Document:

Exhibit 10.17

 

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

 

THIS AGREEMENT
is made on 8th February 2002(FN1)

 

BETWEEN:

 

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

 

(2)                                  Ronagold Limited of Bedford House, 69-79
Fulham High Street, London SW6 3JW (“Ronagold”)

 

IT
IS AGREED as follows:

 

1.                                       Definitions

 

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

 

1.1                                 “Artist”
- a singer taking part in a Competition.

 

1.2                                 “Competition”
- the competition to select a Winning Artist which forms part of the Series in
the Relevant Territory.

 

1.3                                 “Finalists”
- the number of Artists (ten for the Series in the United Kingdom for the
avoidance of doubt including Darius Danesh and excluding Rik Waller in respect
of the first series) reaching the final stages of the Competition in the
Relevant Territory.

 

1.4                                 “Format”
- the television format “Pop Idol” or “Idols” created by 19 TV Limited and
developed by 19 TV Limited and Thames Television Limited.

 

1.5                                 “Local
Record Company” — the person, firm or corporation with whom the Winning Artist
and/or Finalists in the Relevant Territory enter(s) into one or more Recording
Agreements.

 

1.6                                 “Local
TV Company” - the person, firm or corporation authorised to make a Series in
the Relevant Territory.

 

1.7                                 “Masters”
- sound recordings or audio visual material featuring a Winning Artist or
Finalist made, released or exploited by the Local Record Company and its
licensees.

 

1.8                                 “Override
Advances” - the advances set out in Schedule 1 to this Agreement.

 

(FN1)      This Exhibit incorporates
a letter amendment.

 

 

1.9                                 “Override
Artists” - the Winning Artist and all Finalists in the Relevant Territory
(whether recording alone or with others) with whom in each case the ROW
Designee has entered into a recording agreement.

 

1.10                           “Override
Masters” - all sound recordings or audio-visual material featuring an Override
Artist (whether alone or with others) made, acquired or exploited at any time
pursuant to a Recording Agreement between Ronagold (or its licensee or nominee
or successor in title) and an Override Artist (or any third party providing the
services of an Override Artist).

 

1.11                           “Override
Royalty” - a royalty at the rates specified in Schedule 2 to this Agreement.

 

1.12                           “Recording
Agreement” - the recording agreement between the Local Record Company and the
Winning Artist or Finalist (or any third party providing the services of such
Winning Artist or Finalist) in the Relevant Territory and any extensions or
amendments of or agreements in substitution for such agreement.

 

1.13                           “Relevant
Territory’ - the country or countries for which Television Rights are granted
to a Local TV Company.

 

1.14                           “Series”
- a series of television programmes based on the Format.

 

1.15                           “Television
Rights” - the right to develop and produce and arrange for broadcast or other
transmission of a Series.

 

1.16                           “Winning
Artist” - the winner of the Competition in the Relevant Territory.

 

2.                                       USA Option

 

2.1                                 In
consideration of £l paid by Ronagold to 19 (receipt of which 19 hereby
acknowledges) 19 hereby grants to Ronagold an exclusive irrevocable option to
designate the Local Record Company in relation to the first Series for the
Relevant Territory of the United States of America (“USA”).  Ronagold’s right to designate is limited to a
corporation within the BMG/Bertelsmann group which (if any) shall be RCA rather
than Arista.

 

2.2                                 Ronagold
shall have the right to exercise its option pursuant to clause 2.1 above by
notice in writing served on 19 within 30 days after receipt by Ronagold of
notice from 19 confirming all of the following:

 

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

 

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

 

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

 

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

 

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

 

2.3                                 If
Ronagold exercises its option pursuant to clause 2.1 above, 19 and Ronagold’s
designee (“the US Designee”) will execute an agreement promptly thereafter (“the
US Licence”) in the form set out in Exhibit A attached hereto in relation to
the Winning Artist for USA and shall be entitled to exercise the options
referred to in clause 2.5 below in relation to losing Finalists for USA.  19 agrees to consider in good faith
amendments to the USA Licence requested by the US Designee promptly following
exercise of the option.

 

2.4                                 If
Ronagold fails to exercise its option pursuant to clause 2.1 above, 19 shall be
free to appoint a third party as the Local Record Company for USA.  If 19 is willing to contract with such third
party on commercial terms (i.e. territory, rights period, advances, royalty and
product commitment) less favourable to 19 than those contained in the US
Licence, 19 shall give written notice to Ronagold of such commercial terms and
Ronagold shall have 14 days from receipt of 19’s notice to match those terms
and require 19 to enter into the US Licence with the US Designee (which 19
agrees to do promptly) containing such commercial terms.  If Ronagold fails to match 19 shall be free
to enter into an agreement with the third party on such terms previously
notified to Ronagold.

 

2.5                                 If
Ronagold exercises its option pursuant to clause 2.1 above, 19 hereby grants to
the US Designee an exclusive irrevocable (subject to clause 13 below) option to
enter into an agreement with 19 in the form of the US Licence (as amended by
clause 2.6 below) in respect of each of the Finalists other than the Winning
Artist for the first series in the Relevant Territory of the USA.  The US Designee shall exercise its option (if
at all) in relation to each such Finalist by notice in writing served on 19
within 30 days after the final episode of the first series is transmitted in
the USA.

 

2.6                                 If
the US Designee exercises its option in relation to any Finalist pursuant to
clause 2.5 above, 19 and the US Designee shall execute promptly thereafter a
separate licence agreement in respect of each such Finalist in the form of the
US Licence save for the following amendments:

 

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

 

(b)                                 clause
1.34A - “the Series” shall mean the first Series of “Pop Idol” to be
transmitted on television in the United States of America.

 

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(c)                                  clause
6.1.1(a) - the advance in respect of the First Contract Period shall be £*** in
lieu of £*** if the Finalist was placed second in the Competition and shall be
£*** in lieu of £*** if the Finalist was placed third to last (inclusive) in
the Competition.

 

(d)                                 clause
6.1.1(a) - the advance reduced in accordance with sub-clause (b) above shall be
payable as to 50% thereof within 7 days after delivery to the US Designee of
the inducement letter signed by the Artist and as to 50% thereof within 7 days
after the later of Delivery to the US Designee of the Recording Commitment for
the First Contract Period or delivery to the US Designee of the inducement
letter signed by the Artist.

 

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

 

(f)                                    The
US Designee will pay the reasonable legal costs of the lawyer appointed to
advise the Finalists on the form of recording agreement and inducement letter.

 

2.7                                 If
the US Designee does not exercise its option pursuant to clause 2.5 above in
relation to any Finalist, 19 shall be free to enter into an agreement with a
third party to exploit recordings by such Finalist.  If 19 is willing to contract with such third
party on commercial terms (i.e. territory, rights period, advances, royalty and
product commitment) less favourable to 19 than those contained in the US
Licence as amended by clause 2.6 above), 19 shall give written notice to the US
Designee of such commercial terms and the US Designee shall have 14 days from
receipt of 19’s notice to match those terms and require 19 to enter into a
separate licence agreement (which 19 agrees to do promptly) in respect of the
Finalist concerned in the form of the US Licence with the US Designee
containing the matched commercial terms. 
If the US Designee fails to match 19 shall be free to enter into an
agreement with the third party on such terms previously notified to the US
Designee.

 

2.8                                 If
Ronagold exercises its option pursuant to clause 2.1 above in relation to the
first Series for the Relevant Territory of USA, 19 hereby grants to the US
Designee an exclusive irrevocable option to become the Local Record Company in
relation to the second Series for the Relevant Territory of USA upon the same
terms and conditions (set out in clauses 2.2 to 2.7 above) as for the first
such Series.

 

2.9                                 If
the US Designee exercises its option pursuant to clause 2.8 above in relation
to the second Series for the Relevant Territory of USA, 19 hereby grants to the
US Designee an exclusive irrevocable option to become the Local Record Company
in relation to the third Series for the Relevant Territory of USA upon the same

 

*** FOIA Confidential Treatment

4

 

terms and
conditions (set out in clauses 2.2 to 2.7 above) as for the first such Series.

 

2.10                           If
the US Designee exercises its option pursuant to clause 2.9 above in relation
to the third Series for the Relevant Territory of USA, 19 hereby grants to the
US Designee an exclusive irrevocable option to become the Local Record Company
in relation to the fourth Series for the Relevant Territory of USA upon the
same terms and conditions (set out in clauses 2.2 to 2.7 above) as for the
first such Series.

 

2.11                           If
any of the information contained in 19’s notice pursuant to clause 2.2 above
changes after Ronagold exercises its option pursuant to clause 2.1 above but
prior to commencement of filming of the relevant series, 19 shall notify
Ronagold in writing of the changes and Ronagold shall have 14 days after
receipt of such notice to revoke the exercise of its option pursuant to clause
2.1 above.

 

2.12                           If
any of the information contained in 19’s notice pursuant to clause 2.2 above
changes after the US Designee exercises its option pursuant to clause 2.8 above
but prior to commencement of filming of the relevant series, 19 shall notify
the US Designee of the changes and the US Designee shall have 14 days after
receipt of such notice to revoke exercise of its relevant option pursuant to
clause 2.8 above.

 

2.13                           If
any of the information contained in 19’s notice pursuant to clause 2.2 above
changes after the US Designee exercises its option pursuant to clause 2.9 above
but prior to commencement of filming of the relevant series, 19 shall notify
the US Designee of the changes and the US Designee shall have 14 days after
receipt of such notice to revoke exercise of its relevant option pursuant to
clause 2.9 above.

 

2.14                           If
any of the information contained in 19’s notice pursuant to clause 2.2 above
changes after the US Designee exercises its option pursuant to clause 2.10
above but prior to commencement of filming of the relevant series, 19 shall
notify the US Designee of the changes and the US Designee shall have 14 days
after receipt of such notice to revoke exercise of its relevant option pursuant
to clause 2.10 above.

 

3.                                       ROW Option

 

3.1                                 In
consideration of £l paid by Ronagold to 19 (receipt of which 19 hereby
acknowledges) 19 hereby grants to Ronagold an exclusive irrevocable option to
designate the Local Record Company ( a “ROW Designee”) in relation to the first
Series for each Relevant Territory excluding the United Kingdom and USA.
Ronagold’s right to designate is limited to a company or other corporate entity
within the BMG/Bertelsmann group of companies. Each ROW Designee will be party
to a contract with Ronagold pursuant to which the ROW Designee will account to
Ronagold for royalties on all Override Masters equal to or exceeding

 

5

 

the Override
Royalty not less frequently than every 6 months. Ronagold will remain primarily
liable for payment of the Override Advances and the Override Royalty.

 

3.2                                 Ronagold
shall have the right to exercise its option pursuant to clause 3.1 above by
notice in writing served on 19 within 30 days after receipt by Ronagold of
notice from 19 confirming all of the following:

 

(a)                                  the
identity of the Local TV Company for the Relevant Territory concerned;

 

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

 

(c)                                  the
TV channel or TV channels on which the Series is to be broadcast in the
Relevant Territory concerned;

 

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

 

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

 

3.3                                 If
Ronagold exercises its option pursuant to clause 3.1 above, the ROW Designate
shall be exclusively entitled to enter into worldwide Recording Agreements
direct with the Winning Artist and Finalists (or any of them) as part of the
prize for the Competition in the Relevant Territory concerned.  The form of the Recording Agreements and the
advances and royalties payable to a Winning Artist or Finalist under such
Recording Agreements shall be based on the ROW Designee’s usual exclusive
recording agreement and provide for royalties, advances, creative controls and
approvals commensurate to such terms available in BMG agreements to an artist
who has already had one ‘platinum’ selling album prior to signature in the
country concerned.  The ROW Designee will
pay the reasonable legal fees of the lawyer appointed to advise the Finalists
on the Recording Agreement.

 

3.4                                 If
Ronagold exercises its option pursuant to clause 3.1 above, BMG shall pay to 19
the Override Advances and the Override Royalty on all Override Masters
featuring Override Artists.  Ronagold
shall supply to 19 a true copy of each Recording Agreement entered into with or
for any Winning Artist or Finalist promptly following execution of each such
agreement. Ronagold shall also supply 19 with copies of any amendments to or
notices exercising options pursuant to each such Recording Agreement. Ronagold
shall not be in breach of its obligation to supply copy contracts amendments or
notices under this clause unless Ronagold has failed to remedy such failure
within 90 days after receipt of notice from 19 requiring it to do so.

 

6

 

3.5                                 The
Override Royalty shall be calculated on the same sales and on the same basis
and subject to the same reductions, deductions and pro rations as the royalty
payable to Ronagold pursuant to the BMG Group Matrix licence agreement for
inter-Group company accounting (“the Matrix Agreement”) SAVE THAT:

 

(a)                                  no
territorial reductions will apply (save the specific reductions set out in
Schedule 2);

 

(b)                                 the
Override Royalty is payable from “record one” regardless of the recoupment of
any advances or recording costs from Ronagold (or its licensee) the Winning
Artist or Finalist but subject to recoupment of the relevant Override Advance
(or all Override Advances in relation to the same artist);

 

(c)                                  the
Override Royalty will be payable on published dealer price;

 

3.6                                 Ronagold
agrees to account to 19 for the Override Royalty as at 30 June and 31 December
in each year in respect of sales of Override Masters for which it has been paid
or received credit against a previously paid advance in the preceding 6
months.  Ronagold agrees to send to 19
reasonably detailed accounting statements and to pay any sums shown to be due
to 19 within 90 days after each accounting date.

 

3.7                                 Unless
within four (4) years of the date on which an accounting has been made under
clause 3.6 above 19 shall have notified Ronagold in writing of any bona fide
objections in respect thereof, 19 shall be deemed to have accepted the accuracy
thereof which shall be final and binding upon 19 and not open to dispute by 19.

 

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

 

7

 

right of Audit
in connection with this Agreement shall, of itself, give rise to or be deemed
to be proof of debt.

 

3.9                                 19
may not engage the Auditor to Audit when the Auditor is presently engaged in
any other audit or inspection of Ronagold’s books and records of account in
respect of which any claim is still outstanding or is involved in the
negotiation of a settlement of such an audit or inspection on behalf of another
person.  In such circumstances the
applicable time period specified in clause 3.7 above shall be suspended until
the Auditor is not so engaged (but by no more than six (6) months in any
event).  No person or firm shall be
designated as the Auditor if its remuneration is to be calculated wholly or
partially by reference to the amount of any discrepancy revealed by the Audit
and/or the terms of any settlement and/or the outcome of any proceedings
arising out of the Audit.  No Audit may
commence until the Auditor has executed an unconditional undertaking to
Ronagold in a form reasonably prescribed by Licensee providing, inter alia,
that the Auditor shall treat as confidential all information regarding Ronagold’s
affairs and business which it may acquire in the course of the Audit and not to
disclose the same to 19 or to any third party save to the extent necessary to
discharge Auditor’s responsibilities to 19 in relation to the Audit.

 

3.10                           If
Ronagold does not exercise its option under clause 3.1 above for any Relevant
Territory, 19 shall be free to appoint a third party as the Local Record
Company for the Relevant Territory.  If
19 is willing to contract with such third party on commercial terms less
favourable to 19 than those contained in Schedule 1 and Schedule 2, 19 shall
give written notice to Ronagold of such commercial terms and Ronagold shall
have 14 days from receipt of 19’s notice to match those terms. If Ronagold does
match such terms Schedule 1 and Schedule 2 shall be amended to contain such
commercial terms.  If Ronagold fails to
match 19 shall be free to enter into an agreement with the third party on such
terms previously notified to Ronagold.

 

3.11                           If
Ronagold exercises its option under clause 3.1 above for the first Series in a
Relevant Territory, 19 hereby grants to the ROW Designee an exclusive
irrevocable (subject to clause 13 below) option to become the Local Record
Company in relation to the second Series in such Relevant Territory upon the
same terms and conditions (set out in clauses 3.2 to 3.10 above) as for the
first Series in that Relevant Territory.

 

3.12                           If
the ROW Designee exercises its option under clause 3.11 above for the second
Series in a Relevant Territory, 19 hereby grants to the ROW Designee an
exclusive irrevocable (subject to clause 13 below) option to become the Local
Record Company in relation to the third Series in such Relevant Territory upon
the same terms and conditions (set out in clauses 3.2 to 3.10 above) as for the
first Series in that Relevant Territory.

 

3.13                           If
the ROW Designee exercises its option under clause 3.12 above for the third
Series in a Relevant Territory, 19 hereby grants to the ROW Designee an

 

8

 

exclusive
irrevocable (subject to clause 13 below) option to become the Local Record
Company in relation to the fourth Series in such Relevant Territory upon the
same terms and conditions (set out in clauses 3.2 to 3.10 above) as for the
first Series in that Relevant Territory.

 

3.14                           If
any of the information contained in 19’s notice pursuant to clause 3.2 above
changes after Ronagold exercises its option pursuant to clause 3.1 above but
prior to commencement of filming of the relevant series, 19 shall notify
Ronagold in writing of the changes and Ronagold shall have 14 days after
receipt of such notice to revoke the exercise of its option pursuant to clause
3.1 above.

 

3.15                           If
any of the information contained in 19’s notice pursuant to clause 3.2 above
changes after the ROW Designee exercises its option pursuant to clause 3.11
above, 19 shall notify the ROW Designee of the changes and the ROW Designee
shall have 14 days after receipt of such notice to revoke exercise of its
relevant option pursuant to clause 3.11 above.

 

3.16                           If
any of the information contained in 19’s notice pursuant to clause 3.2 above
changes after the ROW Designee exercises its option pursuant to clause 3.12
above, 19 shall notify the ROW Designee of the changes and the ROW Designee
shall have 14 days after receipt of such notice to revoke exercise of its
relevant option pursuant to clause 3.12 above.

 

3.17                           If
any of the information contained in 19’s notice pursuant to clause 3.2 above
changes after the ROW Designee exercises its option pursuant to clause 3.13
above, 19 shall notify the ROW Designee of the changes and the ROW Designee
shall have 14 days after receipt of such notice to revoke exercise of its
relevant option pursuant to clause 3.13 above.

 

4.                                       UK Option

 

4.1                                 19
and Ronagold have entered into a licence agreement for recordings featuring the
Winning Artist for the first Series in the Relevant Territory of the United
Kingdom (“the UK Licence”).  If the
Winning Artist is*** the amendments set out in clause 4.3(e) below will apply
to the UK licence.

 

4.2                                 19
hereby grants to Ronagold an exclusive irrevocable option to enter into an
agreement with 19 in the form of the UK Licence (as amended by clause 4.3
below) in respect of each of the 9 Finalists other than the Winning Artist for
the first series in the Relevant Territory of the United Kingdom.  Ronagold shall exercise its option (if at
all) in relation to each such Finalist by notice in writing served on 19 within
30 days after the final episode of the first series is transmitted in the
United Kingdom. Ronagold confirms it does not wish to exercise its option in
relation to the Finalists ***.  19
confirms it will irrevocably release *** from their respective recording
agreements with 19 as soon as possible following signature of this agreement.

 

*** FOIA Confidential Treatment

 

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4.3                                 If
Ronagold exercises an option in relation to any Finalist pursuant to clause 4.2
above, 19 and Ronagold shall promptly thereafter execute a separate licence
agreement in respect of each such Finalist in the form of the UK Licence save
for the following amendments:

 

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

 

(b)                                 clause
6.1.1(a) — the advance in respect of the First Contract Period shall be £*** in
lieu of £*** if the Finalist was placed second in the Competition and shall be
£*** in lieu of £*** if the Finalist was placed third to tenth (inclusive) in
the Competition.

 

(c)                                  clause
6.1.1(a) —the advance reduced in accordance with subclause (b) above shall be
payable as to 50% thereof within 7 days after delivery to Ronagold of the
inducement letter executed by the relevant Finalist and as to 50% thereof
within 7 days: after the later of Delivery to Ronagold of the Recording
Commitment for the First Contract Period or delivery to Ronagold of the
inducement letter executed by the relevant  Finalist.

 

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

 

(e)                                  if
the Winning Artist or Finalist is ***:

 

(i)                                     clause
3.1(a) and (b) — Contractor will select all Titles after consultation and make
all arrangements for the recording of the First Album;

 

(ii)                                  clause
3.1(c) - Contractor will select all Titles for the second and each subsequent
Recording Commitment Album after consultation;

 

(iii)                               clause
3.1(d) — the identity of producers, mixers and remixers for the First and each
subsequent Recording Commitment Album shall be selected by Contractor after
consultation;

 

(iv)                              clause
3.1(e) — Contractor shall after consultation select all of the Tracks to be
incorporated on each Recording Commitment Album;

 

(v)                                 clause
3.2 — Contractor will designate the Studios to be used for recording, mixing
and mastering of all Tracks on all Recording Commitment Albums;

 

*** FOIA Confidential Treatment

 

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(vi)                              clause
4 — the Company will pay to Contractor the sum of £*** as the Recording Budget
for each Album of the Recording Commitment and the Contractor will pay all
Recording Costs incurred in respect of the Audio Material comprising each such
Album (excluding Supplementary Material and any additional Tracks referred to
in clause 3.4).  The Recording Budget
will be paid to Contractor as to £*** upon commencement of recording the Album
concerned and as to £*** upon Delivery of that Album.  The Contractor will be entitled to retain any
unspent part of the Recording Budget but will be responsible for funding any
overspend of the Recording Budget.  The
Contractor agrees to spend at least £*** of each such Recording Budget.

 

(vii)                           for
the purposes of this sub-clause 4.3(e) “consultation” shall mean bonafide full
prior discussion with BMG’s Chairman or President of Music Division and
listening to such person’s views.

 

(f)                                    the
fees of *** pursuant to clause 31.8 will be £*** per month in lieu of £*** per
month.

 

4.4                                 If
Ronagold does not exercise its option pursuant to clause 4.2 in relation to any
Finalist, 19 shall be free to enter into an agreement with a third party to
exploit recordings by such Finalist.  If
19 is willing to contract with such third party on commercial terms (i.e.
territory, rights period, advances, royalty and product commitment) less
favourable to 19 than those contained in the UK Licence (as amended by clause
4.3 above) 19 shall give written notice to Ronagold of such commercial terms
and Ronagold shall have 14 days from receipt of 19’s notice to match those
terms and require 19 to enter into a separate licence agreement (which 19
agrees to do promptly) in respect of the Finalist concerned in the form of the
UK Licence containing the matched commercial terms.  If Ronagold fails to match 19 shall be free
to enter into an agreement with the third party on such terms previously
notified to Ronagold.

 

4.5                                 19
hereby grants to Ronagold an exclusive irrevocable option to enter into a
licence agreement with 19 for the Winning Artist of the second Series in the
Relevant Territory of the United Kingdom.

 

4.6                                 Ronagold
shall have the right to exercise its option pursuant to clause 4.5 above by
notice in writing served on 19 within 30 days after receipt by Ronagold of
notice from 19 confirming all of the following:

 

(a)                                  the
identity of the Local TV Company for the United Kingdom;

 

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

 

*** FOIA Confidential Treatment

 

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(c)                                  the
TV channel or TV channels on which the Series is to be broadcast in the United
Kingdom;

 

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

 

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

 

4.7                                 If
Ronagold exercises its option pursuant to clause 4.5 above, 19 and Ronagold
will promptly thereafter execute an agreement (“the Second Series Licence”) in
the form of the UK licence for the Winning Artist for the second Series.

 

4.8                                 If
Ronagold exercises its option pursuant to clause 4.5 above, 19 hereby grants to
Ronagold an exclusive irrevocable option to enter into an agreement with 19 in
the form of the Second Series Licence (as amended by clause 4.9 below) in
respect of each of the 9 Finalists other than the Winning Artist for the second
Series in the Relevant Territory of the United Kingdom. Ronagold shall exercise
its option in relation to each such Finalist by notice in writing served on 19
within 30 days after the final episode of the second Series is transmitted in
the United Kingdom.

 

4.9                                 If
Ronagold exercises an option in relation to any Finalist pursuant to clause 4.8
above, 19 and Ronagold will execute promptly thereafter a separate licence
agreement in respect of each such Finalist in the form of the Second Series
Licence with the same amendments referred to in clause 4.3 above.

 

4.10                           If
Ronagold does not exercise its option pursuant to clause 4.8 in relation to any
Finalist, 19 shall be free to enter into an agreement with a third party to
exploit recordings by such Finalist. If 19 is willing to contract with such
third party on commercial terms (i.e. territory, rights period, advances,
royalty and product commitment) less favourable to 19 than those contained in
the UK Licence (as amended by clause 4.3 above) 19 shall give written notice to
Ronagold of such commercial terms and Ronagold shall have 14 days from receipt
of 19’s notice to match those terms and require 19 to enter into a separate
licence agreement (which 19 agrees to do promptly) in respect of the Finalist
concerned in the form of the UK Licence containing the matched commercial
terms.  If Ronagold fails to match 19
shall be free to enter into an agreement with the third party on such terms
previously notified to Ronagold.

