lenders”:  each
Lender that has a Bridge Commitment or that holds a Bridge Loan.

 

“Bridge Loans”:  as
defined in Section 2.1.

 

“Business”:  as defined in
Section 4.17(b).

 

“Business Day”:  a day
other than a Saturday, Sunday or other day on which commercial banks in New
York City are authorized or required by law to close, provided, that
with respect to notices and determinations in connection with, and payments of
principal and interest on, Eurodollar Loans, such day is also a day for trading
by and between banks in Dollar deposits in the interbank eurodollar market.

 

“Capital Expenditures”:  for
any period, with respect to any Person, the aggregate of all expenditures by
such Person and its Subsidiaries for the acquisition or leasing (pursuant to a
capital lease) of fixed or capital assets or additions to equipment (including
replacements, capitalized repairs and improvements during such period) that
should be capitalized under GAAP on a consolidated balance sheet of such Person
and its Subsidiaries.

 

“Capital Lease Obligations”: 
as to any Person, the obligations of such Person to pay rent or other
amounts under any lease of (or other arrangement conveying the right to use)
real or personal property, or a combination thereof, which obligations are
required to be classified and accounted for as capital leases on a balance
sheet of such Person under GAAP and, for purposes of this Agreement, the amount
of such obligations at any time shall be the capitalized amount thereof at such
time determined in accordance with GAAP.

 

“Capital Stock”:  any and
all shares, interests, participations or other equivalents (however designated)
of capital stock of a corporation, any and all equivalent ownership interests
in a Person (other than a corporation) and any and all warrants, rights or
options to purchase any of the foregoing.

 

“Cash Equivalents”:  (a) marketable
direct obligations issued by, or unconditionally guaranteed by, the United
States government or issued by any agency thereof and backed by the full faith
and credit of the United States, in each case maturing within one year from the
date of acquisition; (b) certificates of deposit, time deposits,
eurodollar time deposits or overnight bank deposits having maturities of six
months or less from the date of acquisition issued by any Lender or by any
commercial bank organized under the laws of the United States or any state
thereof or the District of Columbia having combined capital and surplus of not
less than $500,000,000; (c) commercial paper of an issuer rated at least A-1
by

 

4

 

Standard & Poor’s Ratings Services (“S&P”) or P-1
by Moody’s Investors Service, Inc. (“Moody’s”), or carrying an
equivalent rating by a nationally recognized rating agency, if both of the two
named rating agencies cease publishing ratings of commercial paper issuers
generally, and maturing within six months from the date of acquisition; (d) repurchase
obligations of any Lender or of any commercial bank satisfying the requirements
of clause (b) of this definition, having a term of not more than 30 days,
with respect to securities issued or fully guaranteed or insured by the United
States government; (e) securities with maturities of one year or less from
the date of acquisition issued or fully guaranteed by any state, commonwealth
or territory of the United States, by any political subdivision or taxing
authority of any such state, commonwealth or territory or by any foreign
government, the securities of which state, commonwealth, territory, political
subdivision, taxing authority or foreign government (as the case may be) are
rated at least A by S&P or A by Moody’s; (f) securities with
maturities of six months or less from the date of acquisition backed by standby
letters of credit issued by any Lender or any commercial bank satisfying the
requirements of clause (b) of this definition; or (g) shares of money
market mutual or similar funds which invest exclusively in assets satisfying
the requirements of any of clauses (a) through (f) of this definition
or money market funds that (i) comply with the criteria set forth in SEC Rule 2a-7
under the Investment Company Act of 1940, as amended, (ii) are rated AAA
by S&P and Aaa by Moody’s and (iii) have portfolio assets of at least
$5,000,000,000.

 

“Change of Control”: the occurrence of any of the following: (a) Robert
F.X. Sillerman shall (i) cease to own beneficially at least 40% of the
outstanding voting interests in Holdings on a fully diluted basis or (ii) transfer
more than 5% of the economic interest in Holdings that are held by Robert F.X.
Sillerman as of the Closing Date; (b) the board of directors of Holdings
shall cease to consist of a majority of Continuing Directors; (c) Holdings
shall cease to own and control, of record and beneficially, directly, 100% of
each class of outstanding Capital Stock of the Borrower free and clear of all
Liens (except Liens created by the Security Documents and the UK Second Charge
Over Shares (as defined in the EPE Bridge Loan Agreement)); or (d) the
Borrower shall cease to own and control, legally and beneficially, directly or
indirectly, 100% of each class of outstanding Capital Stock of each entity that
is a Guarantor as of the Closing Date, in each case, free and clear of all
Liens (except Liens created by the Security Documents); provided that a
Change of Control shall not be deemed to occur pursuant to this clause (d) by
virtue of the fact that the Borrower will not be the legal owner of the Capital
Stock of 19E until such time as it has complied with its obligations under Section 6.14(b).

 

“CLO”: any entity (whether a corporation, partnership, trust or
otherwise) that is engaged in making, purchasing, holding or otherwise
investing in bank loans and similar extensions of credit in the ordinary course
of its business and is administered or managed by a Lender or an affiliate of
such Lender.

 

“Closing Date”:  the date
on which the conditions precedent set forth in Section 5 shall have been
satisfied or waived, which date is March 17, 2005.

 

“Code”:  the Internal
Revenue Code of 1986, as amended from time to time.

 

5

 

“Collateral”:  all
property of the Loan Parties, now owned or hereafter created or acquired, upon
which a Lien is, or is purported to be, created by any Security Document.

 

“Commonly Controlled Entity”: 
an entity, whether or not incorporated, that is under common control
with the Borrower within the meaning of Section 4001 of ERISA or is part
of a group that includes the Borrower and that is treated as a single employer
under Section 414 of the Code.

 

“Compliance Certificate”: 
a certificate duly executed by a Responsible Officer substantially in
the form of Exhibit B.

 

“Conduit Lender”:  any
special purpose entity organized and administered by any Lender for the purpose
of making Loans otherwise required to be made by such Lender and designated by
such Lender in a written instrument, subject to the consent of the
Administrative Agent and the Borrower (which consent shall not be unreasonably
withheld); provided, that the designation by any Lender of a Conduit
Lender shall not relieve the designating Lender of any of its obligations to
fund a Loan under this Agreement if, for any reason, its Conduit Lender fails
to fund any such Loan, and the designating Lender (and not the Conduit Lender)
shall have the sole right and responsibility to deliver all consents and
waivers required or requested under this Agreement with respect to its Conduit
Lender, and provided, further, that no Conduit Lender shall (a) be
entitled to receive any greater amount pursuant to Section 3.9, 3.10, 3.11
or 10.5 than the designating Lender would have been entitled to receive in
respect of the extensions of credit made by such Conduit Lender or (b) be
deemed to have any Bridge Commitment.

 

“Consolidated EBITDA”: 
for any period, Consolidated Net Income for such period plus,
without duplication and to the extent reflected as a charge in the statement of
such Consolidated Net Income for such period, (and provided that to the extent
that all or any portion of the income of any Subsidiary or other Person is
excluded from Consolidated Net Income pursuant to the definition thereof for
such period or portion thereof, any amounts set forth in the following clauses (a) through
(g) that are attributable to such Subsidiary or other Person shall not be
included for purposes of such clauses for such period or portion thereof) the
sum of (a) income tax expense, (b) interest expense, amortization or
write-off of debt discount and debt issuance costs and commissions, discounts
and other fees and charges associated with Indebtedness (including the Loans), (c) depreciation
and amortization expense, (d) amortization of intangibles (including, but
not limited to, goodwill) and organizational costs, (e) any extraordinary
charges or losses determined in accordance with GAAP, (f) non-cash
compensation expenses arising from the issuance of stock, options to purchase
stock and stock appreciation rights to the management of the Borrower, and (g) any
other non-cash charges, non-cash expenses or non-cash losses of the Borrower or
any of its Subsidiaries for such period (excluding any such charge, expense or
loss incurred in the ordinary course of business that constitutes an accrual of
or a reserve for cash charges for any future period), provided, however,
that cash payments made in such period or in any future period in respect of
such non-cash charges, expenses or losses (excluding any such charge, expense
or loss incurred in the ordinary course of business that constitutes an accrual
of or a reserve for cash charges for any future period) shall be subtracted from
Consolidated Net Income in calculating Consolidated EBITDA in the period when
such payments are made, and minus, to the extent included in the
statement of

 

6

 

such Consolidated Net Income for such period, the sum of (a) interest
income, (b) any extraordinary income or gains determined in accordance
with GAAP and (c) any other non-cash income (excluding any items that
represent the reversal of any accrual of, or cash reserve for, anticipated cash
charges in any prior period that are described in the parenthetical to clause (g) above),
all as determined on a consolidated basis.

 

In addition to and without limitation of the foregoing, (x) with
respect to any Asset Sale or other Disposition or any Permitted Acquisition as
to which the fair market value of the assets that are the subject of such Asset
Sale, Disposition or Permitted Acquisition is equal to or greater than
$1,000,000, for purposes of this definition, “Consolidated EBITDA” shall be
calculated after giving effect to such Asset Sale, Disposition or Permitted
Acquisition, on a pro forma basis for the four quarter period to which such
calculation relates (including, without limitation, any Permitted Acquisition
giving rise to the need to make such calculation as a result of such Person or
one of its Subsidiaries (including any Person who becomes a Subsidiary as a
result of any such Permitted Acquisition) assuming or otherwise becoming liable
for any Acquired Indebtedness in accordance with the terms of this Agreement
and also including (or excluding, in the case of an Asset Sale or other
Disposition) any Consolidated EBITDA attributable to the assets which are the
subject of such Asset Sale, Disposition or Permitted Acquisition), in each
case, occurring during such four quarter period or at any time subsequent to
the last day of such four quarter period and on or prior to the date of such
Asset Sale, Disposition or Permitted Acquisition, as if such Asset Sale,
Disposition or Permitted Acquisition (including the assumption of or liability
for any such Acquired Indebtedness) had occurred on the first day of such four
quarter period and (y) “Consolidated EBITDA” shall be calculated on a pro forma
basis after giving effect to the exclusion of (i) costs and expenses
incurred in connection with effecting the transactions contemplated by the
Acquisition Agreement in an aggregate amount of up to $4,000,000 and (ii) costs
and expenses incurred or associated with the activities listed on Schedule 1.1(a).

 

For purposes of this definition, whenever pro forma effect is to be
given to any Asset Sale, Disposition or Permitted Acquisition and the amount of
income or earnings relating thereto, the pro forma calculations shall be
determined in good faith by a responsible financial or accounting officer of
the Borrower and shall comply with the requirements of Rule 11-02 of
Regulation S-X promulgated by the SEC, except that such pro forma calculations
may include operating expense reductions for the applicable period resulting from
any Permitted Acquisition which is being given pro forma effect that have been
realized or for which the steps necessary for realization have been taken or
are reasonably expected to be taken within six months following such Permitted
Acquisition, including, but not limited to, the execution or termination of any
contracts, the termination of any personnel or the closing (or approval by the
board of directors of such Person of any closing) of any facility, as
applicable, provided that, in either case, such adjustments are reasonably
satisfactory to the Administrative Agent and are set forth in an certificate
signed by the Person’s chief financial officer which states (i) the amount
of such adjustment or adjustments, (ii) that such adjustment or adjustments
are based on the reasonable good faith beliefs of the officer executing such
certificate at the time of such execution and (iii) that any related
incurrence of Indebtedness is permitted pursuant to this Agreement.

 

7

 

“Consolidated Leverage Ratio”: 
as of the last day of any period, the ratio of (a) Consolidated
Total Debt on such day to (b) Consolidated EBITDA for such period.

 

“Consolidated Net Income”: 
for any period, the consolidated net income (or loss) of the Borrower
and its Subsidiaries, determined on a consolidated basis in accordance with
GAAP; provided that there shall be excluded therefrom (a) the
income (or deficit) of any Person accrued prior to the date it becomes a
Subsidiary of the Borrower or is merged into or consolidated with the Borrower
or any of its Subsidiaries, (b) the income (or deficit) of any Person
(other than a Subsidiary of the Borrower) in which the Borrower or any of its
Subsidiaries has an ownership interest, except to the extent that any such
income is actually received by the Borrower or such Subsidiary in the form of
dividends or similar distributions, (c) that percentage of the income (or
deficit) of any Subsidiary of the Borrower equal to the percentage of Capital
Stock of such Subsidiary not owned, directly or indirectly, by the Borrower,
and (d) the undistributed earnings of any Subsidiary of the Borrower to
the extent that the declaration or payment of dividends or similar
distributions by such Subsidiary is not at the time permitted by the terms of
any Contractual Obligation (other than any Loan Document) or Requirement of Law
applicable to such Subsidiary.

 

“Consolidated Net Worth”: 
at any date, all amounts that would, in conformity with GAAP, be
included on a consolidated balance sheet of the Borrower and its Subsidiaries
as (i) stockholders’ or members’ equity at such date or (ii) outstanding
Indebtedness or payables of the Borrower or any of its Subsidiaries to Holdings
permitted hereunder.

 

“Consolidated Total Debt”: 
at any date, the aggregate principal amount of all Indebtedness (other
than the Deferred Consideration) of the Borrower and its Subsidiaries at such
date, determined on a consolidated basis in accordance with GAAP.

 

“Continuing Directors”: 
as of any date of determination, each member of the board of directors
of Holdings who is or was a member thereof on the Closing Date, after giving
effect to the Acquisition and the other transactions contemplated hereby, and
each other member of the board of directors of Holdings elected to the board of
directors of Holdings with the approval of at least 66 2/3% of the then
Continuing Directors.

 

“Contractual Obligation”: 
as to any Person, any provision of any security issued by such Person or
of any agreement, instrument or other undertaking to which such Person is a
party or by which it or any of its property is bound, including undertakings
evidenced primarily by a course of dealing rather than by executed contract.

 

“Copyright”: as defined in the Guarantee and Collateral
Agreement.

 

“Default”:  any event or
condition the occurrence of which is, or with the giving of notice or lapse of
time or both would be, an Event of Default under Section 8.

 

“Deferred Consideration”: 
as defined in the Acquisition Agreement as in effect on the date hereof.

 

8

 

“Deferred Consideration Letter”: 
that certain letter agreement, dated as of March 17, 2005, by and
among RFX, Holdings and the Borrower.

 

“Disposition”:  with
respect to any Property, any sale, lease, license, sale and leaseback,
assignment, conveyance, transfer or other disposition thereof.  The terms “Dispose” and “Disposed
of” shall have correlative meanings.

 

“Disqualified Capital Stock”: 
that portion of any Capital Stock which, by its terms (or by the terms
of any security into which it is convertible or for which it is exchangeable at
the option of the holder thereof) or upon the happening of any event, (a) matures
or is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise on or prior to the date that is three months later than the final
Interest Payment Date, (b) is redeemable at the sole option of the holder
thereof on or prior to the date that is three months later than the final
Interest Payment Date or (c) contains any repurchase obligation which may
come into effect on or prior to the date that is three months later than the
final Interest Payment Date.

 

“Dollars” and “$”: 
dollars in lawful currency of the United States.

 

“Engagement Letter”:  the
engagement letter entered into by the Lead Arranger, RFX and Robert F.X.
Sillerman on December 10, 2004, as acceded to by Holdings in replacement
of RFX and fulfillment of the obligations of Robert F.X. Sillerman thereunder
on March 17, 2005, and as amended on March 17, 2005.

 

“Environmental Laws”:  any
and all foreign, Federal, state, local or municipal laws, rules, orders,
regulations, statutes, ordinances, codes, decrees, requirements of any
Governmental Authority or other Requirements of Law (including common law)
regulating, relating to or imposing liability or standards of conduct
concerning protection of human health or safety or the environment, as now or
may at any time hereafter be in effect.

 

“Environmental Permits”: 
any and all permits, licenses, approvals, registrations, notifications,
exemptions and other authorizations required under any Environmental Law.

 

“EPE Acquisition”: the “Acquisition” as defined in the EPE
Bridge Loan Agreement.

 

“EPE Administrative Agent”: Bear Stearns Corporate Lending, Inc.
as administrative agent under the EPE Bridge Loan Agreement.

 

“EPE Bridge Loan Agreement”: that certain Amended and Restated
Bridge Loan Credit Agreement dated as of the date hereof, among Holdings, EPE
Holding Corporation, the several lenders from time to time parties thereto, and
the EPE Administrative Agent, as the same may be further amended, supplemented
or otherwise modified from time to time in accordance with the terms thereof.

 

“EPE Holding Corporation”: a Delaware corporation and a direct
wholly-owned subsidiary of Holdings.

 

9

 

“EPE Second Lien Collateral Agreement”:  that certain Collateral Agreement, dated as
of the date hereof, whereby EPE Holding Corporation grants a second priority
lien on its assets in favor of the Administrative Agent, substantially in the
form of Exhibit A-4.

 

“ERISA”:  the Employee
Retirement Income Security Act of 1974, as amended from time to time.

 

“Eurocurrency Reserve Requirements”:  for any day as applied to a Eurodollar Loan,
the aggregate (without duplication) of the maximum rates (expressed as a
decimal fraction) of reserve requirements in effect on such day (including
basic, supplemental, marginal and emergency reserves under any regulations of
the Board or other Governmental Authority having jurisdiction with respect
thereto) dealing with reserve requirements prescribed for eurocurrency funding
(currently referred to as “Eurocurrency Liabilities” in Regulation D of the
Board) maintained by a member bank of the Federal Reserve System.

 

“Eurodollar Base Rate”: 
with respect to each day during each Interest Period pertaining to a
Eurodollar Loan, the rate per annum determined on the basis of the rate for
deposits in Dollars for a period equal to such Interest Period commencing on
the first day of such Interest Period appearing on Page 3750 of the
Telerate screen as of 11:00 a.m., London time, two Business Days prior to
the beginning of such Interest Period. 
In the event that such rate does not appear on Page 3750 of the
Telerate screen (or otherwise on such screen), the “Eurodollar Base Rate”
shall be determined by reference to such other comparable publicly available
service for displaying eurodollar rates as may be selected by the
Administrative Agent or, in the absence of such availability, by reference to
the rate at which the Administrative Agent is offered Dollar deposits at or
about 11:00 a.m., New York City time, two Business Days prior to the
beginning of such Interest Period in the interbank eurodollar market where its
eurodollar and foreign currency and exchange operations are then being
conducted for delivery on the first day of such Interest Period for the number
of days comprised therein.

 

“Eurodollar Loans”:  Loans
the rate of interest applicable to which is based upon the Eurodollar Rate.

 

“Eurodollar Rate”:  with
respect to each day during each Interest Period pertaining to a Eurodollar
Loan, a rate per annum determined for such day in accordance with the following
formula (rounded upward to the nearest 1/100th of 1%):

 

	
   

  	
  Eurodollar
  Base Rate

  	
   

  
	
  1.00 -
  Eurocurrency Reserve Requirements

  

 

“Eurodollar Tranche”:  the
collective reference to Eurodollar Loans for which the then current Interest
Periods with respect to all of which begin on the same date and end on the same
later date (whether or not such Loans shall originally have been made on the
same day).

 

“Event of Default”:  any
of the events specified in Section 8, provided that any requirement
for the giving of notice, the lapse of time, or both, has been satisfied.

 

10

 

“Existing Indebtedness”: any outstanding Indebtedness of 19E and
its Subsidiaries in existence as of the Closing Date.

 

“Facility”:  the Bridge
Commitments and the Bridge Loans made in respect thereof.

 

“Federal Funds Effective Rate”: 
for any day, the weighted average of the rates on overnight federal
funds transactions with members of the Federal Reserve System arranged by
federal funds brokers, as published on the next succeeding Business Day by the
Federal Reserve Bank of New York, or, if such rate is not so published for
any day that is a Business Day, the average of the quotations for the day of
such transactions received by the Reference Lender from three federal funds brokers
of recognized standing selected by it.

 

“Fremantle”:  Fremantle
Media Limited, or Fremantle Media North America, as the context requires.

 

“Fuller Employment Agreement”: 
that certain Director’s Service Agreement by and between 19E and Simon
Robert Fuller, dated as of March 17, 2005.

 

“Fuller Non-Compete Agreement”: 
that certain Confidentiality, Non-Competition, Non-Solicitation and
Non-Recruitment Agreement, by and among Simon Robert Fuller, Holdings, Fuller
Nominees Limited, Ingenious Media plc, and Ingenious Ventures Limited, dated as
of March 17, 2005.

 

“Funding Office”:  the
office of the Administrative Agent specified in Section 10.2 or such other
office as may be specified from time to time by the Administrative Agent as its
funding office by written notice to the Borrower and the Lenders.

 

“GAAP”:  generally
accepted accounting principles in the United Kingdom, as in effect from time to
time; provided that for purposes of Section 7.1, GAAP shall be
determined on the basis of such United Kingdom principles in effect on the date
hereof and consistent with those used in the preparation of the most recent
audited financial statements referred to in Section 4.1(b).  In the event that any Accounting Change (as
defined below) shall occur (including, without limitation, the conversion of
the method of accounting that the Borrower employs from generally accepted
accounting principles in the United Kingdom to generally accepted accounting
principles in the United States (the “US GAAP Adoption”)) and such
change results in a change in the method of calculation of financial covenants,
standards or terms in this Agreement, then the Borrower and the Administrative
Agent agree to enter into negotiations in order to amend such provisions of
this Agreement so as to equitably reflect such Accounting Changes with the
desired result that the criteria for evaluating the Borrower’s financial
condition shall be the same after such Accounting Changes as if such Accounting
Changes had not been made.  Until such
time as such an amendment shall have been executed and delivered by the
Borrower, the Administrative Agent and the Required Lenders, all financial
covenants, standards and terms in this Agreement shall continue to be
calculated or construed as if such Accounting Changes had not occurred.  “Accounting Changes” refers to changes
in accounting principles required by the promulgation of any rule, regulation,
pronouncement or

 

11

 

opinion by the Financial Accounting Standards Board of the American
Institute of Certified Public Accountants or, if applicable, the SEC, or, as
set forth above, the US GAAP Adoption. 
For purposes of the proviso contained in the first sentence of this
paragraph, after the occurrence of the US GAAP Adoption, GAAP shall be
determined on the basis of generally accepted accounting principles in the
United States in effect and as used by the Borrower on the date of the US GAAP
Adoption.

 

“Governmental Authority”: 
any nation or government, union of nations, any state, province, region,
or other political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative functions of or
pertaining to government, any securities exchange and any self-regulatory
organization (including the National Association of Insurance Commissioners).

 

“Group Members”:  the
collective reference to Holdings, the Borrower and their respective Subsidiaries,
other than EPE Holding Corporation and its Subsidiaries and other than
Subsidiaries of Holdings acquired in one or more transactions comprising a “Permitted
Acquisition”.

 

“Guarantee and Collateral Agreement”:  the Guarantee and Collateral Agreement to be
executed and delivered by Holdings, the Borrower and the US Guarantor
Subsidiaries, substantially in the form of Exhibit A-1, and to which the
UK Guarantor Subsidiaries must accede as Guarantors in accordance with the
terms of this Agreement.

 

 “Guarantee Obligation”:  as to any Person (the “guaranteeing person”),
any obligation of (a) the guaranteeing person or (b) another Person
(including any bank under any letter of credit) to induce the creation of which
the guaranteeing person has issued a reimbursement, counterindemnity or similar
obligation, in either case guaranteeing or in effect guaranteeing any
Indebtedness, leases, royalties, license fees, dividends or other obligations
(the “primary obligations”) of any other third Person (the “primary
obligor”) in any manner, whether directly or indirectly, including any
obligation of the guaranteeing person, whether or not contingent, (i) to
purchase any such primary obligation or any property constituting direct or
indirect security therefor, (ii) to advance or supply funds (1) for
the purchase or payment of any such primary obligation or (2) to maintain
working capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation or (iv) otherwise to assure or
hold harmless the owner of any such primary obligation against loss in respect
thereof; provided, however, that the term Guarantee Obligation
shall not include endorsements of instruments for deposit or collection in the
ordinary course of business.  The amount
of any Guarantee Obligation of any guaranteeing person shall be deemed to be
the lower of (a) an amount equal to the stated or determinable amount of
the primary obligation in respect of which such Guarantee Obligation is made
and (b) the maximum amount for which such guaranteeing person may be
liable pursuant to the terms of the instrument embodying such Guarantee
Obligation, unless such primary obligation and the maximum amount for which
such guaranteeing person may be liable are not stated or determinable, in which
case the amount of

 

12

 

such Guarantee Obligation shall be such guaranteeing person’s maximum
reasonably anticipated liability in respect thereof as determined by the
Borrower in good faith.

 

“Guarantor”:  Holdings and
each US Guarantor Subsidiary, in their respective capacity as Guarantors under
the Guarantee and Collateral Agreement, and any other Person required to become
a Guarantor under the Guarantee and Collateral Agreement (including, for the
avoidance of doubt, each UK Subsidiary Guarantor upon the Closing Date
following consummation of the Acquisition).

 

“Guarantor Subsidiary”: any Guarantor that is a Subsidiary of
the Borrower.

 

“Hazardous
Substances”: any material substance or waste presently listed, defined,
designated or classified as hazardous, toxic or radioactive under, or otherwise
regulated pursuant to, any applicable Environmental Law or by any Governmental
Authority including petroleum and any derivatives or by-products thereof,
asbestos, presumed asbestos-containing material or asbestos-containing
material, urea formaldehyde and polychlorinated biphenyls and including any
material, substance or waste which is defined as a “hazardous waste,”
“hazardous material,” “hazardous substance,” “extremely hazardous waste,”
“restricted hazardous waste,” “contaminant,” “contaminant,” “toxic waste” or
“toxic substance” under any provision of Environmental Law.

 

“Hedge Agreements”:  any
agreement with respect to any swap, forward, future or derivative transaction
or option or similar agreement involving, or settled by reference to, one or
more rates, currencies, commodities, equity or debt instruments or securities,
or economic, financial or pricing indices or measures of economic, financial or
pricing risk or value or any similar transaction or any combination of these
transactions; provided that no phantom stock or similar plan providing
for payments only on account of services provided by current or former
directors, officers, employees or consultants of the Borrower or any of its
Subsidiaries shall be a Hedge Agreement.

 

“Holdings”:  as defined in
the preamble to this Agreement.

