Document:

Exhibit
10.17

 

THIS AGREEMENT
is made on 8th February 2002(1)

 

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.

 

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)  This Exhibit incorporates a
letter amendment.

 

 

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);

 

(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

 

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(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.

 

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

 

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(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 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 

 

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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 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:

 

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(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.

 

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);

 

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(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 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 

 

7

 

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 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 

 

8

 

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
William Young 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
Aaron Bayley, Hayley Evetts, Jessica Garlick, Laura Doherty, Rosemary Ribbons,
Chris Niblett (‘Korben’) and Zoe Birkett. 
19 confirms it will irrevocably release Aaron Bayley, Hayley Evetts,
Jessica Garlick, Rosemary Ribbons, Laura Doherty and Chris Niblett (“Korben”)
from their respective recording agreements with 19 as soon as possible
following signature of this agreement.

 

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:

 

9

 

(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
£400,000 in lieu of £500,000 if the Finalist was placed second in the
Competition and shall be £300,000 in lieu of 500,000 if the Finalist was placed
third to tenth (inclusive) in the Competition.

 

(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 William Young:

 

(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;

 

(vi)          clause
4 — the Company will pay to Contractor the sum of £400,000 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 £200,000 upon commencement of recording the
Album concerned and as to £200,000 upon Delivery of that Album.  The Contractor will be entitled to retain any

 

10

 

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
£300,000 of each such Recording Budget.

 

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

 

(f)            the
fees of Julian Henry pursuant to clause 31.8 will be £4,000 per month in lieu
of £5,000 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);

 

(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).

 

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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 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;

 

12

 

(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 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.

 

13

 

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 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 

 

14

 

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:

 

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.

 

15

 

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.  19 agrees that Simon Cowell may
say he assisted in the development of Simon Fuller’s original concept but will
not make any other claims to be the owner or creator of the Format.

 

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           Ronagold agrees to
procure Simon Cowell’s execution of the inducement letter attached to this
agreement as Exhibit B.

 

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).

 

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;

 

(2)  Clause 13 was deleted by
amendment.

 

16

 

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 authorized 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

  

 

 

SCHEDULE 1

 

Details of
prior recordings

 

 

EXHIBIT
A

 

Dated:                                       2002

 

 

Exclusive Recording Agreement

 

Between

 

USA Designee

 

And

 

19 Recordings Limited

 

 

THIS AGREEMENT
is made the               
day of                          
200   

 

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:

 

14.           DEFINITIONS

 

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

 

14.1         “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).

 

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

 

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

 

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

 

14.5         “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

 

14.6         “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 

 

 

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)

 

14.7         “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.

 

14.8         “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
twenty-five per cent (25%) 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”.

 

14.9         “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,

 

14.10       “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 - fifteen per cent (15%); in respect of 12” vinyl
Singles in special bags and other non-Album vinyl Records -seventeen and a halt
per cent (17.5%); in respect of vinyl Albums and audio cassette tapes - twenty
per cent (20%); in respect of compact discs, Audio Visual Devices and New
Technology Records - twenty five per cent 25%).

 

14.11       “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.

 

2

 

14.12       “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.

 

14.13       “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.

 

14.14       “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.

 

14.15       “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

 

(b)           by
Mail Order Operation

 

5

 

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.

 

14.16       “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.

 

14.17       “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.

 

14.18       “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.

 

14.19       “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.

 

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

 

14.21       “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).

 

14.22       “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
reasonable efforts to locate Contractor or Contractor’s Authorised
Representative 

 

6

 

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.

 

14.23       “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.

 

14.24       “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.

 

14.25       “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.

 

14.26       “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.

 

14.27       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.

 

14.28       “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.

 

14.29       “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:

 

7

 

(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).

 

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

 

14.31       “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 fifty per cent (50%) 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).

 

14.32       “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:

 

8

 

(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.

 

14.33       “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.

 

14.34       “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.

 

14.35       “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.

 

9

 

14.36       “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.

 

14.37       “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.

 

14.38       “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.

 

10

 

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

 

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

 

14.41       “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.

 

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

 

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

 

14.43       “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.

 

14.44       “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.

 

14.45       “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

 

15.           RECORDING SERVICES

 

15.1         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.

 

15.2         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.