 

4.11                           If
any of the information contained in 19’s notice pursuant to clause 4.6 above
changes after Ronagold exercises its option pursuant to clause 4.5 above but
prior to commencement of the filming of the relevant Series, 19 shall notify
Ronagold of the changes and Ronagold shall have 14 days after receipt of such
notice to revoke exercise of its relevant option pursuant to clause 4.5 above.

 

4.12                           If
Ronagold exercises its option pursuant to clause 4.5 above, 19 hereby grants to
Ronagold an exclusive irrevocable option to enter into a licence agreement with

 

12

 

19 for the
Winning Artist of the third Series in the Relevant Territory of the United
Kingdom.

 

4.13                           Ronagold
shall have the right to exercise its option pursuant to clause 4.12 above by
notice in writing served on 19 within 30 days after receipt by Ronagold of
notice from 19 confirming all of the following:

 

(a)                                  the
identity of the Local TV Company for the United Kingdom;

 

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

 

(c)                                  the
TV channel or TV channels on which the Series is to be broadcast in the United
Kingdom;

 

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

 

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

 

4.14                           If
Ronagold exercises its option pursuant to clause 4.12 above, 19 and Ronagold
will promptly thereafter execute an agreement (“the Third Series Licence”) in
the form of the UK licence for the Winning Artist for the third Series.

 

4.15                           If
Ronagold exercises its option pursuant to clause 4.12 above, 19 hereby grants
to Ronagold an exclusive irrevocable option to enter into an agreement with 19
in the form of the Third Series Licence (as amended by clause 4.16 below) in
respect of each of the 9 Finalists other than the Winning Artist for the third
Series in the Relevant Territory of the United Kingdom. Ronagold shall exercise
its option in relation to each such Finalist by notice in writing served on 19
within 30 days after the final episode of the third Series is transmitted in
the United Kingdom.

 

4.16                           If
Ronagold exercises an option in relation to any Finalist pursuant to clause 4.15
above, 19 and Ronagold will execute promptly thereafter a separate licence
agreement in respect of each such Finalist in the form of the Third Series
Licence with the same amendments referred to in clause 4.3 above.

 

4.17                           If
Ronagold does not exercise its option pursuant to clause 4.15 in relation to
any Finalist, 19 shall be free to enter into an agreement with a third party to
exploit recordings by such Finalist. If 19 is willing to contract with such
third party on commercial terms (i.e. territory, rights period, advances,
royalty and product commitment) less favourable to 19 than those contained in
the UK Licence (as amended by clause 4.3 above) 19 shall give written notice to
Ronagold of such commercial terms and Ronagold shall have 14 days from receipt
of 19’s notice to match those terms and require 19 to enter into a separate
licence agreement (which 19 agrees to do promptly) in respect of the Finalist
concerned in the form of the UK Licence containing the matched commercial
terms. If Ronagold fails to

 

13

 

match 19 shall
be free to enter into an agreement with the third party on such terms
previously notified to Ronagold.

 

4.18                           If
any of the information contained in 19’s notice pursuant to clause 4.13 above
changes after Ronagold exercises its option pursuant to clause 4.12 above but
prior to commencement of the filming of the relevant Series, 19 shall notify
Ronagold of the changes and Ronagold shall have 14 days after receipt of such
notice to revoke exercise of its relevant option pursuant to clause 4.12 above.

 

4.19                           If
Ronagold exercises its option pursuant to clause 4.12 above, 19 hereby grants
to Ronagold an exclusive irrevocable option to enter into a licence agreement
with 19 for the Winning Artist of the fourth Series in the Relevant Territory
of the United Kingdom.

 

4.20                           Ronagold
shall have the right to exercise its option pursuant to clause 4.19 above by
notice in writing served on 19 within 30 days after receipt by Ronagold of
notice from 19 confirming all of the following:

 

(a)                                  the
identity of the Local TV Company for the United Kingdom;

 

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

 

(c)                                  the
TV channel or TV channels on which the Series is to be broadcast in the United
Kingdom;

 

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

 

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

 

4.21                           If
Ronagold exercises its option pursuant to clause 4.19 above, 19 and Ronagold
will promptly thereafter execute an agreement (“the Fourth Series Licence”) in
the form of the UK licence for the Winning Artist for the fourth Series.

 

4.22                           If
Ronagold exercises its option pursuant to clause 4.19 above, 19 hereby grants
to Ronagoid an exclusive irrevocable option to enter into an agreement with 19
in the form of the Fourth Series Licence (as amended by clause 4.23 below) in
respect of each of the 9 Finalists other than the Winning Artist for the fourth
Series in the Relevant Territory of the United Kingdom. Ronagold shall exercise
its option in relation to each such Finalist by notice in writing served on 19
within 30 days after the final episode of the fourth Series is transmitted in
the United Kingdom.

 

4.23                           If
Ronagold exercises an option in relation to any Finalist pursuant to clause
4.22 above, 19 and Ronagold will execute promptly thereafter a separate licence

 

14

 

agreement in
respect of each such Finalist in the form of the Fourth Series Licence with the
same amendments referred to in clause 4.3 above.

 

4.24                           If
Ronagold does not exercise its option pursuant to clause 4.19 in relation to
any Finalist, 19 shall be free to enter into an agreement with a third party to
exploit recordings by such Finalist.  If
19 is willing to contract with such third party on commercial terms (i.e.
territory, rights period, advances, royalty and product commitment) less
favourable to 19 than those contained in the UK Licence (as amended by clause
4.3 above) 19 shall give written notice to Ronagold of such commercial terms
and Ronagold shall have 14 days from receipt of 19’s notice to match those
terms and require 19 to enter into a separate licence agreement (which 19
agrees to do promptly) in respect of the Finalist concerned in the form of the
UK Licence containing the matched commercial terms.  If Ronagold fails to match 19 shall be free
to enter into an agreement with the third party on such terms previously
notified to Ronagold.

 

4.25                           If
any of the information contained in 19’s notice pursuant to clause 4.20 above
changes after Ronagold exercises its option pursuant to clause 4.19 above but
prior to commencement of the filming of the relevant Series, 19 shall notify
Ronagold of the changes and Ronagold shall have 14 days after receipt of such notice
to revoke exercise of its relevant option pursuant to clause 4.19 above.

 

5.                                       Ronagold
shall not, and shall procure that its licensees or successors in title do not,
take any steps to avoid its obligation to pay Override Advances and Override
Royalties in respect of Override Masters. If Ronagold wishes to assign any Recording
Agreement it shall be a pre-condition of such assignment that the assignee
enters into a direct covenant with 19 to pay the Override Advances and Override
Royalty upon the terms of this Agreement with effect from the date of the
assignment.

 

6.                                       All
payments to 19 under this Agreement are exclusive of VAT which shall be paid to
19 in addition upon receipt of a VAT invoice.

 

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

 

To 19: 19
Recordings Limited, Unit 33 Ransome’s Dock, 35-37 Parkgate Road, London SW11
4NP. Attention: Simon Fuller

 

To Ronagold:
Ronagold Limited, Bedford House, 69-79 Fulham High Street, London SW6 3JW.
Attention: Chairman with a copy to VP of Business Affairs, Central Europe at
the same address

 

or to such
other address as may be notified in accordance with this clause.  Notices shall be sent by hand or by special
delivery and shall be deemed given on the day of delivery (if by hand) or the
day of posting (if by special delivery).

 

8.                                       19
agrees that 19 shall procure in relation to each Series the Local Television
Company shall require all contestants to sign an agreement (a copy of which 19
shall supply to the ROW Designee) providing for:

 

15

 

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

 

8.2                                 (as
a pre-condition to being a Finalist) each Finalist to enter into a recording
agreement with the Local Record Company.

 

9.1                                 Ronagold
acknowledges and agrees that the Format was created by Simon Fuller and is now
owned by 19 TV Limited and Freemantle Media Group.  Ronagold will not and will procure that its
officers, employees, and successors will not make any claim inconsistent with
the first sentence of this clause.***.

 

9.2                                 Ronagold
agrees that Ronagold will not be involved or concerned in any television
programme or with any artist or artists selected as part of a television
programme which competes with the Format during the period commencing on the
date hereof and continuing until the earlier of one (1) year after transmission
of the final episode of the Fourth Series of Pop Idol in the United Kingdom or
31 December 2006.  Ronagold agrees that a
television programme competes with the Format if it involves a talent search
for a recording artist (whether for an individual recording artist or a group
of recording artists) and the making of commercial recordings by that artist or
the signature of a recording agreement connected with the programme.

 

9.3                                 ***.

 

9.4                                 19’s
sole remedy for breach of this clause 9 is contained in clause 13.(2)

 

10.                                 No
party to this agreement shall be entitled to assign this agreement to any third
party other than:

 

10.1                           to
its holding company or its subsidiary or associated company; or

 

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

 

For the
purposes of this clause “holding company” and “subsidiary” shall have the
meanings set out in section 736 of the Companies Act 1985 and “associated
company” shall be a company at least 25% owned by a holding company or
subsidiary company of the assignor.

 

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

 

*** FOIA Confidential Treatment

(2)           Clause 13 was
deleted by amendment.

 

16

 

12.                                 19
warrants and undertakes that:

 

12.1                           19
is and will remain entitled to enter into and perform this Agreement and to
grant to Ronagold the options and rights set out above;

 

12.2                           19
shall and shall procure that Simon Fuller and all companies within the 19
Management Limited group of companies (“the Group”) shall at 19’s cost do all
things necessary to perfect the grant to Ronagold of the options and rights set
out above;

 

12.3                           19
shall not do anything inconsistent with any of Ronagold’s rights hereunder; and

 

12.4                           19
has agreed to pay a royalty to Freemnantle Media Group in respect of recordings
by the Winning Artist.

 

13.                                 [Deleted by amendment](3)

 

(3)           Clause 13 was
deleted by amendment.

 

17

 

IN WITNESS a
duly authorised officer of each of the parties has executed this agreement.

 

 

	
   

  	
  SIGNED by

  
	
   

  	
   

  
	
   

  	
  /s/ Simon
  Fuller

  	
   

  
	
   

  	
  for and on behalf of 19 Recordings Limited

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SIGNED by

  
	
   

  	
   

  
	
   

  	
  /s/

  	
   

  
	
   

  	
  for and on behalf of Ronagold Limited

  

 

18

 

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

 

 

EXHIBIT
A

 

Dated:                                   
2002

 

 

Exclusive Recording
Agreement

 

Between

 

USA Designee

 

And

 

19 Recordings Limited

 

 

THIS AGREEMENT is made the     
day of                             2002

 

BETWEEN

 

(1)                                  US Designee of [                       ]
(herein called “Company” which expression shall of include its successors and
assigns) and

 

(2)                                  19 RECORDINGS LIMITED of
Unit 33, Ransome’s Dock, 35-37 Parkgate Road, LONDON
SW11 4NP (herein called “Contractor”)

 

IT IS AGREED as follows:

 

1.                                      DEFINITIONS

 

The following words shall
have the meanings respectively set out opposite them:

 

1.1                                 “Album” shall mean a Record
containing not less than twelve (12) (or such lesser number as Company may
require) nor more than twenty-five (25) different Tracks and totalling no fewer
than forty-five (45) minutes of playing time (unless otherwise agreed by
Company in writing in respect of a particular Record).

 

1.2                                 “Artist” shall mean the
winner of the Competition forming part of the Series.

 

1.3                                 “Artist’s Name” shall mean
any professional name which Artist may use during the Term.

 

1.4                                 “Audio Material” shall mean
any audio only Recording(s) of Artist’s Performance(s) made pursuant to this
Agreement.

 

1.5                                 “Audio Visual Device” shall
mean a reproduction of Audio Visual Material in any form whether now known or
hereafter devised by which such Audio Visual Material (including Audio Visual
Material embodied in Video Clips and/or Long Form Videos) can be perceived
reproduced or otherwise communicated either directly or with the aid of a
machine or other device including but not limited to Videocassette, Videodisc,
DVD Video, CDROM and/or CDi

 

1.6                                 “Audio Visual Material”
shall mean:

 

(a)                                  any film and
any other audio visual Recording made pursuant to this Agreement embodying any
actual or mimed Performance hereunder whether or not such Performance is of a
Title embodied in Audio Material together with such Supplementary Material as
Company may require (and whether or not together with graphics, text and/or
data and whether or not comprising any interactive element(s)); and

 

(b)                                 any film and any
other audio visual Recording made pursuant to this Agreement which does not
feature Artist but is synchronised 

 

1

 

with Audio Material hereunder (including without
limitation animated and/or illustrated film or videotape) (and whether or not
together with graphics, text and/or data and whether or not comprising any
interactive element(s)

 

1.7                                 “CDPA” shall mean the
Copyright Designs and Patents Act 1988 as modified or reenacted and any
subordinate legislation thereunder before or after the date of this Agreement.

 

1.8                                 “Company’s Receipts” shall
mean (subject to the provisions of clause 7.16 below) Company’s actual receipts
(net of discounts, in respect of Electronic Sales) in the UK attributable (by
reference, in respect of any Internet Radio Service, to usage reports) to Audio
Material or Audio-Visual Material (or the exploitation of Recording Agreement
Internet Rights and/or Additional Internet Rights as applicable) less VAT and
similar duties, an on-line cost contribution of ***per cent (***%) and Company’s
out of pocket expenses in fulfilling such sales, being the cost of
postage/delivery and packing, any fees or commissions paid to a third party in
relation to such sale/exploitation and any cost of collecting the relevant
income (excluding Company’s overhead costs in respect thereof).

 

1.8A                       “Competition”
shall mean the competition to select a recording artist to be the USA “Pop Idol”
or “Idol”.

 

1.9                                 “Compilation Album” shall
mean a multi-artist compilation album released by Company or any of its
licencees through conventional retail outlets (excluding consumer-selected “compilations”)
and embodying inter alia Audio Material,

 

1.10                           “Container Charge” shall
mean a percentage of the Dealer Price of a Record or Audio Visual Device (as
the case may be) deducted prior to calculation of the royalty due which
notionally represents that proportion of the Dealer Price which relates to the
packaging of such Record or Audio Visual Device and being as follows: in
respect of 7” vinyl Singles in special bags - *** per cent (***%); in respect
of 12” vinyl Singles in special bags and other non-Album vinyl Records -*** per
cent (***%); in respect of vinyl Albums and audio cassette tapes - *** per cent
(***%); in respect of compact discs, Audio Visual Devices and New Technology Records
- *** per cent ***%).

 

1.11                           “Contractor’s Consent” shall
mean the approval of Contractor, such approval not to be unreasonably withheld
or delayed nor to be withheld on economic grounds and to be deemed given if not
specifically denied with specific and valid reasons given within ten (10)
working days of Company’s request for such approval. After the expiry of the
Term and/or in relation to the exploitation of Recording Agreement Internet
Rights and Additional Internet Rights Contractor’s Consent shell be deemed
given in respect of any matter for which it is required unless specified to the
contrary herein.

 

*** FOIA Confidential Treatment

 

2

 

1.12                           “Contract Period” shall mean
a period of twelve (12) months or, if longer, a period expiring on the sooner
of four (4) months after the initial release in the USA of the Recording
Commitment Album due in such Contract Period or four (4) months after Company’s
receipt of the Release Notice in respect of such Recording Commitment Album
PROVIDED THAT subject to the provisions of sub-clauses 22.4 and clause 23 no
one Contract Period shall exceed a period of three (3) years.

 

1.13                           “Dealer Price” shall mean
either:

 

(a)                                  the published
price (excluding any tax, duties or levies) gross of all discounts (howsoever
arising) at which Records or Audio Visual Devices are customarily available
from Company or Company’s licensees or sub-licensees (as the case may be) to
dealers or wholesalers or sub-distributors (as the case may be) in the country
of retail sale; or

 

(b)                                 if no such
published price exists the actual price gross of all discounts charged for such
Records or Audio Visual Devices by Company or Company’s licensees or
sub-licensees (as the case may be) to dealers or wholesalers or
sub-distributors (as the case may be) in such country; or

 

(c)                                  if Company is
accounted to on a different basis the price upon which royalties due to Company
from Company’s licensees in respect of sales of Records or Audio Visual Devices
hereunder are calculated by such licensees PROVIDED THAT in such latter case if
Company is being accounted to on a retail price basis in lieu of a dealer price
basis, Company reserves the right in such instances to make an appropriate
reduction in the royalty rate payable to the Contractor hereunder in respect of
such sales in order to reflect the increased price upon which such royalties
are calculated.

 

Where for the purposes of
this sub-clause 1.13 the country of retail sale cannot reasonably be determined
then the Dealer Price shall be the applicable price as determined above in the
country of manufacture of the Records or Audio Visual Devices concerned.  In each instance, the Dealer Price shall be
net of all government duties, sales taxes forming part of such price and the
applicable Container Charge.

 

1.14                           “Deliver/Delivery/Delivered”

 

(1)                                  In respect of
each Recording of Audio Material of the Recording Commitment or in respect of
any other Audio Material to which this Agreement may apply these words shall mean
actual delivery to the A & R Executive having responsibility for Artist
from time to time of all the following items in respect of each mix thereof:

 

3

 

(a)                                  one finished,
fully edited, mixed, equalized and leadered stereo half inch master tape of the
applicable Audio Material (identifiably marked up) together with two (2) CDR
copies thereof, each and every original session tape, each and every
multi-track master (together with tape copies or data files in CDR or other
format approved by Company of each session and all final recorded elements
recorded on hard drive), each and every non-equalized mix version and all work
and/or file copies used during recording and/or mixing together with safety
copies of each of the above which copies must be made in a different format to
the original (“Delivery Materials”).  The
Delivery Materials shall only be deemed to be Delivered hereunder if the Audio
Material embodied thereon fulfill all the criteria specified in this Agreement
including those set out in sub-clauses 3.6 and 3.7;

 

(b)                                 all of the
Delivery Materials shall be fully marked showing, inter alia, track sheets,
lyrics, charts, recall information, and software versions and hardware used
during the recording/mixing process. All multi-tracks must contain tones marked
at the front or and thereof;

 

(c)                                  further copies
of the half inch master tape(s) and CDR copies referred to in (a) above with
(at Company’s election) either (i) the lead vocal removed or (ii) the lead vocal
diminished in volume or (iii) the backing vocals removed or (iv) the backing
vocals diminished in volume, PROVIDED THAT such further copies shall only be
required in respect of any Audio Material comprising the “A” side of a Single
and any Audio Material included on en Album which prior to completion of
recording of the relevant Recording Commitment Album Company has notified
Contractor may be released as the “A” side of a Single;

 

(d)                                 a list of (and
where applicable fully completed Union consent forms and other relevant
forms/documentation in respect of including any documentation required in
relation to artists rights under the EC Council Directive 92/100/EC (“Rental
Directive”)) all featured performers, background vocal performers, instrumental
performers and other performers who performed services in connection with the
applicable Audio Material and all data required by Company for purposes of CDPA
or otherwise;

 

(e)                                  fully completed
licences and clearances in accordance with clause 15 in respect of all Sampled
Recordings and Composition Extracts included in such Audio Material;

 

(f)                                    INTENTIONALLY
DELETED.

 

4

 

(g)                                 in the event
Company shall so elect in its discretion and without limiting the generality of
clause 12 a fully executed valid and binding assignment in such terms as
Company may require of all and any rights of Contractor or Artist whatsoever in
relation to the applicable Audio Material(s) and the Performances embodied
therein.

 

(2)                                  In respect of each
Recording of Audio Visual Material these words shall mean:

 

(a)                                  as to Audio
Material embodied in the sound track or tracks of such Audio Visual Materiel
(if such Audio Materiel has not then already been Delivered) all the applicable
items set forth in sub-clauses 1.14(1)(a) to (g) unless Company in its
discretion elects by notice in writing to Contractor to dispense with any such
item; end

 

(b)                                 as to any and
all other Audio Visual Material not subject to (a) above embodied therein
delivery of two (2) Digibeta copies of the Audio Visual Material (one (1)
original master copy and one (1) protection copy) of suitable technical quality
for broadcast throughout the United Kingdom and the USA by standard TV
broadcast and the original signed clearances from all Performers other than the
Artist whose performances appear in the Audio Visual Material,

 

In respect of the matters
referred to in each of sub-clauses 1 and 2 above in the event that Contractor
delivers all of the items specified to Company then Company shall be deemed to
have accepted Delivery thereof (and Delivery shall be deemed to have occurred)
unless (i) within twenty (20) working days thereof Company has notified
Contractor in writing that it does not accept Delivery of the applicable Album
or Audio Visual Material (as applicable) or (ii) Company and Contractor
mutually agree that Delivery has not occurred. 
Notwithstanding the foregoing, Company may at its election accept less
than all the items specified above in fulfillment of Delivery of the applicable
Audio or Audio Visual Material(s).

 

Company shall give its
reasons for any refusal to regard as Delivered any Audio or Audio Visual
Material received from Contractor which Contractor indicates that it wishes to
form part of the Recording Commitment. 
Company shall not reject Audio Material on artistic grounds if it
complies with clause 3.6 below.

 

1.15                           “Electronic Sales” shall
mean the sale or rental or on-demand or near on-demand delivery or distribution
of Records and/or Audio Visual Devices where the orders for such sales, rentals
or distributions are made electronically (directly or indirectly) by the
individual consumer and such sales are fulfilled either:

 

(a)                                  electronically; or

 

5

 

(b)                                 by Mail Order
Operation

 

For the purposes hereof, the
country of sale of an Electronic Sale fulfilled electronically shall be deemed
to be the country in which the relevant sale is delivered to the consumer (to
the extent that the same is reasonably identifiable by Company) or, at Company’s
election, the country from which the relevant sale is fulfilled.

 

1.16                           “Equivalent Formats” shall
mean the off-line Records, in compact disc format or such format as replaces
the compact disc as the leading audio format in the USA from time to time, or
Audio Visual Devices, in VHS format or such format as replaces VHS as the
leading audio visual format in the USA from time to time, which corresponds to
the on-line Audio or AudioVisual Material as applicable, or, if none, then a compact
disc or VHS (as applicable) in the same price category as the relevant on-line
sale.

 

1.17                           “Internet Radio Service”
shall mean an on-line streamed broadcasting or simulcasting service, whether
free or subscription based, operating across one or more channels, whether
genre or artist specific or otherwise and with or without interactive and/or
intelligent capabilities.

 

1.18                           “Long Form Video” shall mean
Audio Visual Material made or commissioned by Company expressly for the purpose
of inclusion in Audio Visual Devices to be offered for sale hereunder and/or in
any public performance, diffusion or broadcast by any means including cable,
satellite, digital or analogue systems as a separate programme but excluding
Audio Visual Material which when made or commissioned by Company is intended
first for inclusion in any Video Clip.

 

1.19                           “Mail Order Operation” shall
mean the sale or rental of Records and/or Audio Visual Devices where such sales
or rentals are ordered and/or fulfilled by means of postage or courier.

 

1.20                           “Material” shall mean all
and any Audio Material, Audio Visual Materiel and Supplementary Material.

 

1.21                           “Minor Territories” shall
mean Albania, Bulgaria, the Czech Republic, Slovakia, Hungary, Poland, Romania,
Latvia, Lithuania, Estonia, Russia and all countries formerly part of the
Soviet Union, Yugoslavia and all countries formerly part of Yugoslavia, China,
India, Pakistan, Saudi Arabia, Iran, Iraq, Syria, Lebanon, Kuwait, Jordan and
all countries of Africa (excluding South Africa).

 

1.22                           “Mutually Agreed” shall mean
agreed between Contractor (or Contractor’s Authorised
Representative) and Company, such agreement not to. be
unreasonably withheld or delayed by either party and with both parties acting
in good faith with a view to seeking such agreement.  Company (acting reasonably) may decide any
matter required to be Mutually Agreed hereunder after the expiry of the Term or
in the event that Contractor or Contractor’s Authorised Representative is not
available to agree such matter (Company having made 

 

6

 

reasonable efforts to locate Contractor or Contractor’s
Authorised Representative with a view to securing Contractor’s agreement), or
in the event that Contractor and Company are unable to reach agreement with
respect to such matter.