 

“HSR Act”:  the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

 

“Indebtedness”:  of any
Person at any date, without duplication, (a) all indebtedness of such
Person for borrowed money, (b) all obligations of such Person for the
deferred purchase price of property or services (other than current trade
payables incurred in the ordinary course of such Person’s business), (c) all
obligations of such Person evidenced by notes, bonds, debentures or other
similar instruments, (d) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property), (e) all Capital Lease Obligations of such
Person, (f) all obligations of such Person, contingent or otherwise, as an
account party or applicant under or in respect of acceptances, letters of
credit, surety bonds or similar arrangements, (g) all obligations of such
Person, contingent or otherwise, to purchase,

 

13

 

redeem, retire or otherwise acquire for value any Capital Stock of such
Person, (h) all Guarantee Obligations of such Person in respect of
obligations of others of the kind referred to in clauses (a) through (g) above,
(i) all obligations of the kind referred to in clauses (a) through (h) above
secured by (or for which the holder of such obligation has an existing right,
contingent or otherwise, to be secured by) any Lien on property (including
accounts and contract rights) owned by such Person, whether or not such Person
has assumed or become liable for the payment of such obligation, (j) all
Disqualified Capital Stock issued by such Person and (k) for the purposes of
Sections 7.2 and 8(e) only, all obligations of such Person in respect of
Hedge Agreements.  The Indebtedness of
any Person shall include the Indebtedness of any other entity (including any
partnership in which such Person is a general partner) to the extent such
Person is liable therefor as a result of such Person’s ownership interest in or
other relationship with such entity, except to the extent the terms of such
Indebtedness expressly provide that such Person is not liable therefor.

 

“Indemnified Liabilities”: 
as defined in Section 10.5.

 

“Indemnitee”:  as defined
in Section 10.5.

 

“Insolvency”:  with
respect to any Multiemployer Plan, the condition that such Plan is insolvent
within the meaning of Section 4245 of ERISA.

 

“Insolvent”:  pertaining
to a condition of Insolvency.

 

“Intellectual Property”: 
as defined in the Guarantee and Collateral Agreement.

 

“Intellectual Property Security Agreement”: as defined in the
Guarantee and Collateral Agreement.

 

“Intercreditor Agreement”: that certain Intercreditor Agreement,
dated as of the date hereof, by and between the Administrative Agent and the EPE
Administrative Agent, substantially in the form of Exhibit K.

 

“Interest Payment Date”:  (a) June 17,
2005, September 16, 2005, December 16, 2005 and February 6, 2006
and (b) as to any optional or mandatory prepayment of the Loans, the date
of such optional or mandatory prepayment.

 

“Interest Period”:  as to
any Eurodollar Loan, (a) initially, the period commencing on the borrowing
or conversion date, as the case may be, with respect to such Eurodollar Loan
and ending one, two or three months thereafter, as selected by the Borrower in
its notice of borrowing or notice of conversion, as the case may be, given with
respect thereto; and (b) thereafter, each period commencing on the last
day of the next preceding Interest Period applicable to such Eurodollar Loan
and ending one, two or three months thereafter, as selected by the Borrower by
irrevocable notice to the Administrative Agent no later than 11:00 a.m.,
New York City time, on the date that is three Business Days prior to the last
day of the then current Interest Period with respect thereto; provided
that, all of the foregoing provisions relating to Interest Periods are subject
to the following:

 

14

 

(i)            if any Interest Period would otherwise end on
a day that is not a Business Day, such Interest Period shall be extended to the
next succeeding Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month in which event such
Interest Period shall end on the immediately preceding Business Day;

 

(ii)           the Borrower may not select an Interest Period that would extend beyond
the date final payment is due on the Bridge Loans;

 

(iii)          any Interest Period that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on the last
Business Day of a calendar month; and

 

(iv)          the Borrower shall select Interest Periods so as not to require a payment
or prepayment of any Eurodollar Loan during an Interest Period for such Loan.

 

“Investments”:  as defined
in Section 7.8.

 

 “Lead Arranger”:  as defined in the recitals to this Agreement.

 

“Lenders”:  as defined in
the preamble hereto; provided, that unless the context otherwise
requires, each reference herein to the Lenders shall be deemed to include any
Conduit Lender.

 

“Lien”:  any mortgage,
pledge, hypothecation, assignment by way of collateral, conditional assignment,
deposit arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including any
conditional sale or other title retention agreement and any capital lease
having substantially the same economic effect as any of the foregoing).

 

“Loan”:  any loan made by
any Lender pursuant to this Agreement.

 

“Loan Documents”:  this
Agreement, the Intercreditor Agreement, the Security Documents and the Notes.

 

“Loan Parties”:  each
Group Member that is a party to a Loan Document.

 

“Material Adverse Effect”: 
a material adverse effect on (a) the business, assets, property,
condition (financial or otherwise), results of operations or prospects of
Holdings, the Borrower and the Borrower’s Subsidiaries, taken as a whole,
excluding, however, any effect attributable to (i) changes in conditions
generally affecting the industries in which Holdings operates and (ii) changes
in law after the Closing Date or (b) the validity or enforceability of
this Agreement or any of the other Loan Documents or the rights or remedies of
the Agents or the Lenders hereunder or thereunder or the validity, perfection
or priority of the Administrative Agent’s Liens on the Collateral.

 

15

 

“Material Environmental Amount”: 
an amount payable by the Borrower and/or its Subsidiaries in excess of
$750,000 (after taking into account any amounts paid to the Borrower or any
Subsidiary of the Borrower in respect thereof pursuant to indemnity claims made
by the Borrower and/or its Subsidiaries) for any violation of or liability
under any Environmental Law, including, without limitation, all remedial costs,
compliance costs, compensatory damages, punitive damages, fines, penalties or
any combination thereof.

 

“Material Subsidiary”: 
any Guarantor and any other Subsidiary of the Borrower which, at any
date of determination, either (a) had Consolidated EBITDA (utilizing, in
such definition of Consolidated EBITDA and the related terms, such Subsidiary
and its consolidated Subsidiaries rather than the Borrower and its
Subsidiaries) for the four full fiscal quarters immediately preceding such date
of determination, equal to or greater than $500,000 or (b) held assets
valued at or above $1,000,000 in the aggregate.

 

“Mortgages”:  each of the
mortgages and deeds of trust made by any Loan Party in favor of, or for the
benefit of, the Administrative Agent for the benefit of the Lenders and other
secured parties, in form and substance reasonably satisfactory to the
Administrative Agent (with such changes thereto as shall be advisable under the
law of the jurisdiction in which such mortgage or deed of trust is to be
recorded).

 

“Multiemployer Plan”:  a
Plan that is a multiemployer plan as defined in Section 4001(a)(3) of
ERISA.

 

 “Net Cash Proceeds”:  (a) in connection with any Asset Sale or
any Recovery Event, the proceeds thereof in the form of cash and Cash
Equivalents (including any such proceeds received by way of deferred payment of
principal pursuant to a note or installment receivable or purchase price
adjustment receivable or by the Disposition of any non-cash consideration
received in connection therewith or otherwise, but only as and when received)
of such Asset Sale or Recovery Event, net of reasonable and customary attorneys’
fees, accountants’ fees, investment banking fees, amounts required to be
applied to the repayment of Indebtedness secured by a Lien expressly permitted
hereunder on any asset that is the subject of such Asset Sale or Recovery Event
(other than any Lien pursuant to a Security Document) and other reasonable and
customary fees and expenses actually incurred in connection therewith and net
of taxes paid or reasonably estimated to be payable as a result thereof (after
taking into account any available tax credits or deductions and any tax sharing
arrangements) and (b) in connection with any issuance or sale of Capital
Stock or any incurrence of Indebtedness or the making of any capital or similar
contribution, the cash proceeds received from such issuance or incurrence, net
of reasonable and customary attorneys’ fees, investment banking fees,
accountants’ fees, underwriting discounts and commissions and other reasonable
and customary fees and expenses actually incurred in connection therewith.

 

“19E”: as defined in the Recitals.

 

“19TV”:  19TV Limited, a
company incorporated in England and Wales with registered number 03478214.

 

16

 

“Non-Excluded Taxes”:  as
defined in Section 3.10(a).

 

“Non-U.S. Lender”:  as
defined in Section 3.10(d).

 

“Notes”:  the collective
reference to any promissory note evidencing Loans.

 

“Obligations”:  the unpaid
principal of and interest on (including interest accruing after the maturity of
the Loans and interest accruing after the filing of any petition in bankruptcy,
or the commencement of any insolvency, reorganization or like proceeding,
relating to the Borrower, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding) the Loans and all other
obligations and liabilities of the Borrower to any Agent or to any Lender,
whether direct or indirect, absolute or contingent, due or to become due, or
now existing or hereafter incurred, which may arise under, out of, or in
connection with, this Agreement, any other Loan Document or any other document
made, delivered or given in connection herewith or therewith, whether on
account of principal, interest, reimbursement obligations, fees, indemnities,
costs, expenses (including all fees, charges and disbursements of counsel to
any Agent or to any Lender that are required to be paid by the Borrower
pursuant hereto) or otherwise.

 

“Other Taxes”:  any and
all present or future stamp or documentary taxes or any other excise or
property taxes, charges or similar levies arising from any payment made
hereunder or from the execution, delivery or enforcement of, or otherwise with
respect to, this Agreement or any other Loan Document.

 

“Participant”:  as defined
in Section 10.6(c).

 

“Patent”: as defined in the Guarantee and Collateral Agreement.

 

“Patriot Act”: as defined in Section 10.18.

 

“PBGC”:  the Pension
Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of
ERISA (or any successor).

 

“Permitted Acquisition”: 
one or more acquisitions by any Group Member of a business unit (with
any associated assets) or all of the outstanding capital stock or other
ownership interests (other than margin stock) of any other Person, or in-bound
license on an exclusive basis by any Group Member of assets comprising a
business unit or units of any other Person, provided that (a) no
more than $2.0 million of cash and/or Cash Equivalents in the aggregate shall
be used in connection with all such Permitted Acquisitions, (b) in the
case of an asset acquisition, the applicable assets to be acquired are used,
or, in the case of a stock acquisition, the applicable Person to be acquired is
predominantly engaged, in media, entertainment or content related businesses, (c) in
the case of an acquisition or in-bound license by the Borrower or any of its
Subsidiaries, the Borrower shall be in compliance with the financial covenants
set forth in Section 7.1 on a pro forma basis after giving effect to such
acquisition (and a Responsible Officer of the Borrower shall have certified to
such compliance), (d) in connection with any such acquisition involving a
merger, Holdings or a Wholly Owned

 

17

 

Subsidiary of Holdings shall be the surviving entity (provided that (x)
if such merger involves the Borrower, the Borrower shall be the surviving
entity and (y) if such merger involves any Subsidiary of the Borrower, the
Borrower or a Wholly Owned Subsidiary of the Borrower shall be the surviving
entity), (e) immediately prior, and after giving effect, to such
acquisition, no Default or Event of Default shall have occurred and be
continuing and (f) in the case of the acquisition of the Capital Stock or
other ownership interests of another Person by the Borrower, the Borrower shall
pledge such Capital Stock or other ownership interest and, to the extent that
such Person is then 100% owned by the Borrower, cause such Person to become a
Guarantor, in each case, in accordance with the Guarantee and Collateral
Agreement (having first completed any requirements of any applicable law or regulation in any relevant
jurisdiction concerning financial assistance by a company for the acquisition
of or subscription for shares or concerning the protection of shareholders’
capital).

 

“Permitted Indebtedness”: the following types of Indebtedness:

 

(1)           Indebtedness
of any Loan Party pursuant to any Loan Document;

 

(2)           Indebtedness
of the Borrower to any Guarantor Subsidiary (provided that such Indebtedness is
subordinated to the payment of the Obligations in accordance with the
Subordination Provisions and the notes issued in respect thereof have been
pledged to the Administrative Agent) and Indebtedness of any Guarantor
Subsidiary to the Borrower (provided that such Indebtedness is subordinated to
the payment of the Obligations in accordance with the Subordination Provisions
and the notes issued in respect thereof have been pledged to the Administrative
Agent);

 

(3)           Indebtedness
outstanding on the date hereof and listed on Schedule 1.1(b);

 

(4)           Indebtedness
in respect of bankers’ acceptances and bid, performance and surety or appeal
bonds, workers’ compensation claims and payment obligations in connection with
self-insurance or similar obligations, in each case in the ordinary course of
business, including guarantees or obligations of the Borrower with respect to
letters of credit, issued in the ordinary course of business, supporting such
obligations;

 

(5)           Indebtedness
arising from the honoring by a bank or other financial institution of a check,
draft or similar instrument inadvertently drawn against insufficient funds, so
long as such Indebtedness is extinguished within five Business Days of
incurrence;

 

(6)           Hedge
Agreements permitted under Section 7.12;

 

(7)           Indebtedness
represented by guarantees by the Borrower or Holdings of Indebtedness otherwise
permitted to be incurred under this Agreement;

 

(8)           Indebtedness
consisting of guarantees, indemnities or obligations in respect of purchase
price adjustments in connection with the acquisition or disposition of assets
or the Capital Stock of Subsidiaries permitted by this Agreement;

 

18

 

(9)           Indebtedness
incurred under commercial letters of credit issued for the account of a Group
Member in the ordinary course of business (and not for the purpose of, directly
or indirectly, incurring Indebtedness or providing credit support or a similar
arrangement in respect of Indebtedness), provided that any drawing under any such
letter of credit is reimbursed in full within seven days;

 

(10)         Indebtedness
of Holdings comprising “earn-out” obligations payable in connection with any
Permitted Acquisition made by Holdings in an aggregate amount not to exceed
5.0% of the aggregate consideration paid by Holdings in connection with such
Permitted Acquisition;

 

(11)         Acquired
Indebtedness in an aggregate amount not to exceed $2,000,000;

 

(12)         Indebtedness,
the proceeds of which are used to acquire assets in the ordinary course of
business of Holdings or any of its Subsidiaries; provided that the
aggregate principal amount of such Indebtedness outstanding at any time shall
not exceed the lesser of (x) the purchase price or other cost of all property
or equipment so acquired plus the amount of reasonable fees and expenses
incurred in connection therewith and (y) $300,000;

 

(13)         Indebtedness
consisting of intercompany loans between Guarantor Subsidiaries (provided
that such Indebtedness is subordinated to the payment of the Obligations in
accordance with the Subordination Provisions and the notes issued in respect
thereof have been pledged to the Administrative Agent); and

 

(14)         Indebtedness
of the Borrower to Holdings in an amount not to exceed the aggregate amount of
advances made by Holdings to the Borrower following the Closing Date, provided
that such advances are evidenced by an intercompany note containing the
Subordination Provisions and pledged as collateral to the Administrative Agent.

 

“Permitted Liens”:  the
following types of Liens:

 

(1)           Liens
for taxes, assessments or governmental charges or claims either (a) not
delinquent or (b) that are being contested in good faith by appropriate
proceedings, provided that adequate reserves with respect thereto are
maintained on the books of Holdings, the Borrower or the other applicable Group
Member, as the case may be, in conformity with GAAP;

 

(2)           common
law or statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, materialmen, repairmen, maritime and other Liens imposed by law
incurred in the ordinary course of business that are not overdue for a period
of more than 30 days or that are being contested in good faith by appropriate
proceedings;

 

(3)           pledges
or deposits in connection with workers’ compensation, unemployment insurance
and other social security legislation;

 

19

 

(4)           deposits
to secure the performance of bids, trade contracts (other than for borrowed
money), leases, statutory obligations, surety and appeal bonds, performance
bonds and other obligations of a like nature incurred in the ordinary course of
business;

 

(5)           easements,
rights-of-way, zoning and other restrictions, minor defects, imperfections or
irregularities in title and other similar encumbrances incurred in the ordinary
course of business that, in the aggregate, are not substantial in amount and
that do not in any case materially detract from the value of the property
subject thereto or materially interfere with the ordinary conduct of the
business of any Group Member;

 

(6)           Liens
created pursuant to the Security Documents;

 

(7)           any
interest or title of a lessor under any lease entered into by the Borrower or
any other Subsidiary in the ordinary course of its business and covering only
the assets so leased;

 

(8)           Liens
existing as of the date hereof and set forth on Schedule 1.1(c);

 

(9)           judgment
Liens (other than with respect to judgments of a size sufficient to cause an
Event of Default under this Agreement) so long as such Lien is adequately
bonded and any appropriate legal proceedings which may have been duly initiated
for the review of such judgment shall not have been finally terminated or the period
within which such proceedings may be initiated shall not have expired;

 

(10)         purchase
money Liens securing Indebtedness permitted under clause (12) of the definition
of “Permitted Indebtedness”; provided that (a) such Liens shall be
limited to the property or equipment of the Borrower or its applicable
Subsidiary actually acquired with the proceeds of such Indebtedness and (b) such
Liens shall be created within 120 days of the date on which such property or
equipment is acquired;

 

(11)         Liens
securing reimbursement obligations with respect to commercial letters of credit
which encumber documents and other property relating to such letters of credit
and products and proceeds thereof;

 

(12)         leases,
subleases, non-exclusive licenses and non-exclusive sublicenses granted by 19E
and its Subsidiaries to others on arm’s-length terms that do not materially
interfere with the ordinary course of business of Holdings or any of its Subsidiaries;

 

(13)         bankers’
Liens, rights of setoff and similar Liens with respect to cash and Cash
Equivalents on deposit in one or more bank accounts in the ordinary course of
business;

 

(14)         Liens
in favor of customs and revenue authorities arising as a matter of law to
secure payments of custom duties in connection with the importation of goods;

 

20

 

(15)         Liens
by way of rent deposit created in favor of commercial landlords, provided that
the amount of Indebtedness secured thereby does not in the aggregate exceed
$350,000 or its equivalent in other currencies;

 

(16)         Liens
not otherwise permitted by this Section on the assets of the Borrower and
its Subsidiaries so long as neither (i) the aggregate outstanding
principal amount of the obligations secured thereby nor (ii) the aggregate
fair market value (determined as of the date such Lien is incurred) of the
assets subject thereto exceeds (as to the Borrower and all Subsidiaries)
$500,000 at any one time; and

 

(17)         Liens
granted on a second-priority basis by Holdings on up to 65% of the voting
Capital Stock and 100% of the non-voting Capital Stock of the Borrower pursuant
to the UK Second Charge Over Shares (as defined in the EPE Bridge Loan
Agreement).

 

“Person”:  an individual,
partnership, company, corporation, limited liability company, business trust,
joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.

 

“Plan”:  at a particular
time, any employee benefit plan that is covered by ERISA and in respect of
which the Borrower or a Commonly Controlled Entity is (or, if such plan were
terminated at such time, would under Section 4069 of ERISA be deemed to
be) an “employer” as defined in Section 3(5) of ERISA.

 

“Pledged Equity Interests”: the “Pledged Stock” as defined in
the Guarantee and Collateral Agreement, the “Securities” as defined in the UK
Debenture and the “Shares” as defined in the UK Charge Over Shares.

 

“Pledged Notes”: the “Pledged Notes” as defined in the Guarantee
and Collateral Agreement and any such assets secured in accordance with the
terms of the UK Debenture.

 

“Presley Preferred Equity”: 
approximately $21.9 million in convertible preferred equity issued by
Holdings to Lisa Marie Presley on the terms and conditions set forth in the
Certificate of Designation in respect thereof, dated February 7, 2005.

 

“Pro Forma Balance Sheet”: 
as defined in Section 4.1(a).

 

“Projections”:  as defined
in Section 5(f).

 

“Properties”:  as defined
in Section 4.17(a).

 

“Property”:  any right or
interest in or to property of any kind whatsoever, whether real, personal or
mixed and whether tangible or intangible, including, without limitation,
Capital Stock.

 

“Recovery Event”:  any
settlement of or payment in respect of any property, casualty, or “key man”
life insurance claim or any condemnation proceeding relating to any asset of
any Group Member; provided that any such recovery event or series of
related recovery events

 

21

 

having a value not in excess of $100,000 shall not be deemed to be a “Recovery
Event” for purposes of Section 3.2(b).

 

“Reference Lender”:  Bear
Stearns Corporate Lending Inc.

 

“Register”:  as defined in
Section 10.6(b)(iv).

 

“Reservations”:  the
principle that equitable remedies may be granted or refused at the discretion
of the courts of England and Wales; the limitations imposed by laws relating to
bankruptcy, insolvency, liquidation, reorganization, court schemes, moratoria,
administration and other laws generally affecting the rights of creditors or
(as the case may be) secured creditors; the time barring of claims; the
possibility that an undertaking to assume liability for or to indemnify against
non-payment of United Kingdom stamp duty may be void; defenses of set-off or
counterclaim and other similar principles of English law.

 

“Regulation U”: 
Regulation U of the Board as in effect from time to time.

 

“Reinvestment Deferred Amount”: 
with respect to any Reinvestment Event, the aggregate Net Cash Proceeds
received by the applicable Group Member in connection therewith that are not
applied to prepay the Bridge Loans pursuant to Section 3.2(b) as a
result of the delivery of a Reinvestment Notice.

 

“Reinvestment Event”:  any
Recovery Event in respect of which the applicable Group Member and the other
applicable parties have elected pursuant to the terms of any material contract
or agreement to use the Net Cash Proceeds from such Recovery Event to repair or
replace the assets which were the subject of such Recovery Event and as to
which the Borrower has delivered a Reinvestment Notice.

 

“Reinvestment Notice”:  a
written notice executed by a Responsible Officer certifying that no Event of
Default has occurred and is continuing and that the applicable Group Member and
the other applicable parties have elected pursuant to the terms of any material
contract or agreement to use all or a specified portion of the Net Cash Proceeds
of a Recovery Event to repair or replace the assets which were the subject of
such Recovery Event.

 

“Reinvestment Prepayment Amount”:  with respect to any Reinvestment Event, the
Reinvestment Deferred Amount relating thereto less any amount expended prior to
the relevant Reinvestment Prepayment Date to repair or replace the assets which
were the subject of the relevant Recovery Event.

 

“Reinvestment Prepayment Date”: 
with respect to any Reinvestment Event, the earlier of (a) the date
occurring six months after such Reinvestment Event and (b) the date on
which the Borrower shall have determined not to, or shall have otherwise ceased
to, repair or replace the assets which were the subject of the relevant
Recovery Event with all or any portion of the relevant Reinvestment Deferred
Amount.

 

“Reorganization”:  with
respect to any Multiemployer Plan, the condition that such plan is in
reorganization within the meaning of Section 4241 of ERISA.

 

22

 

“Reportable Event”:  any
of the events set forth in Section 4043(b) of ERISA, other than those
events as to which the thirty day notice period is waived under subsections
..27, .28, .29, .30, .31, .32, .34 or .35 of PBGC Reg. § 4043.

 

“Required Lenders”:  at
any time, the holders of more than 50% of (a) until the funding of the
Bridge Loans, the Bridge Commitments then in effect and (b) thereafter,
the aggregate unpaid principal amount of the Bridge Loans then outstanding.

 

“Requirement of Law”:  as
to any Person, the Certificate of Incorporation and By-Laws or other
organizational or governing documents of such Person, and any law, treaty, rule or
regulation or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.

 

“Responsible Officer”: 
the chief executive officer, chairman or chief financial officer of the
Borrower, but in any event, with respect to financial matters, the chief
financial officer of the Borrower.

 

“Restricted Payments”:  as
defined in Section 7.6.

 

“RFX”:  RFX Acquisition
LLC, a Delaware limited liability company.

 

 “SEC”:  the Securities and Exchange Commission, any
successor thereto and any analogous Governmental Authority.

 

“Security Documents”:  the
collective reference to the Guarantee and Collateral Agreement, UK Debenture,
UK Charge Over Shares, Intellectual Property Security Agreements, EPE Second
Lien Collateral Agreement, Mortgages (if any) and all other security documents
hereafter delivered to the Administrative Agent granting (or purporting to
grant) a Lien on any property of any Person to secure the obligations and
liabilities of any Loan Party under any Loan Document.

 

“Seller”:  as defined in
the recitals to this Agreement.

 

“Series A Preferred Stock”: 
the Series A Convertible Redeemable Preferred Stock, no par value
per share, of Holdings.

 

“Single Employer Plan”: 
any Plan that is covered by Title IV of ERISA, but that is not a Multiemployer
Plan.

 

“Solvent”:  with respect
to any Person, as of any date of determination, (a) the amount of the “present
fair saleable value” of the assets of such Person will, as of such date, exceed
the amount of all “liabilities of such Person, contingent or otherwise”, as of
such date, as such quoted terms are determined in accordance with applicable
federal and state laws governing determinations of the insolvency of debtors
(or, in the case of Group Members incorporated in England and Wales, the value
of its assets exceeds its liabilities (taking into account contingent and
prospective liabilities)), (b) the present fair saleable value of the
assets of such Person will,

 

23

 

as of such date, be greater than the amount that will be required to
pay the liability of such Person on its debts as such debts become absolute and
matured, (c) such Person will not have, as of such date, an unreasonably
small amount of capital with which to conduct its business, and (d) such
Person will be able to pay its debts as they mature.  For purposes of this definition, (i) ”debt”
means liability on a “claim”, and (ii) ”claim” means any (x) right to
payment, whether or not such a right is reduced to judgment, liquidated, unliquidated,
fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured or unsecured or (y) right to an equitable remedy for breach of
performance if such breach gives rise to a right to payment, whether or not
such right to an equitable remedy is reduced to judgment, fixed, contingent,
matured or unmatured, disputed, undisputed, secured or unsecured.

 

“Subordination Provisions”: 
the subordination provisions attached hereto as Exhibit J.

 

“Subsidiary”:  as to any
Person, a company, corporation, partnership, limited liability company or other
entity of which shares of stock or other ownership interests having ordinary
voting power (other than stock or such other ownership interests having such
power only by reason of the happening of a contingency) to elect a majority of
the board of directors or other managers of such corporation, partnership or
other entity are at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more intermediaries, or both,
by such Person.  Unless otherwise
qualified, all references to a “Subsidiary” or to “Subsidiaries” in this
Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower.

 

“Trademark”:  as defined
in the Guarantee and Collateral Agreement.

 

“Transferee”:  any
Assignee or Participant.

 

“Type”:  as to any Loan,
its nature as a Base Rate Loan or a Eurodollar Loan.

 

“UK Charge Over Shares”: 
the Charge Over Shares to be executed and delivered by Holdings on the
date hereof, substantially in the form of Exhibit A-3.

 

 “UK Debenture”:  the Debenture to be executed and delivered by
the Borrower on the date hereof, substantially in the form of Exhibit A-2,
and to which the UK Guarantor Subsidiaries must accede in accordance with the
terms of this Agreement.

 

“UK Guarantor Subsidiary”: each of 19E, 19 Recordings Limited (a
company incorporated in England and Wales with registered number 03602651),
19TV and 19 Merchandising Limited (a company incorporated in England and Wales
with registered number 03695399).

 

“United States”:  the
United States of America.

 

“US Guarantor Subsidiary”: each of 19 Entertainment Inc., 19
Recordings Inc., On the Road Productions Inc., J2K Inc., 19 Touring LLC, 19
Recording Services Inc., and All Girl Productions, Inc.

 

24

 

“Warrants”:  collectively,
the warrants held by certain shareholders, directors and officers of Holdings
and The Huff Alternative Fund, L.P. and its affiliates to purchase shares of
common stock of Holdings, pursuant to those certain warrant agreements, dated
as of February 7, 2005, as in effect on the date hereof.