 

11

 

16.           RECORDING COMMITMENT

 

16.1         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: Absolute, Stannard & Gallagher, Simon Franglen, Rose &
Foster, David Eriksen, Cathy Dennis, Tim Laws, Simon Ellis, Toddy, Jewels &
Stone, Steve & Pete Lewinson, Oskar Paul, Stargate, Waterfall, True North,
Steelworks, Yak Bondy, Stephen Lipson, Per Magnusson, David Kreuger, Jorgen
Elofsson, Steve Mac, Pete Waterman [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 150%) 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 

 

12

 

Company for Tracks on the First Album in the
event that (i) the applicable royalty is one per cent (1%) on a dealer price
basis or less and (ii) the total producer/mixer/remixer royalty on each
applicable Track does not exceed five per cent (5%). Notwithstanding anything
to the contrary contained in this Agreement, up to three (3) remixes per Album
each of which costs fifteen thousand pounds (£15,000) or less shall be deemed
mutually agreed.

 

16.2         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.

 

16.3         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.

 

16.4         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.

 

13

 

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

 

16.5.2      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.

 

16.6         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.

 

16.7         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.

 

16.8         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.

 

16.9         “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.

 

17.           RECORDING COSTS

 

17.1         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

 

ten per cent (10%) contingency. For the First
Album (only), a Recording Budget of twenty-five thousand pounds (£25,000) 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.

 

17.2         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.

 

17.3         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.

 

17.4         INTENTIONALLY DELETED.

 

18.           RELEASE COMMITMENT

 

18.1.1      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.

 

18.1.2      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) 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 

 

15

 

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 four per cent (4%) 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 rate 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.

 

18.2         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 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 

 

16

 

released in the relevant countries at any
time prior to receipt of such further notice then such further notice shall be
of no effect.

 

18.3         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.

 

18.4         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 twenty per cent (20%) of any advance paid by such
third party in respect of the rights granted together with a royalty of twenty
per cent (20%) 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.

 

18.5         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 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.

 

19.           ADVANCES

 

19.1.1      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:

 

17

 

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

 

(i)        two
hundred and fifty thousand pounds (£250,000) 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)       two
hundred and fifty thousand pounds (£250,000) 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 seventy per cent
(70%) 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:

 

(i)        A
minimum of four hundred thousand pounds (£400,000) and a maximum of eight
hundred thousand pounds (£800,000) in respect of the Second Contract Period

 

(ii)       A
minimum of five hundred thousand pounds (£500,000) and a maximum of one million
pounds (£1,000,000) in respect of the Third Contract Period

 

(iii)      A
minimum of five hundred and fifty thousand pounds (£550,000) and a maximum of
one million one hundred thousand pounds (£1,100,000) in respect of the Fourth
Contract Period

 

18

 

(iv)      A
minimum of seven hundred thousand pounds (£700,000) and a maximum of one
million four hundred thousand pounds (£1,400,000) in respect of the Fifth
Contract Period.

 

19.1.2      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).

 

19.1.3      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.

 

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

 

19.3         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 five
hundred thousand pounds (£500,000) less any unrecouped balance unrecouped on
Contractor’s royalty account but subject to a 

 

19

 

minimum figure of one hundred thousand pounds
(£100,000) in any event.  Such advance,
if any, shall be payable on release of such Greatest Hits Album.

 

19.4         INTENTIONALLY DELETED.

 

19.5         INTENTIONALLY DELETED.

 

19.6         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
fifty per cent (50%) of each and every advance received by Contractor from
Company pursuant to sub-clauses 6.1.1 and/or 6.3 above.

 

20.           ROYALTIES

 

20.1         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 one
hundred per cent (100%) 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

 

	
   

  	
   

  	
   

  	
   

  	
  Major

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  USA

  	
   

  	
  TERRITORIES

  	
   

  	
  ROW

  	
   

  
	
  Albums

  	
   

  	
  25

  	
  %

  	
  24

  	
  %

  	
  24

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Records
  other than Albums released during the First Contract Period

  	
   

  	
  19

  	
  %

  	
  17

  	
  %

  	
  16

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Records
  other than Albums released during subsequent Contract Periods

  	
   

  	
  19

  	
  %

  	
  17.5

  	
  %

  	
  16.5

  	
  %

  

 

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 one
million (1,000,000), then the royalty rate in respect of Records Sold of such
Album in excess of one million (1,000,000) shall increase by one per cent (1%)
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, 

 

20

 

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.