 

1.23                           “New Technology Records”
shall mean Records in any form which is not generally available on sale at the
date hereof and including without prejudice to the generality of the foregoing
digital audio tape or DAT, mini disc, digital compact cassette, DVD Audio and
Super Audio CD.

 

1.24                           “Non-Musical Recordings”
shall mean camcorder or other video footage of Artist’s rehearsals, recording
sessions or live appearances containing no Performances; interviews, chats and
competitions featuring or conducted with the participation of the Artist; any
other recordings featuring Artist or other materials, footage, information,
data or news created by or relating to Artist but not containing any
Performances. To the extent that any Non-Musical Recordings are commissioned by
or delivered to Company, the same shall be deemed to comprise Material
hereunder.

 

1.25                           “Performance” and “Perform”
shall mean Artist’s rendition of services in the performing of musical works
and/or lyrics and/or any series of musical sounds in combination or otherwise
either alone or with others.

 

1.26                           “Producer” shall mean any
person other than the Artist who is to receive any payment or acknowledgement
for services in connection with the production engineering mixing or remixing
of Audio Material.

 

1.27                           The noun “Record” shall mean
a reproduction of Audio Material in any form now or later developed (including
but not limited to discs and tapes) in which sounds alone excluding visual
images (other than technical data such as credits or lyrics) can be perceived
reproduced or otherwise communicated directly and/or with the aid of a machine
or other device. Notwithstanding the foregoing, subject to the provisions of
sub-clause 7.13 below, the formats known as “CD Plus”, “CD +” or “CD Extra”
shall be deemed to be Records for the purposes hereof.  For the avoidance of doubt, the noun “record”
shall mean a reproduction of sound recording(s) in any form now or later
developed (including but not limited to discs and tapes) in which sounds alone
excluding visual images (other than technical data such as credits or lyrics)
can be perceived reproduced or otherwise communicated directly and/or with the
aid of a machine or other device.

 

1.28                           “Recording” shall mean any
Performances of the Artist recorded in whatever medium and whether stored
permanently, temporarily or ephemerally including but not limited to Material.

 

1.29                           “Recording Commitment” shall
mean the minimum quantity of Audio Material required to be Delivered
to Company during the relevant Contract Period. Such Audio Material shall be
sufficient to comprise:

 

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(a)                                  during the First
Contract Period one (1) Album in respect of which the track listing and
sequencing has been finalised in accordance with the terms hereof (the “First
Album”);

 

(b)                                 during each
Contract Period after the First Contract Period one (1) Album in respect of
which the track listing and sequencing has been finalised in accordance with
the terms hereof (the “Second Album” et seq as applicable).

 

1.30                           “Recording Commitment Album”
shall mean an Album forming part of the Recording Commitment.

 

1.31                           “Recording Costs” shall mean
all costs and charges generally recognised as recording costs in the record industry
which are incurred in respect of the recording of Audio Material hereunder
including all costs of recording, mixing and remixing, sequencing, dubbing,
editing, digitising or format conversion (PROVIDED THAT Company shall only be
entitled to recoup one set of format conversion costs per Record per format),
DVD authoring (save in connection with the creation of DVD Videos where the
applicable costs shall be deemed part of the applicable budget and recouped
accordingly) and 5.1 remixing, the creation of enhanced formats (e.g. CD-Plus),
mastering and re-mastering and any costs of cutting of lacquers and production
masters Provided that *** per cent (***%) per Track of mastering and cutting
costs in respect of any Record released by Company in the USA shall be
non-recoupable and non-deductible and shall not fall within this definition;
and the advances, fees and expenses of producers, engineers, mixers and
remixers, musicians, vocalists, arrangers, copyists and conductors; and all
studio charges, porterage, instrument and equipment rentals and purchases; and
all costs for arrangements, orchestrations and copying; and all union scale
payments due to all persons who render performances or services in connection
with recording sessions (and all taxes required to be paid thereon if not
recovered by Company), and all fee-based amounts payable pursuant to any
collective bargaining agreement between Company and any union representing
persons who render performances or services in connection with recording
sessions; and all travel and living expenses (if any) required for session
participants and others (including Artist).

 

1.32                           “Records Sold” shall mean
Records shipped or otherwise distributed for sale in respect of which Company
is paid in the USA or in such other country as Company may request that third
parties remit funds due to Company (“Alternative Country”) (or for which
Company receives a credit in the USA (or in an Alternative Country) against a
previously paid advance) and which are not returned or exchanged (such returned
or exchanged Records shall include but not be limited to “one hundred per cent
return or exchange” returns, privileged returns, defective merchandise,
credits, errors in billing and errors in shipment). For the purposes of this
paragraph:

 

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(a)                                  in the event
that Records hereunder (excluding Electronic Sales) are shipped for sale at a
discounted price or subject to any special merchandising plan the number of such
Records deemed to have been shipped shall be determined by reducing the number
of Records shipped by the percentage of discount granted or the percentage
deduction provided under such merchandising plan as the case may be;

 

(b)                                 in the event
that a discount is granted in the form of so-called “free” or “bonus” Records
such Records shall be deemed not to be included in the number of Records Sold;

 

(c)                                  Records Sold
shall be deemed not to include so called “free” or “bonus” or “dividend”
Records distributed by Mail Order Operations, through record clubs or similar
means or any Records Sold by any record club at concessionary rates and claimed
as part of a “free goods allowance”;

 

(d)                                 in the event
that Records which have been shipped for sale at a discounted Dealer Price or
subject to a merchandising plan or in respect of which a discount has been
granted in the form of “free” or “bonus” Records are returned then the number
of such Records deemed to have been returned shall be determined by reducing
the number of Records returned by the percentage of discount (however granted)
in effect under that discount or the percentage reduction employed in such
merchandising plan applicable to such Records at the time of such return.

 

1.33                           “Royalty Base Price” shall
mean the Dealer Price of the applicable Records and Audio Visual Devices (or
the relevant Equivalent Formats) provided that in respect of Electronic Sales
and sales through Mail Order Operations, the Royalty Base Price shall be deemed
to be Company’s Receipts in respect of such sales/rental.

 

1.34                           “the Royalty” shall mean the
total of any and all royalties and flat fee income whenever payable by Company
to Contractor which shall be inclusive of any royalty payable to any third
party in respect of the exploitation of Material (excluding only mechanical
copyright royalty).

 

1.34A                 “the Series” shall mean the
first series of “Pop Idol” to be transmitted on television in the USA together
with any related programmes.

 

1.35                           “Single” shall mean a
compact digital audio disc Record containing no fewer than two (2) nor more
than four (4) Tracks and/or the analogue tape cassette and/or New Technology
Record and/or seven inch (45rpm) vinyl Record and/or twelve inch (45 or 33rpm)
vinyl Record equivalents thereof.

 

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1.36                           “Standard Packaging” shall
mean:

 

(a)                                  in respect of
vinyl Singles, vinyl Albums and twelve inch laser discs, a four standard colour
sleeve with or without a white inner;

 

(b)                                 in respect of
compact discs and any other form of laser disc other than a twelve inch laser
disc, a four standard colour stitched booklet of not more than eight (8) pages,
up to two (2) colours printed on the disc, a clear tray and a printed back
inlay of up to four (4) colours (“the Basic Format”) or any variation of the
foregoing elements provided always that the total cost to Company shall not
exceed the cost of the Basic Format;

 

(c)                                  in respect of an
audio cassette, a four standard colour inlay card with three fold-outs;

 

(d)                                 in respect of
video cassettes, a single page four standard colour insert.

 

1.37                           “Supplementary Material” shall
mean any Recordings by or other recordings of Artist made hereunder or
delivered to Company during the Term hereof which do not contain Audio Material
and/or Audio Visual Material and are intended primarily to support the off-line
release of Recordings by Artist.

 

1.38                           “Term” shall mean a period
commencing on the date hereof and continuing for one Contract Period (“First
Contract Period”) together with any additional Contract Period(s) hereinafter
set forth in respect of which Company exercises its option.  Company shall have the following separate
irrevocable options to extend the Term:

 

(a)                                  in the First
Contract Period by a further Contract Period (“the Second Contract Period”);
and

 

(b)                                 in the Second
Contract Period by a further Contract Period (“the Third Contract Period”); and

 

(c)                                  in the Third
Contract Period by a further Contract Period (“the Fourth Contract Period”);
and

 

(d)                                 in the Fourth
Contract Period by a further Contract Period (“the Fifth Contract Period”).

 

Each such option to extend
the Term shall be exercisable by notice in writing given by Company to
Contractor prior to or on the date of the expiry of the then current Contract
Period.  Each Contract Period (if any)
after the First Contract Period shall commence on the expiry of the preceding
Contract Period.

 

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1.39                           “Territory” shall mean the
World and the Solar System.

 

1.40                           “Title” shall mean a musical
composition with or without lyrics performed or to be performed by Artist.

 

1.41                           “Track” shall mean Audio
Material comprising one separate and distinct Title of
not less than three (3) minutes nor more than six (6) minutes of playing time.

 

1.42.1                  “United Kingdom” or “UK”
shall mean the United Kingdom of Great Britain and Northern Ireland, Eire, the
Isle of Man and the Channel Islands.

 

1.42.2                  “USA” shall mean the United
States of America and its territories and possessions.

 

1.43                           “Video Clips” shall mean
Audio Visual Material made or commissioned by Company as an audio visual
representation of and/or accompaniment for any Audio Material intended by
Company to be embodied on Records for release hereunder as the “A” side of a
Single.

 

1.44                           “Webcast” shall mean an
audio or audio-visual Internet broadcast whether streamed live, near-live or
archived comprising one (1) or more of Artist’s discrete live concert
Performances.

 

1.45                           “Major Territories” shall
mean UK, Canada, Germany, France, Italy, Spain, Australia and Japan.

 

References to Clauses and
Schedules are unless otherwise stated references to clauses of and Schedules to
this Agreement and such Schedules (if any) form part of this Agreement and have
the same form and effect as if expressly set out in the body of this Agreement

 

2.                                      RECORDING
SERVICES

 

2.1                                 Save as permitted pursuant
to Clause 13 below, Contractor shall procure that Artist shall during the Term
and throughout the Territory make, authorise and/or permit the making of
Recordings exclusively for Company.

 

2.2                                 Contractor shall:

 

(a)                                  Deliver to
Company the Recording Commitment for each Contract Period during such Contract
Period; and

 

(b)                                 use Contractor’s
reasonable endeavours to ensure that the Recording Commitment for each Contract
Period is Delivered to Company within six (6) months of the commencement
thereof.

 

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3.                                      RECORDING
COMMITMENT

 

3.1                                 In respect of each Recording
Commitment Album, the following provisions shall apply:-

 

(a)                                  For the First
Album, Contractor shall make the arrangements for the recording of ten (10)
Titles selected by Contractor and notified to Company prior to recording and
otherwise subject always to all applicable provisions contained in this
Agreement (including but not limited to Clause 4 below) (“Contractor Tracks”).

 

(b)                                 For the First
Album, Company shall make the arrangements for the recording of ten (10) Titles
selected by Company and otherwise subject always to all applicable provisions
contained in this Agreement (including but not limited to Clause 4 below) (“Company
Tracks”).

 

(c)                                  For the Second
and each subsequent Recording Commitment Album the Titles to be recorded will
be mutually agreed between Contractor and Company.

 

(d)                                 The identity of
Producers and Audio Material shall be mutually agreed (PROVIDED ALWAYS THAT a
total of not less than twenty (20) Titles shall be so mutually agreed). The
following Producers shall be deemed mutually agreed for the First Album
hereunder: *** [other producers nominated by US Designee to be added as
agreed].

 

(e)                                  Company and
Contractor shall mutually agree the choice of Tracks to be incorporated on to
each Recording Commitment Album hereunder. In the event that Company and
Contractor are unable to mutually agree the Tracks in respect of any one Album
within thirty (30) days of Delivery to Company of all of the Contractor Tracks
and the Company Tracks, then Company and Contractor shall mutually agree the
total number of Tracks to be incorporated onto such Album and each party shall
designate fifty per cent (50%) of the Tracks to be incorporated thereon.

 

(f)                                    Company shall
engage all producers, mixers and remixers upon terms mutually agreed between Contractor and Company. [Mixer and remixer terms
shall be mutually agreed but shall be deemed mutually agreed in respect of any
mixers/remixer engaged by Company for Tracks on the First Album in the event
that (i) the applicable royalty is *** per cent (***%) on a dealer price basis
or less and (ii) the total producer/mixer/remixer royalty on each applicable
Track does not exceed *** per cent (***%). 

 

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Notwithstanding
anything to the contrary contained in this Agreement, up to three (3) remixes
per Album each of which costs ***pounds (£***) or less shall be deemed mutually
agreed.

 

3.2                                 For the First Album the
studios to be used for recording, mixing and mastering the Contractor Tracks
shall be designated by Contractor; the studios to be used for recording, mixing
and mastering the Company Tracks shall be designated by Company. Save as
aforesaid, the selection of Titles, identity of Producers and the studios to be
used for recording and mixing of Audio Material shall be mutually agreed, and
the studios to be used for mastering sessions of Audio Material shall be
selected by Company in consultation with Contractor and with due consideration
of Contractor’s reasonable wishes. Company shall have the right to have such A
& R executive of Company as shall from time to time have primary
responsibility for Artist attend any and all recording sessions hereunder.
Contractor shall have the right to have Simon Fuller attend any and all
recording sessions for the Company Tracks.

 

3.3                                 Upon Company’s request and
subject to Contractor’s Consent, Contractor shall procure that Artist shall
render such performances as will enable Company to make a reasonable amount of
Supplementary Material and a reasonable number of foreign language versions of
Audio Material made hereunder.  The Audio
Material of those versions will not count towards the Audio Material required
to fulfil the Recording Commitment.  The
costs incurred in making Supplementary Material pursuant to this sub-clause 3.3
and the said foreign language versions shall be recoupable from the Royalty.

 

3.4                                 Upon Company’s request
Contractor shall procure that Artist shall render such additional Performances
as will enable Company in each Contract Period to make up to three (3)
additional Tracks to be incorporated as the ‘B’ sides of Singles the ‘A’ sides
or lead Tracks of which incorporate Tracks made hereunder.  Such additional Tracks will not count towards
the Audio Material required to fulfil the Recording Commitment. Contractor
shall deliver, and if so required shall procure that Artist shall render
additional Performances in order to enable Contractor to deliver, such
additional mixes of Audio Material Delivered hereunder as Company shall
reasonably require for bona fide marketing purposes subject to a maximum of
three (3) per Single.  In the event that
Contractor fails to deliver such mixes in respect of Contractor Tracks within
thirty (30) days of Company’s written request therefor, then notwithstanding
anything to the contrary contained herein, Company shall following the expiry
of such thirty (30) day period Company shall be entitled to commission such
mixes.  The Recording Costs in respect of
any such additional mixes shall be fully recoupable from the Royalty.

 

3.5.1                        Without
limiting Company’s rights generally hereunder Company shall be at liberty
notwithstanding any provision to the contrary herein (but shall not be obliged
hereunder) to compile and release so-called Greatest 

 

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Hits or Best Of Album Records of Audio Material hereunder (“Greatest Hits
Album(s)”) once during the Term and once thereafter.

 

3.5.2                        In relation to
any Greatest Hits Album to be first released during the Term Contractor shall
if so requested by Company procure that Artist shall
record and shall Deliver Audio Material sufficient to comprise up to two (2)
Tracks additional to the applicable Recording Commitment (“Bonus Tracks”). The
Recording Budget for such Bonus Tracks shall be mutually agreed pursuant to
sub-clause 4.1 below.  The amounts so
designated shall to the extent paid or incurred by Company be additional
advances recoupable from the Royalty.

 

3.6                                 Artist’s Performances of
Audio Material hereunder shall be reasonably consistent in concept and style
allowing for genuine artistic development of Artist in Company’s reasonable
opinion) and the lyrical content thereof shall be Performed
in the English language.  For the
purposes of the fulfilment of the Recording Commitment (a) any multiple Album
recorded hereunder shall be deemed a single Album (b) any Audio Material shall
comprise audio only Performances of Titles previously unreleased by Artist,
rendered by Artist in a recording studio and substantially recorded during the
applicable Contract Period.

 

3.7                                 The making of Audio Material
hereunder shall not be deemed to have been completed and such Audio Material
shall not count towards the Recording Commitment and the Recording Commitment
shall not be deemed to have been fulfilled unless such Audio Material is in the
reasonable opinion of Company technically satisfactory for the purpose of
making Records therefrom.  Company may
require that such Audio Material be re-recorded in accordance with the terms
hereof in order to obtain Audio Material which is technically satisfactory to
Company as aforesaid.

 

3.8                                 Company shall use its
reasonable endeavours (to the extent that it is commercially appropriate to do
so in the circumstances) to enable Contractor to fulfil the Recording
Commitment.

 

3.9                                 “Live” performances, multiple
Albums spoken word Material, instrumental Performances without vocal
Performances and Audio Visual Material shall not count towards the Recording
Commitment without Company’s prior written consent.

 

4.                                      RECORDING COSTS

 

4.1                                 The budget for the Recording
Costs to be incurred in respect of any Audio Material including for avoidance
of doubt in respect of any remixes, enhanced formats and special effects (e.g.
for a so-called hidden track) (“the Recording Budget”) shall be Mutually Agreed
and shall be sufficient to enable Artist (acting reasonably) to record the
applicable Recording Commitment and shall include a 

 

14

 

***per
cent (***%) contingency. For the First Album (only), a
Recording Budget of *** pounds (£***) per Track is confirmed as Mutually
Agreed.  A copy of each Recording Budget
shall after being Mutually Agreed be made available by Company to the
Authorised Representative PROVIDED THAT inadvertent failure to do so shall not
constitute a breach of this Agreement. Company shall pay the Recording Costs in
connection with the making of Audio Material up to the relevant Recording
Budget.  An amount equal to all such
Recording Costs shall be treated as a non-returnable advance recoupable from
the Royalty. If the Recording Budget is exceeded by reason of Contractor’s
and/or Artist’s wilful or negligent act or default then Company may deduct an
amount equal to any such excess Recording Costs paid by Company from any sums
due and becoming due to Contractor hereunder.

 

4.2                                 Company shall have no
obligation to continue or permit the continuation of any recording if Company
reasonably anticipates that the Recording Commitment will not be completed or
fulfilled within 110% of the Recording Budget due to any Producer’s or to
Contractor’s or Artist’s negligence or default.

 

4.3                                 Contractor shall not and
Contractor shall procure that Artist shall not incur nor purport to incur any
costs on behalf of Company without Company’s specific prior written approval.

 

4.4                                 INTENTIONALLY DELETED.

 

5.                                      RELEASE
COMMITMENT

 

5.1.1                        If the
Recording Commitment Album for a Contract Period has been Delivered and Company
has not released such Album in the USA within five (5) months (excluding
December if the said five (5) month period would otherwise have expired in
December) after Delivery thereof then Contractor shall be entitled as
Contractor’s sole remedy to serve notice on Company specifically referring to
this Clause 5.1.1 requesting that such Album be released in the USA within the
period of sixty (60) days (excluding December) following receipt by Company of
such notice (“Release Notice”). It shall be a condition precedent of Contractor’s
entitlement to rely on the provisions of this clause that all consents and/or
other approvals shall have been given by Contractor in respect of all relevant
matters in relation to Company’s entitlement to release such Album for which it
is required not less than forty-five (45) days prior to service by Contractor
of the applicable Release Notice.

 

5.1.2                        Failing such
release within such sixty (60) day period Contractor may serve further notice
on Company which notice shall if specifically referring to this sub-clause
5.1.2 and if duly received within thirty (30) 

 

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15

 

days promptly
following such sixty (60) day period be effective as Contractor’s sole remedy
to:

 

(a)                                  terminate the Term; and

 

(b)                                 to require
Company to re-assign to Contractor the copyright and all other rights vested in
Company (but subject to any applicable third party rights and excluding any
territory or territories where the applicable Album has been released by one of
Company’s licensees) in all Audio Material (and all Audio-Visual Material) made
and delivered in respect of the applicable unreleased Recording Commitment
Album and associated Singles in consideration of which Contractor shall either
(at Contractor’s election, which shall be notified in writing to Company when
serving the notice referred to at line 2 of this sub-clause 5.1.2) repay to
Company within seven (7) working days of such notice the full amount of all
costs incurred by Company in creating such Material which have not at that date
previously been recouped from the Royalty, or alternatively pay to Company in
perpetuity a fraction (the numerator of which shall be four (4) and the
denominator of which shall be the gross royalty payable to Contractor by the
applicable third party) of all third party advances (excluding such element of
such advances as are expended on recording costs) received by Contractor in
respect thereof and a royalty payable from record one (subject to recoupment of
the advance paid to Company) of *** per cent (***%) of the Royalty Base Price
as calculated herein on all worldwide exploitation of the applicable Material
plus all applicable Producer and third party royalties and a pro rata share of
all flat fee income derived worldwide in perpetuity therefrom.

 

For avoidance of doubt in the event that such Album
is released at any time prior to receipt of such further notice then such
further notice shall be of no effect.

 

5.2                                 If the Recording Commitment
Album for a Contract Period has been Delivered and Company has not released
such Album in the United Kingdom and/or Germany and/or France and/or Italy
and/or Spain and/or Australia and/or Japan and/or Canada (provided the relevant
country is part of the Territory) within six (6) months (excluding December if
the said six (6) month period would otherwise have expired in December)
following release of such Album in the USA then Contractor shall be entitled as
Contractor’s sole remedy to serve notice on Company specifically referring to
this sub-clause 5.2 requesting that such Album be released in the applicable
country of the Territory within the period of sixty (60) days (excluding
December if the period of sixty (60) days would otherwise have expired in
December) following receipt by Company of such notice. Failing 

 

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such
release within such sixty (60) day cure period Contractor may serve further
notice on Company which notice shall if specifically referring to this
sub-clause 5.3 and if duly received within thirty (30) days following such sixty
(60) day cure period be effective as Contractor’s sole remedy to require
Company to license such Album in the relevant country(ies) to a third party
nominated by Contractor and approved by Company (such approval not to be
unreasonably withheld or delayed) on terms and conditions to be mutually agreed
following receipt by Company of such notice. 
For avoidance of doubt in the event that such Album is released in the
relevant countries at any time prior to receipt of such further notice then
such further notice shall be of no effect.

 

5.3                                 In the event Long Form Video
Material is made or commissioned by Company and has been Delivered then if
Company has not released an Audio Visual Device embodying such Long Form Video
Material in the USA within six (6) months (excluding December if the period of
six (6) months would otherwise have expired in December) after Delivery thereof
then Contractor shall be entitled as Contractor’s sole remedy to serve notice
on Company specifically referring to this sub-clause 5.3 requesting that such
Long Form Video Material be released in the USA within the period of sixty (60)
days (excluding August, November and December) following receipt by Company of
such notice. Failing such release within such sixty (60) day period Contractor
may serve further notice on Company which notice shall if specifically
referring to this sub-clause 5.3 and if duly received promptly following such
sixty (60) day period be effective as Contractor’s sole remedy to require
Company to license such Long Form Video Material in the USA to a third party
nominated by Contractor and approved by Company (such approval not to be
unreasonably withheld or delayed) on terms and conditions to be mutually agreed
following receipt by Company of such notice. For avoidance of doubt in the
event that such Long Form Video Material (as applicable) is released at any
time prior to receipt of such further notice then such further notice shall be
of no effect.

 

5.4                                 Company shall be entitled in
respect of any licence to a third party issued pursuant to sub-clauses 5.2
and/or 5.3 above to receive *** per cent (***%) of any advance paid by such
third party in respect of the rights granted together with a royalty of *** per
cent (***%) of the royalty payable to Contractor by the third party in respect
of such Records or Audio Visual Devices Sold pursuant to such licence.  Company shall not be required to credit to
Contractor’s applicable royalty balance hereunder Company’s share of such
royalties received from such third party in respect of the relevant Album or
Audio Visual Device.

 

5.5                                 Notwithstanding anything
contained herein to the contrary, in the event that Company has made available
for exploitation by way of Electronic Sales via the Internet sound files
comprising the Audio Material contained on any Recording Commitment Album
(PROVIDED ALWAYS THAT electronic sales have at the relevant date achieved a
market penetration in the applicable territory by 

 

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reference to official published industry statistics of
fifteen per cent (15%) or more). Company shall be deemed by such action to have
complied with its obligations to release such Album pursuant to this clause 5.

