2005

UNIVERSAL INTERNATIONAL MUSIC B.V.

and

UNIVERSAL MANUFACTURING & LOGISTICS GMBH

(to be renamed [EDC GERMANY GMBH])

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DISTRIBUTION AND RELATED SERVICES AGREEMENT*

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(UNIVERSAL LOGO) [g95544g9554400.gif]

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* A portion of this document is confidential and has been omitted in accordance
with Rule 24b-2 under the Securities and Exchange Act of 1934. Such omitted
confidential material is marked herein as follows: [*****].

 

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1.0   Overview:       This Distribution and Related Services Agreement
(“Agreement”) is dated May 31, 2005 and is between Universal International
Music, B.V., a company incorporated in The Netherlands with registered office at
Gerrit van der Veenlaan 4, 3743 DN Baarn, The Netherlands and registered number
31018439 (“Customer”), and Universal Manufacturing & Logistics GmbH, a company
incorporated in Germany with registered office at Emil Berlinerstrasse 13, 30851
Langenhagen, Germany and registered number HRBS2670 (as such party may be
renamed (“Supplier”)), referred to collectively as the parties (“Parties”) and
describes the terms and conditions concerning the purchase and supply of certain
distribution related services and activities in the Territory.   2.0  
Definitions: Definitions are set forth out in Schedule 2.0 of this Agreement.  
3.0   Term:

  3.1   Subject to the termination provisions of this Agreement, this Agreement
shall remain in force from the Effective Date until May 31, 2015 (the “Term”).  
  3.2   At least 180 days prior to the expiration of the Term, senior management
of the Parties shall meet in good faith to discuss an extension to the Term.

4.0   Customer Purchase Obligation:

  4.1   In each year of the Term and subject to the exclusions set out in this
Section 4.1, Customer shall purchase, and shall cause all members of the
Universal Music Group to purchase, 100% of its and their respective Distribution
Requirements from Supplier, excluding (i) any Distribution Requirements which
such Universal Music Group member is permitted to purchase from a third party
under Section 6.10 or 9.3 of this Agreement; and (ii) any Distribution
Requirements of a party who becomes a Universal Music Group member by
acquisition after the Effective Date, but only to the extent and for the period
that such Distribution Requirements are contractually committed to a third party
as of the date of signing of the relevant acquisition agreement.[*****]    
4.2   At any time during the Term, Customer may designate [*****].     4.3  
[*****]     4.4   Customer agrees that it will not permit any of the
Distribution Requirements of any member of the Universal Music Group to be
exercised by, or transferred to, another entity outside of the Universal Music
Group, without also assigning, in whole or in part, this Agreement so that any
transferred Distribution Requirements continue to be subject to this Agreement.
Nothing contained in this Section is intended to limit

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      Vivendi Universal S.A. or any of its operations that are not part of or
are acquired separately from the Universal Music Group, or subject to the
limitations in Section 18, to limit the sale of the equity of, or of all or
substantially all of the assets of a Universal Music Group member; provided such
operations or sale are subject to the assignment obligation described in this
Section 4.4.     4.5   Except as expressly provided in Sections 4.1 and 4.4,
Customer shall have no obligation to conduct its business in a manner that
maximizes its demand for DOAs to be requested from Supplier or minimizes the
risks that such DOAs shall not be required by Customer, including, without
limitation, any obligation to extend or renew any agreements with third parties.
Supplier acknowledges that there are no minimum requirements associated with
this Agreement.