 

20.2         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.

 

20.3         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 four per
cent (4%) of the Royalty Base Price, then such royalty up to a maximum of eight
per cent (8%) of the Royalty Base Price shall be divided equally between
Contractor and Company and after such division any royalty in excess of eight
per cent (8%) 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.

 

20.4.1      In respect of
Records Sold by Company or its licensees in the following categories the
Royalty shall be at one-half (1/2) of the applicable rate and calculated in
accordance with the royalty calculation provisions of this Agreement unless
otherwise stated:

 

21

 

(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.

 

20.4.2      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:

 

(a)           INTENTIONALLY
DELETED;

 

(b)           New
Technology Records:  eighty per cent
(80%) 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 fifteen per cent (15%) or more by reference to statistics
published by the BPI or the equivalent body in the applicable territory, the
said eighty per cent (80%) rate shall in respect solely of that particular
format be increased to one hundred per cent (100%) 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 - three quarters (3/4) of the
otherwise applicable rate;

 

22

 

(d)           Compilation
Albums which are released by third parties - two thirds (2/3) 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 — two
thirds (2/3rds) of the otherwise applicable rate.

 

(f)            So-called
soundtrack Records released by Company or one of Company’s licensed affiliates
within the BMG Group - two thirds (2/3) 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 - two thirds
(2/3) 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.

 

20.4.3      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.

 

20.5.1      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 fifty per cent (50%) of the
otherwise applicable rate in respect thereof. 
The half-rate 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 half rate 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).

 

20.5.2      Contractor
agrees that if Company releases Albums hereunder in conjunction with television
and/or radio advertising campaigns in the 

 

23

 

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 one hundred and fifty thousand
US dollars ($150,000), fifty per cent (50%) 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 ($600,000) 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 seventyfive
thousand dollars ($75,000) fifty per cent (50%) 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 50% 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 fifty per cent (50%) of the 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$

  	
  30,000

  	
   

  	
  US$

  	
  15,000

  	
   

  	
  US$

  	
  120,000

  	
   

  	
  US$

  	
  60,000

  	
   

  	
  Australia

  
	
  US$

  	
  50,000

  	
   

  	
  US$

  	
  25,000

  	
   

  	
  US$

  	
  200,000

  	
   

  	
  US$

  	
  100,000

  	
   

  	
  Belgium

  
	
  US$

  	
  30,000

  	
   

  	
  US$

  	
  15,000

  	
   

  	
  US$

  	
  120,000

  	
   

  	
  US$

  	
  60,000

  	
   

  	
  Brazil

  
	
  US$

  	
  50,000

  	
   

  	
  US$

  	
  25,000

  	
   

  	
  US$

  	
  200,000

  	
   

  	
  US$

  	
  100,000

  	
   

  	
  Canada

  
	
  US$

  	
  30,000

  	
   

  	
  US$

  	
  15,000

  	
   

  	
  US$

  	
  120,000

  	
   

  	
  US$

  	
  60,000

  	
   

  	
  Denmark

  
	
  US$

  	
  75,000

  	
   

  	
  US$

  	
  37,500

  	
   

  	
  US$

  	
  300,000

  	
   

  	
  US$

  	
  150,000

  	
   

  	
  France

  
	
  US$

  	
  60,000

  	
   

  	
  US$

  	
  30,000

  	
   

  	
  US$

  	
  240,000

  	
   

  	
  US$

  	
  120,000

  	
   

  	
  Germany

  

 

24

 

	
  Minimum

  TV Spend

  	
   

  	
  Minimum

  Radio Spend

  	
   

  	
  Maximum

  TV Spend

  	
   

  	
  Maximum

  Radio Spend

  	
   

  	
  Country

  
	
  US$

  	
  US45,000

  	
   

  	
  US$

  	
  US22,500

  	
   

  	
  US$

  	
  US180,000

  	
   

  	
  US$

  	
  US90,000

  	
   

  	
  Holland

  
	
  US$

  	
  US60,000

  	
   

  	
  US$

  	
  US30,000

  	
   

  	
  US$

  	
  US240,000

  	
   

  	
  US$

  	
  US120,000

  	
   

  	
  Italy

  
	
  US$

  	
  US45,000

  	
   