 

“Wholly Owned Subsidiary”: 
as to any Person, any other Person all of the Capital Stock of which
(other than directors’ qualifying shares required by law) is owned by such
Person directly and/or through other Wholly Owned Subsidiaries.

 

1.2.          Other
Definitional Provisions. 
(a)  Unless otherwise specified therein, all terms defined in this
Agreement shall have the defined meanings when used in the other Loan Documents
or any certificate or other document made or delivered pursuant hereto or
thereto.

 

(b)           As used herein and in the other Loan Documents, and any certificate or
other document made or delivered pursuant hereto or thereto, (i) accounting
terms relating to any Group Member not defined in Section 1.1 and
accounting terms partly defined in Section 1.1, to the extent not defined,
shall have the respective meanings given to them under GAAP, (ii) the
words “include”, “includes” and “including” shall be deemed to be followed by
the phrase “without limitation”, (iii) the word “incur” shall be construed
to mean incur, create, issue, assume, become liable in respect of or suffer to
exist (and the words “incurred” and “incurrence” shall have correlative
meanings), (iv) the words “asset” and “property” shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, Capital Stock, securities,
revenues, accounts, leasehold interests and contract rights, and (v) references
to agreements or other Contractual Obligations shall, unless otherwise
specified, be deemed to refer to such agreements or Contractual Obligations as
amended, supplemented, restated or otherwise modified from time to time
(subject to any applicable restrictions hereunder).

 

(c)           The words “hereof”, “herein” and “hereunder” and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, Schedule and
Exhibit references are to this Agreement unless otherwise specified.

 

(d)           The meanings given to terms defined herein shall be equally applicable
to both the singular and plural forms of such terms.

 

(e)           The expressions, “payment in full,” “paid in full” and any other
similar terms or phrases when used herein with respect to the Obligations shall
mean the payment in full in cash, in immediately available funds, of all the
Obligations.

 

(f)            For
the purposes of the Loan Documents, if a Dollar amount needs to be determined,
any amount which is denominated in a currency other than Dollars will be
converted into Dollars using the Spot Rate on that date.  “Spot Rate” means the spot rate of
exchange of the Administrative Agent (as determined by the Administrative Agent
in relation to its customers generally) for the purchase of Dollars with the
appropriate amount of a currency in the

 

25

 

New York City foreign exchange market in the ordinary course of
business at or about 10.00 a.m., New York City time, on the day in
question for delivery two Business Days later.

 

(g)           The
term “license” shall include any sub-license.

 

SECTION 2. 
AMOUNT AND TERMS OF BRIDGE COMMITMENTS

 

2.1.          Bridge
Commitments.  Subject to the
terms and conditions hereof, each Bridge Lender severally agrees to make a
bridge loan (a “Bridge Loan”) to the Borrower on the Closing Date in an
amount not to exceed the amount of the Bridge Commitment of such Lender.  The Bridge Loans from time to time may be
Eurodollar Loans or Base Rate Loans, as determined by the Borrower and notified
to the Administrative Agent in accordance with Sections 2.2 and 3.3.

 

2.2.          Procedure
for Bridge Loan Borrowing. 
The Borrower shall give the Administrative Agent irrevocable notice
(which notice must be received by the Administrative Agent prior to 10:00 a.m.,
New York City time, one Business Day prior to the anticipated Closing Date)
requesting that the Bridge Lenders make the Bridge Loans on the Closing Date
and specifying the amount to be borrowed. 
Upon receipt of such notice the Administrative Agent shall promptly
notify each Bridge Lender thereof.  Not
later than 12:00 Noon, New York City time, on the Closing Date each Bridge
Lender shall make available to the Administrative Agent at the Funding Office
an amount in immediately available funds equal to the Bridge Loan or Bridge
Loans to be made by such Lender.  The
Administrative Agent shall credit the account of the Borrower on the books of
such office of the Administrative Agent with the aggregate of the amounts made
available to the Administrative Agent by the Bridge Lenders in immediately
available funds.

 

2.3.          Repayment
of Bridge Loans.  The
outstanding principal amount of the Bridge Loans (inclusive of any interest
capitalized pursuant to Section 3.5(e)) shall mature and be payable in
full on February 6, 2006.

 

SECTION 3. 
GENERAL PROVISIONS APPLICABLE TO LOANS

 

3.1.          Optional
Prepayments.  The Borrower may
at any time and from time to time prepay the Loans, in whole or in part, upon
irrevocable notice delivered to the Administrative Agent no later than 11:00 a.m.,
New York City time, three Business Days prior thereto in the case of Eurodollar
Loans and no later than 11:00 a.m., New York City time, on the date of
prepayment in the case of Base Rate Loans, which notice shall specify the date
and amount of prepayment and whether the prepayment is of Eurodollar Loans or
Base Rate Loans; provided, that if a Eurodollar Loan is prepaid on any day
other than the last day of the Interest Period applicable thereto, the Borrower
shall also pay any amounts owing pursuant to Section 3.11.  Upon receipt of any such notice the
Administrative Agent shall promptly notify each relevant Lender thereof.  If any such notice is given, the amount
specified in such notice shall be due and payable on the date specified
therein, together with accrued interest to such date on the amount
prepaid.  Partial prepayments of Bridge
Loans shall be in an aggregate principal amount of $1,000,000 or a whole
multiple thereof.

 

26

 

 

3.2.          Mandatory
Prepayments.  (a)            If
any Capital Stock (other than Capital Stock issued in respect of the exercise
of any Warrants) or Indebtedness (other than Permitted Indebtedness) shall be
issued or incurred by Holdings or any of its Subsidiaries or Holdings or any of
its Subsidiaries shall otherwise receive any other capital or similar
contribution, an amount equal to 100% of the Net Cash Proceeds thereof, if any,
shall be applied on the date of such issuance or incurrence toward the
prepayment of the Bridge Loans and the loans under the EPE Bridge Loan
Agreement, on a pro rata basis, as set forth in Section 3.2(d); provided,
however, that amounts described in this Section 3.2(a) shall
be required to be so applied only if and to the extent such amounts are not
equity issuances of Holdings to the Seller in satisfaction of the obligation to
pay the Deferred Consideration.

 

(b) If on any date any
Group Member shall receive Net Cash Proceeds from any Asset Sale or Recovery
Event then, unless, in the case of a Recovery Event, a Reinvestment Notice
shall be delivered in respect thereof, such Net Cash Proceeds shall be applied
on such date toward the prepayment of the Bridge Loans as set forth in Section 3.2(d);
provided, that, notwithstanding the foregoing, on each Reinvestment
Prepayment Date, an amount equal to the Reinvestment Prepayment Amount with
respect to the relevant Reinvestment Event shall be applied toward the
prepayment of the Bridge Loans as set forth in Section 3.2(d).

 

(c) Upon the occurrence
of a Change of Control, the Borrower shall prepay the entire principal amount
of the Bridge Loans then outstanding (inclusive of any interest
capitalized pursuant to Section 3.5(e)).

 

(d) Amounts to be
applied in connection with prepayments made pursuant to this Section 3.2
shall be applied to the prepayment of the Bridge Loans, first, to Base
Rate Loans and, second, to Eurodollar Loans.  Each prepayment of the Bridge Loans under
this Section 3.2 shall be accompanied by accrued interest to the date of
such prepayment on the amount prepaid.

 

3.3.          Conversion
and Continuation Options.  (a) 
The Borrower may elect from time to time to convert Eurodollar Loans to Base
Rate Loans by giving the Administrative Agent prior irrevocable notice of such
election no later than 11:00 a.m., New York City time, on the Business Day
preceding the proposed conversion date, provided that any such conversion of
Eurodollar Loans may only be made on the last day of an Interest Period with
respect thereto.  The Borrower may elect
from time to time to convert Base Rate Loans to Eurodollar Loans by giving the
Administrative Agent prior irrevocable notice of such election no later than
11:00 a.m., New York City time, on the Business Day preceding the proposed
conversion date (which notice shall specify the length of the initial Interest
Period therefor), provided that no Base Rate Loan may be converted into a
Eurodollar Loan when any Event of Default has occurred and is continuing and
the Administrative Agent or the Required Lenders have determined in its or
their sole discretion not to permit such conversions. If the Borrower requests
a conversion to Eurodollar Loans in any such notice, but fails to specify an
Interest Period, it will be deemed to have specified an Interest Period of one
month.  Upon receipt of any such notice
the Administrative Agent shall promptly notify each relevant Lender thereof.

 

27

 

(b) Any Eurodollar Loan
may be continued as such upon the expiration of the then current Interest
Period with respect thereto by the Borrower giving irrevocable notice to the
Administrative Agent, in accordance with the applicable provisions of the term “Interest
Period” set forth in Section 1.1, of the length of the next Interest
Period to be applicable to such Loans, provided that no Eurodollar Loan
may be continued as such when any Event of Default has occurred and is
continuing and the Administrative Agent has or the Required Lenders have
determined in its or their sole discretion not to permit such continuations,
and provided, further, that if the Borrower shall fail to give
any required notice as described above in this paragraph or if such
continuation is not permitted pursuant to the preceding proviso such Loans
shall be automatically converted to Base Rate Loans on the last day of such
then expiring Interest Period. So long as no Event of Default has occurred and
is continuing, if the Borrower requests a continuation of Eurodollar Loans in
any such notice, but fails to specify an Interest Period, it will be deemed to
have specified an Interest Period of one month. 
Upon receipt of any such notice the Administrative Agent shall promptly
notify each relevant Lender thereof.

 

3.4.          Limitations
on Eurodollar Tranches. 
Notwithstanding anything to the contrary in this Agreement, all
borrowings, conversions and continuations of Eurodollar Loans hereunder and all
selections of Interest Periods hereunder shall be in such amounts and be made
pursuant to such elections so that, (a) after giving effect thereto, the
aggregate principal amount of the Eurodollar Loans comprising each Eurodollar
Tranche shall be equal to $5,000,000 or a whole multiple of $1,000,000 in
excess thereof and (b) no more than five Eurodollar Tranches shall be
outstanding at any one time.

 

3.5.          Interest
Rates and Payment Dates.

 

(a) Each
Eurodollar Loan shall bear interest on the outstanding principal amount thereof
(inclusive of any interest capitalized pursuant to Section 3.5(e)) for
each day during each Interest Period with respect thereto at a rate per annum
equal to the Eurodollar Rate determined for such day plus the Applicable
Margin.

 

(b) Each Base Rate Loan
shall bear interest on the outstanding principal amount thereof (inclusive
of any interest capitalized pursuant to Section 3.5(e)) at a rate per annum equal to the Base Rate
plus the Applicable Margin.

 

(c) (i) If all or
any portion of the principal amount of any Loan (inclusive of any
interest capitalized pursuant to Section 3.5(e)) shall not be paid when due (whether at the
stated maturity, by acceleration or otherwise), such overdue amount (inclusive
of any interest capitalized pursuant to Section 3.5(e)) shall bear interest at a rate per annum equal
to the rate that would otherwise be applicable thereto pursuant to the
foregoing provisions of this Section plus 2%, and (ii) if all
or a portion of any interest payable on any Loan (inclusive of any
interest payable on any interest capitalized pursuant to Section 3.5(e)) or other amount payable hereunder shall not
be paid when due (whether at the stated maturity, by acceleration or
otherwise), such overdue amount shall bear interest at a rate per annum equal
to the rate then applicable to Base Rate Loans plus 2%, with respect to
clauses (i) and (ii) above, from the date of such non-payment until
such amount is paid in full (after as well as before judgment). In addition,
during

 

28

 

the continuance of a Default or Event of Default, all Obligations
(whether or not overdue) shall bear interest at the rates(s) specified in the
preceding sentence.

 

(d) Interest shall be
payable in arrears on each Interest Payment Date, provided that interest
accruing pursuant to paragraph (c) of this Section 3.5 shall be
payable from time to time on demand.

 

(e) Notwithstanding the
foregoing, at such times as no Default or Event of Default shall have occurred
and be continuing, at the election of the Borrower by written notice to the
Administrative Agent not less than three Business Days prior to the applicable
Interest Payment Date, any interest payable in excess of (i) the
Eurodollar Rate plus 4.00%, in the case of Eurodollar Loans, or (ii) the
Base Rate plus 3.00%, in case of Base Rate Loans, shall be capitalized and
added to the principal amount of the Loan to which such interest relates.  Any such amount so capitalized shall bear
interest as provided in Section 3.5 and shall be payable as provided in Section 2.3
and Section 3.2.

 

(f) The
Applicable Margin on all Loans shall increase by 3.00% above the amount
otherwise payable hereunder in the event that Holdings fails to file, on or
before June 30, 2005, an S-1 registration statement for an offering of
common stock of Holdings to yield net proceeds of at least $150,000,000, which
registration statement contains all financial statements required by applicable
rules and regulations and are presented in accordance with US GAAP, and
such increased Applicable Margin shall continue to apply up to, but not
including, the date on which such filing occurs.

 

3.6.          Computation
of Interest and Fees.

 

(a) Interest
and fees payable pursuant hereto shall be calculated on the basis of a 360-day
year for the actual days elapsed, except that, with respect to Base Rate Loans
the rate of interest on which is calculated on the basis of the Prime Rate, the
interest thereon shall be calculated on the basis of a 365- (or 366-, as the
case may be) day year for the actual days elapsed.  The Administrative Agent shall as soon as
practicable notify the Borrower and the relevant Lenders of each determination
of a Eurodollar Rate.  Any change in the
interest rate on a Loan resulting from a change in the Base Rate or the
Eurocurrency Reserve Requirements shall become effective as of the opening of
business on the day on which such change becomes effective.  The Administrative Agent shall as soon as
practicable notify the Borrower and the relevant Lenders of the effective date
and the amount of each such change in interest rate.  Interest shall accrue on each Loan for each
day on which it is made or outstanding, except the day on which it is repaid
unless it is repaid on the same day that it was made.

 

(b) Each determination
of an interest rate by the Administrative Agent pursuant to any provision of
this Agreement shall be conclusive and binding on the Borrower and the Lenders
in the absence of manifest error.  The
Administrative Agent shall, at the request of the Borrower, deliver to the
Borrower a statement showing the quotations used by the Administrative Agent in
determining any interest rate pursuant to Section 3.5(a).

 

29

 

3.7.          Inability
to Determine Interest Rate. 
If prior to the first day of any Interest Period:

 

(a) the Administrative
Agent shall have determined (which determination shall be conclusive and
binding upon the Borrower) that, by reason of circumstances affecting the
relevant market, adequate and reasonable means do not exist for ascertaining
the Eurodollar Rate for such Interest Period, or

 

(b) the Administrative
Agent shall have received notice from the Required Lenders that the Eurodollar
Rate determined or to be determined for such Interest Period will not
adequately and fairly reflect the cost to such Lenders (as conclusively
certified by such Lenders) of making or maintaining their affected Loans during
such Interest Period,

 

the
Administrative Agent shall give telecopy or telephonic notice thereof to the
Borrower and the relevant Lenders as soon as practicable thereafter.  If such notice is given (x) any Eurodollar
Loans requested to be made on the first day of such Interest Period shall be
made as Base Rate Loans, (y) any Loans that were to have been converted on
the first day of such Interest Period to Eurodollar Loans shall be continued as
Base Rate Loans and (z) any outstanding Eurodollar Loans shall be converted, on
the last day of the then-current Interest Period, to Base Rate Loans.  Until such notice has been withdrawn by the
Administrative Agent, no further Eurodollar Loans shall be made or continued as
such, nor shall the Borrower have the right to convert Loans to Eurodollar
Loans.

 

3.8.          Pro
Rata Treatment and Payments.

 

(a) Each
borrowing by the Borrower from the Lenders shall be made pro rata according to the respective Aggregate Exposure
Percentages of the relevant Lenders.

 

(b) Each payment
(including each prepayment) by the Borrower on account of principal of and
interest on the Bridge Loans shall be made pro  rata according to
the respective outstanding principal amounts of the Bridge Loans then held by
the Bridge Lenders.  Amounts prepaid on
account of the Bridge Loans may not be reborrowed.

 

(c) All payments
(including prepayments) to be made by the Borrower hereunder, whether on
account of principal, interest, fees or otherwise, shall be made without setoff
or counterclaim and shall be made prior to 12:00 Noon, New York City time, on
the due date thereof to the Administrative Agent, for the account of the
Lenders, at the Funding Office, in Dollars and in immediately available funds.  The Administrative Agent shall distribute
such payments to the Lenders promptly upon receipt in like funds as
received.  If any payment hereunder
(other than payments on the Eurodollar Loans) becomes due and payable on a day
other than a Business Day, such payment shall be extended to the next
succeeding Business Day.  If any payment
on a Eurodollar Loan becomes due and payable on a day other than a Business
Day, the maturity thereof shall be extended to the next succeeding Business Day
unless the result of such extension would be to extend such payment into
another calendar month, in which event such payment shall be made on the
immediately preceding Business Day.  In
the case of any

 

30

 

extension of any payment of principal pursuant to the preceding two
sentences, interest thereon shall be payable at the then applicable rate during
such extension.

 

(d) Unless the
Administrative Agent shall have been notified in writing by any Lender prior to
a borrowing that such Lender will not make the amount that would constitute its
share of such borrowing available to the Administrative Agent, the
Administrative Agent may assume that such Lender is making such amount
available to the Administrative Agent, and the Administrative Agent may, in
reliance upon such assumption, make available to the Borrower a corresponding
amount.  If such amount is not made
available to the Administrative Agent by the required time on the date
therefor, such Lender shall pay to the Administrative Agent, on demand, such
amount with interest thereon at a rate equal to the greater of (i) the
Federal Funds Effective Rate and (ii) a rate determined by the
Administrative Agent in accordance with banking industry rules on
interbank compensation for the period until such Lender makes such amount
immediately available to the Administrative Agent.  A certificate of the Administrative Agent
submitted to any Lender with respect to any amounts owing under this paragraph
shall be conclusive in the absence of manifest error.

 

(e) Unless the
Administrative Agent shall have been notified in writing by the Borrower prior
to the date of any payment due to be made by the Borrower hereunder that the
Borrower will not make such payment to the Administrative Agent, the
Administrative Agent may assume that the Borrower is making such payment, and
the Administrative Agent may, but shall not be required to, in reliance upon
such assumption, make available to the Lenders their respective pro  rata
shares of a corresponding amount.  If such
payment is not made to the Administrative Agent by the Borrower within three
Business Days after such due date, the Administrative Agent shall be entitled
to recover, on demand, from each Lender to which any amount which was made
available pursuant to the preceding sentence, such amount with interest thereon
at the rate per annum equal to the daily average Federal Funds Effective
Rate.  Nothing herein shall be deemed to
limit the rights of the Administrative Agent or any Lender against the
Borrower.

 

3.9.          Requirements
of Law.

 

(a) If
the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof or compliance by any Lender with any
request or directive (whether or not having the force of law) from any central
bank or other Governmental Authority made subsequent to the date hereof:

 

(i)            shall subject any
Lender to any tax of any kind whatsoever with respect to this Agreement or any
Eurodollar Loan made by it, or change the basis of taxation of payments to such
Lender in respect thereof (except for Non-Excluded Taxes covered by Section 3.10
(including Non-Excluded Taxes not subject to indemnification under Section 3.10)
and changes in the rate of tax on the overall net income of such Lender);

 

(ii)           shall impose,
modify or hold applicable any reserve, special deposit, compulsory loan or
similar requirement against assets held by, deposits or other liabilities in or
for the account of, advances, loans or other extensions of credit by, or any
other

 

31

 

acquisition
of funds by, any office of such Lender that is not otherwise included in the
determination of the Eurodollar Rate hereunder; or

 

(iii)          shall impose on such Lender any other condition;

 

and the result
of any of the foregoing is to increase the cost to such Lender, by an amount
that such Lender deems to be material, of making, converting into, continuing
or maintaining Eurodollar Loans, or to reduce any amount receivable hereunder
in respect thereof, then, in any such case, the Borrower shall promptly pay
such Lender, upon its demand, any additional amounts necessary to compensate
such Lender for such increased cost or reduced amount receivable.  If any Lender becomes entitled to claim any
additional amounts pursuant to this paragraph, it shall promptly notify the
Borrower (with a copy to the Administrative Agent) of the event by reason of
which it has become so entitled.

 

(b) If any Lender shall
have determined that the adoption of or any change in any Requirement of Law
regarding capital adequacy or in the interpretation or application thereof or
compliance by such Lender or any Person controlling such Lender with any
request or directive regarding capital adequacy (whether or not having the
force of law) from any Governmental Authority made subsequent to the date
hereof shall have the effect of reducing the rate of return on such Lender’s or
such Person’s capital as a consequence of its obligations hereunder to a level
below that which such Lender or such Person could have achieved but for such
adoption, change or compliance (taking into consideration such Lender’s or such
Person’s policies with respect to capital adequacy) by an amount deemed by such
Lender to be material, then from time to time, after submission by such Lender
to the Borrower (with a copy to the Administrative Agent) of a written request
therefor, the Borrower shall pay to such Lender such additional amount or
amounts as will compensate such Lender or such corporation for such reduction.

 

(c) A certificate as to
any additional amounts payable pursuant to this Section 3.9 submitted by
any Lender to the Borrower (with a copy to the Administrative Agent) shall be
conclusive in the absence of manifest error. 
Notwithstanding anything to the contrary in this Section 3.9, the
Borrower shall not be required to compensate a Lender pursuant to this Section 3.9
for any amounts incurred more than six months prior to the date that such
Lender notifies the Borrower of such Lender’s intention to claim compensation
therefor; provided that, if the circumstances giving rise to such claim
have a retroactive effect, then such six-month period shall be extended to
include the period of such retroactive effect. 
The obligations of the Borrower pursuant to this Section 3.9 shall
survive the termination of this Agreement and the payment of the Loans and all
other amounts payable hereunder.

 

3.10.        Taxes.  (a)  All payments made under this
Agreement shall be made free and clear of, and without deduction or withholding
for or on account of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any Governmental
Authority, excluding net income taxes and franchise taxes (imposed in lieu of
net income taxes) imposed on any Agent, Lender or Participant as a result of a
present or former connection between such Agent, Lender or Participant and the
jurisdiction of the Governmental Authority imposing such tax or any political
subdivision or taxing authority thereof or therein

 

32

 

(other than any such connection arising solely from such Agent, Lender
or Participant having executed, delivered or performed its obligations or
received a payment under, or enforced, this Agreement or any other Loan
Document).  If any such non-excluded
taxes, levies, imposts, duties, charges, fees, deductions or withholdings (“Non-Excluded
Taxes”) or Other Taxes are required to be withheld from any amounts payable
to any Agent, Lender or Participant hereunder, the amounts so payable to such
Agent or such Lender shall be increased to the extent necessary to yield to
such Agent, Lender or Participant (after payment of all Non-Excluded Taxes and
Other Taxes) interest or any such other amounts payable hereunder at the rates
or in the amounts specified in this Agreement, provided, however, that the
Borrower shall not be required to increase any such amounts payable to any
Lender or Participant with respect to any Non-Excluded Taxes (i) that are
attributable to such Lender’s or Participant’s failure to comply with the
requirements of paragraph (d) or (e) of this Section 3.10 or (ii) that
are United States withholding taxes imposed on amounts payable to such Lender
or Participant at the time such Lender or Participant becomes a party to this
Agreement, except to the extent that such withholding is newly imposed or
increased as a result of a change in law effective after the date of this
Agreement.

 

(b) In addition, the
Borrower shall pay any Other Taxes to the relevant Governmental Authority in
accordance with applicable law.

 

(c) Whenever any
Non-Excluded Taxes or Other Taxes are payable by the Borrower, as promptly as
possible thereafter the Borrower shall send to the Administrative Agent for its
own account or for the account of the relevant Agent or Lender, as the case may
be, a certified copy of an original official receipt received by the Borrower
showing payment thereof.  If the Borrower
fails to pay any Non-Excluded Taxes or Other Taxes when due to the appropriate
taxing authority or fails to remit to the Administrative Agent the required
receipts or other required documentary evidence, the Borrower shall indemnify
the Agents and the Lenders for any incremental taxes, interest or penalties
that may become payable by any Agent or any Lender as a result of any such
failure.

 

(d) Each Lender (or
Transferee) that is not a “U.S. Person” as defined in Section 7701(a)(30)
of the Code (a “Non-U.S. Lender”) shall deliver to the Borrower and the
Administrative Agent (or, in the case of a Participant, to the Lender from
which the related participation shall have been purchased) two copies of either
U.S. Internal Revenue Service Form W-8IMY and/or Form W-8BEN
(claiming benefits of an applicable tax treaty) or Form W-8ECI, as
applicable (or successor form) or, in the case of a Non-U.S. Lender claiming
exemption from U.S. federal withholding tax under Section 871(h) or
881(c) of the Code with respect to payments of “portfolio interest”, a
statement substantially in the form of Exhibit F and a Form W-8BEN,
or any subsequent versions thereof or successors thereto, properly completed
and duly executed by such Non-U.S. Lender claiming complete exemption from, or
a reduced rate of, U.S. federal withholding tax on all payments by the Borrower
under this Agreement and the other Loan Documents.  Such forms shall be delivered by each
Non-U.S. Lender on or before the date it becomes a party to this Agreement (or,
in the case of any Participant, on or before the date such Participant
purchases the related participation).  In
addition, each Non-U.S. Lender shall deliver such forms promptly upon the
obsolescence or invalidity of any form previously delivered by such Non-U.S. Lender.  Each Non-U.S. Lender shall promptly notify
the Borrower

 

33

 

in writing at any time it determines that it is no longer in a position
to provide any previously delivered certificate to the Borrower (or any other
form of certification adopted by the U.S. taxing authorities for such
purpose).  Notwithstanding any other
provision of this paragraph, a Non-U.S. Lender shall not be required to deliver
any form pursuant to this paragraph that such Non-U.S. Lender is not legally
able to deliver.  Each Lender that is not
a Non-U.S. Lender shall furnish an accurate and complete U.S. Internal Revenue
Service Form W-9 (or successor form) establishing that such Lender is not
subject to U.S. backup withholding, and to the extent it may lawfully do so at
such times, provide a new Form W-9 (or successor form) upon the expiration
or obsolescence of any previously delivered form.

 

(e) A Lender that is
entitled to an exemption from or reduction of non-U.S. withholding tax under
the law of the jurisdiction in which the Borrower is located, or any treaty to
which such jurisdiction is a party, with respect to payments under this
Agreement shall deliver to the Borrower (with a copy to the Administrative
Agent or, in the case of a Participant, to the Lender from which the related
participation shall have been purchased), at the time or times prescribed by
applicable law and as reasonably requested in writing by the Borrower, such
properly completed and executed documentation prescribed by applicable law as
will permit such payments to be made without withholding or at a reduced rate, provided
that such Lender is legally entitled to complete, execute and deliver such
documentation and in such Lender’s judgment such completion, execution or
submission would not materially prejudice the legal position of such Lender.