5.0   Supplier Supply Obligations:

  5.1   Intentionally deleted     5.2   Supplier will supply the DOAs set out in
Schedule 10.1 for all Product distributed from the Distribution Center as
requested by Customer in accordance with the requirements of this Agreement.
These DOAs will at a minimum meet the quality specifications generally met by
Supplier in the twelve months immediately prior to the Effective Date. In the
event that Customer requests that Supplier supply any DOAs which are not set out
in Schedule 10.1, the Parties shall use the procedure set out in Section 10.5 to
resolve the pricing for such requests.     5.3   Supplier may not refuse (i) a
Customer request to provide a DOA for any Product set forth in Schedule 10.1, or
(ii) any DOA not set forth on Schedule 10.1 provided that (A) Customer and
Supplier have followed the procedure described in Sections 10.5.1 through and
including 10.5.5, and (B) the requested distribution service is normally and
customarily provided by distributors in businesses substantially equivalent to
Supplier’s business at the time of Customer’s request.     5.4   Supplier shall
be prohibited from subcontracting the [*****]. In relation to other DOAs
Supplier shall not subcontract their performance to third parties, except
(a) for any DOAs which are subcontracted by Supplier in the [*****] prior to the
Effective Date, (b) for any DOAs which Supplier does not have the capacity to
supply without such subcontracting provided that Supplier is using [*****] of
its available capacity as at the Effective Date or as required by Customer in
the immediately proceeding ,[*****] for Customer, and (c) for any DOAs which
Customer consents to being provided by a third party. In the event that Supplier
subcontracts the performance of any DOAs under this Agreement, as permitted
above, Supplier shall subcontract such work to third-party logistics providers

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      listed on Schedule 5.4 hereto. Supplier may propose to Customer an amended
Schedule 5.4, adding or deleting subcontractors at any time, and from time to
time, provided that such amendment shall not be effective unless and until
Customer approves such amendment, which approval shall not be unreasonably
withheld or delayed. Customer shall have the right to add or delete previously
approved subcontractors at any time and from time to time, provided that, in the
case of deletions, (i) Customer’s deletion is not unreasonable; (ii) Customer
consults with Supplier prior to the deletion; (iii) Customer provides Supplier
with at least [*****] days prior written notice of the deletion; (iv) Customer
permits Supplier, notwithstanding such deletion, [*****] and (v) after the
deletion, a commercially reasonable number of approved subcontractors, and in
any event no less than the lower of (A) the number of subcontractors qualified
to perform the Manufacturing Services subcontracted, or (B) [*****] remain
listed on Schedule 5.4 and any amendments thereto.

  5.4.1   Any order subcontracted by Supplier shall remain subject to the terms
of this Agreement. Supplier shall inform Customer of any order subcontracted
within two Business Days of subcontracting any order.     5.4.2   All Supplier’s
agreements with subcontractors performing services for Customer will provide
that Customer will have the right to inspect such subcontractor’s facilities
upon reasonable advance written notice to Supplier, during normal subcontractor
hours of operation, without interference to subcontractor’s operations, and
subject to any reasonable access rules or confidentiality obligations imposed by
the subcontractor.     5.4.3   Supplier shall disclose the existence of all
subcontracting arrangements to Customer within[*****] of their execution.    
5.4.4   Notwithstanding any of the foregoing restrictions in this Section 5.4
but subject to Section 10.10, Supplier may outsource [*****] of any hand
packaging, refurbishing and other non-automated services.

  5.5   Supplier shall maintain and employ plant security systems and procedures
that are no less effective in preventing theft, pirating, unauthorized
exhibition, copying or duplication of any of Customer’s proprietary audio and/or
audio visual product or other material delivered by Customer to Supplier or its
designated subcontractors than the security systems and procedures disclosed to
Supplier in writing prior to the Effective Date, to the extent such systems and
procedures were Prevailing Practices at the existing Supplier manufacturing
facilities as of the Effective Date.