  	
  US$

  	
  US22,500

  	
   

  	
  US$

  	
  US180,000

  	
   

  	
  US$

  	
  US90,000

  	
   

  	
  Japan

  
	
  US$

  	
  US15,000

  	
   

  	
  US$

  	
  US7,500

  	
   

  	
  US$

  	
  US60,000

  	
   

  	
  US$

  	
  US30,000

  	
   

  	
  New Zealand

  
	
  US$

  	
  US30,000

  	
   

  	
  US$

  	
  US15,000

  	
   

  	
  US$

  	
  US120,000

  	
   

  	
  US$

  	
  US60,000

  	
   

  	
  Portugal

  
	
  US$

  	
  US50,000

  	
   

  	
  US$

  	
  US25,000

  	
   

  	
  US$

  	
  US200,000

  	
   

  	
  US$

  	
  US100,000

  	
   

  	
  Spain

  
	
  US$

  	
  US30,000

  	
   

  	
  US$

  	
  US15,000

  	
   

  	
  US$

  	
  US120,000

  	
   

  	
  US$

  	
  US60,000

  	
   

  	
  Sweden

  
	
  £

  	
  l50,000

  	
   

  	
  £

  	
  20,000

  	
   

  	
  £

  	
  750,000

  	
   

  	
  £

  	
  80,000

  	
   

  	
  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;

 

20.6         Subject always to the
provisions of sub-clause 7.17 below, Company will credit to Contractor’s
royalty balance sixty-two point five per cent (62.5%) 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.

 

20.7         In respect of Electronic
Sales, the Royalty shall be at eighty per cent (80%) of the otherwise applicable
royalty rate calculated on the relevant Royalty Base Price of the Records or
Audio Visual Devices and will increase to one hundred per cent (100%) of the
otherwise applicable royalty rate from the accounting date after electronic
sales achieve a market penetration of fifteen per cent (15%) or more by
reference to official published industry statistics in the country concerned.

 

20.8         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 fifty per cent (50%) of Company’s Receipts (after deduction of any
actual costs associated with the applicable Webcast) to Contractor’s royalty balance
hereunder.

 

25

 

20.9         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.

 

20.10       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 150%) or more from Company’s Dealer
Price.

 

20.11       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.

 

20.12       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.

 

20.13       INTENTIONALLY DELETED

 

20.14       In respect of Records Sold
in the form known as “CD Plus”, “CD +” or “CD Extra” Company shall credit to
Contractor’s royalty balance one hundred per cent (100%) of the royalty
otherwise payable in respect of such Records Sold less a royalty of two per
cent (2%) in respect of Audio-Visual Material embodied thereon calculated as
provided herein which two per cent (2%) royalty shall be credited to the
applicable Audio Visual account hereunder.

 

20.15       Company shall maintain a
separate royalty balance for Contractor, to which Company shall credit fifty
per cent (50%) of Company’s Receipts directly and identifiably attributable to
third party sponsorship and/or endorsement of Artist Site(s) procured by
Company; seventy-five per cent (75%) of Company’s Receipts directly and
identifiably attributable to third party sponsorship and/or 

 

26

 

endorsement of Artist Site(s) procured by
Contractor; eighty per cent (80%) 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)); fifty per
cent (50%) 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.

 

20.16       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 fifty per cent (50%) 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.

 

20.17       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.

 

21.           UNION PAYMENTS

 

21.1         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 

 

27

 

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).

 

22.           MECHANICAL COPYRIGHT LICENCES AND PAYMENT

 

22.1         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 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 seventy-five per cent (75%) of the minimum
statutory rate imposed by the United States Copyright Act (without regard to
playing time) rising to one 

 

28

 

hundred per
cent (100%) in respect of Records Sold on an Album by Album basis in excess of
five hundred thousand (500,000) units in the United States of America;

 

(iii)      In
Canada seventy-five per cent (75%) 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 one hundred per cent (100%) in respect of Records Sold on an
Album by Album basis in excess of fifty thousand (50,000) 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).

 

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 fifty
per cent (50%) 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.

 

22.2         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) 

 

29

 

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.

 

22.3         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.

 

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

 

22.5         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.

 

22.6         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”);

 

30

 

(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 fifty
percent (50%) 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.

 

23.           AUDIO VISUAL MATERIAL

 

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

 

23.2         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 ten per cent (10%) 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 

 

31

 

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.