 

(f) If any Agent, Lender or Participant determines, in its
sole discretion, that it has received a refund of any Non-Excluded Taxes or
Other Taxes as to which it has been indemnified by the Borrower or with respect
to which the Borrower has paid additional amounts pursuant to this Section 3.10,
it shall pay over such refund to the Borrower (but only to the extent of
indemnity payments made, or additional amounts paid, by the Borrower under this
Section 3.10 with respect to the Non-Excluded Taxes or Other Taxes giving
rise to such refund), net of all out-of-pocket expenses of such Agent or such
Lender and without interest (other than any interest paid by the relevant
Governmental Authority with respect to such refund); provided, that the
Borrower, upon the request of such Agent, Lender or Participant, agrees to repay the
amount paid over to the Borrower (plus any penalties, interest or other charges
imposed by the relevant Governmental Authority) to such Agent or such Lender in
the event such Agent or such Lender is required to repay such refund to such
Governmental Authority.  This paragraph
shall not be construed to require any Agent or any Lender to make available its
tax returns (or any other information relating to its taxes which it deems
confidential) to the Borrower or any other Person.  Each Lender or Participant, as
applicable, shall indemnify the Borrower for any losses resulting from any
false, inaccurate or untrue statements provided pursuant to paragraphs (d) or
(e) of this Section 3.10.

 

(g) The
agreements in this Section 3.10 shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable hereunder.

 

(h) For purposes of this
Section 3.10, in the case of any Lender that is a treated as a partnership
for U.S. federal income tax purposes, any Non-Excluded Taxes or Other Taxes
required to be deducted and withheld by such Lender with respect to payments
made by the

 

34

 

Borrower under any Loan Document shall be treated as Non-Excluded Taxes
or Other Taxes required to be deducted by the Borrower, but only to the extent
such Non-Excluded Taxes or Other Taxes would have been required to be deducted
and withheld by the Lender if the Lender were treated as a corporation for U.S.
federal income tax purposes making such payments under the Loan Documents on
behalf of the Borrower.

 

3.11.        Indemnity.  Holdings and the Borrower jointly and severally
agree to indemnify each Lender and each Agent and to hold each Lender and each
Agent harmless from any loss or expense (but excluding any loss of anticipated
profits) that such Lender or such Agent may sustain or incur as a consequence
of (a) default by the Borrower in making a borrowing of, conversion into
or continuation of Eurodollar Loans after the Borrower has given a notice
requesting the same in accordance with the provisions of this Agreement, (b) default
by the Borrower in making any prepayment of or conversion from Eurodollar Loans
after the Borrower has given a notice thereof in accordance with the provisions
of this Agreement or (c) the making of a prepayment of Eurodollar Loans on
a day that is not the last day of an Interest Period with respect thereto.  Such indemnification may include an amount
equal to the excess, if any, of (i) the amount of interest that would have
accrued on the amount so prepaid, or not so borrowed, converted or continued,
for the period from the date of such prepayment or of such failure to borrow,
convert or continue to the last day of such Interest Period (or, in the case of
a failure to borrow, convert or continue, the Interest Period that would have
commenced on the date of such failure) in each case at the applicable rate of
interest for such Loans provided for herein (excluding, however, the Applicable
Margin included therein, if any) over (ii) the amount of interest (as
reasonably determined by such Lender) that would have accrued to such Lender on
such amount by placing such amount on deposit for a comparable period with
leading banks in the interbank eurodollar market.  A certificate as to any amounts payable
pursuant to this Section submitted to the Borrower by any Lender shall be
conclusive in the absence of manifest error. 
This covenant shall survive the termination of this Agreement and the
payment of the Loans and all other amounts payable hereunder.

 

3.12.        Change
of Lending Office.  Each
Lender agrees that, upon the occurrence of any event giving rise to the
operation of Section 3.9, 3.10(a) or 3.15 with respect to such
Lender, it will, if requested by the Borrower, use reasonable efforts (subject
to overall policy considerations of such Lender) to designate another lending
office for any Loans affected by such event with the object of avoiding the
consequences of such event; provided, that such designation is made on terms
that, in the sole judgment of such Lender, cause such Lender and its lending
office(s) to suffer no economic, legal or regulatory disadvantage, and
provided, further, that nothing in this Section shall affect or postpone
any of the obligations of the Borrower or the rights of any Lender pursuant to Section 3.9,
3.10(a) or 3.15.

 

3.13.        Replacement
of Lenders.  The Borrower may replace, with a replacement financial
institution reasonably satisfactory to the Administrative Agent, any
Lender that (a) requests payment of any amounts payable under Section 3.9,
3.10(a) or 3.15 or (b) defaults in its obligation to make Loans hereunder, but, in each case, only if (i) such
replacement does not conflict with any Requirement of Law, (ii) no Event
of Default shall have occurred and be continuing at the time of such
replacement, (iii) prior to any such replacement, such Lender shall have
taken no action under Section 3.12 so as to eliminate the continued need
for payment

 

35

 

of amounts owing pursuant to Section 3.9 or 3.10(a), (iv) the
replacement financial institution shall purchase, at par, all Loans and other
amounts owing to such replaced Lender on or prior to the date of replacement, (v) the
Borrower shall be liable to such replaced Lender under Section 3.11 if any
Eurodollar Loan owing to such replaced Lender shall be purchased other than on
the last day of the Interest Period relating thereto, (vi) the replacement
financial institution, if not already a Lender, shall be reasonably
satisfactory to the Administrative Agent, (vii) the replaced Lender shall
be obligated to make such replacement in accordance with the provisions of Section 10.6
(provided that the Borrower shall be obligated to pay the registration and
processing fee referred to therein), (viii) until such time as such
replacement shall be consummated, the Borrower shall pay all additional amounts
(if any) required pursuant to Section 3.9, 3.10(a) or 3.15, as the
case may be, and (ix) any such replacement shall not be deemed to be a
waiver of any rights that the Borrower, the Administrative Agent or any other
Lender shall have against the replaced Lender.

 

3.14.        Evidence
of Debt.

 

(a) Each
Lender shall maintain in accordance with its usual practice an account or
accounts evidencing Indebtedness of the Borrower to such Lender resulting from
each Loan of such Lender from time to time, including the amounts of principal
and interest payable and paid to such Lender from time to time under this
Agreement.

 

(b) The Administrative
Agent, on behalf of the Borrower, shall maintain the Register pursuant to Section 10.6(b),
and a subaccount therein for each Lender, in which shall be recorded (i) the
amount of each Loan made hereunder and any Note evidencing such Loan, the Type
of such Loan and each Interest Period applicable thereto, (ii) the amount
of any principal or interest due and payable or to become due and payable from
the Borrower to each Lender hereunder and (iii) both the amount of any sum
received by the Administrative Agent hereunder from the Borrower and each
Lender’s share thereof.

 

(c) The entries made in
the Register and the accounts of each Lender maintained pursuant to Section 3.14(a) shall,
to the extent permitted by applicable law, be prima  facie
evidence of the existence and amounts of the obligations of the Borrower
therein recorded; provided, however, that the failure of any
Lender or the Administrative Agent to maintain the Register or any such
account, or any error therein, shall not in any manner affect the obligation of
the Borrower to repay (with applicable interest) the Loans made to the Borrower
by such Lender in accordance with the terms of this Agreement.

 

(d) The Borrower agrees
that, upon the request to the Administrative Agent by any Lender, the Borrower
will execute and deliver to such Lender a promissory note of the Borrower
evidencing any Bridge Loans of such Lender, substantially in the form of Exhibit G,
with appropriate insertions as to date and principal amount.

 

3.15.        Illegality.  Notwithstanding any other provision herein,
if the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof shall make it unlawful for any Lender to
make or maintain Eurodollar Loans as contemplated by this Agreement, (a) the
commitment of such Lender hereunder to make

 

36

 

Eurodollar Loans, continue Eurodollar Loans as such and convert Base
Rate Loans to Eurodollar Loans shall forthwith be canceled and (b) such
Lender’s Loans then outstanding as Eurodollar Loans, if any, shall be converted
automatically to Base Rate Loans on the respective last days of the then
current Interest Periods with respect to such Loans or within such earlier
period as required by law.  If any such
conversion of a Eurodollar Loan occurs on a day which is not the last day of
the then current Interest Period with respect thereto, the Borrower shall pay
to such Lender such amounts, if any, as may be required pursuant to Section 3.11.

 

SECTION 4. 
REPRESENTATIONS AND WARRANTIES

 

To induce the
Agents and the Lenders to enter into this Agreement and to make the Loans,
Holdings and the Borrower hereby jointly and severally represent and warrant to
each Agent and each Lender that:

 

4.1.          Financial
Condition.

 

(a) The unaudited pro
forma consolidated balance sheet of 19E and its consolidated Subsidiaries as at
December 31, 2004 (including
the notes thereto) (the “Pro Forma Balance Sheet”), copies of which have
heretofore been furnished to each Lender, has been prepared giving effect (as
if such events had occurred on such date) to (i) the Loans to be made on
the Closing Date and the application of the proceeds therefrom, (ii) consummation
of the Acquisition and the related transactions, and (iii) the payment of
fees and expenses in connection with the foregoing.  The Pro Forma Balance Sheet has been prepared
based on the best information available to Holdings as of the date of delivery
thereof, and presents fairly on a pro forma basis the estimated financial
position of 19E and its consolidated Subsidiaries as at December 31, 2004,
assuming that the events specified in the preceding sentence had actually
occurred at such date.

 

(b) The audited
consolidated balance sheets of 19E and its Subsidiaries as at June 30,
2002, June 30, 2003 and June 30, 2004, and the related statements of
changes in net assets and cash flows for the years ended June 30, 2002, June 30,
2003, and June 30, 2004, reported on by and accompanied by an unqualified
report from Deloitte & Touche, and the unaudited financial statements
for the six-month periods ended December 31, 2003 and 2004, present fairly
the consolidated financial condition of 19E and its Subsidiaries as at such
dates, and the consolidated results of their respective operations and their
respective consolidated cash flows for the respective months and years then
ended.  All such financial statements,
including the related schedules and notes thereto, have been prepared in
accordance with GAAP applied consistently throughout the periods involved
(except as approved by the aforementioned firm of accountants and disclosed in
their reports thereon).  None of the
Borrower or its Subsidiaries has any material Guarantee Obligations, contingent
liabilities and liabilities for taxes, or any long-term leases or unusual
forward or long-term commitments, including any interest rate or foreign
currency swap or exchange transaction or other obligation in respect of
derivatives, that are not reflected in the most recent financial statements
referred to in this paragraph.  During
the period from June 30, 2004 to and including the date hereof there has
been no Disposition by any Group Member of any material part of its business or
property (other than pursuant to the Acquisition Documentation).

 

37

 

(c) The
parties acknowledge and agree that Deloitte & Touche, on behalf of the
Borrower, will review a reconciliation prepared by the Borrower of the UK GAAP
financial statements provided upon the Closing Date to comply with US GAAP on a
going forward basis.

 

4.2.          No
Change.  Since June 30,
2004, there has been no development or event that has had or could reasonably
be expected to have a Material Adverse Effect.

 

4.3.          Corporate
Existence; Compliance with Law. 
Each Group Member and EPE Holding Corporation (a) is duly
incorporated, organized or formed, validly existing and (where applicable) in
good standing under the laws of the jurisdiction of its incorporation or
organization, (b) has the power and authority, and the legal right, to own
and operate its property, to lease the property it operates as lessee, to
license the property it exploits as licensee, and to conduct the business in
which it is currently engaged, (c) is duly qualified as a foreign
corporation or other organization and in good standing (where applicable) under
the laws of each jurisdiction where its ownership, lease, licensing or
operation of property or the conduct of its business requires such
qualification, except where the failure to be so qualified could not reasonably
be expected to cause a Material Adverse Effect, and (d) is in compliance
with all Requirements of Law except to the extent that the failure to comply
therewith could not, in the aggregate, reasonably be expected to have a
Material Adverse Effect.

 

4.4.          Power;
Authorization; Enforceable Obligations.  Each Group Member and EPE Holding Corporation
has the power and authority, and the legal right, to make, deliver and perform
each Loan Document to which it is a party and the Acquisition Documentation to
which it is a party and, in the case of the Borrower, to obtain extensions of
credit hereunder.  Each Group Member and
EPE Holding Corporation has taken all necessary organizational, company or
corporate action to authorize the execution, delivery and performance of the
Loan Documents to which it is a party and the Acquisition Documentation to
which it is a party and, in the case of the Borrower, to authorize the
extensions of credit on the terms and conditions of this Agreement.  No consent or authorization of, filing with,
notice to or other act by or in respect of, any Governmental Authority or any
other Person is required in connection with the Acquisition (or the other
transactions contemplated thereby) and the extensions of credit hereunder or
with the execution, delivery, performance, validity or enforceability of this
Agreement or any of the Loan Documents or of the Acquisition Documentation,
except (i) consents, authorizations, filings and notices described in Schedule 4.4,
which consents, authorizations, filings and notices have been obtained or made
and are in full force and effect and (ii) the filings referred to in Section 4.19.  Each Loan Document and the Acquisition
Documentation has been duly executed and delivered on behalf of each Group
Member party thereto, and EPE Holding Corporation, if applicable.  This Agreement constitutes, and each other
Loan Document upon execution will constitute, a legal, valid and binding
obligation of each Loan Party thereto, and EPE Holding Corporation, if
applicable, enforceable against each such Loan Party, and EPE Holding
Corporation, if applicable, in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors’ rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).

 

38

 

4.5.          No
Legal Bar.  The execution,
delivery and performance of this Agreement and the other Loan Documents, the
borrowings hereunder and the use of the proceeds thereof will not violate any
Requirement of Law or any Contractual Obligation of any Group Member or EPE
Holding Corporation and will not result in, or require, the creation or
imposition of any Lien on any of their respective properties or revenues pursuant
to any Requirement of Law or any such Contractual Obligation (other than the
Liens created by the Security Documents). 
No Requirement of Law or Contractual Obligation applicable to the
Borrower or any of its Subsidiaries could reasonably be expected to have a
Material Adverse Effect.

 

4.6.          Litigation.  No litigation, investigation or proceeding of
or before any arbitrator or Governmental Authority is pending or, to the
knowledge of Holdings or the Borrower, threatened by or against any Group
Member or against any of their respective properties or revenues (a) with
respect to any of the Loan Documents or the Acquisition Documentation or any of
the transactions contemplated hereby or thereby, or (b) that could
reasonably be expected to have a Material Adverse Effect.

 

4.7.          No
Default.  No Group Member, or,
to the knowledge of Holdings or the Borrower, Fremantle, is in default under or
with respect to any of its Contractual Obligations in any respect that could
reasonably be expected to have a Material Adverse Effect.  No Default or Event of Default has occurred
and is continuing.

 

4.8.          Ownership
of Property; Liens.  Holdings
and each Material Subsidiary has title in fee simple or freehold to, or a valid
leasehold interest in, all its real property, and good title to, or a valid
leasehold interest in, all its other property, and none of such property is
subject to any Lien except as permitted by Section 7.3.  None of the Pledged Equity Interests is
subject to any Lien except for Liens permitted by Section 7.3.

 

4.9.          Intellectual
Property.

 

(a) Each
Group Member owns, or is licensed to use, all Intellectual Property material to
the conduct of its business as currently conducted and, according to current
contemplation, as will be conducted after giving effect to the Acquisition.

 

(b) All
Intellectual Property material to the conduct of any Group Member’s business as
currently conducted and, according to current contemplation, as will be
conducted after giving effect to the Acquisition, and owned by a Group Member
or Fremantle is valid, subsisting, unexpired and enforceable, has not been
abandoned, does not infringe the intellectual property rights of any other
Person and is free from all encumbrances.

 

(c) The
rights of each Group Member in or to the Intellectual Property owned by such
Group Member, or,
to the knowledge of Holdings or the Borrower, Fremantle, do not infringe
upon, misappropriate, or otherwise violate the rights of any other person, and
no claim has been asserted that the use of such Intellectual Property does or
may infringe upon, misappropriate or otherwise violate the rights of any other
person, in either case, which infringement, misappropriation or violation could
reasonably be expected to have a Material Adverse Effect.  To the knowledge of any Group Member, there
is currently no infringement,

 

39

 

misappropriation or unauthorized use of any item of Intellectual
Property owned by any Group Member or Fremantle that, either individually or in
the aggregate, could reasonably be expected to have a Material Adverse Effect.

 

(d) No
action or proceeding is pending, or, to the knowledge of any Group Member,
threatened, on the date hereof (1) seeking to limit, cancel or question
the validity of any Intellectual Property material to the conduct of its
business as currently conducted or, according to current contemplation, as will
be conducted after giving effect to the Acquisition, or a Group Member’s
ownership interest therein, or (2) which, if adversely determined, would
have a Material Adverse Effect.

 

(e) No
holding, decision or judgment has been rendered by any Governmental Authority
which would limit, cancel or question the validity of, or rights in, any Group
Member’s, or, to
the knowledge of Holdings or the Borrower, Fremantle’s, Intellectual
Property in any respect that could reasonably be expected to have a Material
Adverse Effect.  No Group Member is aware
of any uses of any item of Intellectual Property owned by such Group Member or
Fremantle that could reasonably be expected to lead to such item becoming
invalid or unenforceable including, without limitation, unauthorized uses by
other Persons, which uses, either individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.

 

(f) Each
Group Member has made, where possible, all filings and recordations necessary
to adequately protect its ownership interest in its material United States
Intellectual Property and material non-United States Intellectual Property
owned by such Group Member including, without limitation, recordation of its
interests in the Trademarks owned by such Group Member with the United States
Patent and Trademark Office and in corresponding national and international
patent and/or trademark offices, and recordation of any of its interests in the
Copyrights owned by such Group Member with the United States Copyright Office
and in international copyright offices.

 

(g) In
the last 12 months, no Group Member has given or received written notice
purporting to avoid, repudiate, rescind or terminate any agreement that
authorizes the use of Intellectual Property, and to the knowledge of each Group
Member the terms of any agreement authorizing the use of Intellectual Property
to which a Group Member is a party have been complied with by all parties in
all material respects.

 

4.10.        Taxes.  Each Group Member has filed or caused to be
filed all United States Federal, state and other material tax returns that are
required to be filed and has paid all taxes shown to be due and payable on said
returns or on any assessments made against it or any of its property and all
other material taxes, fees or other charges imposed on it or any of its
property by any Governmental Authority (other than any the amount or validity of
which are currently being contested in good faith by appropriate proceedings
and with respect to which reserves in conformity with GAAP have been provided
on the books of Holdings, the Borrower or their Subsidiaries, as the case may
be); no material tax Lien has been filed, and, to the knowledge of Holdings and
the Borrower, no material claim is being asserted, with respect to any such
tax, fee or other charge other than those permitted pursuant to Section 7.3.  No Loan

 

40

 

Party and no Subsidiary thereof intends to treat the Loan, the
Acquisition, or any other transaction contemplated hereby as being a “reportable
transaction” (within the meaning of Treasury Regulation section 1.6011-4).

 

4.11.        Federal
Regulations.  No part of the
proceeds of any Loans, and no other extensions of credit hereunder, will be
used for “buying” or “carrying” any “margin stock” within the respective
meanings of each of the quoted terms under Regulation U as now and from time to
time hereafter in effect or for any purpose that violates the provisions of the
Regulations of the Board.  If requested
by any Lender or the Administrative Agent, the Borrower will furnish to the
Administrative Agent and each Lender a statement to the foregoing effect in
conformity with the requirements of FR Form G-3 or FR Form U-1, as
applicable, referred to in Regulation U.

 

4.12.        Labor
Matters.  Except as, in the
aggregate, could not reasonably be expected to have a Material Adverse
Effect:  (a) there are no strikes or
other labor disputes against any Group Member pending or, to the knowledge of
Holdings or the Borrower, threatened; (b) hours worked by and payment made
to employees of each Group Member have not been in violation of the Fair Labor
Standards Act in respect of any Group Member incorporated in the United States
or any other applicable Requirement of Law dealing with such matters in respect
of any Group Member; and (c) all payments due from any Group Member on
account of employee health and welfare insurance have been paid or accrued as a
liability on the books of the relevant Group Member.

 

4.13.        ERISA.  Neither a Reportable Event nor an “accumulated
funding deficiency” (within the meaning of Section 412 of the Code or Section 302
of ERISA) has occurred during the five-year period prior to the date on which
this representation is made or deemed made with respect to any Plan, and each
Plan intended to be qualified under Section 401 of the Code has received a
favorable determination letter from the Internal Revenue Service regarding such
qualified status and has not, since receipt of the most recent favorable
determination letter, been amended or operated in a way which could reasonably
be expected to adversely affect such qualified status.  No termination of a Single Employer Plan has
occurred, and no Lien in favor of the PBGC or a Plan has arisen, during such
five-year period.  The present value of
all accrued benefits under each Single Employer Plan (based on those
assumptions used to fund such Plans) did not, as of the last annual valuation
date prior to the date on which this representation is made or deemed made,
exceed the value of the assets of such Plan allocable to such accrued benefits
by a material amount.  Neither the
Borrower nor any Commonly Controlled Entity has had a complete or partial
withdrawal from any Multiemployer Plan that has resulted or could reasonably be
expected to result in a liability under ERISA that would reasonably be expected
to cause a Material Adverse Effect, and neither the Borrower nor any Commonly
Controlled Entity would become subject to any material liability under ERISA if
the Borrower or any such Commonly Controlled Entity were to withdraw completely
from all Multiemployer Plans as of the valuation date most closely preceding
the date on which this representation is made or deemed made.  No such Multiemployer Plan is in
Reorganization or Insolvent.  Neither the
Borrower nor any of its Subsidiaries has any liability (and by entering into
this Agreement will not trigger any liability) with respect to any employee
benefit plan (including a pension scheme) that is not subject to the laws of
the United States or a political

 

41

 

subdivision thereof that could reasonably be expected to result in a
Material Adverse Effect and all such employee benefit plans and any pension
schemes are funded to the extent required by applicable law based on reasonable
actuarial assumptions applicable in the jurisdiction in which the relevant
pension scheme is maintained.

 

4.14.        Investment
Company Act; Other Regulations. 
No Loan Party is an “investment company”, or a company “controlled” by
an “investment company”, within the meaning of the Investment Company Act of
1940, as amended.  No Loan Party is
subject to regulation under any Requirement of Law (other than Regulation X of
the Board) that limits its ability to incur Indebtedness.

 

4.15.        Subsidiaries.  Except as disclosed to the Administrative
Agent by the Borrower in writing from time to time after the Closing Date, (a) Schedule 4.15
sets forth the name and jurisdiction of incorporation, organization or
formation of each Group Member and, as to each Subsidiary of Holdings that is a
Group Member, the percentage of each class of Capital Stock owned by any Loan
Party and (b) there are no outstanding subscriptions, options, warrants,
calls, rights or other agreements or commitments (other than stock options
granted to employees or directors and directors’ qualifying shares) of any
nature relating to any Capital Stock of the Borrower or any Subsidiary of the
Borrower, except as created by the Loan Documents.

 

4.16.        Use
of Proceeds.  The proceeds of
the Bridge Loans shall be used to finance that portion of the Acquisition made
by the Borrower (and not that portion of the Acquisition made by Holdings), to
pay related fees and expenses, to repay the Existing Indebtedness in full and
for general corporate purposes; provided that no amount borrowed shall be applied in
any manner that may be illegal or contravene any applicable law or regulation
in any relevant jurisdiction concerning financial assistance by a company for
the acquisition of or subscription for shares or concerning the protection of
shareholders’ capital.

 

4.17.        Environmental
Matters.  Except as,
individually, could not reasonably be expected to cause any Group Member to
incur liability in excess of a Material Environmental Amount, or, in the
aggregate, could not reasonably be expected to have a Material Adverse Effect:

 

(a) to the knowledge of
Holdings and the Borrower, the facilities and properties owned, leased or
operated by Holdings or the Borrower (the “Properties”) do not contain,
and to the knowledge of Holdings or the Borrower, have not previously
contained, any Hazardous Substances in amounts or concentrations or under
circumstances that constitute or constituted a violation of, or could give rise
to liability under, any Environmental Law;

 

(b) to the knowledge of
Holdings and the Borrower, no Group Member has received any notice, actual or
threatened, of violation, alleged violation, non-compliance, liability or
potential liability regarding environmental matters or compliance with
Environmental Laws with regard to any of the Properties or the business
operated by any Group Member (the “Business”);

 

42

 

(c) to the knowledge of
Holdings and the Borrower, no judicial proceeding or governmental or
administrative action is pending or, to the knowledge of Holdings and the
Borrower, threatened, under any Environmental Law to which any Group Member is
or will be named as a party with respect to the Properties or the Business, nor
are there any consent decrees or other decrees, consent orders, administrative
orders or other orders, or other administrative or judicial requirements
outstanding under any Environmental Law with respect to the Properties or the
Business;

 

(d) to the knowledge of Holdings and the
Borrower, there has been no release or threat of release of any
Hazardous Substances at or from the Properties or otherwise in connection with
the Business, in violation of or in amounts or in a manner that could give rise
to liability under Environmental Laws;

 

(e) (i) to the knowledge of Holdings and the
Borrower, there is not now, nor has there been previously, located on
any of the Properties any: (A) underground storage tanks, as defined under
any Environmental Law, or (B) areas or vessels used or intended for the
treatment, storage or disposal of Hazardous Substances; and (ii) to the knowledge of Holdings and the
Borrower, no Group Member has transported, or arranged for the
transport, storage, treatment or disposal, by contract, agreement or otherwise,
of any Hazardous Substances at, on, under or to any of the Properties or any
location including any location used for the treatment, storage or disposal of
Hazardous Substances, other than de minimis quantities used in connection with
the Business in accordance with all Environmental Laws; and

 

(f) to the knowledge of
Holdings and the Borrower, each Group Member is in compliance with all
Environmental Permits with respect to the Business and the Properties and all
operations at the Properties are in compliance with all applicable
Environmental Laws, and there is no contamination in violation of, or that is
reasonably likely to give rise to liability under, any Environmental Law at,
under or about the Properties or violation of any Environmental Law with
respect to the Properties or the Business.