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  5.6   Supplier shall, subject to Section 5.14 comply with all applicable
legislation and formal recommendations from the IFPI which are generally
implemented by IFPI members in each case in respect of the regulation of piracy
(including application of SID codes and/or similar future systems) provided that
Supplier shall have a reasonable time to comply with any such formal
recommendations from the IFPI and to the extent such systems and procedures were
Prevailing Practices at the existing Supplier distribution facilities as of the
Effective Date.     5.7   Supplier confirms that it is aware of the BIEM-IFPI
Memorandum of Understanding of August 1996 on the enforcement of copyrights and
neighboring rights and the IFPI Good Business Practice Guidelines and confirms
that it will, subject to Section 5.14, and throughout the Term, abide by such
memorandum and guidelines as if it were a member of the IFPI and agrees that it
will not knowingly distribute from its facilities sound or other recordings
which have not been authorized by the lawful owners of rights in such
recordings. Supplier also recognizes that at the Effective Date it complies with
the SID Code and confirms that to the extent consistent with Prevailing
Practices it will continue to comply with this code or its successor code as is
generally implemented by comparable facilities to the Supplier.     5.8  
Supplier shall at all times during the Term have a fulltime dedicated account
manager with a full time deputy, who are only responsible for the daily liaison
with Customer and who shall be available to Customer daily from 8:00 a.m. to
5:00 p.m. (Hanover time).     5.9   The Parties shall meet together at least
[*****] at mutually agreeable times during the Term to review performance of the
DOAs and any issues arising under this Agreement. The Universal Senior Account
Manager will arrange and facilitate such meetings. Such meetings shall include
[*****]. On Customer’s reasonable request, Supplier shall also send the
Universal Senior Account Manager to meetings designated by Customer. [*****].  
  5.10   At all times during the Term, Supplier will, to the extent consistent
with Prevailing Practices, maintain for Customer a minimum installed daily
capacity to handle that number of order lines which is equal to the greater of
(a) [*****] and (b) [*****] of the highest daily number of order lines utilized
solely by Customer at Supplier’s Distribution Centers for its Products in the
corresponding month of its most recently completed Customer calendar year.    
5.11   [*****]     5.12   The Parties hereto acknowledge and agree that,
notwithstanding any other provision of this Agreement, the standards to which
Supplier will be held

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      in connection with the DOAs to be provided by Supplier to Customer
hereunder, including without limitation, quality, turnaround, shipment, security
and reporting standards, shall as of the Effective Date be the standards which
Supplier was generally meeting in the twelve-month period prior to the Effective
Date; ; provided, however, that, prior to adopting any standards pursuant this
Section 5.12 or Section 5.15 that vary from those set forth in this Agreement,
Supplier shall first provide written notice to Customer of such intention with a
reasonably detailed description of the standards Supplier intends to adopt and
the basis for doing so (a “Section 5.12 Notice”); provided, further, that the
Parties further acknowledge and agree that notwithstanding the foregoing, after
the [*****] of the Term, Supplier will (a) meet the standards as set forth
herein and established hereunder, and (b) subject to Section 5.14, further meet
industry standards as required by Section 5.13.     5.13   The Parties hereto
acknowledge and agree that the standards applicable to the DOAs to be provided
by Supplier to Customer hereunder, including without limitation, quality, the
nature of services, security standards, IT Systems and support, will change over
the Term. If the standards applicable to similar distribution services provided
by Supplier to any other customer are higher than those applicable to Customer,
those higher standards shall also be applicable to the services provided by
Supplier to Customer. In addition, Supplier shall, to the extent the industry
standards referenced herein or the standards which are generally required by
Major Music Company buyers of services such as those provided by Supplier
hereunder, increase or improve those standards in effect on the Effective Date,
upgrade its operations and services to incorporate such increased or improved
standards for the benefit of Customer. Notwithstanding the foregoing, Supplier
shall not be required as a result of this Section 5.13 to be the first or an
early adopter of new standards or technology, but is required to implement such
new standards and technology as and when they become generally used and
available.     5.14   [*****]     5.15   Notwithstanding the provisions of
Sections 5.5, 5.6, 5.7, , 5.10, 6.5.1-6.5.4, 6.11.1, 7.2.a, 7.2.b, 7.2.c, 7.2.d,
7.2.h, 7.2.j, 7.15.b, 7.15.e, 7.15.h, and 8.2, on and after the first
anniversary of the Effective Date, the standards set forth in each such Section
shall apply without reference to Prevailing Practices unless Supplier has
previously challenged and reasonably proven, in the manner set forth below, that
Prevailing Practices were inconsistent with the standards otherwise set forth in
such Section (such standards, collectively, the “Specified Standards”). [*****].