 

6.                                      ADVANCES

 

6.1.1                        Save as otherwise
herein provided in sub-clause 22.4 below Company shall pay Contractor the
following sums by way of non-returnable advances against and recoupable from
the Royalty:

 

(a)                                  in respect of
the First Contract Period the following:-

 

(i)                                     ***pounds (£***) within seven
(7) working days of the later of (i) signature hereof and (ii) delivery to
Company of an inducement letter executed by Artist in the form attached;

 

(ii)                                  *** pounds
(£***) within seven (7) working days of the later of (i) Delivery to Company of
the Recording Commitment for the First Contract Period and (ii) delivery to
Company of an inducement letter executed by Artist in the form approved by
Company;

 

(b)                                 subject to the
minimum and maximum figures specified in sub-clause (c) below, the advance payable
in subsequent Contract Periods shall be determined by reference to Contractor’s
share (net of third party royalties) (“Share”) of the accrued royalty earnings
as at the date twelve (12) months after the initial USA release of the
Recording Commitment Album last delivered to Company (“the Date”).  Such advance shall equal *** per cent (***%)
of the Share of the total accrued royalties net of reserves in respect of
Records Sold at full price of such Album as shown on the last accounting
statement submitted by Company to Contractor prior to the Date and taking into
account pipeline royalties (being the Share of royalties net of reserves held
by Company in the USA and in Major Territories but not yet accounted to
Contractor in respect of Records Sold in the USA and by Company or Company’s
licensees in Major Territories) as at the Date in respect of such Album.

 

(c)                                  The total
advance payment due in each Contract Period other than the First Contract
Period shall be governed by the maximum and minimum figures as set out below:

 

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(i)                                     A minimum of ***
pounds (£***) and a maximum of *** pounds (£***) in respect of the Second
Contract Period

 

(ii)                                  A minimum of
*** pounds (£***) and a maximum of *** pounds (£***) in respect of the Third
Contract Period

 

(iii)                               A minimum of
*** pounds (£***) and a maximum of *** (£***) in respect of the Fourth Contract
Period

 

(iv)                              A minimum of ***
pounds (£***) and a maximum of *** pounds (£***) in respect of the Fifth
Contract Period.

 

6.1.2                        SAVE in respect
of the advances payable in the First Contract Period the advances set out above
shall be paid as follows:

 

(a)                                  one third
(1/3rd) of the minimum advance due within seven (7) working days of commencement
of the applicable Contract Period; and

 

(b)                                 one third
(1/3rd) of the minimum advance due within seven (7) working days of bona fide
commencement of recording of the Recording Commitment Album due in the
applicable Contract Period (for the purposes hereof recording of the relevant
Recording Commitment Album shall only be deemed to have commenced if (in
accordance with the provisions of sub-clauses 3.1, 3.2, 3.6 and 3.9 hereof)
recording of at least three (3) Tracks intended by Contractor and Company to form
part of such Recording Commitment Album, in respect of which all relevant
matters hereunder have been agreed, has commenced); and

 

(c)                                  the remaining
balance within seven (7) working days following the Delivery of the Recording
Commitment due in such Contract Period;

 

In the event that bona fide
commencement of recording pursuant to sub-clause (b) above occurs after the
relevant Date for calculation, the payment made to Contractor pursuant to
sub-clause (b) above shall be equivalent to two-thirds of the actual advance
due as calculated pursuant to sub-clause 6.1.1 (b) and (c) above less the
payment made pursuant to sub-clause (a) above. In the event that Delivery of
the applicable Recording Commitment occurs prior to the relevant Date for
calculation, the payment made pursuant to sub-clause (c) above shall consist of
one third (1/3rd) of the minimum advance due, and the remaining balance due (if
any) shall be paid within seven (7) working days following the applicable
Date).

 

*** FOIA Confidential Treatment

 

19

 

6.1.3                        Any advances
paid prior to the dates upon which they are due shall constitute due payment
thereof by Company for the purposes hereof but such advances shall not be
pre-paid without Contractor’s consent.

 

6.2                                 No advances shall be payable
hereunder other than as specified above or below.

 

6.3                                 In respect of a Greatest
Hits Album released during the Term or within six (6) months thereafter,
Company shall pay Contractor an advance exclusive of Recording Costs of ***
pounds (£***) less any unrecouped balance unrecouped on Contractor’s royalty
account but subject to a minimum figure of *** pounds (£***) in any event.  Such advance, if any, shall be payable on
release of such Greatest Hits Album.

 

6.4                                 INTENTIONALLY DELETED.

 

6.5                                 INTENTIONALLY DELETED.

 

6.6                                 Contractor undertakes that
subject to Artist complying with the provisions of the agreement between
Contractor and Artist, Contractor shall pay through to Artist not less than ***
per cent (***%) of each and every advance received by Contractor from Company
pursuant to sub-clauses 6.1.1 and/or 6.3 above.

 

7.                                      ROYALTIES

 

7.1                                 In consideration of the
services rendered and procured and rights granted by Contractor hereunder
Company shall accrue to the credit of Contractor a royalty in respect of ***
per cent (***%) of Records Sold by Company or its
licensees.  Subject as herein provided
such royalty shall be calculated on the Royalty Base Price of the relevant
Record and shall as set forth herein be inclusive of all royalties to any
Producer or other third party (excluding only mechanical copyright royalties)
and shall be at a rate determined according to the country of retail sale, the
Contract Period of release, and the nature and configuration of the applicable
Record in accordance with the following table:

 

COUNTRY OF SALE

 

	
   

  	
   

  	
  USA

  	
   

  	
  Major

  TERRITORIES

  	
   

  	
  ROW

  	
   

  
	
  Albums

  	
   

  	
  ***%

  	
   

  	
  ***%

  	
   

  	
  ***%

  	
   

  
	
  Records other than Albums released during the First Contract Period

  	
   

  	
  ***%

  	
   

  	
  ***%

  	
   

  	
  ***%

  	
   

  
	
  Records other than Albums released during subsequent Contract Periods

  	
   

  	
  ***%

  	
   

  	
  ***%

  	
   

  	
  ***%

  	
   

  

 

*** FOIA Confidential Treatment

 

20

 

PROVIDED THAT on an Album by
Album basis, in the event that the number of Records Sold during the Term of
any Recording Commitment Album throughout the world exceeds *** (***), then the
royalty rate in respect of Records Sold of such Album in excess of *** (***)
shall increase by *** per cent (***%) in every
territory.

 

For the purposes of the
foregoing escalation, reference to Records Sold shall be deemed to refer to
Records Sold at full price through normal retail outlets only, and also Records
Sold embodying Electronic Sales at full price made in territories in which
electronic sales have at the relevant date achieved a market penetration, by
reference to official published industry statistics, of fifteen per cent (15%)
or more.

 

7.2                                 Royalties on Records Sold
outside the USA shall be computed in the national currency in which Company or
its licensee is accounted to at the rate of exchange in effect at the time of
payment to Company as reflected in the books of Company. In respect of any of
Company’s licensees which are owned by Bertelsmann AG (“Company’s Licensed
Affiliates”), Company shall procure that such licensees are obliged to render
accountings to Company in respect of Records Sold no less frequently that twice
in each calendar year.  If Company is
paid for Records Sold outside the USA, and Company cannot legally remit such payment
to the USA, then (in the event that royalties would be payable to Contractor if
such payment were remitted) Company shall notify Contractor in writing and at
Contractor’s election and expense Company shall deposit the royalties payable
to Contractor with respect to such Records Sold in the currency and in the
country in which Company receives payment therefor.  Such deposit and notice to Contractor shall
discharge Company of the royalty obligation for Records Sold to which such
royalties are applicable.  If the laws of
any country require taxes on such remittances to be withheld at source then the
royalties that accrue to Contractor shall be reduced proportionately unless and
until Company receives a credit in the USA in respect of such
withholdings.  Company shall if possible
supply a tax deduction certificate to Contractor in respect of any taxes
withheld and shall give Contractor reasonable assistance to attempt to claim
repayment. Company shall use its reasonable endeavours to complete and submit
appropriate double taxation exemption claim forms in respect of payments to
Company in the USA.  If Company receives
a tax credit in the USA in respect of Contractor’s share of royalties due to
Company but withheld pursuant to the above Company shall credit Contractor’s
royalty account with the appropriate portion of such tax credit.

 

*** FOIA Confidential Treatment

 

21

 

7.3                                 If the royalty which Company
receives is under the foreign exchange remittance regulations of any country
restricted to a royalty which is equal to or less than the aggregate of
Contractor’s applicable royalty rate pursuant to this clause 7 and *** per cent
(***%) of the Royalty Base Price, then such royalty up to a maximum of *** per
cent (***%) of the Royalty Base Price shall be divided equally between
Contractor and Company and after such division any royalty in excess of *** per
cent (***%) of the Royalty Base Price shall accrue to Contractor. Contractor’s
share of such royalty receipts shall be in place of the otherwise applicable
royalty rate.

 

7.4.1                        In respect of
Records Sold by Company or its licensees in the following categories the
Royalty shall be at *** of the applicable rate and calculated in accordance
with the royalty calculation provisions of this Agreement unless otherwise
stated:

 

(a)                                  budget price
Records (being Records the Dealer Price of which is equal to or less than
sixty-five per cent (65%) of Company’s or its licensee’s Dealer Price for
Records sold on its full price line label);

 

(b)                                 sales to or through
record clubs (excluding Electronic Sales) and/or sales for rental (excluding
Electronic Sales) (where the Royalty Base Price shall be the price upon which
royalties to Company are calculated);

 

(c)                                  sales by or through
Mail Order Operations (excluding Electronic Sales);

 

(d)                                 INTENTIONALLY
DELETED;

 

(e)                                  so-called
soundtrack Records released by third parties (PROVIDED THAT Company shall at
its election be entitled to apply either the reduced rate hereunder or to
account in respect of such Records pursuant to sub-clause 7.6 below);

 

(f)                                    sales through P.X
outlets;

 

(g)                                 educational sales,
governmental sales and sales to libraries;

 

(h)                                 Records Sold in
the Minor Territories;

 

(i)                                     INTENTIONALLY
DELETED.

 

7.4.2                        In respect of
Records Sold by Company or its licensees in the following categories the
Royalty shall be at the following proportions of the otherwise applicable rate
and calculated in accordance with the royalty calculation provisions of this
Agreement unless otherwise stated:

 

*** FOIA Confidential Treatment

 

22

 

(a)                                  INTENTIONALLY
DELETED;

 

(b)                                 New Technology
Records:  *** per cent (***%) of the
otherwise applicable rate PROVIDED THAT in the event that any particular format
of New Technology Record achieves a market penetration in any territory of ***
per cent (***%) or more by reference to statistics published by the BPI or the
equivalent body in the applicable territory, the said *** per cent (***%) rate
shall in respect solely of that particular format be increased to *** per cent
(***%) but only with effect from sales in that territory which take place in
the accounting period which commences after the date upon which such market
penetration has been achieved:

 

(c)                                  Compilation
Albums which are released by Company or as part of its joint venture
arrangements or by an affiliate of Company – *** of the otherwise applicable
rate;

 

(d)                                 Compilation
Albums which are released by third parties – *** of the otherwise applicable
rate.

 

(e)                                  Mid-price
Records (being Records the Dealer Price of which is equal to or less than
eighty per cent (80%) but more than sixty-five per cent (65%) of Company’s or
its licensees Dealer Price for Records sold on its full price line label – ***
of the otherwise applicable rate.

 

(f)                                    So-called soundtrack
Records released by Company or one of Company’s licensed affiliates within the
BMG Group – *** of the otherwise applicable rate.

 

(g)                                 Records sold as
Singles in the USA at a discount of thirty-five per cent (35%) or more, but
less than fifty per cent (50%), from Company’s Dealer Price – *** of the
otherwise applicable rate.

 

7.4.2A              The excess costs of any
packaging other than Standard Packaging used on Records and/or Audio-Visual
Devices hereunder (which such excess costs shall be subject to Contractor’s
consent not to be unreasonably withheld or delayed) shall be recoupable from
the Royalty.

 

7.4.3                        For the
avoidance of doubt no more than one of the provisions of sub-clauses 7.4.1
and/or 7.4.2 shall be applied when accounting to Contractor for any Record Sold
and no Record Sold to which either such sub-clause applies shall count towards
the total of Records Sold required to cause any increase in royalty rates set
forth in this Agreement as the same may be amended.

 

*** FOIA Confidential Treatment

 

23

 

7.5.1                        In respect of
Records Sold by Company or its licensees the marketing of which is supported by
a major advertising campaign on radio and/or television in recognition that the
cost of marketing the sale of Records hereunder by such means will be a
speculative venture, it is agreed that the Royalty shall be at *** per cent
(***%) of the otherwise applicable rate in respect thereof.  The *** reduction referred to in this
sub-clause 7.5.1 shall be limited in application to Records Sold in the
accounting period in which the sell-in period prior to the campaign occurs, in
the accounting period(s) in which the campaign is conducted and in the next two
accounting periods thereafter.  The ***
reduction shall cease when the amount retained by the Company equals 50% of the
cost of the radio or TV campaign concerned (including the cost of producing the
advertisements).

 

7.5.2                        Contractor
agrees that if Company releases Albums hereunder in conjunction with television
and/or radio advertising campaigns in the following countries the following
terms will apply in place of sub-clause 7.5.1:-

 

(a)                                  if the TV spend
(including the production costs of the applicable advertisement) in the USA for
each such Album is in excess of *** US dollars ($***), *** per cent (***%) of
the TV spend in the USA shall be treated as an advance recoupable from the
Royalty (it being acknowledged and agreed that Company dollars ($***) on TV
advertising any one Album in the USA without Contractor’s consent, not to be
unreasonably withheld or delayed);

 

(b)                                 if the radio
spend (including the production costs of the applicable advertisement) in the
USA for each such Album is in excess of *** dollars ($***) fifty per cent
(***%) of the radio spend in the USA shall be treated as an advance recoupable
from the Royalty;

 

(c)                                  if the TV
and/or radio spend (including the production costs of the applicable
advertisement) is in excess of the following minimum TV spends (including in
each case the production costs of the relevant advertisement(s)) in the
following countries, the royalty payable to Contractor on Records Sold in the
relevant country shall be reduced by the amount of any royalty reduction in BMG’s
inter-Company royalty agreed between Company and the applicable licensee until
such time as ***% of the TV/radio spend in the country concerned has been
recovered from the royalty retained by Company on the Album the subject of the
TV/radio advertising campaign and PROVIDED THAT Contractor’s royalty rate shall
in no event be reduced to more than *** per cent (***%) of the 

 

*** FOIA Confidential Treatment

 

24

 

otherwise
applicable rate and FURTHER PROVIDED THAT TV/radio spends in the following
countries in respect of which Company wishes to apply the foregoing royalty
reduction shall require Contractor’s prior consent, not to be unreasonably
withheld or delayed, in the event that the applicable spends exceed the
applicable maximum TV/radio spends (including in each case the production costs
of the relevant advertisement(s)):-

 

	
  Minimum 

  TV Spend

  	
   

  	
  Minimum 

  Radio Spend

  	
   

  	
  Maximum 

  TV Spend

  	
   

  	
  Maximum 

  Radio Spend

  	
   

  	
  Country

  
	
  US$

  	
  ***

  	
   

  	
  US$

  	
  ***

  	
   

  	
  US$

  	
  ***

  	
   

  	
  US$

  	
  ***

  	
   

  	
  Australia

  
	
  US$

  	
  ***

  	
   

  	
  US$

  	
  ***

  	
   

  	
  US$

  	
  ***

  	
   

  	
  US$

  	
  ***

  	
   

  	
  Belgium

  
	
  US$

  	
  ***

  	
   

  	
  US$

  	
  ***

  	
   

  	
  US$

  	
  ***

  	
   

  	
  US$

  	
  ***

  	
   

  	
  Brazil

  
	
  US$

  	
  ***

  	
   

  	
  US$

  	
  ***

  	
   

  	
  US$

  	
  ***

  	
   

  	
  US$

  	
  ***

  	
   

  	
  Canada

  
	
  US$

  	
  ***

  	
   

  	
  US$

  	
  ***

  	
   

  	
  US$

  	
  ***

  	
   

  	
  US$

  	
  ***

  	
   

  	
  Denmark

  
	
  US$

  	
  ***

  	
   

  	
  US$

  	
  ***

  	
   

  	
  US$

  	
  ***

  	
   

  	
  US$

  	
  ***

  	
   

  	
  France

  
	
  US$

  	
  ***

  	
   

  	
  US$

  	
  ***

  	
   

  	
  US$

  	
  ***

  	
   

  	
  US$

  	
  ***

  	
   

  	
  Germany

  
	
  US$

  	
  ***

  	
   

  	
  US$

  	
  ***

  	
   

  	
  US$

  	
  ***

  	
   

  	
  US$

  	
  ***

  	
   

  	
  Holland

  
	
  US$

  	
  ***

  	
   

  	
  US$

  	
  ***

  	
   

  	
  US$

  	
  ***

  	
   

  	
  US$

  	
  ***

  	
   

  	
  Italy

  
	
  US$

  	
  ***

  	
   

  	
  US$

  	
  ***

  	
   

  	
  US$

  	
  ***

  	
   

  	
  US$

  	
  ***

  	
   

  	
  Japan

  
	
  US$

  	
  ***

  	
   

  	
  US$

  	
  ***

  	
   

  	
  US$

  	
  ***

  	
   

  	
  US$

  	
  ***

  	
   

  	
  New Zealand

  
	
  US$

  	
  ***

  	
   

  	
  US$

  	
  ***

  	
   

  	
  US$

  	
  ***

  	
   

  	
  US$

  	
  ***

  	
   

  	
  Portugal

  
	
  US$

  	
  ***

  	
   

  	
  US$

  	
  ***

  	
   

  	
  US$

  	
  ***

  	
   

  	
  US$

  	
  ***

  	
   

  	
  Spain

  
	
  US$

  	
  ***

  	
   

  	
  US$

  	
  ***

  	
   

  	
  US$

  	
  ***

  	
   

  	
  US$

  	
  ***

  	
   

  	
  Sweden

  
	
  £

  	
  ***

  	
   

  	
  £

  	
  ***

  	
   

  	
  £

  	
  ***

  	
   

  	
  £

  	
  ***

  	
   

  	
  United Kingdom

  

 

(d)                                 there will be
no royalty reduction on Records Sold in the USA by reason solely of such
TV/radio campaigns if the applicable spend is less than the appropriate amounts
referred to in (a) and (b) above.  There
shall be no royalty reduction or recoupment of TV/radio spend if the TV/radio
spend is less than the appropriate amount referred to in (c) above for the
country concerned;

 

7.6                                 Subject always to the
provisions of sub-clause 7.17 below, Company will credit to Contractor’s
royalty balance *** per cent (***%) of net income (not being advances of
royalty) (where “net income” shall mean income net of direct costs relating to
the applicable exploitation) received by or credited to Company in the USA on a
flat fee basis (paid in lieu of a royalty rate and not being sales through Mail
Order Operations) which is specifically attributed to the exploitation of Audio
Material including so-called “premiums” but excluding exploitation under
sub-clause 7.7 below.

 

*** FOIA Confidential Treatment

 

25

 

7.7                                 In respect of Electronic
Sales, the Royalty shall be at *** per cent (***%) of the otherwise applicable
royalty rate calculated on the relevant Royalty Base Price of the Records or
Audio Visual Devices and will increase to *** per cent (***%) of the otherwise
applicable royalty rate from the accounting date after electronic sales achieve
a market penetration of *** per cent (***%) or more by reference to official
published industry statistics in the country concerned.

 

7.8                                 In the event that Company
receives in the USA or is credited with royalties or fees in respect of
exploitation by Webcast, pay-per-view, digital broadcast and/or cable
retransmission (for the avoidance of doubt excluding Electronic Sales and
exploitation by means of Internet Radio Service(s)) and such royalties or fees
are directly and identifiably attributable to Audio Material hereunder then
notwithstanding anything else to the contrary contained herein Company shall
credit *** per cent (***%) of Company’s Receipts (after deduction of any actual
costs associated with the applicable Webcast) to Contractor’s royalty balance
hereunder.

 

7.9                                 In respect of Records Sold
by Company or its licensees which comprise Material together with other
recordings not comprising Material the royalty in respect thereof shall be that
proportion of the rate otherwise applicable that the number of Tracks embodied
on such Record bears to the total number of tracks embodied on such Record.

 

7.10                           No royalty shall be paid in
respect of vinyl picture discs, coloured vinyl Records and vinyl disc Records
which are not round; and Records supplied by Company to juke box companies at
no more than cost price; and sales as deletions, cut-outs, overstocks or as
scrap; and reasonable numbers of promotional Records; and Records distributed
to members of staff of Company or its licensees; and Records Sold as Singles in
the USA at a discount of fifty per cent (50%) or more from Company’s Dealer
Price.

 

7.11                           If Artist performs pursuant
hereto jointly with any artist(s) in favour of whom Company or its licensees is
obliged to accrue royalties in respect of Records Sold embodying such joint
performances then the royalty in respect of such Records and the applicable
proportion of net income under sub-clauses 7.6 and 7.8 above shall be that
proportion of the rate or the income as the case may be otherwise applicable as
the number “one” (1) bears to the total number of Artist’s (including Artist)
whose performances are contained on such Record and to whom Company or its
licensees is obliged to pay royalties. 
Notwithstanding the foregoing Contractor shall procure that Artist shall
not Perform hereunder with any other Artist to whom Company or its licensees is
obliged to pay royalties without the prior written consent of Company and for
purposes of this sub-clause 7.11 Artist shall count as one where Artist is a
group of more than one.

 

*** FOIA Confidential Treatment

 

26

 

7.12                           Company’s obligation under
this Agreement to accrue to the credit of Contractor the Royalty in respect of
the exploitation of Recordings shall be limited to the extent that such
exploitation occurs during the life of copyright (including all extensions and
renewals) of the sound recording embodied in such Record in the country of sale
or other exploitation.

 

7.13                           INTENTIONALLY DELETED

 

7.14                           In respect of Records Sold
in the form known as “CD Plus”, “CD +” or “CD Extra” Company shall credit to
Contractor’s royalty balance *** per cent (***%) of the royalty otherwise
payable in respect of such Records Sold less a royalty of *** per cent (***%)
in respect of Audio-Visual Material embodied thereon calculated as provided
herein which *** per cent (***%) royalty shall be credited to the applicable
Audio Visual account hereunder.

 

7.15                           Company shall maintain a
separate royalty balance for Contractor, to which Company shall credit *** per
cent (***%) of Company’s Receipts directly and identifiably attributable to
third party sponsorship and/or endorsement of Artist Site(s) procured by
Company; *** per cent (***%) of Company’s Receipts directly and identifiably
attributable to third party sponsorship and/or endorsement of Artist Site(s)
procured by Contractor; *** per cent (***%) of Company’s Receipts directly and
identifiably attributable to the sale of tickets and/or items of merchandise
from Artist Site(s) (PROVIDED THAT Contractor’s prior written consent shall be
required for the sale of tickets or merchandise from Artist Site(s)); *** per
cent (***%) of Company’s Receipts otherwise directly and identifiably
attributable to the exploitation by Company of the Additional Internet Rights
and not provided for elsewhere in this clause 7 and excluding any commission
received by Company pursuant to clause 11.7 below.

 

7.16                           For the avoidance of doubt,
in relation to Company’s Receipts arising from the exploitation of Audio
Material by means of an Internet Radio Service or any other kind of streaming
service not specifically provided for above, in the event that the licence or
other agreement pursuant to which such moneys are received by Company describes
or characterises the exploitation as “broadcast” or “transmission” Company
shall (subject to the provisions of clause 7.17 below) credit Contractor’s
royalty balance hereunder with *** per cent (***%) thereof, but where the
licence or other agreement does not so describe the exploitation as indicated
above or describes or characterises the exploitation as “distribution” or “sales”
then such monies shall be treated in accordance with the provisions of
sub-clause 7.7 above.  In the event that
such a service is operated by Company or its affiliates its nature shall be
characterised by the basis upon which Company accounts to the majority of its
then current roster in respect of exploitation by such service.

 

*** FOIA Confidential Treatment

 

27

 

7.17                           It is acknowledged and
agreed that the remuneration specified herein is full and final compensation
for the rights granted and services provided by Contractor and Artist hereunder
and that such remuneration represents and is full and sufficient reasonable and
equitable remuneration for all rental and lending or other rights hereby
granted to Company its licensees and successors in title. For the avoidance of
doubt, notwithstanding anything contained herein to the contrary, Contractor
shall not be entitled to a share of income received by or credited to Company
on a general or label basis and/or income received by Company from broadcasting
and public performance collection societies such as Phonographic Performance
Limited.  Company shall not be entitled
to a share of income received by or credited to Artist from broadcasting and
public performance collection societies such as Phonographic Performance
Limited.