 

4.18.        Accuracy
of Information, etc.  (a)No statement
or information, other than the Projections and pro forma financial information,
contained in this Agreement, any other Loan Document or any other document,
certificate or statement furnished by or on behalf of any Loan Party for use in
connection with the transactions contemplated by this Agreement or the other
Loan Documents, contained as of the date such statement, information, document
or certificate was so furnished any untrue statement of a material fact or
omitted to state a material fact necessary to make the statements contained
herein or therein taken as a whole not misleading.  The projections and pro forma financial
information contained in the materials referenced above are based upon good
faith estimates and assumptions believed by management of Holdings and the
Borrower to be reasonable at the time made, it being recognized by the Lenders
that such financial information as it relates to future events is not to be
viewed as fact and that actual results during the period or periods covered by
such financial information may differ from the projected results set forth
therein by a material amount.  As of the
date hereof, the representations and warranties contained in the Acquisition
Documentation are true and correct in all material respects.  There is no fact known to any Loan Party that
could reasonably be expected to have a Material Adverse Effect that has not
been expressly disclosed herein, in the

 

43

 

other Loan Documents or in the other documents, certificates and
statements furnished to the Administrative Agent and the Lenders for use in
connection with the transactions contemplated hereby and by the other Loan
Documents.

 

(b) That
certain unexecuted draft letter agreement, titled “American Idol: The Search
For a Superstar”, dated as of April 22, 2002, by and between Fox
Broadcasting Company, Fremantle Media North America, Inc. and 19TV, as
amended by that certain letter agreement, titled “American Idol Re-Negotiation”,
dated as of May 15, 2003, sets forth the complete understanding of the
parties thereto and is intended by all of the parties named therein to be a
legally valid and binding contract as if fully executed thereby and governs,
and has consistently governed since the date thereof the relationship of such
parties as to the matters set forth therein. 
19TV has relied to its detriment on the existence of such contract.

 

(c) The
terms of the co-production agreement between 19TV and Fremantle, as it relates
to their broadcasting agreement with Fox Broadcasting Company, dated April 22,
2002 (as modified by the Creative Artists Agency letter of May 15, 2003)
for broadcast of the American Idol television show, are as follows:  (a) 19TV is entitled to receive 50% of
any “Production Underage” from American Idol 3, and all subsequent seasons,
payable by Fremantle no later than six months following each season (for the
avoidance of doubt, Production Underage is defined as the difference between
(x) the non-auditable license fee and format fee paid by Fox Broadcasting
Company and (y) the production costs and other related expenses paid by
Fremantle directly in order to produce episodes of the American Idol television
show); (b) 19TV is entitled to receive 50% of any Ratings/Rankings bonus
paid by Fox Broadcasting Company; and (c) 19TV is entitled to receive 40%
of any Executive Producer Fees (as defined therein).

 

4.19.        Security
Documents.  (a) Each of
the Guarantee and Collateral Agreement and the EPE Second Lien Collateral
Agreement is effective to create in favor of the Administrative Agent, for the
benefit of the Secured Parties, a legal, valid and enforceable security
interest in the Collateral described therein and proceeds and products
thereof.  In the case of the Pledged
Equity Interests described in the Guarantee and Collateral Agreement and the
EPE Second Lien Collateral Agreement, when certificates representing such
Pledged Equity Interests and related transfer powers are delivered to the
Administrative Agent (or, in the case of the Pledged Equity Interests described
in the EPE Second Lien Collateral Agreement only, the EPE Administrative Agent
acting as agent (solely for purposes of perfection) for the Administrative
Agent), and in the case of the other Collateral described in the Guarantee and
Collateral Agreement and the EPE Second Lien Collateral Agreement, when
financing statements and other filings specified on Schedule 4.19 in
appropriate form are filed in the offices specified on Schedule 4.19 to
the extent that a security interests therein can be perfected by the filing of
a financing statement, each of the Guarantee and Collateral Agreement and the
EPE Second Lien Collateral Agreement shall constitute a fully perfected Lien
on, and security interest in, all right, title and interest of the Loan Parties
in such Collateral and the proceeds thereof, as security for the Obligations
(as defined in the Guarantee and Collateral Agreement and the EPE Second Lien
Collateral Agreement), in each case prior and superior in right to any other Person
(except, in the case of (i) Collateral other than Pledged Equity
Interests, Liens permitted by Section 7.3, and (ii) Pledged Equity
Interests described in the EPE Second Lien Collateral Agreement, Liens in favor
of the EPE Administrative Agent).

 

44

 

(b) Subject to the Reservations, each of the UK
Debenture and the UK Charge Over Shares is effective to create in favor of the
Administrative Agent, for the benefit of the Secured Parties, a legal, valid and
enforceable security interest in the Collateral described therein and proceeds
and products thereof.  In the case of the
Pledged Equity Interests described in each of the UK Debenture and the UK
Charge Over Shares, when certificates representing such Pledged Equity
Interests and related blank executed stock transfer forms are delivered to the
Administrative Agent, and in the case of the other Collateral described in each
of the UK Debenture and the UK Charge Over Shares, when the filings specified
on Schedule 4.19 in appropriate form are filed in the offices or registers
specified on Schedule 4.19 to the extent that a security interests therein
can be perfected by any such filing and all notices required to be served under
such Security Documents are duly served before any competing notice comes into
effect, each of the UK Debenture and the UK Charge Over Shares shall (subject
to the Reservations) constitute a fully perfected Lien on, and security
interest in, all right, title and interest of the Loan Parties in such
Collateral and the proceeds thereof, as security for the Secured Obligations
(as defined in each of the UK Debenture and the UK Charge Over Shares), in each
case prior and superior in right to any other Person (except, in the case of
Collateral other than Pledged Equity Interests, Liens permitted by Section 7.3).

 

4.20.        Solvency.  Each Group Member is, and after giving effect
to the Acquisition and the incurrence of all Indebtedness and obligations being
incurred in connection herewith and therewith will be and will continue to be,
Solvent.

 

4.21.        Senior
Indebtedness.  The Obligations
constitute senior indebtedness of the Borrower and the Guarantors.

 

4.22.        Certain
Documents.  The Borrower has
delivered to the Administrative Agent a complete and correct copy of the
Acquisition Agreement and the related Acquisition Documentation, including any
amendments, supplements or modifications with respect thereto, and all
conditions precedent to the closing of the Acquisition set forth therein have
been satisfied, and no such conditions have been waived without the consent of
the Lead Arranger.

 

4.23.        Foreign
Assets Control Regulations and Anti-Money Laundering.  (a) Neither the making of Loans under
this Agreement nor the use of the proceeds thereof shall cause Holdings or any
Subsidiary of Holdings to violate any material provision of the U.S. Bank
Secrecy Act, as amended, and any applicable regulations thereunder or any of
the sanctions programs administered by the U.S. Department of the Treasury’s
Office of Foreign Assets Control (“OFAC”) of the United States
Department of Treasury, any regulations promulgated thereunder by OFAC or under
any affiliated or successor governmental or quasi-governmental office, bureau
or agency and any enabling legislation or executive order relating
thereto.  Without limiting the foregoing,
neither Holdings nor any Subsidiary of Holdings (i) is a person whose
property or interests in property are blocked or subject to blocking pursuant
to Section 1 of Executive Order 13224 of September 23, 200l Blocking
Property and Prohibiting Transactions With Persons Who Commit, Threaten to
Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)), (ii) knowingly
engages in any dealings or transactions prohibited by such Section 2 of
such executive order, or is otherwise knowingly associated with any such person
in any manner

 

45

 

violative of Section 2, or (iii) is a person on the list of
Specially Designated Nationals and Blocked Persons or subject to the
limitations or prohibitions under any other OFAC regulation or executive order.

 

Holdings and its Subsidiaries are in compliance, in
all material respects, with the Patriot Act. 
No part of the proceeds of the Loans hereunder will knowingly be used,
directly or indirectly, for any payments to any governmental official or
employee, political party, official of a political party, candidate for
political office, or anyone else acting in an official capacity, in order to
obtain, retain or direct business or obtain any improper advantage, in
violation of the United States Foreign Corrupt Practices Act of 1977, as
amended.

 

4.24.        Compliance
with Financial Assistance Laws. 
As far as the Borrower and the UK Guarantor Subsidiaries are concerned,
all of the requirements of Sections 151 — 158 of the Companies Act 1985 of
England and Wales have been, or prior to the execution and delivery to the
Administrative Agent of the Security Documents (or of the accession documents
to such Security Documents) to which such entities are party, will have been
satisfied to the extent necessary to ensure that the execution, delivery and
performance of such Security Documents (or accession documents, as applicable)
is lawful and that the obligations of such entities thereunder are not limited
as a result of the such requirements.

 

SECTION 5.  CONDITIONS PRECEDENT

 

The agreement of each Lender to make the initial
extension of credit requested to be made by it is subject to the satisfaction,
prior to or concurrently with (or, in the case of any condition precedent
relating to any UK Guarantor Subsidiary, immediately following but on the same
day as) the making of such extension of credit on the Closing Date (but in any
event no later than March 17, 2005), of the following conditions
precedent:

 

(a) Credit
Agreement; Security Documents.  The
Administrative Agent shall have received (i) this Agreement executed and
delivered by each Agent, Holdings and the Borrower and, in the case of the
Lenders, an Addendum, (ii) the Guarantee and Collateral Agreement,
executed and delivered by Holdings, the Borrower and the US Guarantor
Subsidiaries, (iii) the UK Debenture executed and delivered by the
Borrower, (iv) the UK Charge Over Shares executed and delivered by
Holdings, (v) an Intellectual Property Security Agreement, executed and
delivered by the Borrower and each US Subsidiary Guarantor (and on the Closing
Date but not prior to the Closing, each UK Subsidiary Guarantor), (vi) the
Intercreditor Agreement executed and delivered by the EPE Administrative Agent,
(vii) accession documents to the Guarantee and Collateral Agreement and
the UK Debenture executed and delivered by each UK Guarantor Subsidiary, and (viii) the
EPE Second Lien Collateral Agreement, executed and delivered by EPE Holding
Corporation.

 

(b) Acquisition, etc.  The following transactions shall have been
consummated, in each case on terms and conditions reasonably satisfactory to
the Administrative Agent:

 

(i)            other than as regards the payment of the
Consideration (as defined in the Acquisition Agreement), which shall occur
immediately after the funding of the

 

46

 

Bridge
Loans, the Acquisition shall have been consummated in accordance with the terms
of the Acquisition Documentation (and no provision thereof shall have been
amended, waived or otherwise modified in a manner adverse to Holdings, the
Borrower or the Lenders without the prior consent of the Administrative Agent);

 

(ii)           the Administrative
Agent shall have received satisfactory evidence that the fees and expenses to
be incurred in connection with the Acquisition and the financing thereof shall
not exceed $4.0 million;

 

(iii)          Holdings shall have received at least $25.0 million from the exercise
of Warrants;

 

(iv)          (i) the Administrative Agent shall have received satisfactory
evidence that all Existing Indebtedness other than any Permitted Indebtedness
shall have been discharged in full or terminated and all amounts thereunder
shall have been paid in full, and (ii) satisfactory arrangements shall
have been made for the termination or release of all Liens granted in
connection therewith other than in respect of any Permitted Liens; and

 

(v)           the Administrative
Agent shall have received satisfactory evidence that Holdings will transfer the
Capital Stock of 19E acquired in the Acquisition to the Borrower such that at
close of business on the Closing Date, 19E will be, on a beneficial basis with
legal title to move promptly thereafter, a Wholly Owned Subsidiary of the
Borrower.

 

(c) EPE
Bridge Loan Restatement.  The
Administrative Agent shall have received a fully executed copy of the EPE
Bridge Loan Agreement, executed by all parties thereto, satisfactory to it in
form and substance and effectuating all amendments necessary to permit the
execution of this Agreement, the incurrence of the Bridge Loans hereunder, and
the consummation of all guarantees and grants of security contemplated hereby.

 

(d) Financial
Covenants.  The Administrative Agent
shall have received a certificate of a Responsible Officer certifying that,
after giving effect to the Acquisition (including the payment of all fees and
expenses incurred in connection therewith), (i) the pro forma
Consolidated EBITDA of the Borrower for the four fiscal quarter period ended December 31,
2004 is equal to or greater than $23.0 million, (ii) the pro forma
Consolidated Leverage Ratio of the Borrower for the four fiscal quarter period
ended December 31, 2004 is less than 4.75 to 1.0 and (iii) cash and Cash Equivalents of the Borrower is
equal to or greater than $1,000,000.

 

(e) Pro Forma
Balance Sheet; Financial Statements. 
The Lenders shall have received (i) the Pro Forma Balance Sheet and
(ii) audited consolidated financial statements of 19E and its Subsidiaries
for the 2003 and 2004 fiscal years and (iii) unaudited consolidated
financial statements of 19E and its Subsidiaries for the six month period ended
December 31, 2004.

 

47

 

(f) Business
Plan and Projections.  The
Administrative Agent shall have received and shall be satisfied with a business
plan and financial projections (the “Projections”) for each calendar
quarter in 2005, and the first calendar quarter in 2006.

 

(g) Approvals.  All governmental and third party approvals
(including HSR Act approval and other consents) necessary, or in the reasonable
discretion of the Administrative Agent, advisable in connection with the
Acquisition, the continuing operations of the Group Members and the
transactions contemplated hereby shall have been obtained and be in full force
and effect (including shareholder approvals), and all applicable waiting
periods shall have expired without any action being taken or threatened by any
competent authority that would restrain, prevent or otherwise impose adverse
conditions on the Acquisition or the financing contemplated hereby.

 

(h) Lien and other
Searches.  The Administrative Agent
shall have received the results of (i) a recent lien search in each of the
jurisdictions designated by the Administrative Agent, and such search shall
reveal no liens on any of the assets of the Loan Parties except for liens
permitted by Section 7.3 or discharged on or prior to the Closing Date
pursuant to documentation satisfactory to the Administrative Agent, (ii) in
respect of the Borrower and each other Group Member incorporated in England and
Wales, recent searches of such person’s companies file at the Companies
Registry of England and Wales showing, amongst other things, no appointment of
(or the presentation of any petition in relation to any appointment of) a
receiver, liquidator or administrator, and (iii) in respect of any real
property located in England and Wales, official priority searches in favor of
the Administrative Agent in relation to any registered titles giving a
sufficient period of priority (of at least 15 days following the Closing Date).

 

(i) Fees.  The Lenders and the Agents shall have
received all fees required to be paid (including payment of a fee equal to 1.0%
of the principal amount of Bridge Loans funded on the Closing Date to the Lead
Arranger), and all expenses for which invoices have been presented (including
the reasonable fees and expenses of legal counsel and excluding corporate
overhead and other non out-of-pocket expenses), on or before the Closing
Date.  All such amounts will be paid with
proceeds of Loans made on the Closing Date and will be reflected in the funding
instructions given by the Borrower to the Administrative Agent on or before the
Closing Date.

 

(j) Closing
Certificate.  The Administrative
Agent shall have received a certificate of each Loan Party and EPE Holding
Corporation, dated the Closing Date, substantially in the form of Exhibit C,
with appropriate insertions and attachments including, without limitation, the
formation documents and a good standing certificate (where applicable) of each
Group Member certified by the relevant authority of the jurisdiction of
organization of such Group Member.

 

48

 

(k) Legal Opinions.  The Administrative Agent shall have received
the following executed legal opinions:

 

(i)            the legal opinion of Paul, Hastings, Janofsky
and Walker LLP, counsel in the United States to Holdings and its Subsidiaries,
substantially in the form of Exhibit E-1;

 

(ii)           the legal opinion of Baker & McKenzie, counsel in England and
Wales to the Borrower and the UK Guarantor Subsidiaries, substantially in the
form of Exhibit E-2; and

 

(iii)          the legal opinion of local counsel in Colorado, substantially in the
form of Exhibit E-3.

 

Each
such legal opinion shall cover such other matters incident to the transactions
contemplated by this Agreement, and otherwise be in such form and of such
substance, as the Administrative Agent may reasonably require.

 

(l) Pledged Equity
Interests; Transfer Powers; Pledged Notes. 
The Administrative Agent shall have received (i) the certificates
representing the shares of Capital Stock pledged pursuant to the Security
Documents, together with an undated transfer power for each such certificate executed
in blank by a duly authorized officer of the pledgor thereof (or, in the case
of the Capital Stock pledged pursuant to the UK Debenture and the UK Charge
Over Shares, the equivalent thereof for each entity incorporated in England and
Wales) and (ii) each promissory note (if any) pledged to the
Administrative Agent pursuant to the Security Documents endorsed (without
recourse) in blank (or accompanied by an executed transfer form in blank) by
the pledgor thereof.

 

(m) Filings,
Registrations and Recordings.  Each
document (including any Uniform Commercial Code financing
statement) required by the Security Documents or under law or reasonably
requested by the Administrative Agent to be delivered, filed, registered or
recorded in order to create in favor of the Administrative Agent, for the
benefit of the Lenders, a perfected Lien on the Collateral described therein,
prior and superior in right to any other Person (other than with respect to
Liens expressly permitted by Section 7.3), shall (within the relevant time
period for filing) be in proper form for delivery, filing, registration or
recordation.

 

(n) Solvency
Certificate.  The Administrative
Agent shall have received and shall be reasonably satisfied with a solvency
certificate of the chief financial officer of Holdings substantially in the
form of Exhibit I, which shall document the solvency of the Borrower and
its Subsidiaries (on a consolidated basis), after giving effect to the
Acquisition and other transactions contemplated hereby.

 

(o) No Default;
Representations; Officer’s Certificate. 
No Default or Event of Default shall have occurred and be continuing on
such date or after giving effect to the extensions of credit requested to be
made on such date.  Each of the
representations and warranties made by any Loan Party in or pursuant to the
Loan Documents shall be true and correct in all material respects on and as of
such date as if made on and as of such date. 
The Administrative Agent shall have received a certificate executed on
behalf of the Borrower by the chief executive officer of the Borrower
certifying (i) as to the accuracy of the representations and

 

49

 

warranties of the Borrower in the Acquisition Documentation and the
Loan Documents and (ii) that since June 30, 2004, no event has
occurred, that alone or in connection with other events, could reasonably be
expected to have a Material Adverse Effect.

 

(p) Insurance.  The Administrative Agent shall be satisfied
with the insurance program to be maintained by the Borrower and its
Subsidiaries after giving effect to the Acquisition and shall have received
insurance certificates reasonably satisfactory to the Administrative Agent.

 

(q) Financial
Assistance.

 

(i)            The Administrative Agent shall have received
evidence that the requirements
of Sections 155 - 158 of the Companies Act 1985 of England and Wales (in the
case of each UK Guarantor Subsidiary) have been complied with so far as they
relate to the Loan Documents and the Acquisition (including any upstream loan
agreement to be whitewashed);

 

(ii)           The Administrative Agent shall have received a certificate of the Borrower, dated the date
on which the statutory declarations in respect of the financial assistance
procedures referred to in paragraph (i) above are entered into, specifying
all directors of each UK Guarantor Subsidiary; and

 

(iii)          The Administrative Agent shall have received a certified extract of the
register of members of each Group Member incorporated in England and Wales
whose shares are subject to a security interest granted under the Security
Documents.

 

(r) Shareholder
Resolutions.  The Administrative
Agent shall have received (if required) shareholder resolutions to amend the
articles of association of any Group Member incorporated in England and Wales
to remove any restrictions on the transferability of such Group Member’s shares
upon the enforcement of the security interests in respect thereof granted to
the Administrative Agent (in its capacity as such).

 

(s) Agent for
Service of Process.  The
Administrative Agent shall have received evidence that Holdings has appointed
the Borrower to be its agent for service of process in connection with the UK
Charge Over Shares.

 

(t) Employment
Agreements.  The Administrative Agent
shall have received true and correct copies of the Fuller Employment Agreement
and the Fuller Non-Compete Agreement.

 

(u) Miscellaneous.  The Administrative Agent shall have received
such other documents, agreements, certificates and information as it shall
reasonably request.

 

SECTION 6.  AFFIRMATIVE COVENANTS

 

Holdings and
the Borrower hereby jointly and severally agree that, so long as the Bridge
Commitments remain in effect or any Loan or other amount is owing to any Lender
or

 

50

 

Agent hereunder, each of Holdings and the Borrower shall and shall
cause each other Group Member to:

 

6.1.          Financial
Statements.  Furnish to the
Administrative Agent and each Lender:

 

(a) as soon as
available, but in any event within 90 days after the end of the 2004
fiscal year of the Borrower, a copy of the audited consolidated balance sheet
of the Borrower and its consolidated Subsidiaries as at the end of such year
and the related audited consolidated statements of income and of cash flows for
such year, setting forth in each case in comparative form the figures for the
previous year, together with calculations demonstrating that the Borrower is in
compliance with the financial covenants set forth in Section 7.1, reported
on without a “going concern” or like qualification or exception, or
qualification arising out of the scope of the audit, by Deloitte &
Touche or other independent certified public accountants of nationally
recognized standing;

 

(b) as soon as
available, but in any event not later than 45 days after the end of each of the
first three quarterly periods of each fiscal year of the Borrower, the
unaudited consolidated balance sheet of the Borrower and its consolidated
Subsidiaries as at the end of such quarter and the related unaudited
consolidated statements of income and of cash flows for such quarter and the
portion of the fiscal year through the end of such quarter, setting forth in
each case in comparative form the figures for the previous year, together with
calculations demonstrating that the Borrower is compliance with the financial
covenants set forth in Section 7.1, certified by a Responsible Officer as
being fairly stated in all material respects (subject to normal year-end audit
adjustments); and

 

(c) as soon as available,
but in any event not later than 45 days after the end of each month occurring
during each fiscal year of the Borrower (other than the third, sixth, ninth and
twelfth such month), the unaudited consolidated balance sheets of the Borrower
and its Subsidiaries as at the end of such month and the related unaudited
consolidated statements of income and of cash flows for such month and the
portion of the fiscal year through the end of such month, setting forth in each
case in comparative form the figures for the previous year, certified by a
Responsible Officer as being fairly stated in all material respects (subject to
normal year-end audit adjustments).

 

All such
financial statements shall be complete and correct in all material respects and
shall be prepared in reasonable detail and in accordance with GAAP applied
consistently throughout the periods reflected therein and with prior periods
(except as approved by such accountants or officer, as the case may be, and
disclosed therein and except for regular year-end adjustments).

 

6.2.          Certificates;
Other Information.  Furnish to
the Administrative Agent and each Lender:

 

(a) concurrently with
the delivery of the financial statements referred to in Section 6.1(a), a
certificate of the independent certified public accountants reporting on such
financial statements stating that in making the examination necessary therefor
no knowledge was

 

51

 

obtained of any Default or Event of Default with respect to the financial
covenants set forth in Section 7.1, except as specified in such
certificate;

 

(b) concurrently with
the delivery of any financial statements pursuant to Section 6.1, (i) a
certificate of a Responsible Officer stating that, to the best of such
Responsible Officer’s knowledge, each Loan Party during such period has
observed or performed all of its covenants and other agreements contained in
this Agreement and the other Loan Documents to which it is a party to be
observed, performed or satisfied by it, and that such Responsible Officer has
obtained no knowledge of any Default or Event of Default except as specified in
such certificate, (ii) a certificate of a Responsible Officer of the
Borrower setting forth the amount and type of each payment made during such
period pursuant to Sections 7.6 (b), and (iii) in the case of quarterly or
annual financial statements, (x) a Compliance Certificate containing all
information and calculations necessary for determining compliance by each Group
Member with the provisions of this Agreement referred to therein as of the last
day of the fiscal quarter or fiscal year of the Borrower, as the case may be,
and (y) to the extent not previously disclosed to the Administrative Agent, a
description of any change in the jurisdiction of organization of any Loan Party
and a listing of any Intellectual Property acquired by any Loan Party since the
date of the most recent list delivered pursuant to this clause (y) (or, in the
case of the first such list so delivered, since the Closing Date);

 

(c) no later than 30
days following the Closing Date, a reconciliation of the UK GAAP financial
statements provided on the Closing Date to comply with US GAAP on a
going-forward basis, as prepared by Deloitte & Touche on behalf of the
Borrower;

 

(d) if the Borrower is
not then a reporting company under the Securities Exchange Act of 1934, as
amended, within 45 days after the end of each fiscal quarter of the Borrower, a
narrative discussion and analysis of the financial condition and results of
operations of the Borrower and its Subsidiaries for such fiscal quarter and for
the period from the beginning of the then current fiscal year to the end of
such fiscal quarter, as compared to the portion of the Projections covering
such periods and to the comparable periods of the previous year;

 

(e) no later than 10
Business Days prior to the effectiveness thereof, copies of substantially final
drafts of any proposed amendment, supplement, waiver or other modification with
respect to the Acquisition Documentation;

 

(f) within five days
after the same are sent, copies of all financial statements and reports that
Holdings or the Borrower sends to the holders of any class of its debt
securities or public equity securities and, within five days after the same are
filed, copies of all financial statements and reports that Holdings or the
Borrower may make to, or file with, the SEC;

 

(g) as soon as possible
and in any event within 5 days of obtaining knowledge thereof, notice of any
development, event, or condition that, individually or in the aggregate with
other developments, events or conditions, could reasonably be expected to
result in the payment by Holdings, the Borrower or any of its Subsidiaries of a
Material Environmental Amount; and

 

52

 

(h) promptly, such
additional financial and other information as the Administrative Agent or any
Lender may from time to time reasonably request.

 

6.3.          Payment
of Obligations.  Pay,
discharge or otherwise satisfy at or before maturity or before they become
delinquent, as the case may be, all its material obligations of whatever
nature, except where the amount or validity thereof is currently being
contested in good faith by appropriate proceedings and reserves in conformity
with GAAP with respect thereto have been provided on the books of the relevant
Group Member.

 

6.4.          Maintenance
of Existence; Compliance.  (a)(i) 
Preserve, renew and keep in full force and effect its organizational, company
or corporate existence and (ii) take all reasonable action to maintain all
rights, privileges and franchises necessary or desirable in the normal conduct
of its business, except, in each case, as otherwise permitted by Section 7.4
and except, in the case of clause (ii) above, to the extent that failure
to do so could not reasonably be expected to have a Material Adverse Effect;
and (b) comply with all Contractual Obligations and Requirements of Law
except to the extent that failure to comply therewith could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect.

 

6.5.          Maintenance
of Property; Insurance.  (a) 
Keep all property useful and used in the ordinary course of its business in
good working order and condition, ordinary wear and tear excepted, or replace
or substitute such property as necessary, except where the failure to keep such
property in good working order or replace such property could not reasonably be
expected to have a Material Adverse Effect and (b) maintain with
financially sound and reputable insurance companies insurance on all property
useful and used in the ordinary course of its business in at least such amounts
and against at least such risks (but including in any event public liability
and business interruption) as are insured against as of the date hereof or as
are otherwise required to be maintained under any material contract or
agreement or other requirement applicable to the Borrower, in each case, except
where the failure to maintain such insurance could not reasonably be expected
to have a Material Adverse Effect.