 

23.3         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 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.

 

23.4         In respect of any Video
Clip fifty per cent (50%) 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.

 

23.5         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 sixteen per cent (16%) in respect of sales in the USA
and fifteen percent (15%) 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:

 

32

 

	
  Country

  	
   

  	
  Amount of Audio

  Visual Devices Sold

  	
   

  	
  Increase in Royalty

  
	
  USA

  	
   

  	
  100,000

  	
   

  	
  1%

  
	
  USA

  	
   

  	
  200,000

  	
   

  	
  1%

  
	
  ROW

  	
   

  	
  200,000

  	
   

  	
  1%

  
	
  ROW

  	
   

  	
  300,000

  	
   

  	
  1%

  

 

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 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, sixty-two point five per cent
(62.5%) 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 twenty-five per cent (25%)
of the gross income accruing to such Licensed Affiliates from such
exploitation).

 

23.6         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.

 

23.7         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.

 

33

 

23.8         INTENTIONALLY DELETED.

 

23.9         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 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.

 

23.10       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.

 

34

 

23.11       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 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.

 

23.12       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 

 

35

 

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.

 

23.13       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 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.

 

23.14       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 shell 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.

 

36

 

24.           INTERNET PROVISIONS

 

24.1         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”.

 

24.2         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 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 ten thousand pounds (£l0,000) of each budget shall be non-recoupable;

 

37

 

(b)           fifty
per cent (50%) of all such costs in each budget over ten thousand pounds
(£10,000) shall be recoupable from the Royalty.

 

24.3         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:-

 

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

 

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

 

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

 

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

 

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

 

24.4         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:-

 

24.4.1      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

 

24.4.2      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

 

24.4.3      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

 

24.4.4      INTENTIONALLY
DELETED

 

38

 

24.4.5      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.

 

24.5         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 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.

 

24.6         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.

 

24.7         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.

 

24.8         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.

 

39

 

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

 

24.10       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.

 

24.11       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.

 

24.12       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 

 

40

 

the opportunity to explore any potential
cross-promotional opportunities with the relevant third parties

 

25.          OWNERSHIP/LICENCE

 

25.1.1      (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 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.

 

25.1.2      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 fifty per
cent (50%) 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 

 

41

 

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.

 

25.2         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 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.

 

25.3         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

 

42

 

(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.

 

26.           RECORDING
RESTRICTIONS

 

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

 

26.1.1      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 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 

 

43

 

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

 

(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.

 

26.2         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.

 

26.3         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 

 

44

 

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.

 

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

 

26.5         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]

 

27.           INTENTIONALLY
DELETED

 

28.           SAMPLING
PROVISIONS

 

28.1         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 utilizes extracts from
compositions and/or any literary or other copyright works other than Controlled
Titles (“Composition Extracts”) then:

 

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

 

28.1.2      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.

 

45

 

28.2         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.

 

28.3         INTENTIONALLY DELETED

 

28.4         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
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.

 

28.5         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.

 

29.           NAME
AND LIKENESS

 

29.1         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 

 

46

 

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.

 

29.2         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,

 

29.3         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.

 

29.4         INTENTIONALLY DELETED.

 

29.5         INTENTIONALLY DELETED.

 

30.           ACCOUNTING

 

30.1         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.

 

30.2         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 

 

47

 

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.

 

30.3         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.

 

30.4         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.

 

30.5         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 

 

48

 

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.

 

30.6         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 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.

 

31.           ATTENDANCE
AT PUBLICITY SESSIONS, TOURING AND PROMOTIONS

 

31.1         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).

 

31.2         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 

 

49

 

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.  Fifty per
cent (50%) 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.

 

31.2.1      INTENTIONALLY
DELETED.

 

31.2.2      INTENTIONALLY
DELETED.

 

31.2.3      INTENTIONALLY
DELETED.

 

32.           WARRANTIES

 

32.1         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

 

50

 

(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

 

(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

 

33.           CO-OPERATION
IN UNAUTHORISED MANUFACTURE ETC.

 

33.1         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 

 

51

 

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.

 

34.           CONSENTS
AND APPROVALS

 

34.1         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]

 

34.2         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.

 

35.           INDEMNITIES

 

35.1         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.

 

35.2         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 

 

52

 

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,

 

35.3         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.