 

8.                                      UNION PAYMENTS

 

8.1                                 If a royalty or other
payment becomes due in respect of any Audio Material made hereunder to any
union or other similar third party including but not limited to the American
Federation of Musicians or AFTRA or to any organisation or trust fund
established by them pursuant to any collective bargaining agreement or
otherwise (“Union Payments”), Company may make all such Union Payments and
deduct an amount equal thereto from the Royalty. Contractor will not knowingly
record Audio Material hereunder in circumstances which would give rise to such
Union Payments without Company’s prior written consent, but if Contractor
inadvertently does not seek that consent or a payment becomes due
retrospectively or in circumstances where Contractor did not know such a
payment would become due, then Company shall not be prevented from deducting as
aforesaid the full amount so defrayed. Company shall not make arrangements for
the recording of Audio Material or Audio Visual Material giving rise to Union
Payments without Contractor’s prior written consent (not to be unreasonably
withheld or delayed).

 

9.                                      MECHANICAL
COPYRIGHT LICENCES AND PAYMENT

 

9.1                                 In the event that Artist has
written in whole or in part (to the extent of the part only), or Artist owns or
controls, directly or indirectly in whole or in part (to the extent of the part
only) any Titles embodied in any Audio Material made hereunder or Artist has a
direct or indirect interest in the income to be derived therefrom or from the
copyright thereof (including any reversionary interest) (“Controlled Titles”)
Contractor hereby agrees, warrants, represents and undertakes that:

 

(a)                                  prompt written notice
of any Titles which are Controlled Titles will be given to Company;

 

(b)                                 Contractor will
procure that Company and its licensees will promptly receive valid mechanical
licenses upon application therefor in respect of all Controlled Titles so as to
enable Company 

 

28

 

and its licensees to exploit Records embodying the same
throughout the Territory;

 

(c)                                  Contractor will
procure that Company and its licensees shall not be required to pay any
mechanical royalties in respect of Controlled Titles embodied in Records at a
rate in excess of the following rates in force from time to time of the
applicable Audio Material embodying each Controlled Title:

 

(i)                                     In the United
Kingdom the rate set by the Copyright Tribunal or (in the absence of such rate)
the rate agreed between the BPI and the MCPS from time to time (“the UK Rate”)
or (if Company obtains a mechanical licence outside the United Kingdom for the
UK) the rate set for the payment of mechanical royalties on the standard terms
of the body granting such licence (or in the absence of such rate the rate
agreed between the bona fide record industry and publishing industry bodies in
the country in which Company obtains such licence which shall not be lower than
the UK Rate);

 

(ii)                                  In the United
States of America *** per cent (***%) of the minimum
statutory rate imposed by the United States Copyright Act (without regard to
playing time) rising to *** per cent (***%) in respect of Records Sold on an
Album by Album basis in excess of *** units in the United States of America;

 

(iii)                               In Canada ***
per cent (***%) of the rate payable pursuant to the CMRRA-CRIA Mechanical
Licensing Agreement 1990 as amended or any future replacement thereof (without
regard to playing time) rising, solely in the event that the escalation
provided for in sub-clause 9.1 (c) (ii) above has become applicable to the
applicable Album as at the date of the Canadian sales achievement, to *** per
cent (***%) in respect of Records Sold on an Album by Album basis in excess of
*** units in Canada;

 

(iv)                              In any other
country either:

 

A.                                   the prescribed
or compulsory rate (as the case may be) fixed in such country or;

 

B.                                     if none exists,
the generally accepted rate negotiated between Record companies and music
publishers therein (without regard to playing time).

 

*** FOIA Confidential Treatment

 

29

 

The rate specified above for
each country is hereinafter referred to as “the Controlled Title Rate”.

 

(d)                                 If as a result
of the breach of such agreements, warranties, representations or undertakings
as aforesaid Company or any of its licensees is required to pay mechanical
royalties for Controlled Titles in excess of the Controlled Title Rate then
Company shall have the right to deduct such excess from any Record royalties
and/or flat fee income payable to Contractor hereunder.

 

(e)                                  Notwithstanding
any contrary provision contained herein in respect of the USA and Canada
Company and its licensees shall only be required to pay any mechanical
royalties in respect of Controlled Titles embodied on Records Sold, and*** per
cent (***%) of album free goods distributed in the USA.

 

(f)                                    Where
Controlled Titles consist of arrangements of Titles in the public domain then
the applicable mechanical rate shall be reduced to that proportion applied by
the applicable local performing rights society in its award in respect of those
Titles.

 

9.2                                 If Company or its licensees
shall be required in the United States of America and/or Canada to pay a
mechanical royalty rate on Records Sold in excess of twelve times (12x) the
Contractor Title Rate per (single) Album or two times (2x) the Contractor Title
Rate per 7” vinyl Single or three times (3x) the Contractor Title Rate per 12”
vinyl CD or cassette Single or six times (6x) the Contractor Title Rate with
respect to any Record which is longer than a Single but shorter than an Album,
then Company shall have the right to deduct such excess first from any
mechanical royalties payable to Artist or Artist’s publisher in respect of
Controlled Titles and thereafter from the Royalty.

 

9.3                                 In the event that Company is
unable to obtain a mechanical licence for the USA in the case of a Controlled
Title or Contractor Title which is embodied on Audio Material otherwise
completed in accordance with the terms hereof the Audio Material containing any
such Controlled Title or Contractor Title shall be deemed not to have been
Delivered until such licence has been obtained. In the event that Company is
unable to obtain a mechanical licence on the applicable terms for any part of
the Territory in respect of a Controlled Title or Contracted Title which is
embodied in Audio Material which is otherwise completed in accordance with the
terms hereof, then any release commitment for that part of the Territory shall
not apply to any Record embodying such Audio Material.

 

9.4                                 Company and its licensees
shall be responsible for the payment of all mechanical copyright royalties
payable as the result of Company’s and its licensees’ 

 

30

 

manufacture distribution and sale of Records hereunder subject to all
applicable provisions of this Agreement.

 

9.5                                 Contractor
shall use reasonable endeavours to procure that Company is entitled to
reproduce without charge the lyrics of any Titles recorded hereunder in the
packaging and artwork of Records and Audio Visual Devices released.

 

9.6                                 In
the event that Contractor or 19 Songs Limited or 19 Music Limited owns or
controls, directly or directly in whole or in part (to the extent of the part
only) any Titles embodied in any Audio Material made hereunder or has a direct
or indirect interest in the copyright thereof (including any reversionary
interest) (“Contractor Titles”), Contractor hereby agrees, warrants, represents
and undertakes that:

 

(a)                                  prompt
written notice of any Titles which are Contractor Titles will be given to
Company;

 

(b)                                 Contractor
will procure the Company and its licensees will receive valid mechanical
licences upon application therefor in respect of all Contractor Titles so as to
enable Company and its licensees to exploit Records embodying the same
throughout the Territory;

 

(c)                                  Company
and its licensees shall in respect of Contractor Titles pay mechanical
royalties at the prescribed or compulsory rate (as the case may be) fixed in the
relevant country or, if none exists, the rate agreed between the bona fide
record industry and publishing industry bodies in the country in which Company
obtains such licence (“the Contractor Title Rate”);

 

(d)                                 Notwithstanding
any contrary provision contained herein in respect of the USA and Canada
Company and its licensees shall only be required to pay any mechanical
royalties in respect of Contractor Titles embodied on Records Sold and ***
percent (***%) of album free goods distributed in the USA and Canada.

 

Where
Contractor Titles consist of arrangements of Titles in the public domain then
the applicable mechanical rate shall be reduced to that proportion applied by
the applicable local performing rights society in its award in respect of those
Titles.  For the avoidance of doubt
sub-clauses 9.1 and 9.2 above do not apply to Contractor Titles.

 

10.                               AUDIO VISUAL MATERIAL

 

10.1                                                                           (a)                                  Company
shall be exclusively entitled to make, commission or approve the recording of
audio visual Performances (including

 

*** FOIA Confidential Treatment

 

31

 

without limitation Audio Visual Material in the form of Video Clips
and/or Long Form Videos).

 

(a)                                  During
the First Contract Period Long Form Videos shall only be made hereunder if so
mutually agreed by Company and Contractor, both acting reasonably and in good
faith.

 

(b)                                 In
each Contract Period after the First Contract Period, Company shall be entitled
to require Contractor to procure, and if so required Contractor agrees to
procure, that Artist shall perform for the making of Long Form Videos hereunder
on terms to be mutually agreed in good faith between Contractor and Company in
a timely manner so as to ensure that Company can comply with its proposed
release schedule.

 

(c)                                  Sub-clauses
(c) and (d) above shall not apply to Long Form Videos which consist primarily
of Video Clips (“Clips Compilations”) which Company shall be free to compile
and release.

 

10.2                           The
treatment, story-board, producer and director of any Audio Visual Material
shall be mutually agreed, Contractor agreeing to co-operate fully and in a
timely manner with Company so as to ensure that mutual agreement is reached
promptly so that Company may comply with its proposed release schedule and
associated promotional and marketing campaign. 
The budget for the recording of such Audio Visual Material (“the Audio
Visual Material Budget”) shall be Mutually Agreed and shall be reasonable in
the context of the applicable mutually agreed treatment, story-board producer
and director and shall be sufficient to enable the Company to record such Audio
Visual Material and shall include a contingency fund of *** per cent (***%) of
the total budget (excluding any contingencies). 
The Audio Visual Material Budget shall include without limitation any
synchronisation fees payable to the publishers of Titles embodied in the
applicable Audio Visual Material, and all Union Payments. In the event that the
Audio Visual Material Budget is exceeded due to Contractor’s and/or Artist’s
default without the prior written consent of Company the amount of such excess
(the “Excess Costs”) shall be fully deductible from any and all sums becoming
due to Contractor hereunder.

 

10.3                           Subject
always to sub-clauses 10.1 (c) and (d) above, Contractor shall procure that
upon Company’s request and prior reasonable notice Artist shall attend all
filming sessions in connection with Audio Visual Material (including but not
limited to Audio Visual Material reasonably requested by Company as additional
Audio Visual Material for Clips Compilations) and undertakes to render
performances free of charge to the best of Artist’s ability in connection
therewith and to attend promptly at such times and places as Company shall
designate for the making of Audio Visual Material and Long Form Videos (and
subject to Contractor’s

 

*** FOIA Confidential Treatment

 

32

 

Consent such amount of Supplementary Material as is in Company’s
reasonable opinion required for inclusion on Audio Visual Devices).  The costs of creating Supplementary Material
hereunder shall be recoupable as if the same were a Video Clip pursuant to
sub-clause 10.4 below.  Company shall
reimburse to Contractor any reasonable out of pocket traveling and living
expenses of Artist approved by Company. 
Such expenses shall form part of the Audio Visual Material Budget and be
recouped in the manner specified in sub-clause 10.4 below.

 

10.4                           In
respect of any Video Clip *** per cent (***%) of the costs within the Audio
Visual Material Budget incurred by Company in making Video Clips and/or any
Excess Costs for any Audio Visual Material (to the extent not recovered in
accordance with sub-clause 10.2 above) shall be deemed an advance recoupable
against the Royalty.  Any balance of all
such costs in respect of Audio Visual Material together with all and any costs
incurred by Company in making Long Form Videos shall be recoupable against all
and any monies payable to Contractor in respect of the exploitation of all Audio
Visual Material hereunder.

 

10.5                           In
respect of the exploitation of Audio Visual Material Company shall credit to
Contractors royalty balance:

 

(a)                                  in
respect of Audio Visual Devices Sold by Company or Company’s Licensed
Affiliates a royalty of *** per cent (***%) in respect of sales in the USA and
*** percent (***%) in respect of sales in the rest of Territory calculated on
the Royalty Base Price of each Audio Visual Device Sold PROVIDED THAT on a Long
Form Video by Long Form Video and country by country basis, in the event that
the number of Audio Visual Devices Sold during the Term of any Long Form Video
in any country exceeds the amounts set out in the table below, then the royalty
rate in respect of Audio Visual Devices Sold of such Long Form Video in such
country in excess of such amounts shall increase in each instance by the
additional royalty set out in the table below:

 

	
  Country

  	
   

  	
  Amount of Audio

  Visual Devices Sold

  	
   

  	
  Increase in Royalty

  
	
  USA

  	
   

  	
  ***

  	
   

  	
  ***%

  
	
  USA

  	
   

  	
  ***

  	
   

  	
  ***%

  
	
  ROW

  	
   

  	
  ***

  	
   

  	
  ***%

  
	
  ROW

  	
   

  	
  ***

  	
   

  	
  ***%

  

 

For the
purposes of the foregoing escalations, reference to Audio-Visual Devices Sold
shall be deemed to refer to Audio Visual Devices Sold at full price through
normal retail outlets only.  For the
purposes of calculating the number of Audio Visual Devices

 

*** FOIA Confidential Treatment

 

33

 

Sold
hereunder, the provisions of sub-clause 1.32 above shall apply insofar as is
practicable as if “Records” (as specified therein) were Audio Visual
Devices.  In calculating royalties
payable pursuant to this sub-clause the provisions of Clause 7 above relating
to the calculation of Record royalties shall apply to Audio Visual Devices
(insofar as they are capable of applying) as if ‘Records” (as specified
therein) were Audio Visual Devices and as if “Audio Material” as specified
therein was Audio Visual Material;

 

(b)                                 subject
to the provisions of sub-clauses 7.8 and 7.16 above, in respect of all other
forms of exploitation of Audio Visual Material (and any other audiovisual
performances in respect of which Company has given its consent) by Company, its
licensees, sub-licensees and/or third parties, *** per cent (***%) of Company’s
actual receipts in the USA from such exploitation (it being acknowledged that
under Company’s current matrix arrangements with its Licensed Affiliates, its
Licensed Affiliates deduct *** per cent (***%) of the gross income accruing to
such Licensed Affiliates from such exploitation).

 

10.6                           For
the avoidance of doubt the amounts credited to Contractor’s royalty balance in
respect of Audio Visual Material pursuant to sub-clause 10.5(a) and (b) above
shall first be applied towards recoupment of the cost of making the same in
accordance with sub-clause 10.4 above. 

 

10.7                           For
the avoidance of doubt if Audio Visual Material is exploited together with
other audio visual material not subject to this Agreement then the royalties
and/or share of net receipts credited to Contractor’s royalty balance pursuant
to sub-clause 10.5 above shall be reduced pro rata according to the duration of
Audio Visual Material used as against the duration of the whole Audio Visual
Device in which they are incorporated.

 

10.8                           INTENTIONALLY
DELETED.

 

10.9                           in
respect of all Controlled Titles and Contractor Titles embodied in Audio Visual
Material Contractor shall as and when requested by Company procure the grant to
Company of:

 

(a)                                  a
worldwide perpetual licence to synchronise Controlled Titles and Contractor
Titles in Audio Visual Material and to exploit the same as so synchronised by
all means now or hereafter known including without limitation the right to
cause the broadcast and/or other transmission delivery and/or exhibition of
each such Controlled Title and Contractor Title incorporated in such Audio
Visual

 

*** FOIA Confidential Treatment

 

34

 

Material by any and all means. In respect of any Audio Visual Devices
the fee for such synchronisation licence shall be free in respect of all
promotional usage from which no income shall accrue to Company (other than
public performance royalties), and for commercial exploitation in any and all
media shall not exceed the highest fee for synchronisation payable to any other
publishers to whom fees are payable in respect of the particular exploitation
(PROVIDED THAT in respect of the third and any subsequent Long Form Videos the
rate applicable for Contractor Titles shall be negotiated reasonably and in
good faith between Company and the publishers of the Contractor Title(s) in
question in line with then current market practice); and/or

 

(b)                                 a
worldwide perpetual mechanical licence to enable Company to manufacture,
distribute and exploit Audio Visual Devices in all ways and by all means.  Company shall pay mechanical royalties in
respect of (i) Controlled Titles embodied in any such Audio Visual Devices
subject to and in accordance with the provisions of sub-clauses 9.1 (a), (b),
(c)(i) and (c)(iv) above (ii) Contractor Titles embodied in any such Audio
Visual Devices subject to and in accordance with sub-clause 9.6 above, in
either case as if references therein to “Audio Material” were references to
Audio Visual Material and as if references to “Records” were references to
Audio Visual Devices. Contractor shall procure that Company is able to
reproduce the relevant lyrics of Controlled Titles and Contractor Titles for a
nominal fee.

 

10.10                     Contractor
shall give notice in writing to Company (hereinafter called a “Programme Notice”)
in the event that Contractor wishes to make, or receives an offer in writing
from a third party to make, an audio-visual programme featuring Artist for
television broadcast (not being a programme upon which recording artists
automatically render promotional performances, which such programmes are the
subject of sub-clause 13.1.1(c) below) (“Third Party Programme”).  In the event Artist performs (3) Tracks or
less for television broadcast, such programme shall not be deemed a “Third
Party Programme” hereunder and shall instead be governed by the provisions of
clause 13.1.1(c) below.

 

10.11                     The
Programme Notice shall specify all relevant details of Contractor’s proposed
programme or all relevant details contained in the offer from such third party
(and be accompanied by a copy of the offer) relating to the making of the
relevant Third Party Programme including, inter alia, the proposed budget,
concept, storyboard, director, location, titles to be featured, all other
creative matters relating to the making of such Third Party Programme and the
payments to be made to Contractor in respect of exploitation of the Third Party
Programme.  In the event that Contractor
wishes to grant video rights in respect of the applicable Third Party Programme
to a third party record company (or wishes to exploit such rights itself or via
an entity which is a parent, subsidiary, co-subsidiary or

 

35

 

associated company of Contractor (where the term “associated company”
shall mean a company which is associated with another company either through holdings
of shares to an extent of not less than twenty five per cent (25%) of its
equity share capital (as defined in the said Act) or through common directors
to an extent of not less than one-third (1/3) for the time being of the total
number of directors) (“Linked Company”), Contractor shall, and shall procure
that the applicable Linked Company shall immediately following service of
notice from Company (to be served within twenty-one (21) days after receipt of
the applicable Programme Notice) enter into good faith negotiations with
Company regarding Company’s acquisition of video rights in respect of the
applicable Programme, if Company wishes to acquire such rights. Contractor
shall not, and shall procure that the said third party or parties or Linked Company
shall not, enter into discussions with any other third party regarding such
rights for a period of twenty-one (21) days following the commencement of such
negotiations. Contractor shall not artificially structure its corporate
arrangements so as to circumvent the foregoing provisions.

 

10.12                     If
Company notifies Contractor in writing that Company does not wish to acquire
video rights in the particular Programme, or fails to require negotiations
pursuant to Clause 10.11, or Company and Contractor are unable to agree terms
for Company’s acquisition of video rights in respect of the applicable Third
Party Programme within the said period of twenty-one (21) days, then (but not
otherwise) Contractor shall notwithstanding the exclusivity hereof be entitled
to enter into similar negotiations with a third party (whether or not a Linked
Company, a record company, video distributor, broadcaster or otherwise
howsoever) for the granting of video rights in respect of the applicable Third
Party Programme to such third party provided that Contractor shall not (and
shall procure that its Linked Companies shall not) enter into an agreement with
any such third party unless Contractor has first given Company full and
complete details in writing of the offer made by such third party and has
allowed Company fourteen (14) days from the supply of such details in which to
match third party’s offer (other than terms which Company is physically unable
to fulfil e.g a key-man clause in respect of a particular individual) (“the
Terms”).  Contractor shall procure that
such third party offer shall contain all relevant creative elements, the
applicable commercial terms and the applicable budget.  In the event that Company so matches the
Terms Contractor agrees to enter into an agreement with Company forthwith upon
the Terms and otherwise on terms to be agreed between Company and Contractor in
good faith.  If Company fails to match
the Terms Contractor shall be entitled to enter into an agreement with that
third party upon the Terms (a true copy of which shall be provided to Company
promptly following its execution) provided that such Agreement shall contain an
express provision that neither the performances by Artist nor any recordings
thereof shall be used directly or indirectly for the purpose of making records.

 

10.13                     Contractor
shall procure that no video embodying a Third Party Programme in respect of
which Company does not acquire video rights will be released, on a
territory-by-territory basis, within two (2) months before or two (2) months
after

 

36

 

Company’s or its licensees’ proposed release date notified to
Contractor of any Recording Commitment Album or any Greatest Hits Album or any
Long Form Video, nor shall there be (unless Company agrees otherwise) more than
one (1) Third Party Programme made per Contract Period hereunder which is
substantially comprised of footage of Artist’s live concert Performances.

 

10.14                     No
Third Party Programme may be exploited as a pay-per-view programme or on a
pay-per-view service within two (2) months before or two (2) months after
Company’s or its licensees’ release date notified to Contractor of any
Recording Commitment Album or any Greatest Hits Album or any Long Form Video,
on a territory by territory basis.  No
Third Party Programme may (without limiting the foregoing) be made available
for downloading from the Internet, or via an audio-only subscription service or
on audio-only record, or DVD Audio or similar primarily audio-only or
audio-only format.  Contractor shall
procure that each Third Party Programme shall only be exploited substantially
as originally broadcast on television (and without limiting the generality of
the foregoing may not be sold or licensed to third parties for compilation-type
programmes).  Without limiting the
foregoing, Contractor shall procure that Artist’s Performances may not be
extracted from a particular Third Party Programme and compiled with other
footage of Artist’s Performances. 
Contractor acknowledges and agrees that the restrictions contained in
sub-clause 13.1.1(c) below shall apply equally to Third Party Programmes and to
Performances by Artist contained therein.

 

11.                               INTERNET PROVISIONS

 

11.1                           It
is hereby acknowledged and agreed that pursuant to the terms and conditions of
this Agreement, Company has the exclusive right to exploit the products and
services of Artist created and rendered pursuant to this Agreement and all
Material by means of the Internet (irrespective of the manner by which the
Internet is accessed) including, without limitation, the exclusive right to
distribute and sell Material on-line and to authorise others to do so on its
behalf and the exclusive right to permit, commission, arrange and/or authorise
Webcasts containing Artist’s Performance(s) (subject only to sub-clause 13.1.1
(c) below) or all or any part of any Material. 
For the purposes of the following provisions, such right shall be
referred to as the “Recording Agreement Internet Rights”.

 

11.2                           Contractor
hereby grants and shall procure that Artist shall grant to Company and its
licensees the exclusive right to (and Company agrees that during the Term from
time to time it shall) create, host, manage, maintain, update and service
website(s) and/or webpage(s) on the Internet relating primarily to the Artist’s
services pursuant to this Agreement and the products thereof (“Artist Site(s)”)
whether as part of its click2music or other site or independently therefrom as
Company may elect in its discretion from time to time Artist Site(s) shall be
jointly owned by Company & Contractor. 
The general appearance and style of Artist Site(s) during the Term
hereof shall be mutually agreed, and both parties agree to co-operate fully, in
good faith and in a timely manner so as to ensure that

 

37

 

Artist Site(s) may be made operational promptly following signature
hereof and may thereafter be maintained and operated in an efficient and
compelling a manner as possible (for which purpose Company and Contractor agree
to meet on a regular basis during the Term in order to discuss the general
appearance, style and content of

Artist Site(s).  For the avoidance
of doubt, the parties acknowledge that Company shall be responsible for and
shall incorporate Materials, information and other material on to the
Artist Site(s) on a day to day basis without consultation. Contractor
shall and shall procure that Artist shall regularly on an on-going basis
provide to Company free of charge Non-Musical Recordings from time to time
during the Term or otherwise as reasonably requested by Company.  The costs of creating any Non-Musical
Recordings which are commissioned by Company shall be paid for by Company
pursuant to a Mutually Agreed budget. 
Company shall be entitled to incorporate into the

Artist Site(s) links to third party sites relevant to the rights granted
hereunder and to aggregate content from other artists working in similar genres
of music onto the Artist Site(s).  The
cost of creating, hosting, maintaining (including creating Non-Musical
Recordings), updating and servicing Artist Site(s) during the Term shall be
paid by Company in accordance with budgets Mutually Agreed prior to release of
each Album under this Agreement (wherever practicable) and shall be treated as
follows:

 

(a)                                  the
first *** pounds (£***) of each budget shall be non-recoupable;

 

(b)                                 ***
per cent (***%) of all such costs in each budget over *** pounds (£***) shall
be recoupable from the Royalty.