 

6.6.          Inspection
of Property; Books and Records; Discussions.  (a)  Keep proper books of records and
account in which full, true and correct entries in conformity with GAAP and all
Requirements of Law shall be made of all dealings and transactions in relation
to its business and activities and (b) permit representatives of any
Lender, during normal business hours, from time to time upon three Business
Days’ prior notice (unless an Event of Default shall have occurred and be
continuing, in which case, no such notice shall be required), to visit and
inspect any of its properties and examine and make abstracts from any of its
books and records at any reasonable time and as often as may reasonably be
desired and to discuss the business, operations, properties and financial and
other condition of the Group Members with officers and employees of the Group
Members and with their independent certified public accountants; provided
that all such visits shall be arranged through the Administrative Agent, which
shall use reasonable efforts to coordinate such visits so as to minimize the
total number thereof, and any officer of any of the Group Members, if it so
chooses, may be present at such visit (except to the extent that such visit
involves discussions with such Group Member’s independent accountants or
auditors and the Administrative Agent has requested that such officer

 

53

 

or officers not be present). 
Physical access to any of the properties of any Group Member shall be
governed by the rules, policies and procedures of such property relating to
visits thereto by the public.

 

6.7.          Notices.  Promptly give notice to the Administrative
Agent and each Lender of:

 

(a) the occurrence of
any Default or Event of Default;

 

(b) any (i) default
or event of default under any Contractual Obligation of any Group Member or, to
the knowledge of Holdings or the Borrower, Fremantle, or (ii) litigation,
investigation or proceeding that may exist at any time between any Group Member
or Fremantle on the one hand, and any Governmental Authority on the other hand,
that in either case, if not cured or if adversely determined, as the case may
be, could reasonably be expected to have a Material Adverse Effect;

 

(c) any litigation or
proceeding affecting any Group Member (i) in which the amount involved is
$1,000,000 or more and not covered by insurance, (ii) in which injunctive
or similar relief is sought or (iii) which relates to any Loan Document;

 

(d) the following
events, as soon as possible and in any event within 30 days after the Borrower
knows or has reason to know thereof:  (i) the
occurrence of any Reportable Event with respect to any Plan, a failure to make
any required contribution to a Plan, the creation of any Lien in favor of the
PBGC or a Plan or any withdrawal from, or the termination, Reorganization or
Insolvency of, any Multiemployer Plan or (ii) the institution of
proceedings or the taking of any other action by the PBGC or the Borrower or
any Commonly Controlled Entity or any Multiemployer Plan with respect to the
withdrawal from, or the termination, Reorganization or Insolvency of, any Plan;
and

 

(e) any development or
event that has had or could reasonably be expected to have a Material Adverse
Effect.

 

Each notice
pursuant to this Section 6.7 shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action Holdings, the Borrower or the relevant Group Member
proposes to take with respect thereto.

 

6.8.          Intellectual
Property.

 

(a) Consistent
with past practices (i) continue to use each material Trademark in a
manner that maintains such Trademark in full force free from any claim of
abandonment for non-use, and (ii) use such Trademark with the appropriate
notice of registration and all other notices and legends required by applicable
Requirements of Law.

 

(b) Notify
the Administrative Agent and the Lenders immediately if it knows that any
application or registration relating to any material Intellectual Property may
become forfeited, abandoned or dedicated to the public, or of any adverse
determination or development (including, without limitation, the institution
of, or any such determination or development in,

 

54

 

any proceeding in the United States Patent and Trademark Office, the
United States Copyright Office or any court or tribunal in any country)
regarding such Group Member’s or Fremantle’s ownership of, or the validity of,
any Intellectual Property or such Group Member’s or Fremantle’s right to
register the same or to own and maintain the same, unless such forfeiture,
abandonment or dedication or such adverse determination or development could
not reasonably be expected to cause a Material Adverse Effect or constitute an
Event of Default.

 

(c) Promptly
upon a Loan Party’s acquisition, exclusive license of, or creation of any
invention, trademark or other applicable Intellectual Property, the value of
which is material in the context of the Group Members as a whole, such Loan
Party shall apply for registration thereof or require an agent to so apply with
the United States Patent and Trademark Office and the appropriate international
office to register such Intellectual Property or exclusive license thereof, as
applicable.  Whenever a Loan Party,
either by itself or through any agent, employee, licensee or designee, shall
file an application for the registration of any Intellectual Property with the
United States Patent and Trademark Office or any similar office or agency in
any other country or any political subdivision thereof, such Loan Party shall
report such filing to the Administrative Agent within five Business Days after
the last day of the fiscal quarter in which such filing occurs.  Subject always to the ability to comply with
local laws (including as to financial assistance) upon request of the
Administrative Agent, such Loan Party shall execute and deliver, and have
recorded, any and all agreements, instruments, documents, and papers as the
Administrative Agent may request to evidence the Agents’ and the Lenders’
security interest in any Patent or Trademark and the goodwill and general
intangibles of such Loan Party relating thereto or represented thereby.  Promptly upon, and in no event more than
fifteen days after, a Loan Party’s acquisition, exclusive license of, or
creation of any copyrightable work or rights in any copyrightable work the
value of which is material in the context of the Group Members as a whole, such
Loan Party shall apply for registration thereof with the United States
Copyright Office and the appropriate international office to register such
Intellectual Property or license thereof, as applicable.  Before a Loan Party, either by itself or
through any agent, employee, licensee or designee, shall file an application
for the registration of any Intellectual Property with the United States
Copyright Office or any similar office or agency in any other country or any
political subdivision thereof, such Loan Party shall give the Administrative
Agent no less than ten Business Days prior notice.  Subject always to the ability to comply with
local laws (including as to financial assistance) upon request of the
Administrative Agent, such Loan Party shall execute and deliver, and have
recorded, any and all agreements, instruments, documents, and papers as the
Administrative Agent may reasonably request to evidence the Agents’ and the
Lenders’ security interest in any Copyright or right therein.

 

(d) Take
all reasonable and necessary steps, including, without limitation, in any
proceeding before the United States Patent and Trademark Office, the United
States Copyright Office or any similar office or agency in any other country or
group of countries or any political subdivision of any of the foregoing, to
maintain and pursue each application (and to obtain the relevant registration)
and to maintain each registration of the material Intellectual Property,
including, without limitation, filing of applications for renewal, affidavits
of use and affidavits of incontestability.

 

55

 

(e)  In the event that any material Intellectual
Property of a Group Member is infringed, misappropriated or diluted by a third
party, such Group Member shall (i) take such actions as such Group Member
shall reasonably deem appropriate under the circumstances to protect such
Intellectual Property and (ii) if such Intellectual Property is of
material economic value, promptly notify the Administrative Agent after it
learns thereof and sue for infringement, misappropriation or dilution, to seek
injunctive relief where appropriate and to recover any and all damages for such
infringement, misappropriation or dilution.

 

6.9.  Environmental Laws.

 

(a)  Comply in all material respects with, and use
commercially reasonable efforts to cause all tenants and subtenants, if any, to
comply in all material respects with, all applicable Environmental Laws and
Environmental Permits, and obtain and comply in all material respects with and
maintain, and ensure that all tenants and subtenants obtain and comply in all
material respects with and maintain, any and all material Environmental
Permits.

 

(b)  Conduct and complete all investigations,
studies, sampling and testing, and all remedial, removal and other actions
required under Environmental Laws and promptly comply in all material respects
with all lawful orders and directives of all Governmental Authorities regarding
Environmental Laws.

 

6.10.  Additional Collateral,
etc. (a) With
respect to any property acquired after the Closing Date by the Borrower or any
Wholly Owned Subsidiary thereof (other than any property described in paragraph
(b) below) as to which the Administrative Agent, for the benefit of the
Secured Parties, does not have a perfected Lien, and subject always to the
ability to comply with local laws (including as to financial assistance)
promptly (i) execute and deliver to the Administrative Agent such
amendments to the Security Documents or such other documents as the
Administrative Agent deems necessary or advisable to grant to the
Administrative Agent, for the benefit of the Lenders, a security interest in
such property and (ii) take all actions necessary or advisable to grant to
the Administrative Agent, for the benefit of the Secured Parties, a perfected
first priority security interest in such property (subject to Liens on assets
other than Capital Stock permitted under Section 7.3 and as otherwise
permitted to not be so granted according to the terms of the Collateral
Documents), including the filing of Uniform Commercial Code financing
statements in such jurisdictions as may be required by the Security Documents
or by law or as may be requested by the Administrative Agent and the delivery
of certificates and transfer powers in respect of any newly formed or acquired
Subsidiary (or, in any such case, the equivalent thereof required in any other
jurisdiction).

 

(b)  With respect to any fee interest in any real
property having a value (together with improvements thereof) of at least
$1,000,000 acquired after the Closing Date by any Loan Party and subject always
to the ability to comply with local laws (including as to financial
assistance), promptly (i) execute and deliver a first priority Mortgage,
in favor of the Administrative Agent, for the benefit of the Secured Parties,
covering such real property, (ii) if requested by the Administrative
Agent, provide the Secured Parties with (x) title and extended coverage
insurance covering such real property in an amount at least equal to the
purchase price of such real property (or such other amount as shall be reasonably
specified by the 

 

56

 

Administrative Agent) as well
as a current ALTA survey thereof in relation to the United States real estate,
together with a surveyor’s certificate and (y) any consents reasonably
deemed necessary or advisable by the Administrative Agent in connection with
such Mortgage, each of the foregoing in form and substance reasonably
satisfactory to the Administrative Agent and (iii) if requested by the
Administrative Agent, deliver to the Administrative Agent legal opinions
relating to the matters described above, which opinions shall be in form and
substance, and from counsel, reasonably satisfactory to the Administrative
Agent.

 

(c)  With respect to any new Wholly Owned
Subsidiary created or acquired after the Closing Date by the Borrower (which,
for the purposes of this paragraph (c), shall include any existing Subsidiary
that becomes a Wholly Owned Subsidiary) and subject always to the ability to
comply with local laws (including as to financial assistance), promptly (i) execute
and deliver to the Administrative Agent such amendments to the Security
Documents as the Administrative Agent reasonably deems necessary or advisable
to grant to the Administrative Agent, for the benefit of the Lenders, a
perfected first priority security interest in the Capital Stock of such new
Subsidiary that is owned by the Borrower, (ii) deliver to the
Administrative Agent the certificates representing such Capital Stock, together
with undated stock powers, in blank, executed and delivered by a duly
authorized officer of the Borrower (or the equivalent thereof in any other
applicable jurisdiction), (iii) cause such new Subsidiary (A) to
become a party to (i) the Guarantee and Collateral Agreement (as a Guarantor,
and, if such subsidiary is organized under the laws of the United States, as a
Grantor), and (ii) if such entity is incorporated under the laws of
England and Wales, the UK Debenture, (B) to take such actions necessary or
advisable to grant to the Administrative Agent for the benefit of the Lenders a
perfected first priority security interest in the Collateral described in the
relevant Security Documents with respect to such new Subsidiary, including the
filing of Uniform Commercial Code financing statements (or the equivalent
thereof in any other applicable jurisdiction) in such jurisdictions as may be
required by the Security Documents or by law or as may be reasonably requested
by the Administrative Agent and (C) to deliver to the Administrative Agent
a certificate of such Subsidiary, substantially in the form of Exhibit C,
with appropriate insertions and attachments, (iv) if requested by the
Administrative Agent, deliver to the Administrative Agent legal opinions
relating to the matters described above, which opinions shall be in form and
substance, and from counsel, reasonably satisfactory to the Administrative
Agent and (v) (if applicable) each of the documents referred to in Section 5(r)
in relation to such new Subsidiary (each satisfactory to the Administrative
Agent); provided that no provision of this Section 6.10 shall
require the Borrower or any other Loan Party to cause 19 Entertainment SL, 19
Entertainment GMBH or 19 Touring GMBH to become Guarantors hereunder or party
to any Security Document.

 

(d)  In the event that any Group Member is
prevented from complying with its obligations under this Section 6.10 or
elsewhere in this Article 6 as a result of any local laws (including as to
financial assistance), then each Loan Party will use all reasonable efforts to
overcome the relevant legal prohibition (and, in the case of a financial
assistance or similar prohibition, will procure that the relevant Group Member
will undertake all whitewash or similar procedures which are possible, whether
under the Companies Act 1985 of England and Wales or 

 

57

 

otherwise) to enable the
relevant obligation to be complied with as soon as is reasonably practicable.

 

(e) If at any
time additional Collateral (as defined therein) is granted to the EPE
Administrative Agent pursuant to Section 6.10 of the EPE Bridge Loan
Agreement, Holdings shall cause its Subsidiaries to take all actions deemed
necessary or advisable by the Administrative Agent to grant to the Administrative
Agent a second-priority security interest in such new collateral, for the
benefit of the Secured Parties.

 

6.11.  Use of Proceeds.  Use
the proceeds of the Loans only for the purposes specified in Section 4.16.

 

6.12.  Further Assurances. 
Subject always to the ability to comply with local laws (including as to
financial assistance), from time to time execute and deliver, or cause to be
executed and delivered, such additional instruments, certificates or documents,
and take all such actions, as the Administrative Agent may reasonably request
for the purposes of implementing or effectuating the provisions of this
Agreement and the other Loan Documents, or of more fully perfecting or renewing
the rights of the Administrative Agent and the Lenders with respect to the
Collateral (or with respect to any additions thereto or replacements or
proceeds thereof or with respect to any other property or assets hereafter
acquired by the borrower or any Subsidiary which may be deemed to be part of
the Collateral) pursuant hereto or thereto. 
Upon the exercise by the Administrative Agent or any Lender of any
power, right, privilege or remedy pursuant to this Agreement or the other Loan
Documents which requires any consent, approval, recording qualification or
authorization of any Governmental Authority, each of Holdings and the Borrower
will execute and deliver, or will cause the execution and delivery of, all
applications, certifications, instruments and other documents and papers that
the Administrative Agent or such Lenders may be required to obtain from
Holdings, the Borrower or any of their respective Subsidiaries for such
governmental consent, approval, recording, qualification or authorization.

 

6.13.  UK Financial Assistance.  Each
of Holdings and the Borrower will (i) procure (to the extent that it is
lawful to do so) that each Subsidiary of the Borrower transfers sufficient
funds to enable the Borrower to meet its payment obligations under the Loan
Documents as they fall due and (ii) ensure that all payments among the
Borrower and any of its Subsidiaries (or any of them) have been and will be
made in compliance with applicable local laws or regulations concerning
financial assistance by a company for the acquisition of or subscription for
its own shares or concerning the protection of shareholders’ capital.

 

6.14.  Post-Closing Obligations.(a) 
Subject always to the ability to comply with English laws as to financial
assistance, within 90 Business Days following the Closing Date, cause each
Wholly Owned Subsidiary of the Borrower incorporated in England and Wales and
which is not already a party thereto (by virtue of being an original signatory
or by accession) to become party to (a) the Guarantee and Collateral
Agreement as Guarantors thereunder by delivery of fully executed Assumption
Agreements and (b) the UK Debenture as Chargors thereunder by deliver of
fully executed Accession Deeds (as such term is defined in the UK Debenture) provided
that prior to the delivery of any such Assumption Agreement or 

 

58

 

Accession Deed, each such Wholly Owned Subsidiary will
(to the extent it is legally able to do so) provide evidence in form and
substance satisfactory to the Administrative Agent that the requirements of section 151-158
of the Companies Act 1985 of England and Wales have been complied with so far
as they relate to any such agreement and shall have delivered equivalent
documents to each of the documents referred to in Section 5(r).

 

(b)  The Borrower will procure that adjudication
for United Kingdom stamp duty purposes of the transfers of the Capital Stock of
19E:  (i) from the Seller to each of
Holdings and the Borrower for the purposes of the Acquisition; and (ii) from
Holdings to the Borrower (such transfer to occur following completion of the
Acquisition but on the Closing Date); in each case, occurs as soon as
reasonably practicable after the Closing Date and that, within 3 Business Days
following completion of the adjudication referred to above, it will deliver to the
Administrative Agent (i) share certificates in respect of 100% of the
Capital Stock of 19E in the name of the Borrower and (ii) a certified
extract of the register of members of 19E demonstrating that the Borrower is
the sole shareholder of 19E.

 

(c)  Prior to the day that is 30 days after the
Closing Date, cause the satisfaction of all conditions precedent to the Closing
Date set forth in Section 5 that were not satisfied on the Closing Date.

 

6.15.  Warrants.  In
the event that all or any portion of the Warrants are exercised at any time
following the Closing Date, Holdings will contribute the first $2.5 million of
proceeds from such exercises to EPE Holding Corporation, which will segregate
and hold aside such proceeds (in an account which shall be pledged to the
Lenders as Collateral on a second priority basis) for use solely in order to
comply with Holdings’ obligations pursuant to that certain letter agreement,
dated as of February 7, 2005, by and among Holdings, RFX, EPE Holding
Corporation, the Promenade Trust, Elvis Presley Enterprises, LLC, and Elvis
Presley Enterprises, Inc., as the same may be further amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof.

 

6.16.  Deferred Consideration.  If Simon Robert Fuller has not exercised his
option pursuant to Clause 3.4(b) of the Acquisition Agreement to accept
payment of the Deferred Consideration in the form of Capital Stock of Holdings,
Holdings shall exercise its option, pursuant to Clause 3.4(c) of the Acquisition
Agreement, to cause the Seller to accept payment of the Deferred Compensation
solely in the form of shares of Capital Stock of Holdings.

 

SECTION 7.  NEGATIVE COVENANTS

 

Holdings and the Borrower hereby jointly and
severally agree that, so long as the Bridge Commitments remain in effect or any
Loan or other amount is owing to any Lender or Agent hereunder, each of
Holdings and the Borrower shall not, and shall not permit any Group Member to,
directly or indirectly:

 

59

 

7.1.  Financial Condition Covenants.

 

(a)  Consolidated Leverage Ratio.  Permit the Consolidated Leverage Ratio of the
Borrower for any period of four consecutive fiscal quarters ended December 31,
2004 or for any period of four consecutive fiscal quarters ending with any
fiscal quarter during 2005 to exceed 4.75 to 1.00.

 

(b)  Minimum Consolidated EBITDA.  Permit the Consolidated EBITDA of the
Borrower for any period of four consecutive fiscal quarters ended December 31,
2004 or for any period of four consecutive fiscal quarters ending with any
fiscal quarter during 2005 to be less than $23,000,000.

 

(c)  Minimum Consolidated Net Worth.  Permit Consolidated Net Worth at any time to
be less than $40,000,000.

 

(d)  Minimum Liquidity.  Permit cash and Cash Equivalents of the
Borrower and its consolidated Subsidiaries in the aggregate at any time to be
less than $1,000,000.

 

7.2.  Indebtedness.  Create, issue, incur, assume, become liable
in respect of or suffer to exist any Indebtedness, except for Permitted
Indebtedness.

 

7.3. Liens. 
Create, incur, assume or suffer to exist any Lien upon any of its
property, whether now owned or hereafter acquired, except for Permitted Liens.

 

7.4. Fundamental Changes.  Enter
into any merger, consolidation or amalgamation, or liquidate, wind up or
dissolve itself (or suffer any liquidation or dissolution), or Dispose of, all
or substantially all of its property or business, except that:

 

(a)  any Guarantor Subsidiary of the Borrower may
be merged or consolidated with or into the Borrower or any Guarantor Subsidiary
of the Borrower and any Subsidiary of the Borrower that is not a
Guarantor Subsidiary may be merged or consolidated with or into the Borrower,
any Guarantor Subsidiary (as long as the continuing or surviving entity is a
Guarantor Subsidiary) or any other Subsidiary of the Borrower that is not a
Guarantor Subsidiary (provided
that, with respect to any such merger or consolidation involving the Borrower,
the Borrower shall be the continuing or surviving entity);

 

(b)  Holdings may be merged or consolidated with
or into any Subsidiary of Holdings (other than the Borrower or EPE Holding
Corporation or any of its Subsidiaries) for the purpose of changing the
jurisdiction of domicile of Holdings provided that the surviving entity shall
be required to assume all of the obligations of Holdings under this Agreement
and the other Loan Documents to which Holdings is a party in a manner
reasonably satisfactory to the Administrative Agent;

 

(c)  any Subsidiary of the Borrower may Dispose of
any or all of its assets (upon voluntary liquidation or otherwise) to the
Borrower or any Guarantor Subsidiary; provided that if the relevant
asset was the subject of a Lien pursuant to any Security Document, the Borrower
grants security to a similar extent and of a comparable quality over such asset
in favor of the 

 

60

 

Administrative Agent (such
security to be in form and substance satisfactory to the Administrative Agent);

 

(d)  in connection with a Permitted Acquisition,
any Person that is the subject of such Permitted Acquisition may be merged or
consolidated with or into the Borrower or any Subsidiary of the Borrower (provided
that the Borrower or the applicable Subsidiary of the Borrower shall be the
continuing or surviving corporation); and

 

(e)  the Borrower and any Guarantor Subsidiary may
Dispose of any Subsidiary that is not a Guarantor Subsidiary and that is not a
Material Subsidiary; provided that the proceeds of all such Dispositions
following the Closing Date shall not exceed $1.5 million in the aggregate.

 

7.5.  Disposition of Property. 
Dispose of any of its property, whether now owned or hereafter acquired,
or, in the case of the Borrower or any of its Subsidiaries, issue or sell any
shares of the Borrower’s or such Subsidiary’s Capital Stock to any Person,
except:

 

(a)  the Disposition of obsolete or worn out
property in the ordinary course of business;

 

(b)  the sale of inventory or licensing of
Intellectual Property in the ordinary course of business on a non-exclusive
basis;

 

(c)  Dispositions permitted by Section 7.4(c);

 

(d)  the sale or issuance of any Subsidiary’s
Capital Stock to the Borrower provided that if such Capital Stock was the
subject of a Lien pursuant to any Security Document, the Borrower grants
security to a similar extent and of a comparable quality over such asset in
favor of the Administrative Agent (such security to be in form and substance
satisfactory to the Administrative Agent);

 

(e)  the sale or Disposition of immaterial assets
with an aggregate fair market value not to exceed $1,000,000;

 

(f)  the disposition of cash not otherwise
prohibited by this Agreement.

 

7.6.  Restricted Payments. 
Declare or pay any dividend (other than dividends payable solely in
common stock of the Person making such dividend) on, or make any payment on
account of, or set apart assets for a sinking or other analogous fund for, the
purchase, redemption, defeasance, retirement or other acquisition of, any
Capital Stock of any Group Member, whether now or hereafter outstanding, or
make any other distribution in respect thereof, either directly or indirectly,
whether in cash or property or in obligations of Holdings, the Borrower or any
Subsidiary (collectively, “Restricted Payments”), except that:

 

(a)  (i) any Subsidiary may make Restricted
Payments to the Borrower or to any Wholly Owned Subsidiary of the Borrower and (ii) any
Subsidiary may make Restricted 

 

61

 

Payments to the Borrower and
the other holders of its Capital Stock in respect of their proportionate
ownership of such Subsidiary; and

 

(b)  so long as no Default under Section 8(a) and no Event of
Default shall have occurred and be continuing or would result therefrom
(including the requirement that the Borrower maintain cash and Cash Equivalents
of at least $1,000,000), the Borrower may pay dividends to Holdings to
reimburse Holdings for (i) out-of-pocket expenses incurred in connection
with compliance by Holdings and the Borrower with the Sarbanes-Oxley Act of
2002 and corporate overhead expenses and management services in the ordinary
course of business in an aggregate amount not to exceed $1.0 million during any
fiscal quarter after the Closing Date, provided that to the extent such
reimbursement is less than $1.0 million in any fiscal quarter, the Borrower may
carry forward such difference to any subsequent fiscal quarter (it being
understood that any future payments made in excess of $1.0 million in any subsequent
fiscal quarter shall reduce the amount of the amount so carried forward) and (ii) any
taxes that are due and payable by Holdings and the Borrower as part of a
consolidated or combined group in an amount not to exceed the lesser of (x) the
relevant amount of any taxes (including any penalties and interest) that the
Borrower would owe if the Borrower were filing a separate tax return (or a
separate consolidated or combined return with its Subsidiaries that are members
of the consolidated or combined group) at the rate applicable to Holdings as
part of a consolidated or combined group with the Borrower, taking into account
any carryovers or carrybacks of tax attributes (such as operating losses) of
the Borrower and such Subsidiaries from other taxable years and (y) the net
amount of the relevant tax that Holdings actually owes to the appropriate
taxing authority; provided that any such payment in respect of taxes
received by Holdings shall be paid over to the appropriate taxing authority
within 60 days of Holdings’ receipt of such payments or shall be refunded to
the Borrower.

 

7.7.  Capital Expenditures.  Make
or commit to make any Capital Expenditure, except (a) Capital Expenditures
of the Borrower and its Subsidiaries in the ordinary course of business not
exceeding $1,000,000, (b) Capital Expenditures made with the proceeds of
any Reinvestment Deferred Amount and (c) Capital Expenditures consisting
of Permitted Acquisitions.

 

7.8.  Investments.  Make
any advance, loan, extension of credit (by way of guaranty or otherwise) or
capital contribution to, or purchase any Capital Stock, bonds, notes,
debentures or other debt securities of, or any assets constituting a business
unit of, or make any other investment in, any Person (all of the foregoing, “Investments”),
except:

 

(a)  extensions of trade credit in the ordinary
course of business;

 

(b)  Investments in cash and Cash Equivalents;

 

(c)  loans and advances to employees, directors
and officers of any Group Member in the ordinary course of business (including
for travel, entertainment and relocation expenses) in an aggregate amount for
all Group Members not to exceed $250,000 at any one time outstanding;

 

(d)  the Acquisition;

 

62

 

(e)  Investments in assets useful in the business
of the Borrower and its Subsidiaries made by the Borrower or any of its
Subsidiaries with the proceeds of any Reinvestment Deferred Amount;

 

(f)  intercompany Investments by any Guarantor in
the Borrower (provided that such Investments that consist of
intercompany Indebtedness shall be subordinated to the Obligations in
accordance with the Subordination Provisions and any notes issued in respect
thereof have been pledged to the Administrative Agent) and Investments by the
Borrower in any of its Guarantor Subsidiaries consisting of intercompany
Indebtedness (provided that any notes evidencing such intercompany
Indebtedness shall have been pledged to the Administrative Agent);

 

(g)  Investments under Hedge Agreements
entered into in the ordinary course of a Group Member’s business and not for
speculative purposes and otherwise in compliance with this Agreement;

 

(h)  Investments in securities of trade
creditors, licensors, licensees or customers received pursuant to any plan of
reorganization or similar arrangement upon the bankruptcy or insolvency of such
trade creditors or customers or in good faith settlement of delinquent
obligations of such trade creditors or customers;

 

(i)  Investments represented by guarantees
that are otherwise permitted under this Agreement;

 

(j)  Permitted Acquisitions; and

 

(k)  Investments consisting of (a) intercompany
loans between Subsidiary Guarantors and (b) Investments in
non-Guarantor Subsidiaries (provided
that such Investments shall be subordinated to the Obligations in accordance
with the Subordination Provisions and the notes issued in respect thereof have
been pledged to the Administrative Agent); provided that the
value of such Investments in non-Guarantor Subsidiaries may not exceed $250,000
in the aggregate.