 

35.4         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.

 

35.5         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.

 

35.6         INTENTIONALLY DELETED.

 

36.           FORCE
MAJEURE

 

36.1         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 

 

53

 

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
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.

 

37.           PARTIES’
RIGHTS AND REMEDIES

 

37.1         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.

 

54

 

37.2         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.

 

37.3         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)

 

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.

 

38.           ASSIGNMENT

 

38.1         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.

 

38.2         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]

 

39.           NOTICES

 

39.1         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.

 

55

 

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.

 

39.2         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

 

(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).

 

40.           MODIFICATIONS

 

40.1         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.

 

40.2         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.

 

56

 

41.           GOVERNING
LAW

 

41.1         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]

 

42.           AUTHORISED
REPRESENTATIVE

 

42.1         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 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.

 

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

 

42.3         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.

 

43.           TRADE
MARKS

 

43.1         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 

 

57

 

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.

 

43.2         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 fifty per cent (50%) 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.

 

43.3         INTENTIONALLY DELETED

 

43.4         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.

 

43.5         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.

 

44.           CONTRACTOR
APPROVALS

 

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

 

44.1.1      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;

 

44.1.2      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;

 

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

 

44.1.4      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;

 

58

 

44.1.5      (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.

 

44.1.6

 

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

 

44.1.8      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;

 

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

 

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

 

44.1.11    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;

 

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

 

44.1.13    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.

 

44.2         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.

 

44.3         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.

 

59

 

44.4         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:

 

(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.

 

44.5         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.

 

44.6         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 

 

60

 

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.

 

45.           MISCELLANEOUS

 

45.1         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.

 

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

 

45.3         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.

 

45.4         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.

 

45.4A      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 

 

61

 

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.

 

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

 

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

 

46.           LEGAL
ADVICE

 

46.1         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.

 

46.2         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.

 

62

 

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.

 

63Exhibit
10.23

 

As of May 15, 2003

 

VIA MESSENGER

 

Mr. Ira Kurgan

Executive Vice President

Fox Broadcasting Co.

10201 West Pico Blvd.

Executive Building 100

Rm. 4570

Los Angeles, CA 90035

 

Re:                               American Idol Re-Negotiation

 

Dear Ira:

 

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

 

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

 

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

 

A.                                   Ratings
Bonus: Calculated per current deal on 37 hours for Al 3.  If fewer than 37 hours are produced, Fox may
offset the difference between the amount paid and the amount based on actual
hours produced against any monies owed 19/Fremantle.

 

B.                                     Ranking
Bonus: $75,000 per hour if ranked number 1-5 in the 18-49 demo, or $50,000 per
hour if ranked 6-10, calculated on 37 hours for AI 3.  If fewer than 37 hours are produced, Fox shall
have same offset right as above.

 

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

 

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

 

 

III.                                 AI3
and Subsequent Cycles:

 

A.                                   Episodic
Order: Initial order for AI3 and each subsequent cycles (i.e.  AI 4, AI 5, etc.) shall be 26.5 hours.  The contractual minimum order shall be 24.5
hours, reducible to 19 hours if 19/Fremantle and Fox mutually agree that the
relevant cycle has fewer than 10 finalists.  
However, 19/Fremantle hereby approve a total of 37 hours per cycle.  Each cycle shall have ten finalists unless,
following good faith consultation with Fox, l9/Fremantle and Fox agree that
twelve finalists are preferable, based on the quality of the ten finalists.  Each cycle shall have no more than three
specials, subject to III.C.  below.  l9/Fremantle shall have reasonable creative
approval on the content of the specials, and prior meaningful consultation on
how the series episodes shall be expanded. 
No more than one cycle per broadcast season.

 

B.                                     License
Fee:  Flat, non-auditable $950,000
per hour, pro-rata increases/decreases, plus auditable breakage pre-approved by
Fox (e.g.  judges, hosts, auditions, and
the breakage categories, such as judges and auditions approved for AI 2, and
the host category to the extent Fox approves such breakage for AI 3 or
subsequent cycles).  The executive
producer fee is deemed to be $80,000 for AI 3. 
4% cumulative increases in each subsequent cycle.