 

11.3                           For
the purposes of this Agreement, the term “Additional Internet Rights” shall
mean the right throughout the Territory during the Term to manage and exploit
by means of the Internet (however the same may be accessed whether by PC,
cable, digital television, or otherwise howsoever) the following products of
Artist’s efforts and Artist’s services in all branches of the entertainment
industry:-

 

11.3.1                  the
on-line exploitation of Non-Musical Recordings which do not comprise Material
by way of Internet Radio, Webcasting or otherwise; and

 

11.3.2                  the
provision of on-line live/tour information and (subject to Contractor’s prior
written consent) on-line ticket sales; and

 

11.3.3                  on-line
sponsorship of Artist Site(s); and

 

11.3.4                  (subject
to Contractor’s prior written consent) the advertising and sale of Artist’s
branded merchandising on-line; and

 

11.3.5                  the
rights referred to in clause 11.2 above in respect of Additional Internet
Rights including the right to incorporate links to other

 

*** FOIA Confidential Treatment

 

38

 

websites/pages
relevant to such Additional Internet Rights and any other on-line business or
enterprise in which the Artist’s reputation may be put to advantageous use.

 

11.4                           Contractor
hereby grants non-exclusively to Company the Additional Internet Rights and
shall procure that Artist grants the same to Contractor.  Notwithstanding the non-exclusivity of this
grant of rights, Contractor shall not and shall procure that Artist shall not:-

 

11.4.1                  supply
any Non-Musical Recordings to any third party without ensuring that all such
Non-Musical Recordings are also available to Company on a exclusive basis free
of charge and that any third party site to which Non-Musical Recordings are
supplied shall contain links back to Artist Site(s) prominently placed in close
proximity to such Non-Musical Recordings; and/or

 

11.4.2                  make
a general grant of such Additional Internet Rights or a limited grant covering
a range of such rights to any third party (as opposed to a one-off grant of
individual rights falling within this category of rights); and/or

 

11.4.3                  provide
any Non-Musical Recordings to any third party site(s) which site(s) are artist
specific and/or which purport, represent or imply that they comprise “official”
or “endorsed” site(s) save as permitted pursuant to sub-clauses 11.9 and 11.11
below; and

 

11.4.4                  INTENTIONALLY
DELETED

 

11.4.5                  Contractor
shall notify Company prior to concluding any agreement with a third party in
respect of any or all of the Additional Internet Rights in sufficient time to afford
Company the opportunity to explore any potential cross-promotional
opportunities with such third parties.

 

11.5                           Company
shall have the exclusive right to and to authorise its licensees at its and
their discretion to make, pursue, modify, discontinue or abandon any
application to register (and to renew any such registrations) the Artist Name
and any variations thereon and any logo or design used by Artist or in
connection with Artist’s services the subject of this Agreement (and variations
thereon) as URLs with all available suffixes, including, without limitation:
..com, .net, .uk, .de, .ie, .fr, .jp, .tv and .cd (the “Addresses”).  The Addresses shall be jointly owned by
Company and Contractor and shall be linked to the Artist Site(s).  Following the expiry of the Term hereof,
Company shall transfer the Addresses to Contractor PROVIDED THAT Contractor
shall procure that on any website maintained by or on behalf of Contractor
there shall be a prominently-placed hyperlink to Company’s website.  The costs incurred by Company in carrying out
the activities referred to in the first sentence of this sub-clause 11.5 shall
be mutually agreed

 

39

 

and shall be treated, for the purposes of recoupment, as part of the budgets
referred to in the final sentence of sub-clause 11.2 above.

 

11.6                           Contractor
for itself and on behalf of Artist hereby irrevocably appoints Company to be
the attorney of Contractor and Artist for the purpose of making any such
application and executing any documentation necessary to pursue or secure any
such registrations and hereby grants Company the right to enforce such rights
against any third parties on both Company’s and Contractor’s/Artist’s behalf.

 

11.7                           Contractor
acknowledges and agrees that Company shall be entitled to retain for its own
benefit a commission on any sales made by third parties to consumers driven to
such third parties’ websites/pages from Artist’s Site(s), subject to Company
concluding agreements with such third parties in respect thereof and provided
that any such commission shall first be applied in recoupment of any unrecouped
recoupable costs referred to in the final sentence of sub-clause 11.2 above.

 

11.8                           Any
consumer data collected by Company as a result of or arising from its operation
of the Artist Site(s) (“Consumer Names”) shall, as between Company and
Contractor, be owned by Company.  Subject
to the relevant Data Protection (or other applicable) legislation, Company
agrees if requested to do so by Contractor to carry out at Contractor’s expense
six (6) electronic mailings per year during the Term and one electronic mailing
following the expiry of the Term to Consumer Names on Contractor’s behalf in
relation to the Additional Internet Rights from time to time PROVIDED THAT
Contractor shall not be able to require Contractor to include in any such
mailing any material which (i) is defamatory or obscene; and/or (ii) relates in
any way to any artist other than Artist; and/or (iii) infringes any rights;
and/or (iv) may be likely to bring Company into disrepute.

 

11.9                           Upon
Contractor’s request Company agrees:-

 

(a)                                  to
add to the Artist Site(s) links to websites at Contractor’s expense (provided
that such websites shall without limitation not be, or carry any content which
is, defamatory, obscene, nor without limitation shall they infringe any rights
or bring Company or its licencees into disrepute) operated by third parties
with whom 19 Merchandising Limited has entered into an agreement solely for
Artist-related merchandising, advertising, endorsement or sponsorship; and

 

(b)                                 to
add to the Artist Site(s) a reasonable number of pages (“Contractor Pages”)
(constituting not more than 25% of the total number of pages comprised within
Artist Site(s)) provided to Company by Contractor at Contractor’s cost as
Artist pages PROVIDED THAT Contractor Pages must (i) be of a style commensurate
with the general style of Artist Site(s) ; and (ii) not

 

40

 

be defamatory or obscene; and (iii) not infringe any rights; and (iv)
not bring Company into disrepute.

 

11.10                     Company
agrees that third parties referred to in sub-clause 11.9(a) above shall have
the right at their expense to refer to Artist on their websites PROVIDED that
(a) such websites shall not be artist sites (official or otherwise); and (b)
they must maintain links to Artist Site(s) from their website. Company also
agrees that such third parties may host micro-sites in relation to the
particular activity authorised by 19 Merchandising Limited PROVIDED THAT such
micro-sites may not carry or feature in any way musical performances by Artist
and PROVIDED FURTHER THAT representatives of Contractor shall attend regular
meetings with Company at Company’s reasonable request in order to discuss with
Company Contractor’s and 19 Merchandising Limited’s plans in this regard and
Contractor shall use its reasonable commercial endeavours to procure that
Company shall have the right to use on Artist Site(s) content relating to
Artist used by third parties on such micro-sites.

 

11.11                     Company
acknowledges that to the extent that there is an official website of the Series
(“the Series Site”), the Series Site will feature performances of Artist as
part of the Series and will include information concerning Artist. Contractor
shall procure that there shall be no downloading of Artist’s Performances from
the Series Site, nor any exploitation thereof via subscription Services.

 

11.12                     Nothing
contained in this Agreement shall restrict Contractor’s or Artist’s ability to
operate an Artist-endorsed WAP site or to endorse or sponsor WAP or telephony
services PROVIDED THAT no Material or Artist’s Performances shall be used in
any of the foregoing activities and PROVIDED FURTHER THAT Contractor shall
notify Company before Contractor or Artist concludes an agreement for any of
the foregoing activities in sufficient time to afford Company the opportunity
to explore any potential cross-promotional opportunities with the relevant
third parties.

 

12.                                 OWNERSHIP/LICENCE

 

12.1.1  (a)                                              Contractor
hereby grants to Company, its licensees and successors in title the exclusive
licence to exploit the entire copyright and all other rights of a like nature
and all other rights now or hereafter conferred by the law in force in any part
of the World in and to (i) all Material made hereunder during the Term and (ii)
any Recordings made prior to or during the Term which Contractor owns or to
which Contractor is able to acquire rights (which Contractor shall use its best
endeavours to do) (other than those listed in Schedule 1 hereto) (other than
Recordings permitted pursuant to clause 13 below, and demo Recordings given to
Artist’s publisher PROVIDED ALWAYS THAT the same are not distributed to the
public) (including, without limitation, all rights of reproduction, fixation,
rental, distribution, broadcast and

 

41

 

communication to the public and performers’ property rights as referred
to in the CDPA) (free of any claims by Contractor, Artist or any other person)
throughout the World for the full duration of such copyright and other rights,
and for any and all extensions and renewals thereof. Contractor warrants that
in its recording agreement with Artist Contractor has included a clause which
is exactly identical to the foregoing sentence, mutatis mutandis.

 

12.1.2                  The
entire copyright and all other rights of a like nature and all other rights now
or hereafter conferred by the law in force in any part of the world in and to
any promotional, marketing and advertising material (such as but not limited to
artwork, text, sleeve notes, label copy, graphics, data, posters and point of
sale material) and any consumer data or other information created and/or
compiled by or on behalf of Company shall vest and belong to Company (free of
any claims by Contractor, Artist or any other person) throughout the world for
the full duration of such copyright and other rights and for any and all
extensions and renewals thereof.  Without
limiting the foregoing Company shall at Contractor’s request authorise and
permit Contractor by way of licence to exploit commercially any such artwork
made hereunder by means of the manufacture and sale of merchandise other than
Records and Audio Visual Devices SUBJECT ALWAYS to such third party rights in
respect of such artwork as Company’s rights therein may be subject to.  Such rights shall be licensed to Contractor
free of charge save that in respect of any artwork which Contractor requests to
be licensed and which was commissioned by Company, Contractor shall in
consideration of the licence of such rights reimburse Company with *** per cent
(***%) of the costs actually incurred by Company in respect of the design,
creation, origination and production of the finished artwork used by Contractor.  Contractor shall not be entitled to use any
trade mark or logo of Company or any parent associate subsidiary or licensor of
Company in connection with such artwork, Company agrees that Contractor shall
retain copyright in any logos and/or artwork created at Contractor’s sole
expense, which shall if used hereunder by mutual agreement be licensed
irrevocably to Company in perpetuity for the purposes of this Agreement.

 

12.2                           To
the extent that any rights in any of the material referred to in sub-clause
12.1 .2 above vest at any time in Contractor such rights (subject as set out
therein) are hereby assigned to Company absolutely and with the benefit to
Company of all covenants, warranties, agreements or representations expressed
or implied herein and by way of present assignment of present and/or future
rights for the full duration thereof (together with all extensions and
renewals) and in the event that any such rights vest at any time in Artist,
Contractor shall procure that Artist shall promptly so assign the same to
Company.  Without limiting the foregoing

 

*** FOIA Confidential Treatment

 

42

 

Contractor shall procure that Artist will upon Company’s request
execute and deliver to Company such documents deeds or other instruments and in
such form as Company may require to confirm or further assure to Company its
licensees and successors in title all or any of the rights intended to be
granted to Company by this agreement.

 

12.3                           Subject
always to any approvals or restrictions contained in this Agreement, Company
and its licensees shall have (without limiting the generality of rights granted
hereunder) the sole exclusive and unlimited right throughout the Territory to
and to authorise and permit others to:

 

(a)                                  manufacture
Records and Audio Visual Devices by any method(s) now or hereafter known
embodying any portion(s) or all of the Material recorded or deemed to have been
recorded hereunder; and

 

(b)                                 to
store the Material in data banks and to distribute the same by telephone line,
cable, transmitter, satellite, internet, online or any other manner or form of
communication; and

 

(c)                                  broadcast,
perform publicly and to permit public performances and broadcasts and digital
and/or other on line and/or internet and/or electronic transmissions and/or
communications to the public and making available of all and any such Material
and all and any such Records and Audio Visual Devices; and

 

(d)                                 repackage,
sell, transfer, deal in, exploit all and any such Material (as well as
duplicates and derivatives of the same) and all and any Records and Audio
Visual Devices derived therefrom; and

 

(e)                                  delete
or otherwise dispose of Records and Audio Visual Devices derived from Material;
and

 

(f)                                    collect
any and all income payable to Company and/or its licensees arising from the
exercise of any or all of the rights granted to Company herein.

 

Subject always
to any approvals or restrictions contained in this Agreement, all such rights
may be exercised at such times and places, in any and all media and manner and
under any trademarks, trade names or labels as shall be determined and/or
designated by Company in its sole and absolute discretion.

 

13.                               RECORDING
RESTRICTIONS

 

13.1                           Contractor
shall procure that Artist shall not anywhere in the Territory (save as
specifically permitted in clause 10 above):

 

13.1.1                  during
the Term render any Performance whereby any Recording may be made for any third
party or make any such Recording on Artist’s own

 

43

 

account for
subsequent sale or distribution to the public. Notwithstanding the foregoing it
shall not be a breach of this clause for Artist to:

 

(a)                                  Perform
as a non-featured sideman at recording sessions for record companies other than
Company, PROVIDED that Company receives prior notice from Contractor of such
Performance (specifying the other record company, other Artists, title(s) of
track(s) and nature and extent of Artist’s Performance).  It shall be a precondition of ARTIST
rendering such Performance that Contractor and/or Artist shall enter into a
written agreement with such record company (a copy of which Contractor shall
promptly furnish to Company) under which any credit or reference to Artist in
connection therewith (including, but not limited to, on artwork for sleeves,
labels and advertising) shall be as a non-featured sideman (as opposed to as an
artist) and shall be smaller and less prominent than that given to the featured
artist thereon and no larger nor more prominent than that given to any other
non-featured sideman thereon.

 

(b)                                 act
as (a) record producer(s) mixer or remixer for any third party (without
rendering any musical services save as set out in sub-clause 13.1.1(a) above),
PROVIDED THAT Artist may only be credited in respect thereof in Artist’s legal
name.

 

Contractor
will not permit or approve the use of any artwork which could or might imply
that Artist has rendered any Performance thereon other than as permitted by
this sub-clause 13.1.1.

 

(c)                                  Perform
up to three (3) Tracks at a time for third parties for the purpose of making
radio and/or television programmes and allow the makers of such programmes to
record such Performances for radio and television broadcasts, PROVIDED THAT
Artist may only do so pursuant to a written agreement (and in respect thereof
Contractor hereby grants and shall procure that Artist grants to Company full
authority to negotiate such written agreements which shall nevertheless be
executed by Artist) which may permit streamed simulcasting of the applicable
programme on the Internet but which limits the use of any such Performance
and/or recording to a television and/or radio broadcast. For the avoidance of
doubt, such agreement shall:-

 

(i)                                     prohibit
the inclusion of such Performances and/or recordings on records and/or
audio-visual devices; and

 

(ii)                                  prohibit
the inclusion of such Performances in any pay-per view or subscription
television services; and

 

44

 

(iii)                               prohibit
the making available of such Performances via any audio-only or audio-visual
Internet subscription services or via a video-on-demand service or in a form
which is downloadable from the Internet.

 

No such
programme may be exploited commercially as a pay-per-view event or on record or
audio-visual device or via a audio-only subscription service. In the event that
Company retains the rights to do so, Company shall not exploit such
Performances on Record or Audio-Visual Device hereunder without Contractor’s
consent, not to be unreasonably withheld or delayed.

 

Nothing
contained in this sub-clause shall restrict Artist from undertaking work in
films and/or television and/or radio in which Artist’s performances are solely
dramatic in nature (as opposed to musical) or where Artist is acting as a non-music
performing presenter and/or limited to an interview of Artist provided that
Artist and Contractor shall procure that no records or audio-visual devices
shall be distributed to the public embodying any part of any recorded interview
of Artist without Company’s prior written consent.

 

13.2                           Subject
to the provisions of sub-clauses 13.1.1(a) and 13.1.1(b) above, Contractor
shall procure that Artist shall not anywhere in the Territory during the Term
use or authorise the use of Artist’s Name without the prior written consent of
Company for the purpose of distributing to the public any Recordings other than
Audio Material made hereunder and as otherwise permitted by this Agreement.

 

13.3                           Contractor
shall procure that Artist shall not anywhere in the Territory during the Term
purport to grant rights or permission for or assist in the exploitation of
recording(s) of Performance(s) made before the Term and owned or controlled by
Contractor and/or Artist, unless otherwise expressly agreed in writing between
the parties hereto.  Contractor agrees,
warrants and represents that to the best of Contractor’s and Artist’s knowledge
there are no prior recordings of Performance(s) made before the Term now in
existence or any restrictions upon Titles which Artist may record except as
disclosed in Schedule 1 hereto.

 

13.4                           Contractor
shall procure that Artist shall not anywhere in the Territory for a period of
five years immediately following the end of the Term render any Performance
whereby a recording may be distributed to the public of any Title embodied in
any Material for any person, firm or company other than Company or make such a
recording on Artist’s own account, PROVIDED THAT the foregoing period of five
(5) years shall be reduced to one (1) year in respect only of any Title which
shall have been embodied solely in a Long Form Video hereunder but has not been
exploited on Record and PROVIDED FURTHER THAT Artist shall be entitled to
record any Title embodied as aforesaid after the expiry of eighteen (18) months
following the end of the Term should Material

 

45

 

embodying such Title not have been released by Company or one of
Company’s Licensed Affiliates prior to the expiry of such period.

 

13.5                           For
the purposes of the CDPA this Agreement shell be deemed to be an “exclusive
recording contract” as defined in Section 185 thereof. Artist shall notify any
third party for which Artist records a Performance permitted pursuant to this
clause 13 that such Performance is made subject to the Company’s rights as the “person
having recording rights” in relation to the Artist’s Performances (as specified
in the CDPA).  [Insert equivalent US
provision]

 

14.                               INTENTIONALLY
DELETED

 

15.                               SAMPLING
PROVISIONS

 

15.1                           In
the event that Contractor and/or Artist wish to include in any Material
so-called “sampled” extracts from other recordings not wholly owned or wholly
controlled by Contractor and/or Artist (“ Sampled Recordings”) and/or utilises
extracts from compositions and/or any literary or other copyright works other
than Controlled Titles (“Composition Extracts”) then:

 

15.1.1                  such
Sampled Recordings and/or Composition Extracts shall only be included with
Company’s prior written consent;

 

15.1.2                  Contractor
shall and shall at Company’s request procure that Artist and any individual
Producer of the relevant Material will promptly furnish to Company a fully
itemised and detailed list in the form a copy of which is attached as Schedule
2 hereto together with a listening tape recording copy for Company’s reference
of all Sampled Recordings and Composition Extracts included therein with
details of the owners thereof and their licensees and a copy of every clearance
agreement and correspondence with such owners and licensees and the identity of
the recordings and compositions concerned.

 

15.2                           For
the purposes of this clause Delivery of the relevant Material shall be deemed
not to have occurred and Company’s written consent to the use of Sampled
Recordings and/or Composition Extracts shall not be deemed to have been given
until at Company’s election either (a) Company has secured all requisite
licences and clearances in respect thereof or (b) Contractor has secured
requisite licences and clearances and has furnished copies thereof to Company.

 

15.3                           INTENTIONALLY
DELETED

 

15.4                           For
the purposes hereof the expression “Sampling Payments” shall include, without
limitation, any fees, royalties, advances, costs and legal expenses incurred in
connection with the use of Sampled Recordings and/or Composition Extracts, any
and all costs incurred in obtaining or endeavouring to obtain the requisite
licences and clearances in respect thereof, and any re-recording, re-editing
and re-cutting costs required in order to secure the deletion and/or removal of
a Sampled

 

46

 

Recording and/or Composition Extract. 
The expression “Sampling Payments” shall exclude mechanical royalties
payable in respect of Composition Extracts. Company shall have the right to and
to require Contractor to edit and/or re-record any Material in order to remove
any Sampled Recording or Composition Extract for which any requisite licence or
clearance is not obtained in writing by such date as Company deems necessary to
permit planned release schedules to be met. 
Any Sampling Payments shall be deductible from any and all sums (other
than mechanical royalties payable to Contractor pursuant to this
Agreement.  To the extent that Company is
unable to recover such Sampling Payments from such sums within six (6) months
of payment thereof, Contractor undertakes at all times to keep Company fully
indemnified from and against all Sampling Payments, to the extent not recovered
from the applicable Producer, and to the extent incurred pursuant to a court
order or a settlement reached with Contractor’s consent, not to be unreasonably
withheld or delayed.  Notwithstanding the
foregoing Sampling Payments in respect of Company Tracks shall only be
recoupable from the Royalty.

 

15.5                           Company
shall (unless otherwise approved by Contractor) use its best commercial
endeavours, to ensure that each agreement entered into by Company with a
Producer hereunder shall contain a provision substantially to the effect that
the Producer shall not include samples in Audio Material without Company’s
prior written consent.

 

16.                               NAME AND
LIKENESS

 

16.1                           Company
shall have the irrevocable right and licence to use and publish and permit
others to use and publish Artist’s Name. 
Company shall also have the irrevocable right and licence to use and publish
and permit others to use and publish Artist’s approved photographs, likenesses,
signature, caricatures, sobriquets, logos, facsimiles and biographical
materials and other such materials for the purpose of and in association with
the exploitation of Material made hereunder (including, without limitation, on
Artist Site(s) and Company’s or its affiliates’ websites) and the use of all
such materials shall be subject to Contractor’s Consent during the Term in
respect of usage in the USA only, PROVIDED THAT in the event that Contractor,
Artist or Contractor’s Authorised Representative provides any of the
aforementioned materials then Contractor shall be deemed to have consented to
use of such material and any previously approved materials shall be deemed approved
for future use for the purposes of this Agreement.  Company shall use its best commercial
endeavours to procure that its licensees outside the USA use materials used in
the USA or materials previously approved for the applicable licensee PROVIDED THAT
inadvertent failure to do so shall not constitute a breach of this Agreement.
In the event that Contractor’s Consent is given subject to a bona fide
qualification arising from existing legitimate third party rights, Company
shall use its best commercial endeavours to abide thereby.

 

47

 

16.2                           Contractor
hereby warrants and represents that Contractor has and will continue to have
the right both during and after the Term to use and to license others to use Artist’s
Name and all of the aforesaid materials.

 

16.3                           Contractor
shall procure that during the Term Artist shall only use for professional
purposes Artist’s Name approved by Company in writing.  Company hereby approves Artist’s real (i.e.
legal) name.

 

16.4                           INTENTIONALLY
DELETED.

 

16.5                           INTENTIONALLY
DELETED.

 

17.                               ACCOUNTING

 

17.1                           Company
shall furnish to Contractor within ninety (90) days of the 30 June and 31
December in each year (or such other semi-annual accounting period as
designated by Company from time to time) a statement prepared in accordance
with Company’s standard accounting procedure showing in reasonable detail the
calculation of and the total royalties that have been credited to Contractor’s
balance hereunder in the period of six (6) months prior to such date and shall
pay Contractor any balance shown to be due when furnishing such statement,
PROVIDED THAT following the expiry of the Term Company shall not be liable to
furnish any statements for any period in which royalties accrued have not exceeded
one hundred pounds sterling (£100) although one statement in respect of each
period shall be provided to Contractor on request from time to time.

 

17.2                           Company
may maintain reasonable reserves on account of Records and Audio Visual Devices
which may be returned or exchanged and will subsequently make adjustments based
on the number of Records and/or Audio Visual Devices actually returned or
exchanged, PROVIDED THAT each such reserve shall be released equally over two
accounting periods following that in which it was first maintained.  In the event that reserves are insufficient
to cover Records returned or exchanged in any accounting period Company may
deduct from any royalties that accrue in such or any subsequent accounting
period an amount equal to such deficit. 
Company shall be entitled to deduct from payments otherwise accruing due
to Contractor such sums as it may be required to deduct by way of withholding
or similar taxes but shall upon Contractor’s request provide such relevant
information as is in Company’s possession in order to assist Contractor to
recover such sums deducted.

 

17.3                           Unless
within three (3) years of the date of Company’s rendering of any statement
furnished hereunder Contractor shall have notified Company in writing of any bona
fide objections thereto such statement shall be conclusive evidence as to the
accuracy of accountings made to Contractor hereunder during the period covered
by such statement and final and binding on and not open to dispute by either
Contractor or Company.