 

7.9.  Optional Payments and Modifications of Indebtedness.  (a)
Make or offer to make any optional or voluntary payment, prepayment, repurchase
or redemption of or otherwise optionally or voluntarily defease or segregate
funds with respect to any Indebtedness (other than prepayments of the Bridge
Loans in accordance with the terms of this Agreement), (b) amend, modify,
waive or otherwise change, or consent or agree to any amendment, modification,
waiver or other change to, any of the terms of any Indebtedness other than the
Bridge Loans (other than any such amendment, modification, waiver or other
change that (i) would extend the maturity or reduce the amount of any
payment of principal thereof or reduce the rate or extend any date for payment of
interest thereon and (ii) does not involve the payment of a consent fee),
or (c) amend, modify, waive or otherwise change, or consent or agree to
any amendment, modification, waiver or other change to, any of the terms of the
Presley Preferred Equity or the Series A Preferred Stock (other than any
such amendment, modification, waiver or other change that (x) (i) would
extend the scheduled redemption date or reduce the amount of 

 

63

 

any scheduled redemption
payment or reduce the rate or extend any date for payment of dividends thereon
and (ii) does not involve the payment of a consent fee) or (y) would
be required in connection with effecting any merger or consolidation
contemplated by Section 7.4(b).

 

7.10.  Transactions with Affiliates. 
Enter into any transaction, including any purchase, sale, lease or
exchange of property, the rendering of any service or the payment of any
management, advisory or similar fees, with any Affiliate (other than Holdings
or the Borrower) unless such transaction is (a) set forth on Schedule 7.10,
(b) otherwise permitted under this Agreement or (c) upon fair and
reasonable terms no less favorable to the relevant Group Member, than it would
obtain in a comparable arm’s length transaction with a Person that is not an
Affiliate.

 

7.11.  Sales and Leasebacks.  Enter
into any arrangement with any Person providing for the leasing by any Group
Member of real or personal property that has been or is to be sold or
transferred by such Group Member to such Person or to any other Person to whom
funds have been or are to be advanced by such Person on the security of such
property or rental obligations of such Group Member.

 

7.12.  Hedge Agreements.  Enter into any Hedge
Agreement, except (a) Hedge Agreements entered into to hedge or mitigate
risks to which the Borrower or any Subsidiary has actual exposure (other than
those in respect of Capital Stock) and (b) Hedge Agreements entered into
in order to effectively cap, collar or exchange interest rates (from fixed to
floating rates, from one floating rate to another floating rate or otherwise)
with respect to any interest-bearing liability or investment of the Borrower or
any Subsidiary.

 

7.13.  Changes in Fiscal Periods. 
Permit the fiscal year of the Borrower to end on a day other than June 30
or December 31, or change the Borrower’s method of determining fiscal
quarters.

 

7.14.  Negative Pledge Clauses. 
Enter into or suffer to exist or become effective any agreement that
prohibits or limits the ability of any Group Member to create, incur, assume or
suffer to exist any Lien upon any of its property or revenues, whether now
owned or hereafter acquired, other than this Agreement and the other Loan
Documents, and the EPE Bridge Loan Agreement or any guarantee of obligations
thereunder.

 

7.15.  Clauses Restricting Subsidiary Distributions. 
Enter into or suffer to exist or become effective any consensual
encumbrance or restriction on the ability of any Subsidiary of the Borrower to (a) make
Restricted Payments in respect of any Capital Stock of such Subsidiary held by,
or pay any Indebtedness owed to, the Borrower or any other Subsidiary of the
Borrower, (b) make loans or advances to, or other Investments in, the
Borrower or any other Subsidiary of the Borrower or (c) transfer any of
its assets to the Borrower or any other Subsidiary of the Borrower, except for
such encumbrances or restrictions existing under or by reason of (i) any
restrictions existing under the Loan Documents, (ii) applicable law or any
rule, regulation or order, (iii) customary non-assignment provisions or
restrictions on cash or other deposits contained in any contract or any lease
governing a leasehold interest of any Group

 

64

 

Member, (iv) restrictions on
the transfer of assets subject to any Lien permitted under this Agreement
imposed by the holder of such Lien, (v) restrictions imposed by any agreement
to sell assets or Capital Stock permitted under this Agreement to any Person pending
the closing of such sale (vi) customary provisions in joint venture agreements
and other similar agreements entered into by Holdings or one of its
Subsidiaries (other than the Borrower or any of its Subsidiaries), in each
case, relating solely to the respective joint venture or similar entity or the
equity interests therein and entered into in the ordinary course of business,
or (vii) purchase money obligations (including any capitalized lease
obligations) relating to property acquired in the ordinary course of business.

 

7.16.  Lines of Business. 
Enter into any business, either directly or through any Subsidiary,
except for those businesses in which the Borrower and its Subsidiaries are
engaged on the date of this Agreement (after giving effect to the Acquisition)
or that are reasonably related thereto.

 

7.17.  Certain Amendments.  Amend, supplement or otherwise
modify (pursuant to a waiver or otherwise) the terms and conditions of (a) the
indemnities and licenses furnished to the Borrower or any of its Subsidiaries
pursuant to the Acquisition Documentation such that after giving effect thereto
such indemnities or licenses shall be materially less favorable to the
interests of the Group Members or the Lenders with respect thereto, (b) any
Group Member’s organizational or constitutional documents or (c) the
Acquisition Documentation or any other material agreement (including without
limitation the Fuller Employment Agreement and the Fuller Non-Compete
Agreement), in each case, except for any such amendment, supplement or
modification that could not reasonably be expected to have a Material Adverse
Effect or (in the case of any Group Member’s organizational or constitutional
documents) that would impose any restrictions on the transferability of such
Group Member’s shares upon the enforcement of the security interests in respect
thereof granted to the Administrative Agent (in its capacity as such).

 

7.18.  Accounting Changes.  Permit, or cause any of its
Subsidiaries to make or permit, any material change in its accounting policies
or reporting practices, except as may be required by or permitted under GAAP or
in order to effect the US GAAP Adoption as contemplated by Section 4.1(c).

 

7.19.  Intellectual
Property.  

 

(a)  Knowingly perform any act or knowingly
instruct or authorize its licensees to perform any act whereby any material
Intellectual Property may become forfeited, abandoned or dedicated to the
public.

 

(b)  Knowingly perform any act or knowingly
instruct or authorize its licensees to perform any act that infringes,
misappropriates or violates the intellectual property rights of any other
Person.

 

7.20.  Hazardous Substances.  Knowingly permit, or cause any
of its Subsidiaries to knowingly permit, any Hazardous Substances to be brought
on to or located on 

 

65

 

any of the Properties,
except in compliance in all material respects with, and in a manner not
reasonably likely to lead to any liability pursuant to, all applicable
Environmental Laws only in such quantities and types as reasonably needed to
conduct the Business.  If any such
Hazardous Substance is brought by any Group Member or found located thereon due
to the actions of any Group Member in violation of this Section 7.20, the Borrower shall diligently undertake all
removal, remedial and other response actions required under applicable
Environmental Laws.  EACH LOAN PARTY
HEREBY ACKNOWLEDGES THAT ALL MATERIALS OF ENVIRONMENTAL CONCERN HANDLING
PRACTICES AND ENVIRONMENTAL PRACTICES AND PROCEDURES ARE THE SOLE
RESPONSIBILITY OF SUCH LOAN PARTY AND ITS SUBSIDIARIES.  EACH LOAN PARTY FURTHER ACKNOWLEDGES THAT
NEITHER THE ADMINISTRATIVE AGENT NOR ANY LENDER IS AN ENVIRONMENTAL CONSULTANT,
ENGINEER, INVESTIGATOR OR INSPECTOR OF ANY TYPE WHATSOEVER.  NO ACT (OR DECISION NOT TO ACT) OF THE
ADMINISTRATIVE AGENT OR ANY LENDER RELATED TO THIS AGREEMENT OR ANY LOAN
DOCUMENT SHALL GIVE RISE TO ANY OBLIGATION OR LIABILITY ON THE PART OF THE
ADMINISTRATIVE AGENT OR ANY LENDER WITH RESPECT TO ENVIRONMENTAL MATTERS OR
PURSUANT TO ENVIRONMENTAL LAWS.  IN NO
EVENT SHALL ANY INFORMATION OBTAINED FROM THE ADMINISTRATIVE AGENT OR ANY
LENDER OR THEIR RESPECTIVE EMPLOYEES, REPRESENTATIVES OR AGENTS PURSUANT TO
THIS AGREEMENT OR ANY LOAN DOCUMENT CONCERNING THE ENVIRONMENTAL CONDITION OF
THE PROPERTIES OR THE BUSINESS OF ANY LOAN PARTY OR ANY SUBSIDIARY OF ANY LOAN
PARTY BE CONSIDERED BY ANY LOAN PARTY OR ANY SUBSIDIARY OF ANY LOAN PARTY (OR
ANY OTHER RECIPIENT OF SUCH INFORMATION) AS CONSTITUTING LEGAL OR ENVIRONMENTAL
CONSULTING, ENGINEERING, INVESTIGATING OR INSPECTING ADVICE, AND NEITHER ANY
LOAN PARTY NOR ANY SUBSIDIARY OF ANY LOAN PARTY (NOR ANY OTHER RECIPIENT OF
SUCH INFORMATION) SHALL RELY ON SAID INFORMATION.  THE RESPONSIBILITY FOR COMPLIANCE WITH
ENVIRONMENTAL LAWS WITH RESPECT TO THE PROPERTIES OR BUSINESS RESTS SOLELY WITH
EACH LOAN PARTY AND ITS SUBSIDIARIES. 
NOTHING IN THIS SECTION 7.20 SHALL LIMIT ANY RIGHTS THAT ANY LOAN
PARTY OR ANY OF THEIR RESPECTIVE SUBSIDIARIES MAY HAVE TO SEEK
CONTRIBUTION OR ALLOCATE RESPONSIBILITY PURSUANT TO ENVIRONMENTAL LAW FROM ANY
THIRD PARTY (OTHER THAN ANY SECURED PARTY).

 

SECTION 8.  EVENTS OF DEFAULT

 

If any of the following events shall occur
and be continuing:

 

(a)  the Borrower shall fail to pay any principal
of any Loan when due in accordance with the terms hereof; or the Borrower shall
fail to pay any interest on any Loan, or any other amount payable hereunder or
under any other Loan Document, within five Business Days after any such
interest or other amount becomes due in accordance with the terms hereof; or

 

66

 

(b)  any representation or warranty made or deemed
made by any Loan Party herein or in any other Loan Document or that is
contained in any certificate, document or financial or other statement
furnished by it at any time under or in connection with this Agreement or any
such other Loan Document shall prove to have been inaccurate in any material
respect on or as of the date made or deemed made; or

 

(c)  (i) any Loan Party shall default in the
observance or performance of any agreement contained in Sections 6.4(a)(i), 6.7(a) or
7 of this Agreement or Section [5.4 or 5.7(b)] of the Guarantee and
Collateral Agreement, or Clauses 4.3(b), 9.1, or 19.1 through 19.3 of the UK
Debenture or Clauses 7.1(i) or 8.1 of the UK Charge Over Shares, or (ii) an
“Event of Default” under and as defined in any Mortgage shall have occurred and
be continuing; or

 

(d)  any Loan Party shall default in the
observance or performance of any other agreement contained in this Agreement or
any other Loan Document (other than as provided in paragraphs (a) through (c) of
this Section 8) and such default shall continue unremedied for a
period of 30 days after notice thereof from the Administrative Agent to
the Borrower (which notice shall be given promptly at the request of any
Lender); or

 

(e)  Holdings or any of its Subsidiaries shall (i) default
in making any payment of any principal of any Indebtedness (including any
Guarantee Obligation, but excluding the Loans) on the scheduled or original due
date with respect thereto; or (ii) default in making any payment of any
interest on any such Indebtedness beyond the period of grace, if any, provided
in the instrument or agreement under which such Indebtedness was created; or (iii) default
in the observance or performance of any other agreement or condition relating
to any such Indebtedness or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall occur or
condition exist, the effect of which default or other event or condition is to
cause, or to permit the holder or beneficiary of such Indebtedness (or a
trustee or agent on behalf of such holder or beneficiary) to cause, with the
giving of notice if required, such Indebtedness to become due prior to its
stated maturity or to become subject to a mandatory offer to purchase by the
obligor thereunder or (in the case of any such Indebtedness constituting a
Guarantee Obligation) to become payable; provided, that a default, event
or condition described in clause (i), (ii) or (iii) of this paragraph
(e) shall not at any time constitute an Event of Default unless, at such
time, one or more defaults, events or conditions of the type described in
clauses (i), (ii) and (iii) of this paragraph (e) shall have
occurred and be continuing with respect to Indebtedness the outstanding
principal amount of which exceeds in the aggregate $1,000,000; or

 

(f)  (i) Holdings or any Material Subsidiary
shall commence any case, proceeding or other action (A) under any existing
or future law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have an order for
relief entered with respect to it, or seeking to adjudicate it bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding up,
liquidation, dissolution, composition or other relief with respect to it or its
debts, or (B) seeking appointment of a receiver, trustee, custodian,
conservator, liquidator, administrative receiver, administrator or other
similar official for it or for all or any substantial part of its assets, or
Holdings or any Material Subsidiary shall make a general assignment for the
benefit of its creditors; or (ii) there shall be commenced 

 

67

 

against Holdings or any
Material Subsidiary any case, proceeding or other action of a nature referred
to in clause (i) above that (A) results in the entry of an order
for relief or any such adjudication or appointment or (B) remains
undismissed, undischarged or unbonded for a period of 60 days (unless (x) such
case, proceeding or other action is a winding-up petition instituted under the
laws of England which is frivolous or vexatious, in which case such period
shall be shortened to 14 days or (y) any other such case, proceeding or
other action is instituted under the laws of England, in which case such period
shall be shortened to zero days); or (iii) there shall be commenced
against Holdings or any Material Subsidiary any case, proceeding or other
action seeking issuance of a warrant of attachment, execution, distraint or
similar process against all or any substantial part of its assets that results
in the entry of an order for any such relief that shall not have been vacated,
discharged, or stayed or bonded pending appeal within 60 days from the entry
thereof (unless such case, proceeding or other action is instituted under the
laws of England, in which case such period shall be shortened to 14 days); or (iv) Holdings
or any Material Subsidiary shall take any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the acts set
forth in clause (i), (ii), or (iii) above; or (v) Holdings or any
Material Subsidiary generally shall not, or shall be unable to, or shall admit
in writing its inability to, pay its debts as they become due; or

 

(g)  (i) any “accumulated funding deficiency”
(as defined in Section 302 of ERISA), whether or not waived, shall exist
with respect to any Plan or any Lien in favor of the PBGC or a Plan shall arise
on the assets of any Group Member or any Commonly Controlled Entity, (ii) any
Person shall engage in any “prohibited transaction” (as defined in Section 406
of ERISA or Section 4975 of the Code) involving any Plan, (iii) a
Reportable Event shall occur with respect to, or proceedings shall commence to
have a trustee appointed, or a trustee shall be appointed, to administer or to
terminate, any Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is, in the reasonable opinion of the
Required Lenders, likely to result in the termination of such Plan for purposes
of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for
purposes of Title IV of ERISA, (v) any Group Member or any Commonly
Controlled Entity shall, or in the reasonable opinion of the Required Lenders
is likely to, incur any liability in connection with a withdrawal from, or the
Insolvency or Reorganization of, a Multiemployer Plan or (vi) any other
event or condition shall occur or exist with respect to a Plan; and in each
case in clauses (ii) through (vi) above, such event or condition,
together with all other such events or conditions, if any, could, in the sole
judgment of the Required Lenders, reasonably be expected to have a Material
Adverse Effect; or

 

(h)  one or more judgments or decrees shall be
entered against any Group Member involving in the aggregate a liability (not
paid or fully covered by insurance as to which the relevant insurance company
has acknowledged coverage) of $1,000,000 or more, and all such judgments or
decrees shall not have been vacated, discharged, stayed or bonded pending
appeal within 60 days from the entry thereof; or

 

(i)  any of the Security Documents shall cease,
for any reason other than as set forth in Section 10.14, to be in full
force and effect, or any Loan Party or any Affiliate of any Loan Party shall so
assert, or any Lien created by any of the Security Documents covering
Collateral having a fair market value in excess of $1,000,000 shall cease to be
enforceable and of the same effect and priority purported to be created
thereby; or

 

68

 

(j)  the guarantee contained in Section 2 of
the Guarantee and Collateral Agreement shall cease, for any reason, to be in
full force and effect or any Loan Party or any Affiliate of any Loan Party
shall so assert; or

 

(k)  Holdings shall (i) conduct, transact or
otherwise engage in, or commit to conduct, transact or otherwise engage in, any
business or operations other than those incidental to its ownership of the
Capital Stock of the Borrower, EPE Holding Company or any entity comprising a
Permitted Acquisition or the business related thereto, (ii) incur, create,
assume or suffer to exist any Indebtedness or other liabilities or financial
obligations, except (x) nonconsensual obligations imposed by operation of
law, (y) pursuant to the Loan Documents to which it is a party and its guarantee
of the loans under the EPE Bridge Loan Agreement and (z) obligations with
respect to its Capital Stock, or (iii) own, lease, manage or otherwise
operate any properties or assets (including cash (other than cash received in
connection with dividends made by the Borrower in accordance with Section 7.6
pending application in the manner contemplated by said Section) and Cash
Equivalents) other than the ownership of shares of Capital Stock of the
Borrower or EPE Holding Company or any entity comprising a Permitted
Acquisition or the business related thereto; or

 

(l)  Holdings or the Borrower shall have breached
any of their respective obligations under the Engagement Letter; or

 

(m)  any portion of the Intellectual Property becomes invalidated, falls into the public
domain or otherwise becomes impaired, unless such an event could not reasonably
be expected to cause a Material Adverse Effect; or

 

(n)  Holdings shall fail to pay the Deferred
Consideration as and when due pursuant to the Acquisition Agreement, solely in
the form of Capital Stock of Holdings, or in a combination of Capital Stock and
cash (such cash component consisting only of amounts received by Holdings from
the exercise of Warrants pursuant to the Deferred Consideration Letter); or

 

(o)  Fremantle shall breach any Contractual
Obligation owed to any Group Member and fail to cure such breach for a period
of 60 days where such breach could reasonably be expected to have a Material
Adverse Effect;

 

then, and in
any such event, (A) if such event is an Event of Default specified in
clause (i) or (ii) of paragraph (f) above with respect to the
Borrower (unless such Event of Default arises pursuant to any existing or
future law of England), automatically the Loans hereunder (with accrued
interest thereon and the prepayment premium in respect thereof) and all other
amounts owing under this Agreement and the other Loan Documents shall
immediately become due and payable, and (B) if such event is any other
Event of Default (where such Event of Default is continuing), with the consent
of the Required Lenders, the Administrative Agent may, or upon the request of
the Required Lenders, the Administrative Agent shall, by notice to the
Borrower, declare the Loans hereunder (with accrued interest thereon and the
prepayment premium in respect thereof) and all other amounts owing under this
Agreement and the other Loan Documents to be due and payable forthwith,
whereupon the same shall immediately become due 

 

69

 

and payable.  Except as expressly provided above in this Section 8,
presentment, demand, protest and all other notices of any kind are hereby
expressly waived by the Borrower and Holdings.

 

SECTION 9.  THE AGENTS

 

9.1.  Appointment.  Each
Lender hereby irrevocably designates and appoints each Agent as the agent of
such Lender under this Agreement and the other Loan Documents, and each such
Lender irrevocably authorizes such Agent, in such capacity, to take such action
on its behalf under the provisions of this Agreement and the other Loan
Documents and to exercise such powers and perform such duties as are expressly
delegated to such Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental thereto.  Notwithstanding any provision to the contrary
elsewhere in this Agreement, no Agent shall have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender, and no implied covenants, functions, responsibilities,
duties, obligations or liabilities shall be read into this Agreement or any
other Loan Document or otherwise exist against any Agent.

 

9.2.  Delegation of Duties.  Each Agent may execute any of
its duties under this Agreement and the other Loan Documents by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties.  No Agent shall be responsible for the
negligence or misconduct of any agents or attorneys in-fact selected by it with
reasonable care.

 

9.3.  Exculpatory Provisions.  Neither any Agent nor any of
their respective officers, directors, employees, agents, attorneys-in-fact or
affiliates shall be (i) liable for any action lawfully taken or omitted to
be taken by it or such Person under or in connection with this Agreement or any
other Loan Document (except to the extent that any of the foregoing are found
by a final and nonappealable decision of a court of competent jurisdiction to
have resulted from its or such Person’s own gross negligence or willful
misconduct) or (ii) responsible in any manner to any of the Lenders for
any recitals, statements, representations or warranties made by any Loan Party
or any officer thereof contained in this Agreement or any other Loan Document
or in any certificate, report, statement or other document referred to or
provided for in, or received by the Agents under or in connection with, this
Agreement or any other Loan Document or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document or for any failure of any Loan Party a party thereto to perform its
obligations hereunder or thereunder.  The
Agents shall not be under any obligation to any Lender to ascertain or to
inquire as to the observance or performance of any of the agreements contained
in, or conditions of, this Agreement or any other Loan Document, or to inspect
the properties, books or records of any Loan Party.

 

9.4.  Reliance by Agents.  Each Agent shall be entitled
to rely, and shall be fully protected in relying, upon any instrument, writing,
resolution, notice, consent, certificate, affidavit, letter, telecopy, telex or
teletype message, statement, order or other document or conversation believed by
it to be genuine and correct and to have been signed, sent or made by the
proper Person or Persons and upon advice and statements of legal counsel
(including counsel to Holdings or the Borrower), independent accountants and
other experts 

 

70

 

selected by such Agent.  The Administrative Agent may deem and treat
the payee of any Note as the owner thereof for all purposes unless a written
notice of assignment, negotiation or transfer thereof shall have been filed
with the Administrative Agent.  Each
Agent shall be fully justified in failing or refusing to take any action under
this Agreement or any other Loan Document unless it shall first receive such
advice or concurrence of the Required Lenders (or, if so specified by this
Agreement, all Lenders) as it deems appropriate or it shall first be
indemnified to its satisfaction by the Lenders against any and all liability
and expense that may be incurred by it by reason of taking or continuing to
take any such action.  The Agents shall
in all cases be fully protected in acting, or in refraining from acting, under
this Agreement and the other Loan Documents in accordance with a request of the
Required Lenders (or, if so specified by this Agreement, all Lenders), and such
request and any action taken or failure to act pursuant thereto shall be
binding upon all the Lenders and all future holders of the Loans.

 

9.5.  Notice of Default.  No Agent shall be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless such Agent has received notice from a Lender, Holdings or the
Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a “notice of default”.  In the event that the Administrative Agent
receives such a notice, the Administrative Agent shall give notice thereof to
the Lenders.  The Administrative Agent
shall take such action with respect to such Default or Event of Default as shall
be reasonably directed by the Required Lenders (or, if so specified by this
Agreement, all Lenders or any other instructing group of Lenders specified by
this Agreement); provided, that unless and until the Administrative Agent shall
have received such directions, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable in the
best interests of the Lenders.

 

9.6.  Non-Reliance on Agents and Other Lenders.  Each
Lender expressly acknowledges that neither the Agents nor any of their
respective officers, directors, employees, agents, attorneys-in-fact or
affiliates have made any representations or warranties to it and that no act by
any Agent hereafter taken, including any review of the affairs of a Loan Party
or any affiliate of a Loan Party, shall be deemed to constitute any
representation or warranty by any Agent to any Lender.  Each Lender represents to the Agents that it
has, independently and without reliance upon any Agent or any other Lender, and
based on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Loan Parties and
their affiliates and made its own decision to make its Loans hereunder and
enter into this Agreement.  Each Lender
also represents that it will, independently and without reliance upon any Agent
or any other Lender, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement
and the other Loan Documents, and to make such investigation as it deems necessary
to inform itself as to the business, operations, property, financial and other
condition and creditworthiness of the Loan Parties and their affiliates.  Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, the Administrative Agent shall not have any
duty or responsibility to provide any Lender with any 

 

71

 

credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of any Loan Party or any affiliate of
a Loan Party that may come into the possession of the Administrative Agent or
any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates.

 

9.7.  Indemnification.  The
Lenders agree to indemnify each Agent in its capacity as such (to the extent
not reimbursed by Holdings or the Borrower and without limiting the obligation
of Holdings or the Borrower to do so), ratably according to their respective
Aggregate Exposure Percentages in effect on the date on which indemnification
is sought under this Section (or, if indemnification is sought after the
date upon which the Bridge Commitments shall have terminated and the Loans shall
have been paid in full, ratably in accordance with such Aggregate Exposure
Percentages immediately prior to such date), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind whatsoever that may at any
time (whether before or after the payment of the Loans) be imposed on, incurred
by or asserted against such Agent in any way relating to or arising out of, the
Bridge Commitments, this Agreement, any of the other Loan Documents or any
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by such Agent
under or in connection with any of the foregoing; provided that no Lender shall
be liable for the payment of any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements that are found by a final and nonappealable decision of a court
of competent jurisdiction to have resulted from such Agent’s gross negligence
or willful misconduct.  The agreements in
this Section 9.7 shall survive the payment of the Loans and all other
amounts payable hereunder.

 

9.8.  Agent in Its Individual Capacity.  Each
Agent and its affiliates may make loans to, accept deposits from and generally
engage in any kind of business with any Loan Party as though such Agent were
not an Agent.  With respect to its Loans
made or renewed by it, each Agent shall have the same rights and powers under
this Agreement and the other Loan Documents as any Lender and may exercise the
same as though it were not an Agent, and the terms “Lender” and “Lenders” shall
include each Agent in its individual capacity.

 

9.9.  Successor Administrative Agent.  The
Administrative Agent may resign as Administrative Agent upon 10 days’ notice to
the Lenders and the Borrower.  If the
Administrative Agent shall resign as Administrative Agent under this Agreement
and the other Loan Documents, then the Required Lenders shall appoint from
among the Lenders a successor agent for the Lenders, which successor agent
shall (unless an Event of Default under Section 8(a) or Section 8(f) with
respect to the Borrower shall have occurred and be continuing) be subject to
approval by the Borrower (which approval shall not be unreasonably withheld or
delayed), whereupon such successor agent shall succeed to the rights, powers
and duties of the Administrative Agent, and the term “Administrative Agent”
shall mean such successor agent effective upon such appointment and approval,
and the former Administrative Agent’s rights, powers and duties as
Administrative Agent shall be terminated, without any other or further act or
deed on the part of such former Administrative Agent or any of the parties to
this Agreement or any holders of the Loans. 
If no successor agent has accepted appointment as Administrative Agent
by the date that is 10 days following a retiring Administrative Agent’s notice
of 

 

72

 

resignation, the retiring
Administrative Agent’s resignation shall nevertheless thereupon become
effective and the Lenders shall assume and perform all of the duties of the
Administrative Agent hereunder until such time, if any, as the Required Lenders
appoint a successor agent as provided for above.  After any retiring Administrative Agent’s
resignation as Administrative Agent, the provisions of this Section 9
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Administrative Agent under this Agreement and the other Loan
Documents.