 

C.                                     Extended
and Additional Episodes:

 

1.                                       Extended/additional
episodes and specials in excess of the pre-approved total hours set forth in
III.A.  above may be ordered and produced
only if approved in writing by Simon Fuller or Chrissie Harwood on behalf of
19, and by Cecile Frot-Coutaz on behalf of FremantleMedia (or a designated
substitute of which Fox is given prior written notice).  (Email from these individuals is acceptable
written approval.)  19/Fremantle shall
notify Fox of its decision in a timely manner. 
For between 37 and 45 hours, 19/Fremantle may withhold their approval
only for reasonable creative reasons or for concerns of diluting or otherwise
harming the franchise.  19/Fremantle may
not withhold approval on grounds they want additional compensation.  Hours in excess of 45 may be ordered only if
19/Fremantle approve such additional hours in writing by the individuals
identified above; said approval may be withheld for any reason in 19/Fremantle’s
sole discretion.

 

2.                                       For
each hour produced in excess of the initial order of 26.5 hours, Fox shall pay
19/Fremantle a premium license fee, which shall equal the flat license fee
described above plus the following:

 

a.                                       27-30:
hours: 100% of the executive producer fee and format fee;

 

b.                                      31-35:
125% of the executive producer and format fees;

 

c.                                       36-39:
150% of the executive producer and format fees;

 

 

d.                                      40-45:
200% of the executive producer and format fees.

 

3.                                       Additionally,
for each hour in excess of 37 hours produced in AI 3 or subsequent cycles, Fox
shall pay 19/Fremantle an “excess hour fee” equal to the ratings and ranking
bonuses for the immediately preceding cycle. 
Such “excess hour fee” shall be due after broadcast of the applicable
hour, payable 10 business days after receipt of appropriate invoice.

 

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

 

1.                                       Ratings
bonuses for AI 3 and subsequent years shall increase 4% each cycle on a
cumulative basis.  All other terms of
such bonus shall be per the prior AI Agreement.

 

2.                                       A
ranking bonus of $75,000 per hour if in top 5 in the 18-49 demo; or $50,000 per
hour if ranked 6-10 in the 18-49 demo; or $25,000 per hour if in top 11-15 in
the 18-49 demo.  Ranking is the average
during the regular September-May season as defined in Attachment “A”.

 

3.                                       If
any episode is re-run by FBC, l9/Fremantle shall receive bonuses equal to 1/3
of the original bonus for that episode, regardless of the rating for the rerun
episode.

 

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

 

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

 

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

 

2.                                       Up
to 15 seconds of vertical scroll per episode listing tour dates and venues, and
telephone numbers for ticket purchase and concert information, during the last
five weeks of each cycle.  Additionally,
for each hour in excess of 26.5, 19/Fremantle may add a fifteen second scroll
per episode promoting any American Idol-branded items, 19/Fremantle and Fox
shall mutually determine which extended episodes and specials during the cycle
shall contain these additional fifteen second scrolls.  In no 

 

 

event will there be more than
30 seconds of promotional time per hour between the items in sub-paragraphs 1
and 2.

 

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

 

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

 

F.                                      Subject
to appropriate invoice, payments shall be as follows:  the ratings and ranking bonuses due to
19/Fremantle per the prior AI Agreement and this agreement shall be paid 50% to
19 and 50% to Fremantle.  Ancillary
revenues payable by Fox to 19/Fremantle shall be paid to each entity in
percentages as instructed by the parties. 
The license fee, breakage and other production-related out-of-pocket costs
shall be paid to Fremantle.

 

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

 

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

 

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

 

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

 

Best regards,

 

 

Daniel J.
Grover

CREATIVE ARTISTS AGENCY

 

 

AGREED AND ACCEPTED:

 

Fox Broadcasting Company

 

 

	
  By:

  	
  /s/ 

  	
   

  	
  Date:

  	
  8/15/03

  	
   

  
	
  FremantleMedia North America, Inc.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ 

  	
   

  	
  Date:

  	
  8/14/03

  	
   

  
	
  19 TV Limited

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ 

  	
   

  	
  Date:

  	
  26 August 2003

  	
   

  

 

cc:                                 Simon
Fuller

Chrissie Harwood

Andy Stinson

Cecile Frot-Coutaz

Mike Hobel, Esq.

Lee Gabler

Steve Lafferty

Jeff Frasco

Steve Smooke

Alix Hartley

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00086-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00086-of-00352.parquet"}]]