 

48

 

17.4                           Company
agrees that Contractor may (but not more than once during any calendar year and
only once with respect to any statement rendered hereunder) inspect examine and
otherwise audit (“Audit”) Company’s books and records for the purposes of
determining the accuracy of Company’s statements to Contractor hereunder.
Contractor shall not be entitled to Audit any records which do not specifically
relate to the exploitation of Material hereunder.  All Audits shall be made during regular
business hours upon reasonable prior notice (not less than sixty (60) days) and
shall be conducted on Contractor’s behalf by an independent chartered
accountant (“the Auditor”).  Each
examination shall be made at Contractor’s own expense at Company’s regular
place of business in the United Kingdom where such books and/or records are
maintained.  If Contractor wishes to make
a claim for underpayment, Contractor shall furnish Company with a copy of the
Auditor’s report promptly following the conclusion of the Audit.  If such Audit reveals an underpayment to
Contractor of ten per cent (10%) of total royalties due hereunder during the
period covered by such Audit or ten thousand pounds (£10,000) whichever is the
greater, then Company shall pay all reasonable audit costs (excluding
accommodation travel and subsistence costs) of such Audit. Contractor agrees
that, for the avoidance of doubt, although in respect of money claimed to be
due to Contractor as a result of any Audit, the rights of Audit granted by this
Agreement are a substantial remedy for any underpayment which any such Audit
may reveal, neither the grant by Company nor the exercise by Contractor of any
right of Audit in connection with this Agreement shall, of itself, give rise to
or be deemed to be proof of debt.

 

17.5                           Contractor
may not engage the Auditor to Audit when the Auditor is presently engaged in
any other audit or inspection of Company’s books and records of account in
respect of which any claim is still outstanding or is involved in the
negotiation of a settlement of such an audit or inspection on behalf of another
person.  If Contractor’s chosen Auditor
is so engaged Company agrees that upon written request from Contractor Company
will extend the period of three years in clause 17.3 above to three and a half
years to allow the Auditor to finalise the outstanding audit.  No person or firm shall be designated as the
Auditor if its remuneration is to be calculated wholly by reference to the
amount of any discrepancy revealed by the Audit and/or the terms of any
settlement and/or the outcome of any proceedings arising out of the Audit.  Contractor shall procure that the Auditor
will prior to the start of the Audit execute an unconditional undertaking to
Company in a form reasonably prescribed by Company providing, inter alia, that
the Auditor shall treat as confidential all information regarding Company’s
affairs and business which it may acquire in the course of the Audit and not to
disclose the same to Contractor or Artist (and their respective professional
advisers) or to any third party save to the extent necessary to discharge
Auditor’s responsibilities to Contractor and/or Artist in relation to the
Audit.

 

17.6                           Contractor
shall render where applicable a proper value added tax invoice to Company in
respect of any monies payable hereunder and no VAT shall be payable until the
appropriate VAT invoice has been received by Company.  All 

 

49

 

sums payable by Company hereunder are exclusive of VAT.  Any and all sums paid by Company hereunder or
on Company’s behalf hereunder in a currency other than Sterling shall be
treated as the Sterling equivalent thereof as reflected in Company’s books.

 

18.                               ATTENDANCE
AT PUBLICITY SESSIONS, TOURING AND PROMOTIONS

 

18.1                           For
the purposes of furthering Artist’s career and/or selling or otherwise
exploiting Material made hereunder, Contractor shall procure that (subject to
Artist’s bona fide prior professional commitments) Artist shall during the
Term, as Company may reasonably request from time to time and subject to the provisions
of clauses 11 and 13 above, attend any photographic and/or publicity sessions,
press receptions, interviews (both on and off-line), appear on radio programmes,
in television programmes, Webcasts and in any film to which clause 10 does not
apply and which Company may produce or commission and shall co-operate in such
other reasonable publicity ventures as Company may arrange, without payment
therefor by Company (except as otherwise provided below).

 

18.2                           Company
shall reimburse Contractor promptly following receipt of valid receipts for
those reasonable out-of-pocket travelling and living expenses necessarily
incurred by or on behalf of Artist in connection with the foregoing.  No reimbursement shall be in excess of the
specific amounts approved by Company prior to the same being incurred.  For the avoidance of doubt, Company shall not
reimburse expenses incurred by or in relation to any individual other than Artist
unless it has previously agreed in writing to do so.  In the event that any fees are payable by
third parties in respect of the foregoing, Contractor hereby grants and shall
procure that Artist grants to Company full authority to negotiate documentation
in this regard (and Company shall use its best commercial endeavours to copy
such documentation to Contractor’s legal representatives PROVIDED THAT
inadvertent failure to do so shall not constitute a breach of this Agreement),
which such documentation shall be executed by Artist, and to collect such fees
on Contractor and/or Artist’s behalf (as the case may be).  On all occasions when any appearance fee is
payable to Artist, Company shall be entitled to collect such fees and Company
shall deduct therefrom all of those reasonable out-of-pocket travelling and
living expenses incurred by or on behalf of Contractor and/or Artist in
connection therewith and any remaining credit balance shall be credited to
Contractor’s royalty balance hereunder.  ***
per cent (***%) of the Costs of stage or other clothing purchased by Company to
augment Artist’s performances shall be recoupable from the Royalty.  Neither Contractor nor Artist shall incur any
costs or endeavour to commit Company to any expense in this regard without
Company’s prior consent.

 

18.2.1                              INTENTIONALLY
DELETED.

 

18.2.2                              INTENTIONALLY
DELETED.

 

*** FOIA Confidential Treatment

 

50

 

18.2.3                              INTENTIONALLY
DELETED.

 

19.                               WARRANTIES

 

19.1                           Contractor
agrees, warrants, represents and undertakes that:

 

(a)                                  Contractor
is and will remain entitled to enter into and perform this Agreement and to
grant, licence (as and if applicable) and assign to Company all the rights
herein granted, licensed and/or assigned (including without limitation the
rights granted pursuant to clause 10 above) free of all encumbrances and third
party rights (save only that ownership of Titles embodied in Material may be
vested in publisher(s)) and Contractor shall and shall procure that Artist shall
at its own cost do all that it can upon Company’s request to perfect the said
grant of rights; and

 

(b)                                 Contractor’s
agreement with Artist is a royalty-based agreement, and not an agreement under
which Artist is entitled to a share of net receipts.

 

(c)                                  None
of the Titles selected or mutually agreed by Contractor which are embodied in
any of the Material hereunder, nor any arrangement or adaptation of any Title
which is initiated or carried out by Contractor or Artist, nor Artist’s
performance of any Title (PROVIDED THAT Contractor shall have no liability in
respect of a performance by Artist which does not comply with this sub-clause
(c) and the infringing aspects of which such performance were carried out at
Company’s direction), shall infringe or give rise to any claim of infringement
of the copyright or any other rights (such as but not limited to so-called
moral rights or performers’ rights) of any third party nor be criminally
obscene nor defamatory of any person, firm or company; and

 

(d)                                 Contractor
and Artist will observe all requirements of all relevant unions having
jurisdiction in connection with the making of Audio Material and Audio Visual
Material; and

 

(e)                                  Contractor
is resident in the United Kingdom for taxation purposes (and shall give written
notice to Company of any changes thereto together with details thereof) and
each of Artist and Contractor is a “qualifying person” for the purposes of the
CDPA and shall remain so throughout the Term; and

 

(f)                                    None
of Contractor, Artist and any person deriving any rights from Contractor and/or
Artist shall at any time do or authorise any person to do anything inconsistent
with any of Company’s rights hereunder nor shall the extent of Artist’s
Performances hereunder be misrepresented to Company; and

 

51

 

(g)                                 Neither
Contractor nor Artist nor anyone on behalf of them shall make any claim or
commence any proceedings against Company its licensees or successors in title
in reliance upon any rights in the nature of moral rights now or hereafter
known in any part of the world in relation to the exploitation of any of the
rights granted to Company in this Agreement or of any Controlled Title and
Contractor and Artist shall as Company may require pursuant to clause 20 below
make the benefit of any such moral rights available to assist Company in
proceedings as therein described; and

 

(h)                                 Neither
Contractor nor Artist shall make any claim against Company for any personal
injury or any loss or damage to the property of or in the control of Contractor
and/or Artist which may be sustained in rendering or procuring any of Artist’s
services pursuant hereto, except where the law forbids Company from excluding
such liability; and

 

(i)                                     Contractor
and Artist shall at all times comply with all the terms of the BPI Code of
Conduct (and Contractor acknowledges that Contractor has received from Company
the current form of such Code of Conduct); and [insert US equivalent provision]

 

(j)                                     INTENTIONALLY
DELETED

 

20.                               CO-OPERATION
IN UNAUTHORISED MANUFACTURE ETC.

 

20.1                           At
the request and expense of Company, Contractor shall and shall procure that
Artist shall co-operate fully in preventing (including but not limited to
assisting Company in legal proceedings) the unauthorised manufacture or sale
and/or distribution of Records and Audio Visual Devices and any other devices
embodying performances of Artist (whether or not the same are embodied in
Material made hereunder) and/or the use of Artist’s Name and/or photographs,
likenesses, biographical material and such other identification and/or
materials in such manner as may derogate from rights granted to Company
hereunder. Company may with Contractor’s consent (not to be unreasonably
withheld or delayed) take such steps or institute such legal proceedings in the
name of Contractor and/or Artist as Company may deem suitable, PROVIDED THAT
all of the costs of such proceedings shall be borne by Company.  Company shall be entitled to deduct such
costs incurred from all sums recovered as a result of such proceedings, and
shall credit one half of any excess recovery to Contractor’s royalty
balance.  Nothing herein shall be
construed as a limitation on any other rights Company may have hereunder or in
any way affect the agreements, warranties, representations, undertakings and
indemnities given herein.

 

52

 

21.                               CONSENTS AND
APPROVALS

 

21.1                           Contractor
hereby grants and/or shall procure that Artist and/or any third parties grant
to Company all consents required to be given in accordance with Part II of CDPA
or otherwise required to enable Company to exercise all the rights of Company
hereunder and to exploit fully all Material made hereunder.  [Insert US equivalent provision]

 

21.2                           Where
Contractor’s Consent is required in relation to any creative issue relating to
the making of any Material hereunder and Artist (with Contractor’s knowledge
and approval) does in fact participate in the making of such Material, such
participation shall comprise the necessary consent/agreement (as applicable)
for the purposes of this Agreement.

 

22.                               INDEMNITIES

 

22.1                           Company
and Contractor mutually agree at all times to keep the other fully indemnified
from and against all losses and expenses (including but not limited to reasonable
legal fees and expenses) which the party alleging default (“the Indemnitee”)
may sustain or incur by reason of any actual or alleged breach or
non-observance of any provisions hereof by the other party hereto (“the
Indemnitor”) or any warranty representation or undertaking given by the
Indemnitor being untrue inaccurate or unfulfilled.

 

22.2                           The
Indemnitee shall give written notice to the Indemnitor of claims to which the
provisions of this clause relate and the Indemnitor shall have the right at its
own cost and expense to participate in the defence of any such claim (without
prejudice to its liability under such indemnity).  Company shall on giving written notice to
Contractor, be entitled to withhold from royalties, fees and advances payable
to Contractor hereunder such amounts as are reasonably necessary to protect
Company from such claim and are directly related to Company’s potential
liability under such claim until liability in respect of such claim is finally
settled or adjudicated and Company has been reimbursed all costs and expenses
incurred (including legal costs). 
Notwithstanding the foregoing, Company shall release any withholding
made in accordance with the provisions of this Clause together with any
interest earned thereon during the period of withholding in respect of any
particular claim if proceedings are not instituted within six (6) months of the
date upon which Company first establishes such withholding to meet the claim,

 

22.3                           Neither
party hereto shall be entitled to effect a settlement with a third party in
relation to which the indemnity herein contained applies and is to be relied
upon without the prior written agreement of the other party hereto to the terms
of that settlement, such agreement not to be unreasonably withheld or delayed.  For the avoidance of doubt any costs losses
and expenses incurred by the Indemnitee falling within the scope of the
indemnity given by the Indemnitor under sub-clause 22.1 above and not
reimbursed under any settlement as aforesaid shall be reimbursed promptly by
the Indemnitor and where the same is due to Company from Contractor Company
shall be entitled to deduct the same from any sums due to Contractor hereunder.

 

53

 

22.4                           Notwithstanding
the foregoing if Contractor at any time refuses to fulfil Contractor’s material
obligations hereunder or breaches any of the materiel terms and conditions
hereof Company may without prejudice to its other rights serve notice on
Contractor requesting that Contractor remedy such refusal/breach within
fourteen (14) days following receipt by Company of such notice.  In the event that Contractor does not so
remedy such refusal/breach within such fourteen (14) day period, Company may
without prejudice to its other rights suspend its obligations hereunder
(including without limitation its obligation to pay advances) by written notice
to Contractor for the duration of such default or breach until the same has
been cured and the Term including any maximum Contract Period length pursuant
to sub-clause 1.12 above shall thereafter be deemed automatically extended for
a period equal to all or any part of the period of such default or breach
PROVIDED THAT no such suspension or extension for any one default shall exceed
six (6) months.

 

22.5                           Company
shall have the right at its sole expense to purchase one or more insurance
policy(ies) covering Artists life and/or any disability suffered by Artist due
to accident or sickness.  Company shall
be the named owner and beneficiary of any such policy(ies).  Contractor shall procure that Artist shall
co-operate in the completion of any necessary proposal form for such insurance
but Artist shall not be required to attend any medical examinations.

 

22.6                           INTENTIONALLY
DELETED.

 

23.                               FORCE
MAJEURE

 

23.1                           If
by reason of an act of God, outbreak of hostilities (whether or not war is
declared), insurrection, riot, act of terrorism, civil disturbance, government
act or regulation, fire, flood, explosion, accident, theft, strike, lockout or
trade dispute (whether involving employees of Company or of other parties), any
action by any trade union or by any association of Artist’s musicians and/or
composers or any other cause or reason beyond Company’s control Company is
prevented from or materially hampered in manufacturing, distributing or selling
Records and/or Audio Visual Devices in the United Kingdom then:

 

(a)                                  Company
shall not be liable to Contractor for any loss expense or disadvantage suffered
by Contractor; and

 

(b)                                 Company
may by written notice to Contractor suspend the current Contract Period or any
of its obligations hereunder (save for any obligation to account to, and/or
(unless the applicable event prevents it) make payments to, Contractor
hereunder) for such period as Company is so prevented or materially hampered,
but so that no Contract Period shall be suspended for any period or periods in
aggregate exceeding twelve (12) months. 
In such event a number of days equal to the number of days of such
suspension shall be added to the then current Contract Period including any

 

54

 

maximum Contract Period length, pursuant to sub-clause 1.12 Provided
that in respect of any option which falls due to be exercised within thirty
(30) days of the end of such period of extension or suspension Company shall in
respect thereof have no less then thirty (30) days in which to exercise such
option pursuant to this Agreement and the then-current Contract Period shall be
further extended by a period of up to thirty (30) days as necessary to give
effect to the foregoing and permit the valid exercise of such option during the
Term.  Notwithstanding the foregoing, if
the aforementioned affects only Company then no Contract Period shall be
suspended for any period or periods in aggregate exceeding six (6) months.

 

24.                               PARTIES’
RIGHTS AND REMEDIES

 

24.1                           If
for any reason either party materially breaches this Agreement (“the Defaulting
Party”) then without limiting the rights of the party alleging default (“the
Non-Defaulting Party”) that party may at its election by written notice to the
Defaulting Party where such breach is capable of remedy require the Defaulting
Party to cure the default complained of and where that breach is capable of
cure but remains uncured at the end of sixty (60) days after receipt of such
notice by the Defaulting Party, then the Non-Defaulting Party may terminate the
Term by further written notice, such termination to have effect from the date
of service of such notice.  If either
party validly exercises such right of termination, such termination shall be
without prejudice to the rights of both parties which survive the Term and any
rights the Non-Defaulting Party may have by reason of such breach.  For the purposes of this sub-clause
Contractor’s failure to materially perform will include but will not be limited
to any incapacity preventing Artist’s services being procured in accordance
with the terms of this Agreement.

 

24.2                           Except
as otherwise expressly indicated herein to the contrary the rights and remedies
of the parties as specified herein are not to be exclusive of each other or of
any other rights or remedies of the parties. 
The parties may exercise or decline to exercise any one or more of their
respective rights and remedies as they may deem fit, without jeopardizing any
other rights and remedies.

 

24.3                           In
the event that:

 

(a)                                  a
receiver is appointed over Company’s interest under this Agreement and/or the
whole of its assets and is not removed within ninety days after such
appointment takes effect; or

 

(b)                                 an
order is made or an effective resolution is passed for Company’s winding up or
reorganisation entered into in consequence or anticipation of insolvency (but
excluding for the purposes of reconstruction or amalgamation)

 

55

 

then in any
one of such events Contractor shall have the right (within fourteen (14) days
of the occurrence of such event) to terminate the Term.

 

25.                               ASSIGNMENT

 

25.1                           The
rights and privileges to which Contractor is entitled under this Agreement
cannot be assigned disposed of charged or transferred by Contractor in any way
whatsoever and the parties acknowledge that this Agreement does not purport to
confer upon any third party (including, without limitation, the Artist) any of
those rights and privileges or any other benefit to the Contractor under this
Agreement.

 

25.2                           Company
may assign the benefit of and/or any of its obligations hereunder to its
holding company or to any subsidiary or associated company or affiliate of
Company, or to any company acquiring substantially all the undertaking or
assets of Company or its holding company or subsidiaries or associates
thereof.  For the purposes of this clause
“subsidiary” and “holding company” shall have the meanings set out in Section
736 of the Companies Act 1985 and “associated company” shall mean a company
which is associated with another company either through holdings of shares to
an extent of not less than twenty five per cent (25%) of its equity share
capital (as defined in the said Act) or through common directors to an extent
of not less than one-third (1/3) for the time being of the total number of
directors.  [Insert US equivalent
provision]

 

26.                               NOTICES

 

26.1                           All
notices hereunder or in connection herewith shall be in writing and shall be
addressed as follows:

 

To:                              Contractor
either at the address hereinabove provided or care of the Authorised
Representative at the address hereinafter specified.

 

To:                              Company
[Insert US details]

 

or to such
other address as may be notified in writing in conformance herewith. Notices
shall be sent by hand or by special delivery within the USA and shall be deemed
given on the day on which they are sent in such manner.  A courtesy copy of all notices and consents
from Company shell be sent to Andy Stinson, 33 Ransome’s Dock, 35-37 Parkgate
Road, London SW11 4NP but failure to send such copy shall not invalidate such
notice or be in breach of this agreement.

 

26.2                           If
at the date when the then current Contract Period would otherwise have expired,
Company has neither exercised its option to extend the Term by a further
Contract Period nor notified Contractor that it does not wish to exercise such
option then the following provisions shall apply:

 

(i)                                     Contractor
shall upon such omission coming to Contractor’s notice immediately notify
Company in writing that the relevant option has not yet been exercised (“Option
Warning Notice”); and

 

56

 

(ii)                                  Company
shall be entitled to exercise the relevant option at any time before receiving
an Option Warning Notice or within five (5) working days thereafter; and

 

(iii)                               The
relevant Contract Period shall be automatically extended until Company
exercises, or gives notice that it declines to exercise, the relevant option or
until five (5) working days after the receipt by Company of the relevant Option
Warning Notice (whichever is the earlier).

 

27.                               MODIFICATIONS

 

27.1                           The
entire agreement between the parties in relation to the subject matter hereof
is contained herein.  No modification
amendment or waiver of this Agreement or any provision hereof shall be binding
upon any party unless confirmed in writing by the parties.  No waiver of any provisions of or default
under this Agreement shall affect any party’s right thereafter to enforce such
provision or to exercise any right or remedy hereunder in respect of a
subsequent default.  If any part of this
Agreement shall be determined to be invalid or unenforceable by a court of competent
jurisdiction or by any other legally constituted body having the jurisdiction
to make such determination then such part or parts shall be deemed never to
have been incorporated in this Agreement but all other terms and provisions in
the remainder of this Agreement shall remain in full force and effect.

 

27.2                           Contractor
hereby on behalf of Artist gives its and Artist’s consent to the processing of
any data necessary for the performance of this recording agreement or necessary
for complying with any legal obligation upon Company.  Any such processing will be fair and lawful
within the meaning of the Data Protection Act 1988.

 

28.                               GOVERNING
LAW

 

28.1                           This
Agreement and any and all extensions and/or modifications thereof shall be
governed by and construed in accordance with the laws of England and the High
Court of England and Wales shall have exclusive jurisdiction to determine all
matters arising therefrom.  [Insert US
jurisdiction/choice of Law clause]

 

29.                               AUTHORISED
REPRESENTATIVE

 

29.1                           At
all times there shall be one person who shall be the Authorised Representative
for the purposes of this Agreement and Company shall be entitled but not
obliged to deal with the Authorised Representative from time to time on behalf
of Contractor (to the exclusion of all other persons including Contractor) for
the following purposes only:

 

(a)                                  To
consult on behalf of Contractor and to give consent agreement or approval on
behalf of Contractor whenever consultation with Contractor

 

57

 

or any consent
agreement or approval is required of Contractor under this Agreement.

 

(b)                                 To
negotiate and agree any amendments or variations of this Agreement on behalf of
Contractor save that the Authorised Representative is specifically prohibited
from executing any documents evidencing the same or any other documents of any
kind on behalf of Contractor.

 

29.2                           Notice
to the Authorised Representative of any act matter or thing shall be deemed to
be notice to Contractor.

 

29.3                           The
first Authorised Representative is Simon Fuller who shall notwithstanding
sub-clause 29.1(b) be able to execute such documents as are referred to
therein. Any change in the Authorised Representative shall be made by notice in
writing to Company signed on behalf of Contractor and until receipt of such a notice
by Company no such change shall be effective against Company for any purpose.

 

30.                               TRADE MARKS

 

30.1                           Company
shall be at liberty to and to authorise its licensees at its and their
discretion to make pursue modify discontinue or abandon any application to
register (in Contractor’s name) the Artist Name and any logo or design used by
Artist or in connection with Artist’s services the subject of this agreement as
a trademark in the USA and such other parts of the Territory as Company and its
licensees may reasonably require in order to protect in the applicable class or
classes (in respect of trademarks) those rights granted to Company under this
Agreement including without limitation in the USA classes [Insert equivalent US
classes] and any overseas equivalents thereof. 
Contractor hereby licenses to Company irrevocably and in perpetuity all
necessary rights in respect of Artist Name and any such logos or designs to
enable Company to exploit all rights granted to Company hereunder in
conjunction with Artist Name and such logos and designs.  Such licence shall be exclusive during the
Term insofar as records and audio visual devices (other than audio visual
devices released by third parties pursuant to the provisions of Clause 10
above) embodying Performances are concerned.

 

30.2                           Contractor
for itself and on behalf of Artist hereby irrevocably appoints Company to be
the attorney of Contractor and Artist for the purpose of making any such
application and executing any documentation necessary to pursue or secure any
such registrations and in such event *** per cent (***%) of any costs or
expenses incurred by Company in connection therewith pursuant to a mutually
agreed budget shall be regarded as additional advances recoupable from the
Royalty.

 

30.3                           INTENTIONALLY
DELETED

 

*** FOIA Confidential Treatment

 

58

 

30.4                           Following
the expiry of the Term Contractor shall permit Company its licensees and
successors in title to continue without charge of any kind to exploit those of
Company’s rights hereunder which survive termination of the Term by reference
to any such trademark as registered user thereof.

 

30.5                           Nothing
herein shall oblige Company or its licensees to make or pursue any application
for trade-mark registration nor to maintain support or defend any such
registration if any such application is successful and Contractor for itself
and on behalf of Artist agrees that neither Contractor nor Artist nor anyone on
behalf of it or them will make any claim against Company its licensees and
successors in relation to any act or omission concerning trademarks and
trademark applications hereunder.

 

31.                               CONTRACTOR
APPROVALS

 

31.1                           Company
shall not without the prior written consent of Contractor in each case:-

 

31.1.1                  release
by any means (including Electronic Sales) any Record or Audio Visual Device
embodying Material which is sold or distributed as a so-called “premium” or as
an endorsement or in connection with the sale of any product, commodity or
service;

 

31.1.2                  release
or grant a licence for any Recording Commitment Album and/or Greatest Hits
Album hereunder to be released through a record club (including any Electronic
Sales record club) within three (3) months of the initial retail sale release
of such Album in USA;

 

31.1.3                  release
a Record embodying Audio Material which is pressed in special or odd shaped or
coloured vinyl or as a vinyl picture disc;

 

31.1.4                  release
any Recording Commitment Album embodying Audio Material (a) in the USA as a low
price record within nine (9) months from its initial full price release in the
USA, or, (b) outside the UK as a low price record prior to its release in the
USA as a low price record;

 

31.1.5                  (subject
always to all so-called industry blanket licences) grant to a third party a
licence for the synchronisation of Audio Material in:-

 

(a)                                  a
television advertisement for a third party product or service;

 

(b)                                 a
motion picture of any kind released during the Term;

 

(c)                                  a
motion picture released after the Term which is pornographic.