 

9.10.  Agents Generally.  Except as expressly set forth
herein, no Agent shall have any duties or responsibilities hereunder in its
capacity as such.

 

9.11.  The Lead Arranger.  The
Lead Arranger, in its capacity as such, shall have no duties or
responsibilities, and shall incur no liability, under this Agreement or any
other Loan Document.

 

9.12.  Withholding Tax.  To
the extent required by any applicable law, the Administrative Agent may
withhold from any interest payment to any Lender an amount equivalent to any
applicable withholding tax.  If any
Governmental Authority asserts a claim that the Administrative Agent did not
properly withhold tax from amounts paid to or for the account of any Lender
because the appropriate form was not delivered or was not properly executed or
because such Lender failed to notify the Administrative Agent of a change in
circumstance which rendered the exemption from, or reduction of, withholding
tax ineffective or for any other reason, such Lender shall indemnify the
Administrative Agent fully for all amounts paid, directly or indirectly, by the
Administrative Agent as tax or otherwise, including any penalties or interest
and together with all expenses (including legal expenses, allocated internal
costs and out-of-pocket expenses) incurred.

 

SECTION 10.  MISCELLANEOUS

 

10.1.  Amendments and Waivers.  Neither this Agreement, any
other Loan Document, nor any terms hereof or thereof may be amended, supplemented
or modified except in accordance with the provisions of this Section 10.1.  The Required Lenders and each Loan Party to
the relevant Loan Document may, or, with the written consent of the Required
Lenders, the Administrative Agent and each Loan Party to the relevant Loan
Document may, from time to time, (a) enter into written amendments,
supplements or modifications hereto and to the other Loan Documents for the
purpose of adding any provisions to this Agreement or the other Loan Documents
or changing in any manner the rights of the Lenders or of the Loan Parties
hereunder or thereunder or (b) waive, on such terms and conditions as the
Required Lenders or the Administrative Agent, as the case may be, may specify
in such instrument, any of the requirements of this Agreement or the other Loan
Documents or any Default or Event of Default and its consequences; provided,
however, that no such waiver and no such amendment, supplement or
modification shall (i) forgive the principal amount or extend the final
scheduled date of maturity of any Loan (inclusive of any interest capitalized
pursuant to Section 3.5(e)), reduce the stated rate of any interest or fee
payable hereunder (except in connection with the waiver of applicability of any
post-default increase in interest rates, which waiver shall be effective with
the consent of the Required Lenders) or extend the scheduled date of any
payment 

 

73

 

thereof, in each case
without the written consent of each Lender directly affected thereby;  (ii) eliminate or reduce the voting
rights of any Lender under this Section 10.1 without the written consent
of such Lender; (iii) reduce any percentage specified in the definition of
Required Lenders, consent to the assignment or transfer by the Borrower of any
of its rights and obligations under this Agreement and the other Loan Documents
or, except as set forth in Section 10.14, release all or substantially all
of the Collateral or release any Guarantor from its obligations under the
Guarantee and Collateral Agreement, in each case without the written consent of
all Lenders; or (iv) amend, modify or waive any provision of Section 9
without the written consent of each Agent adversely affected thereby.  Any such waiver and any such amendment,
supplement or modification shall apply equally to each of the Lenders and shall
be binding upon the Loan Parties, the Lenders, the Agents and all future
holders of the Loans.  In the case of any
waiver, the Loan Parties, the Lenders and the Agents shall be restored to their
former position and rights hereunder and under the other Loan Documents, and
any Default or Event of Default waived shall be deemed to be cured and not
continuing; but no such waiver shall extend to any subsequent or other Default
or Event of Default, or impair any right consequent thereon.

 

10.2.  Notices.  All
notices, requests and demands to or upon the respective parties hereto to be
effective shall be in writing (including by telecopy), and, unless otherwise
expressly provided herein, shall be deemed to have been duly given or made when
delivered, or three Business Days after being deposited in the mail, postage
prepaid, or, in the case of telecopy notice, when received, addressed as
follows in the case of Holdings, the Borrower and the Agents, and as set forth
in an administrative questionnaire delivered to the Administrative Agent in the
case of the Lenders, or to such other address as may be hereafter notified by
the respective parties hereto:

 

Holdings:                                                                                                                                                                                            Sports Entertainment Enterprises, Inc.

650 Madison Avenue, 16th Floor

New York, New York 10022

Attention: General Counsel

Telecopy: (212) 753-3188

Telephone: (212) 407-9101

 

The Borrower:                                                                                                                                                                    CKX UK Holdings Limited

650 Madison Avenue, 16th Floor

New York, New York 10022

Attention: General Counsel

Telecopy: (212) 753-3188

Telephone: (212) 407-9101]

 

with a copy to:                                                                                                                                                                 Paul, Hastings, Janofsky & Walker
LLP

75 East 55th Street

New York, New York 10022

Attention: William Schwitter, Esq.

Telecopy: (212) 230-7834

Telephone: (212) 318-6400

 

74

 

The Administrative Agent:                                                                                                 Bear Stearns Corporate Lending Inc.

383 Madison Avenue

New York, New York 10179

Attention:  Kevin Cullen

Telecopy:  (212) 272-9184

Telephone:  (212) 272-5724

 

with a copy to:                                                                                                                                                                 Latham & Watkins LLP

885 Third Avenue, Suite 1000

New York, New York 10022

Attention: Michèle Penzer, Esq.

Telecopy: (212) 751-4864

Telephone: (212) 906-1245

 

provided
that any notice, request or demand to or upon any Agent or the Lenders shall
not be effective until received.

 

Notices and other
communications to the Lenders hereunder may be delivered or furnished by
electronic communications pursuant to procedures approved by the Administrative
Agent; provided that the foregoing shall not apply to notices pursuant
to Section 2 unless otherwise agreed by the Administrative Agent and the
applicable Lender.  The Administrative
Agent or the Borrower may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved by it; provided that approval of such procedures may
be limited to particular notices or communications.

 

10.3.  No Waiver; Cumulative Remedies.  No
failure to exercise and no delay in exercising, on the part of any Agent or any
Lender, any right, remedy, power or privilege hereunder or under the other Loan
Documents shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power
or privilege.  The rights, remedies,
powers and privileges herein provided are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by law.

 

10.4.  Survival of Representations and Warranties.  All
representations and warranties made hereunder, in the other Loan Documents and
in any document, certificate or statement delivered pursuant hereto or in
connection herewith shall survive the execution and delivery of this Agreement
and the making of the Loans and other extensions of credit hereunder.

 

10.5.  Payment of Expenses and Taxes.  The
Borrower agrees (a) to pay or reimburse each Agent for all its reasonable
out-of-pocket costs and expenses incurred in connection with the development,
preparation and execution of, and any amendment, supplement or modification to,
this Agreement and the other Loan Documents and any other documents prepared in
connection herewith or therewith, and the consummation and administration of
the transactions contemplated hereby and thereby, including the reasonable fees
and disbursements of counsel to such Agent (and excluding corporate overhead
and other non out-of-pocket expenses) and filing and recording fees and
expenses, with statements with respect to the 

 

75

 

foregoing to be submitted to
the Borrower prior to the Closing Date (in the case of amounts to be paid on
the Closing Date) and from time to time thereafter on a monthly basis or such
other periodic basis as such Agent shall deem appropriate, (b) to pay or
reimburse each Lender and Agent for all its costs and expenses incurred in
connection with the enforcement or preservation of any rights under this
Agreement, the other Loan Documents and any such other documents, including the
fees and disbursements of counsel (and excluding corporate overhead and other
non out-of-pocket expenses) to each Lender and of counsel to such Agent and (c) to
pay, indemnify, and hold each Lender and Agent harmless from any and all
recording and filing fees and any and all liabilities with respect to, or
resulting from any delay in paying, stamp, excise and other taxes, if any, that
may be payable or determined to be payable in connection with the execution and
delivery of, or consummation or administration of any of the transactions
contemplated by, or any amendment, supplement or modification of, or any waiver
or consent under or in respect of, this Agreement, the other Loan Documents and
any such other documents.  Holdings and
the Borrower jointly and severally agree to pay, indemnify, and hold each
Lender and Agent and their respective officers, directors, employees,
affiliates, agents and controlling persons (each, an “Indemnitee”)
harmless from and against any and all other liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever with respect to the execution, delivery,
enforcement, performance and administration of this Agreement, the other Loan
Documents and any such other documents, including any of the foregoing relating
to the use of proceeds of the Loans or the violation of, noncompliance with or
liability under, any Environmental Law applicable to the operations of any
Group Member or any of the Properties or the Business or the unauthorized use
by Persons of information or other materials sent through electronic,
telecommunications or other information transmission systems that are
intercepted by such Persons and the reasonable fees and expenses of legal
counsel in connection with claims, actions or proceedings by any Indemnitee
against any Loan Party under any Loan Document (all the foregoing,
collectively, the “Indemnified Liabilities”), provided, that neither
Holdings nor the Borrower shall have any obligation hereunder to any Indemnitee
with respect to Indemnified Liabilities to the extent such Indemnified
Liabilities are found to have resulted from the gross negligence or willful
misconduct of such Indemnitee.  Without
limiting the foregoing, and to the extent permitted by applicable law, Holdings
and the Borrower agree not to assert and to cause their respective Subsidiaries
not to assert, and hereby waive and agree to cause their respective Subsidiaries
to waive, all rights for contribution or any other rights of recovery with
respect to all claims, demands, penalties, fines, liabilities, violations,
settlements, damages, costs and expenses of whatever kind or nature, under or
related to Environmental Laws, that any of them might have by statute or
otherwise against any Indemnitee.  All
amounts due under this Section 10.5 shall be payable not later than 10
days after written demand therefor. 
Statements payable by Holdings or the Borrower pursuant to this Section 10.5
shall be submitted to the General Counsel of the Borrower (Telephone No. (212)
407-9101) (Telecopy No. (212) 753-3188), at the address of the Borrower
set forth in Section 10.2, or to such other Person or address as may be
hereafter designated by Holdings or the Borrower in a written notice to the
Administrative Agent.  The agreements in
this Section 10.5 shall survive repayment of the Loans and all other
amounts payable hereunder.

 

76

 

10.6.  Successors and Assigns; Participations and Assignments .  (a) 
The provisions of this Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns permitted
hereby, except that (i) neither Holdings nor the Borrower may assign or
otherwise transfer any of their respective rights or obligations hereunder
without the prior written consent of each Lender (and any attempted assignment
or transfer by Holdings or the Borrower without such consent shall be null and
void) and (ii) no Lender may assign or otherwise transfer its rights or
obligations hereunder except in accordance with this Section (and any
attempted assignment or transfer in violation of this Section 10.6 shall
be null and void).

 

(b)  (i)  Subject to the conditions set forth
in paragraph (b)(ii) below, any Lender may assign to one or more assignees
(each, an “Assignee”) all or a portion of its rights and obligations
under this Agreement (including all or a portion of its Bridge Commitments and
the Bridge Loans at the time owing to it) with the prior written consent (such
consent not to be unreasonably withheld) of:

 

(A) the
Borrower, provided that no consent of the Borrower shall be required for
an assignment to a Lender, an Affiliate of a Lender, an Approved Fund or, if an
Event of Default has occurred and is continuing, any other Person; and

 

(B) the
Administrative Agent, provided that no consent of the Administrative
Agent shall be required for an assignment to an Assignee that is a Lender, an
Affiliate of a Lender or an Approved Fund immediately prior to giving effect to
such assignment.

 

(ii) Assignments
shall be subject to the following additional conditions:

 

(A) except
in the case of an assignment to a Lender, an Affiliate of a Lender or an
Approved Fund or an assignment of the entire remaining amount of the assigning
Lender’s Bridge Commitments or Bridge Loans, the amount of the Bridge
Commitments or Bridge Loans of the assigning Lender subject to each such
assignment (determined as of the date the Assignment and Assumption with
respect to such assignment is delivered to the Administrative Agent) shall not
be less than $1,000,000 unless each of the Borrower and the Administrative
Agent otherwise consent, provided that (1) no such consent of the
Borrower shall be required if an Event of Default has occurred and is
continuing and (2) such amounts shall be aggregated in respect of each
Lender and its affiliates or Approved Funds, if any;

 

(B) the
parties to each assignment shall execute and deliver to the Administrative
Agent an Assignment and Assumption, together with a processing and recordation
fee of $3,500;

 

(C) the
Assignee, if it shall not be a Lender, shall deliver to the Administrative
Agent an administrative questionnaire; and

 

77

 

(D) in
the case of an assignment to a CLO, the assigning Lender shall retain the sole
right to approve any amendment, modification or waiver of any provision of this
Agreement and the other Loan Documents, provided that the Assignment and
Assumption between such Lender and such CLO may provide that such Lender will
not, without the consent of such CLO, agree to any amendment, modification or
waiver that (1) requires the consent of each Lender directly affected
thereby pursuant to the proviso to the second sentence of Section 10.1 and
(2) directly affects such CLO.

 

(iii) Subject
to acceptance and recording thereof pursuant to paragraph (b)(iv) below,
from and after the effective date specified in each Assignment and Assumption
the Assignee thereunder shall be a party hereto and, to the extent of the
interest assigned by such Assignment and Assumption, have the rights and
obligations of a Lender under this Agreement, and the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Assumption, be released from its obligations under this Agreement (and, in the
case of an Assignment and Assumption covering all of the assigning Lender’s
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto but shall continue to be entitled to the benefits of
Sections 3.9, 3.10, 3.11 and 10.5). 
Any assignment or transfer by a Lender of rights or obligations under this
Agreement that does not comply with this Section 10.6 shall be treated for
purposes of this Agreement as a sale by such Lender of a participation in such
rights and obligations in accordance with paragraph (c) of this Section.

 

(iv) 
The Administrative Agent, acting for this purpose as an agent of the Borrower,
shall maintain at one of its offices a copy of each Assignment and Assumption
delivered to it and a register for the recordation of the names and addresses
of the Lenders, and the Bridge Commitments of, and principal amount and stated
interest of the Loans owing to, each Lender pursuant to the terms hereof from
time to time (the “Register”). 
The entries in the Register shall be conclusive, and the Borrower, the
Administrative Agent and the Lenders may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for
all purposes of this Agreement, notwithstanding notice to the contrary.  The Register shall be available for
inspection by the Borrower and any Lender, at any reasonable time and from time
to time upon reasonable prior notice.

 

(v) 
Upon its receipt of a duly completed Assignment and Assumption executed by an
assigning Lender and an Assignee, the Assignee’s completed administrative
questionnaire (unless the Assignee shall already be a Lender hereunder), the
processing and recordation fee referred to in paragraph (b) of this Section and
any written consent to such assignment required by paragraph (b) of this
Section, the Administrative Agent shall accept such Assignment and Assumption
and record the information contained therein in the Register.  No assignment shall be effective for purposes
of this Agreement unless it has been recorded in the Register as provided in
this paragraph.

 

(c)  (i)  Any Lender may, without the consent
of the Borrower or the Administrative Agent, sell participations to one or more
banks or other entities

 

78

 

(a “Participant”) in
all or a portion of such Lender’s rights and obligations under this Agreement
(including all or a portion of its Bridge Commitments and the Loans owing to
it); provided that (A) such Lender’s obligations under this
Agreement shall remain unchanged, (B) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (C) the Borrower, the Administrative Agent and the Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender’s rights and obligations under this Agreement.  Any agreement pursuant to which a Lender
sells such a participation shall provide that such Lender shall retain the sole
right to enforce this Agreement and to approve any amendment, modification or
waiver of any provision of this Agreement; provided that such agreement
may provide that such Lender will not, without the consent of the Participant,
agree to any amendment, modification or waiver that (1) requires the
consent of each Lender directly affected thereby pursuant to the proviso to the
second sentence of Section 10.1 and (2) directly affects such
Participant.  Subject to paragraph (c)(ii) of
this Section, the Borrower agrees that each Participant shall be entitled to
the benefits of Sections 3.9, 3.10 or 3.11 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to paragraph (b) of
this Section 10.6.  To the extent
permitted by law, each Participant also shall be entitled to the benefits of Section 10.7(b) as
though it were a Lender, provided such Participant shall be subject to Section 10.7(a) as
though it were a Lender.

 

(ii)  A Participant shall not be
entitled to receive any greater payment under Section 3.9 or 3.10 than the
applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the participation to
such Participant is made with the Borrower’s prior written consent.  Any Participant that is a Non-U.S. Lender
shall not be entitled to the benefits of Section 3.10 unless such
Participant complies with Section 3.10(d).

 

(d)  Any Lender may at any time pledge
or assign a security interest in all or any portion of its rights under this
Agreement to secure obligations of such Lender, including any pledge or
assignment to secure obligations to a Federal Reserve Bank, and this Section shall
not apply to any such pledge or assignment of a security interest; provided
that no such pledge or assignment of a security interest shall release a Lender
from any of its obligations hereunder or substitute any such pledgee or
Assignee for such Lender as a party hereto.

 

(e)  The Borrower, upon receipt of
written notice from the relevant Lender, agrees to issue Notes to any Lender
requiring Notes.

 

(f)  Notwithstanding the foregoing, any
Conduit Lender may assign any or all of the Loans it may have funded hereunder
to its designating Lender without the consent of the Borrower or the
Administrative Agent and without regard to the limitations set forth in Section 10.6(b).  Each of Holdings, the Borrower, each Lender
and the Administrative Agent hereby confirms that it will not institute against
a Conduit Lender or join any other Person in instituting against a Conduit
Lender any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceeding under any state bankruptcy or similar law, for one year and one day
after the payment in full of the latest maturing commercial paper note issued
by such Conduit Lender; provided, 

 

79

 

however, that each Lender designating any
Conduit Lender hereby agrees to indemnify, save and hold harmless each other
party hereto for any loss, cost, damage or expense arising out of its inability
to institute such a proceeding against such Conduit Lender during such period
of forbearance.

 

10.7.  Adjustments; Set-off.  (a)  Except to the extent
that this Agreement expressly provides for payments to be allocated to a
particular Lender, if any Lender (a “Benefited Lender”) shall receive
any payment of all or part of the Obligations owing to it, or receive any collateral
in respect thereof (whether voluntarily or involuntarily, by set-off, pursuant
to events or proceedings of the nature referred to in Section 8(f), or
otherwise), in a greater proportion than any such payment to or collateral
received by any other Lender, if any, in respect of the Obligations owing to
such other Lender, such Benefited Lender shall purchase for cash from the other
Lenders a participating interest in such portion of the Obligations owing to
each such other Lender, or shall provide such other Lenders with the benefits
of any such collateral, as shall be necessary to cause such Benefited Lender to
share the excess payment or benefits of such collateral ratably with each of
the Lenders; provided, however, that if all or any portion of such excess
payment or benefits is thereafter recovered from such Benefited Lender, such
purchase shall be rescinded, and the purchase price and benefits returned, to
the extent of such recovery, but without interest.

 

(b)  In addition to any rights and remedies of the
Lenders provided by law, each Lender shall have the right, without prior notice
to Holdings or the Borrower, any such notice being expressly waived by Holdings
and the Borrower to the extent permitted by applicable law, upon any amount
becoming due and payable by Holdings or the Borrower hereunder (whether at the
stated maturity, by acceleration or otherwise), to set off and appropriate and
apply against such amount any and all deposits (general or special, time or
demand, provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by such Lender or any branch or agency thereof to or for the credit or
the account of Holdings or the Borrower, as the case may be.  Each Lender agrees promptly to notify the
Borrower and the Administrative Agent after any such setoff and application
made by such Lender, provided that the failure to give such notice shall
not affect the validity of such setoff and application.

 

10.8.  Counterparts.  This
Agreement may be executed by one or more of the parties to this Agreement on
any number of separate counterparts, and all of said counterparts taken
together shall be deemed to constitute one and the same instrument.  Delivery of an executed signature page of
this Agreement by facsimile transmission shall be effective as delivery of a
manually executed counterpart hereof.  A
set of the copies of this Agreement signed by all the parties shall be lodged
with the Borrower and the Administrative Agent.

 

10.9.  Severability.  Any
provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other
jurisdiction.

 

80

 

10.10.  Integration.  This Agreement and the other Loan Documents
represent the entire agreement of Holdings, the Borrower, the Agents and the
Lenders with respect to the subject matter hereof and thereof, and there are no
promises, undertakings, representations or warranties by any Agent or any
Lender relative to subject matter hereof not expressly set forth or referred to
herein or in the other Loan Documents.

 

10.11.  GOVERNING LAW.  THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

10.12.  Submission To Jurisdiction; Waivers.  Each
of Holdings and the Borrower hereby irrevocably and unconditionally:

 

(a)  submits for itself and its property in any
legal action or proceeding relating to this Agreement and the other Loan
Documents to which it is a party, or for recognition and enforcement of any
judgment in respect thereof, to the non-exclusive general jurisdiction of the
courts of the State of New York, the courts of the United States for the
Southern District of New York, and appellate courts from any thereof;

 

(b)  consents that any such action or proceeding
may be brought in such courts and waives any objection that it may now or
hereafter have to the venue of any such action or proceeding in any such court
or that such action or proceeding was brought in an inconvenient court and
agrees not to plead or claim the same;

 

(c)  agrees that service of process in any such
action or proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage prepaid, to
Holdings or the Borrower, as the case may be, at its address set forth in Section 10.2
or at such other address of which the Administrative Agent shall have been
notified pursuant thereto;

 

(d)  agrees that nothing herein shall affect the
right to effect service of process in any other manner permitted by law or shall
limit the right to sue in any other jurisdiction; and

 

(e)  waives, to the maximum extent not prohibited
by law, any right it may have to claim or recover in any legal action or
proceeding referred to in this Section any special, exemplary, punitive or
consequential damages.

 

10.13.  Acknowledgments.  Each
of Holdings and the Borrower hereby acknowledges that:

 

(a)  it has been advised by counsel in the
negotiation, execution and delivery of this Agreement and the other Loan
Documents;

 

(b)  no Agent or Lender has any fiduciary
relationship with or duty to Holdings or the Borrower arising out of or in
connection with this Agreement or any of the other Loan Documents, and the
relationship between the Agents and Lenders, on one hand, and Holdings 

 

81

 

and the Borrower, on the other
hand, in connection herewith or therewith is solely that of debtor and
creditor; and

 

(c)  no joint venture is created hereby or by the
other Loan Documents or otherwise exists by virtue of the transactions
contemplated hereby among the Lenders or among Holdings, the Borrower and the
Lenders.

 

10.14.  Releases of Liens.  (a) 
Notwithstanding anything to the contrary contained herein or in any other Loan
Document, the Administrative Agent is hereby irrevocably authorized by each
Lender (without requirement of notice to or consent of any Lender except as
expressly required by Section 10.1) to take any action requested by the
Borrower having the effect of releasing any Collateral (i) to the extent
necessary to permit consummation of any transaction not prohibited by any Loan
Document or that has been consented to in accordance with Section 10.1 or (ii) under
the circumstances described in paragraph (b) below.

 

(b)  At such time as the Loans and the other
obligations under the Loan Documents shall have been paid in full and the
Bridge Commitments have been terminated, the Collateral shall be released from
the Liens created by the Security Documents, and the Security Documents and all
obligations (other than those expressly stated to survive such termination) of
the Administrative Agent and each Loan Party under the Security Documents shall
terminate, all without delivery of any instrument or performance of any act by
any Person and the Administrative Agent agrees (at the sole cost and expense of
the Borrower) to take such actions as may reasonably be requested by the
Borrower to evidence such release and termination.

 

10.15.  Confidentiality.  Each
Agent and each Lender agrees to keep confidential all non-public information
provided to it by any Loan Party pursuant to or in connection with this
Agreement that is designated by such Loan Party as confidential; provided that
nothing herein shall prevent any Agent or any Lender from disclosing any such
information (a) to any Agent, any other Lender or any Lender Affiliate, (b) subject
to an agreement to comply with the provisions of this Section 10.15, to
any actual or prospective Transferee or any direct or indirect counterparty to
any Hedge Agreement (or any professional advisor to such counterparty), (c) to
its employees, directors, agents, attorneys, accountants and other professional
advisors or those of any of its affiliates, (d) upon the request or demand
of any Governmental Authority, (e) in response to any order of any court
or other Governmental Authority or as may otherwise be required pursuant to any
Requirement of Law, (f) if requested or required to do so in connection
with any litigation or similar proceeding, (g) that has been publicly
disclosed, (h) to the National Association of Insurance Commissioners or
any similar organization or any nationally recognized rating agency that
requires access to information about a Lender’s investment portfolio in
connection with ratings issued with respect to such Lender, or (i) in
connection with the exercise of any remedy hereunder or under any other Loan
Document.

 

10.16.  WAIVERS OF JURY TRIAL.  HOLDINGS, THE BORROWER, THE AGENTS AND THE
LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND
FOR ANY COUNTERCLAIM THEREIN.

 

82

 

10.17.  Delivery of Addenda.  Each
initial Lender shall become a party to this Agreement by delivering to the
Administrative Agent an Addendum duly executed by such Lender.

 

10.18.  USA PATRIOT Act.  Each
Lender hereby notifies the Borrower that pursuant to the requirements of the
USA PATRIOT Act (Title III of Publ. L. 107-56 (signed into law October 26,
2001)), (the “Patriot Act”), it is required to obtain, verify and record
information that identifies the Borrower, which information includes the name
and address of the Borrower and other information that will allow such Lender
to identify the Borrower in accordance with the Patriot Act.

 

83

 

IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.

 

	
   

  	
  SPORTS ENTERTAINMENT ENTERPRISES,

  INC., a Colorado Corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/  Thomas P. Benson

  	
   

  
	
   

  	
    Name:  Thomas P. Benson

  
	
   

  	
    Title:    Executive
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CKX UK HOLDINGS LIMITED, a company

  incorporated in England and Wales, as Borrower

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/  Thomas P. Benson

  	
   

  
	
   

  	
    Name:  Thomas P. Benson

  
	
   

  	
    Title:    Chairman

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BEAR, STEARNS & CO. INC., as Sole
  Lead

  Arranger

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/  Keith C. Barnish

  	
   

  
	
   

  	
    Name:  Keith C. Barnish

  
	
   

  	
    Title:    Senior
  Managing Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BEAR STEARNS CORPORATE LENDING INC.,

  as Administrative Agent and as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/  Victor
  Bulzacchelli

  	
   

  
	
   

  	
    Name:  Victor Bulzacchelli

  
	
   

  	
    Title:    Vice
  President

  

 

84

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