 

31.1.6

 

31.1.7                  (subject
always to Company’s right to engage Producers without prior consent pursuant to
sub-clauses 3.1(e) and 3.4 above) engage a third

 

59

 

party to whom
a royalty is payable which is deductible from Contractor’s royalty hereunder;

 

31.1.8                  release
or grant a licence for the release of any Audio Material on any Compilation
Album SAVE THAT notwithstanding the foregoing the inclusion of any Audio
Material in any Compilation Album which is released by a major record company
or companies (whether or not as part of a joint venture) shall be deemed
approved;

 

31.1.9                  re-sequence
the running order of Tracks on any Recording Commitment Album after it has been
initially released hereunder;

 

31.1.10            release
or otherwise exploit any so-called demos or outtakes;

 

31.1.11            release
or otherwise exploit any Material comprising recordings of “live” Performances
by the Artist unless specifically made or delivered hereunder for release
and/or other exploitation;

 

31.1.12            knowingly
grant a licence for the use of any Audio Material in a radio advertisement for
products or services unrelated to the Artist;

 

31.1.13            grant
a licence during the Term for the use of any Audio Material in a computer game
of any type; or grant such a licence after the Term where the computer game in
question is violent in nature.

 

31.2                           In
the event that any primarily interactive product (such as a CDi or CD ROM) is
made or produced hereunder the parties agree that the budget therefor shall be
Mutually Agreed and shall be recoupable only from royalties and flat fee income
accruing to the credit of Contractor in respect of interactive products.

 

31.3                           The
concept and design of artwork for use in packaging or Records and Audio Visual
Devices released during the Term wholly embodying Material hereunder shall be
mutually agreed by the parties PROVIDED ALWAYS THAT Contractor agrees to
co-operate promptly arid fully with Company so as to ensure that artwork is
approved in a timely manner in order to enable Company to comply with its
proposed release schedule.  Following the
Term, Company shall not without Contractor’s consent (not to be unreasonably
withheld or delayed) make any substantial alterations to artwork used hereunder
during the Term.

 

31.4                           It
is acknowledged and agreed that during the Term Contractor shall be entitled to
notify Company of proposed projects as premiums, and/or synchronisation and/or
use of Audio Material or Audio Visual Material in an advert or commercial (“Relevant
Projects”) which Contractor wishes to permit third parties to undertake in
connection with advertising, merchandising, sponsorship or endorsements
featuring Artist and involving third party products or services.  Contractor shall give Company not less than
14 days written notice of any such Relevant Project. Provided that Company:

 

60

 

(a)                                  acting
reasonably, approves the content of, and identity of the third party brand or
entity involved in the Relevant Project concerned; and

 

(b)                                 approves
the selection and amount of the Audio Material or Audio Visual Material which
Contractor wishes to use in the Relevant Project concerned.

 

then Company
shall grant an appropriate non-exclusive licence to the third party on terms
negotiated by Company with the third party concerned (PROVIDED THAT in respect
of synchronisation licences Company shall be entitled to receive the same as
but not more than the publisher(s) concerned and in respect of premiums Company
shall not be entitled to insist on manufacturing and will be entitled to
receive 2.5 times the amount charged by the applicable publisher’s collection
society per unit.  Contractor
acknowledges and agrees that, where clearance of a Relevant Project is sought
wholly or partially for a territory outside the UK, Company shall be entitled
to impose on such a Relevant Project (and Contractor shall comply with) such
reasonable restrictions as may be requested by Company’s licensees.

 

31.5                           Contractor
and Company shall mutually agree the A-side or lead track of each Single to be
released hereunder in the USA during the Term. 
Singles released hereunder in the USA during the Term may be released
outside the USA in the same formats and with the same track listing.  If Company’s licensee wishes to release a
Single during the Term other than in a format and with a track listing agreed
for USA release, the A side or lead track of that Single will be mutually
agreed between Contractor and the relevant licensee.

 

31.6                           Company
agrees that it will procure in respect of Records and Audio Visual Devices
released in the USA, and will use its best endeavours to procure in respect of
Records and Audio Visual Devices released outside the USA, that the ‘19’ logo
will be embodied on the label and packaging of, and printed advertising (but
solely where BMG’s logo is to be included) concerning; Records and Audio Visual
Devices released hereunder.  Contractor
agrees to supply in a timely manner artwork for the ‘19’ logo at Contractor’s
cost, and hereby warrants that it owns such logo and that its use by Company
will not infringe any third party rights. 
Inadvertent failure by Company or its licensees to comply with the
provisions of this sub-clause shell not constitute a breach of this Agreement.

 

32.                               MISCELLANEOUS

 

32.1                           Clause
headings used herein are for convenience of reference only and are not part of
any clause and shall not be used in construing the meaning of any clause of
this Agreement.

 

61

 

32.2                           All
references to the masculine gender shall include the feminine gender also and
words in the singular shall include the plural and vice versa.

 

32.3                           In
the event that Company overpays Contractor or pays any sums to Contractor in
error Contractor shall give written notice to Company of such overpayment or
erroneous payment and shall promptly reimburse the same to Company following
Company’s request so to do.  At Company’s
election, Company may deduct any or all of such overpayment or erroneous
payment from any monies due to Contractor pursuant to this Agreement within
three (3) years following the date of the overpayment or erroneous payment.

 

32.4                           Contractor
acknowledges on behalf of itself and Artist that in the course of performing
their obligations hereunder Contractor and Artist will be exposed to
information which is confidential and/or commercially sensitive and which if
disclosed may be liable to cause significant harm to Company, its clients and
customers. Contractor agrees to and agrees to procure that Artist shall keep
secret during the Term and thereafter and not for any reason to use,
communicate or reveal to any other person (whether for Contractor’s, Artist’s
or another’s benefit or otherwise) any confidential information which has come
into Contractor’s and/or Artist’s knowledge during the Term.  Contractor shall use its best endeavours and
shall procure that Artist uses Artist’s best endeavours to prevent publication
or disclosure of any such information by Contractor, Artist or any other
party.  Given the high public profile of
various of Company’s staff, clients and customers and the effect unwanted
publicity can have on the private life, career end earning capacity of the
same, Contractor acknowledges that this requirement of confidence is a very
important and fundamental term of this Agreement.

 

32.4A                 Company
acknowledges that in the course of performing its obligations hereunder Company
will be exposed to information which is confidential and/or commercially
sensitive and which if disclosed may be liable to cause significant harm to
Artist or Contractor, its clients and customers.  Company agrees to keep secret during the Term
and thereafter and not for any reason to use, communicate or reveal to any
other person (whether for Company’s or another’s benefit or otherwise) any
confidential information which has come into Company’s knowledge during the
Term.  Company shall use its best
endeavours to prevent publication or disclosure of any such information by
Company or any other party. Given the high public profile of various of Artist
and Contractor’s staff, clients and customers and the effect unwanted publicity
can have on the private life, career and earning capacity of the same, Company
acknowledges that this requirement of confidence is a very important and fundamental
term of this Agreement.

 

32.5                           By
way of example only, information will be deemed confidential if it is not in
the public domain and relates to any financial information; marketing
strategies and tactics; current activities; current and future plans relating
to development, production or sales, including the timing of any such matters;
the development

 

62

 

and engagement of artists and/or producers or recording engineers; and
the creating, acquiring and/or licensing of repertoire from third parties.

 

32.6                           Information
which is publicly available or becomes publicly available through no breach of
this Agreement shall not be treated as confidential hereunder.

 

33.                               LEGAL ADVICE

 

33.1                           Contractor
acknowledges that Company has advised Contractor to take independent legal
advice from a solicitor specialising in the music business on the terms and
conditions of this Agreement and on the implications of Contractor executing it
and that such advice has been taken prior to Contractor executing this
Agreement.

 

33.2                           Company
will not use the logo from the Series but can use the name of the Series in
associated marketing for Records, Audio Visual Devices wholly embodying
Material hereunder and in any printed materiel accompanying Electronic Sales.

 

63

 

IN WITNESS
whereof a duly authorised officer of each of the parties hereto has entered
into this Agreement the day and year first above written.

 

	
  SIGNED
  by

  	
  )

  	
   

  	
   

  
	
  for
  and on behalf of:

  	
  )

  	
   

  	
   

  
	
   

  	
  )

  	
   

  	
   

  
	
  [US
  Designess]

  	
   

  	
   

  	
   

  
	
  in
  the presence of:

  	
  )

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SIGNED
  by

  	
  )

  	
   

  	
   

  
	
  for
  and on behalf of:

  	
  )

  	
   

  	
   

  
	
  19
  RECORDINGS LIMITED

  	
  )

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  In
  the presence of:

  	
  )

  	
   

  	
   

  

 

NOTICE
TO ARTIST

 

THIS
AGREEMENT IS INTENDED TO BE LEGALLY BINDING AND IS BY ITS NATURE
RESTRICTIVE.  YOU SHOULD CONSULT AN
INDEPENDENT EXPERT LEGAL ADVISOR BEFORE SIGNING AND BY YOUR SIGNATURE HERETO
YOU CONFIRM THAT YOU HAVE SO CONSULTED AN INDEPENDENT EXPERT LEGAL ADVISOR.

 

64Exhibit 10.18

 

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

 

	
   

  	
  From:

  	
  Ronagold
  Limited

  
	
   

  	
   

  	
  Bedford
  House

  
	
   

  	
   

  	
  69-79 Fuham
  High Street

  
	
   

  	
   

  	
  London SW6
  3JW

  
	
   

  	
   

  	
   

  
	
  To:

  	
  19 Recordings Limited

  	
   

  	
   

  
	
   

  	
  33 Ransome’s Dock

  	
   

  	
   

  
	
   

  	
  35-37 Parkgate Road

  	
   

  	
   

  
	
   

  	
  London SW11 4NP

  	
   

  	
   

  

 

14
October, 2004

 

Dear Sirs:

 

Pop Idol/Idols

 

We refer to the option agreement between you and us dated 8 February
2002 (“the Agreement”).

 

In consideration of the sum of one pound (£l) now paid by us to you and
the mutual promises contained herein you and we have mutually agreed to vary
the Agreement as follows:-

 

1.                                       INTENTIONALLY
DELETED

 

2.                                         Clause 3.1 of
the Agreement shall be deemed amended with effect from the date of signature thereof
by the deletion from the seventh line of the words “BMG/Bertelsmann group of
companies” and the substitution therefor of the words “Sony BMG Music
Entertainment group of companies or such group’s customary licensee in the
Relevant Territory”.

 

3.                                       19 consents to
*** being present at recording sessions in addition to the representative of
the US Licensee pursuant to clause 3.2 of the US Licence attached to the
Agreement as Exhibit A. Ronagold shall obtain the consent of the US Designee to
the presence of  *** at such recording
sessions.

 

4.                                       (a)           It
is agreed that BMG Records Africa PTY Limited (“BMG Africa”) has been
designated by Ronagold as the ROW Designee in respect of the first and second
Series for the Relevant Territory of South Africa.

 

(b)                                 Ronagold
agrees that BMG Africa shall have the right to make up to two recordings by
each of the 11 Finalists of the first and second Series in South Africa (making
a total of up to 22 recordings in respect of each Series) for release as ‘Idols’
compilation albums, the first of which was released in South Africa on 11th
July 2002. The recordings shall be treated as Override Masters and the
compilation albums shall be treated as albums of Override Masters. Ronagold

 

 

agrees to procure that BMG Africa pays to 19
on Ronagold’s behalf an advance of £*** in relation to each such compilation
album (to the extent not already paid prior to the date hereof) and Ronagold
shall account and, subject to recoupment of the said advance, pay Override
Royalties to 19 calculated at the rates set out in paragraph Al of Schedule 2
to the Agreement on all sales of the said compilation albums. For the avoidance
of doubt, Ronagold’s liability to pay Override Royalties to 19 in respect of
records embodying the said albums shall be limited to the foregoing sentence,
so that Ronagold shall not be liable to pay 19 a double royalty in respect
thereof.

 

(c)                                  Ronagold
agrees to procure the payment by BMG Africa of an advance of ZAR *** to the
Winner of the Competition within 14 days after the final episode of the first
Series. 19 acknowledges that Ronagold has complied with the said obligation.
Ronagold agrees to procure the payment by BMG Africa (if not already made prior
to the date hereof) of an advance of ZAR *** (less ZAR *** payable to the
management designee in South Africa) to the Winner of the Competition within 14
days after the final episode of the second Series.

 

5.                                       (a)                                  It
is agreed that BMG Poland Ltd (“BMG Poland”) shall be the ROW Designee in
respect of the first, second and third Series for the Relevant Territory of
Poland.

 

(b)                                 19
agrees that BMG Poland shall have the right to make up to two recordings by
each of the 10 Finalists of each Series in Poland (making a total of up to 20
recordings in respect of each Series) for release on ‘Idols’ compilation
albums, the first of which was released in Poland in August 2002. The
recordings shall be treated as Override Masters and each compilation shall be
treated as an album of Override Masters. Ronagold agrees to procure that BMG
Poland pays to 19 on Ronagold’s behalf an advance of £*** within 14 days after
the date hereof in relation to the compilation album for the first Series
(receipt of which is hereby acknowledged) and Ronagold shall account for and,
subject to recoupment of such advance, pay Override Royalties to 19 at the
rates set out in paragraph Al of Schedule 2 to the Agreement on all sales of
the compilation albums. There shall be no advance for the compilation album for
the second Series. For the avoidance of doubt, Ronagold’s liability to pay
Override Royalties to 19 in respect of records embodying the said albums shall
be limited to the foregoing sentence, so that Ronagold shall not be liable to
pay 19 a double royalty in respect thereof.

 

(c)                                  INTENTIONALLY
DELETED.

 

6.                                       (a)                                  In
Clause 3.3 the second sentence (beginning “The form of ...........” and ending “............
country concerned”) shall be deemed deleted in respect of Series commencing
after the date of signature hereof and replaced with:

 

*** FOIA Confidential Treatment

 

 

“Ronagold
shall ensure that the form of and terms contained in the Recording Agreements
shall comply with clause 3.18 below but Ronagold shall not be in breach of the
Agreement if its choice as to the Local Record Company refuses to contract on
all such terms”.

 

(b)                                 A
new clause 3.18 shall be deemed added to the Agreement in respect of recording
agreements entered into after the date of signature hereof in the following
terms:

 

“3.18
The Recording Agreement to be entered into by the Winning Artist and any Finalist
pursuant to clause 3.3 above:

 

(i)                                     shall
be based on the ROW Designee’s usual exclusive recording agreement;

 

(ii)                                  shall
provide for an initial firm recording commitment of a minimum of one album;

 

(iii)                               shall
provide for advances, creative controls, royalties and approvals commensurate
with such terms available in ROW Designee’s agreements to an artist who has
already had one ‘platinum’ selling album prior to signature in the country
concerned;

 

(iv)                              shall
provide a commitment to release the first album in the country concerned within
a reasonable time following delivery of the completed album;

 

(v)                                 shall
not attempt to obtain any merchandising (it being acknowledged and agreed that
for the purposes of this sub-clause (v) the term ‘merchandising’ shall exclude
so-called “electronic ‘merchandising’ e.g. ringtones whether they do or do not
embody master recordings), sponsorship, advertising or endorsement rights from
the artist concerned;

 

(vi)                              shall
not restrict the artist’s ability to perform live concerts (provided no
recording of such concert is to be made by any party whatsoever (including but
not limited to 19 and any other company within the 19 group of companies) other
than the ROW Designee and other than to satisfy local series TV broadcast obligations
(but not in any event on a pay-per-view basis or subscription basis));

 

(vii)                           shall
not attempt to obtain the songwriting services of the artist, obtain assignment
or licence of rights in musical compositions written by the artist (other than
normal warranties concerning so-called ‘controlled compositions’) or require
the artist to grant such rights to any third party;

 

(viii)                        shall
PROVIDED ALWAYS THAT 19 have served the relevant notice upon Ronagold pursuant
to sub-clause 3.2 above be supplied to 19

 

 

promptly following 19’s request therefor
solely in order to enable 19 to check that the same complies with this
sub-clause 3.18; and

 

(ix)                                shall
be executed by the ROW Designee promptly following execution of the agreement
by each Finalist.

 

7.                                       In the first
line of clause 3.4 of the Agreement the word ‘BMG’ shall be deemed deleted with
effect from signature of the Agreement and replaced with the word ‘Ronagold’.

 

8.                                       (a)                                  In
the event that Ronagold exercises its option to be the Local Record Company in
respect of the Third Series in the Relevant Territory of the United Kingdom
pursuant to clause 4.12 of the Agreement, 19 hereby grants to Ronagold an
exclusive irrevocable option (‘the Third Series Compilation Option’) to enter
into a licence agreement with 19 for the Third Series compilation album and any
and all proposed single releases (‘Group Singles’) embodying recordings by
predominantly all of the Finalists (‘Group Recordings’). 19 shall not make more
than one such compilation album in relation to the Third Series without
Ronagold’ s prior written consent.

 

(b)                                 Ronagold
shall have the right to exercise the Third Series Compilation Option pursuant
to sub-clause 8(a) above by notice in writing served on 19 within 21 days after
receipt by Ronagold of notice from 19 complying with the provisions of
sub-clause (c) below confirming:

 

(i)                                     that
19 intends to make a compilation album (and, if applicable, one or more Group
Recordings) featuring recordings by the Finalists of the Third Series in the
Relevant Territory of the United Kingdom;

 

(ii)                                  19’s
bona fide estimate of the recording costs and the producer advances to be
incurred by 19 in making the compilation album (and any applicable Group
Recordings) (which the parties do not intend should exceed £*** per track in
aggregate);

 

(iii)                               the
bona fide amount payable directly to the Finalists by way of advances against
royalties in respect of tracks for the compilation album (and any Group
Recordings);

 

(iv)                              the
proposed release date(s);

 

(v)                                 the
proposed track listing(s);

 

(vi)                              any
restriction upon, or dilution of, the Artist Rights (as defined in sub-clause
(c) below.

 

*** FOIA Confidential Treatment

 

 

(c)                                  19
shall serve such notice no earlier than seven (7) days after broadcast in the
UK of the first programme following selection of all of the Finalists, and no
later than six (6) weeks prior to the broadcast in the UK of the last programme
in the series (the period between the said two (2) dates being hereinafter
referred to as ‘the Notice Period’)). 19 shall use its commercial endeavours to
secure from the Finalists the necessary rights to enable 19 to enter into the
applicable compilation album licence agreement with Ronagold (‘the Artist
Rights’).  If 19 is unable to secure the
Artist Rights, 19 shall notify Ronagold to that effect within the Notice
Period, and if 19 (prior to, during or after the Notice Period) acquires the
Artist Rights it shall then serve a notice on Ronagold in accordance with
sub-clause (b) above and Ronagold shall have the Third Series Compilation Album
Option on the terms set out above. If Ronagold exercises its option pursuant to
sub-clause 8(a) above, 19 and Ronagold will promptly thereafter execute an
agreement (‘the Third Series Compilation Licence’) on the terms contained in
the agreement of even date herewith between 19 and Ronagold regarding the
compilation album for the second Series in the United Kingdom mutatis mutandis
save that it is acknowledged and agreed that if the Profit (as defined therein)
is a negative amount, i.e. a loss has been made by Ronagold, 19 shall have no
liability to make a contribution to Ronagold in respect of such loss.

 

(d)                                 For
the avoidance of doubt, no additional advances or royalties will be payable by
Ronagold in respect of the making or exploitation of the recordings comprised
on the Third Series Compilation Album and any Group Recordings other than
pursuant to the Third Series Compilation Licence (for example, Ronagold will
not be obliged to pay any advances and/or royalties for such recordings under
any Licence Agreement entered into in respect of the Winning Artist or any
other Finalist in respect of whom Ronagold has exercised its option to be the
Local Record Company in the United Kingdom).

 

(e)                                  INTENTIONALLY
DELETED

 

(f)                                    If
Ronagold so wishes, Ronagold may create and maintain a website relating to the
Third Series Compilation Album, the costs of which shall be subject to 19’s
approval (such approval not to be unreasonably withheld or delayed) and shall
be a Cost within the meaning of sub-clause (vi) above. 19 shall supply to
Ronagold all materials (at cost price) and co-operation reasonably required by
Ronagold in connection therewith.

 

(g)                                 19
shall not release a long-form video (whether in VHS format, DVD format or any
other format) featuring the Finalists which is substantially similar, in terms
of musical content, to the Third Series Compilation Album.

 

8A.                             If Ronagold exercises its
option pursuant to clause 4.19 of the Option Agreement to enter into a Licence
Agreement with 19 for the Winning Artist of the fourth Series in the Relevant
Territory of the United Kingdom, 19 hereby grants to Ronagold an exclusive
irrevocable option to enter into an agreement with 19 for the compilation album
to be released in association with the fourth Series in the

 

 

UK on the same terms and conditions as apply
in respect of the compilation album to be released in association with the
third Series in the UK.

 

8B.                               The following sentence
shall be deemed added with effect from the date of signature hereof to sub-clauses
3.2, 4.13 and 4.20 of the Agreement:-

 

 

‘19 shall
serve such confirmatory notice on Ronagold by no later than 30 days prior to
first transmission of the first programme in the Series in question, whether or
not any formal agreement in respect of the relevant Television Rights has yet
been concluded, and if 19 fails to serve such notice prior to 90 days prior to
first transmission of the first programme in the Series in question, Ronagold
shall be entitled (but not obliged) to treat such notice as having been served.
In any event, 19 shall send to Ronagold all available information regarding the
Series as soon as the same is available without prejudice to Ronagold’s right
to proceed as aforesaid.’

 

8C.                               The words ‘if available’
shall be deemed inserted with effect from the date hereof in sub-clauses
3.2(b),4.13(b) and 4.20(b) of the Agreement, in each case after the word ‘same’
and before the parenthesis.

 

9.                                       (a)                                  For
the avoidance of doubt Ronagold and/or Ronagold’s ROW Designee shall be
entitled in relation to any compilation album and Group Single(s) to which it
acquires rights hereunder to (i) refer to the title of the Series on the
packaging of Records embodying the same and in all promotional and marketing
materials therefor and (ii) to incorporate the Series logo on the packaging of
all Records embodying such compilation album/Group Single, and in all
promotional and marketing materials therefor.

 

(b)                                 In
the event that Ronagold does not exercise its rights to acquire the Third
Series compilation album or the Fourth Series compilation album in the UK then
19 may offer rights in the applicable compilation album to third parties but 19
may not grant rights in respect of any such album to any third party on terms
which are less favourable to 19 in any respect unless it first gives Ronagold
(by notice in writing) the opportunity to match the terms upon which it
proposes to grant the said rights, and in the event that Ronagold (by notice in
writing) so matches such terms within 10 days of receipt of 19’s notice 19
shall promptly enter into an agreement with Ronagold pursuant to which 19 shall
grant such rights to Ronagold upon such terms. In the event that Ronagold
declines to match such terms, 19 shall procure that the release of the
applicable compilation shall not take place within the period commencing on the
date 3 months prior to, and ending on the date 3 months after, any release by
Ronagold of an album embodying performances by the winner from the applicable
Series; 19 shall procure that neither the applicable compilation album nor any
Group Single shall be released in the week of release of any single embodying
performances by the winner of the applicable Series; and 19 shall procure that
the names and likenesses of artists in respect of whom Ronagold exercises its
option pursuant to the Agreement shall not, in the packaging and marketing of
the applicable compilation, be given more prominence than the other artists
featured thereon.

 

10.                                 INTENTIONALLY DELETED.

 

11.                                 INTENTIONALLY DELETED.

 

 

12.                                 INTENTIONALLY DELETED.

 

13.                                 With effect from
signature hereof, a new clause 14 shall be deemed inserted into the Agreement
as follows:

 

‘It is acknowledged and agreed that all option notices
to be served by 19 upon all ROW Designees shall be served by 19 upon the
applicable ROW Designee but with a copy of each notice being simultaneously
sent to Ronagold, and that the applicable ROW Designee shall be the entity
which serves the applicable notice (rather than Ronagold) on 19 to exercise the
applicable option, which 19 agrees shall be a valid exercise thereof.’

 

14.                                 Save as varied hereby
the Agreement shall remain in full force and effect.

 

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

 

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

 

	
  Yours faithfully

  	
  Accepted and Agreed

  
	
   

  	
   

  
	
  /s/

  	
   

  	
  /s/

  	
   

  
	
  For and on behalf of Ronagold Limited

  	
  For and on behalf of 19 Recordings Limited

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