6.0   DOA Timelines:

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  6.1   Customer shall place DOAs as to Product with Supplier through the
Supplier’s electronic order system (“IT System”) or by fax (each, an “Order”),
provided, however, that Customer shall use commercially reasonable endeavors to
transition all orders to Supplier’s IT System as soon as possible.     6.2   Any
Order for DOAs received prior to the Order deadlines for the destination of such
Order as set out in Schedule 6.5 on a Working Day, local Distribution Center
time, will be deemed placed on that Working Day for purposes of Sections 6.5.1,
6.5.2, 6.5.3 and 6.5.4 hereof; all other Orders made which fail to meet the
relevant Order deadlines set out in Schedule 6.5 [*****] or Orders made on a
non-Working Day will be deemed received on the opening of business the next
Working Day for purposes of Sections 6.5.1, 6.5.2, 6.5.3 and 6.5.4.     6.3  
Intentionally deleted.     6.4   Intentionally deleted.     6.5   Provided
Customer has met the Order deadlines for each country and region stipulated in
Schedule 6.5, Supplier will, to the extent consistent with Prevailing Practices,
Tender Product to carriers as follows:

  6.5.1   In relation to New Releases which are separately shipped on Customer’s
request pursuant to Section 6.17, [*****]% of Products and [*****]% or greater
in order lines, will be Tendered to carrier by Supplier by the shipping times
required to be met to make each relevant country or region’s next day delivery;
    6.5.2   In relation to NDU Distribution, [*****] of Products and [*****]% or
greater of order lines will be Tendered to carrier by Supplier by the shipping
times required to be met to make each relevant country or region’s next day
delivery.     6.5.3   In relation to all other Products excluding Direct Export,
[*****]% of Products and [*****]% of order lines or greater will be Tendered to
carrier by Supplier by the shipping times required to be met to make each
relevant country or region’s next day delivery.     6.5.4   In relation to all
Late Orders (as described in Section 6.11) [*****] of Late Orders should be
Tendered to carrier by Supplier by the shipping times required to be met to make
each relevant country or region’s [*****] delivery.     6.5.5   Notwithstanding
the minimum service levels set out at Sections 6.5.1 to 6.5.4, above, the
Supplier shall use its usual and

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      customary endeavors to tender [*****] of Products and order lines on time.

  6.6   The above metrics for each country and region may be evaluated and
monitored by Customer randomly selecting [*****] and determining the actual time
and date tendered to the designated carrier versus Customer’s Order time and
specified tender date.     6.7   Late Delivery. To the extent consistent with
prevailing Supplier practices as at the Effective Date:

  6.7.1   Promptly after Supplier becomes aware that a shipment will be late it
will notify Customer, Supplier will at start of next Working Day produce and
deliver to Customer on a country and region basis a schedule of its compliance
with the service levels set out at Sections 6.5.1 to 6.5.4.     6.7.2   Supplier
shall evaluate and monitor actual deliveries daily per country and region, and
confirm actual delivery information to Customer within [*****] of such delivery,
on a country by country basis.

  6.8   Customer shall be responsible for ensuring that Supplier has sufficient
Product and/or Universal Materials to fulfill all Orders. To assist Customer
with this obligation, Supplier shall notify Customer as soon as it becomes aware
that there is any significant shortfall in Product and/or Universal Materials.
Supplier shall also notify Customer of any circumstances which might reasonably
lead to late deliveries as soon as it becomes aware of such circumstances and
shall act in accordance with Customer’s reasonable instructions in such
situations.     6.9   If Customer does not provide explicit and timely
instructions as to how to prioritize among Orders, Supplier will automatically
prioritize Orders as follows:         [*****]     6.10   Without limitation to
Customer’s other remedies, if Supplier is unable or otherwise fails to fulfill
any DOA in accordance with this Agreement within [*****] days of the date
required under this Agreement, then Customer may secure the services of a third
party or parties to fulfill such DOA(s).     6.11   Required Supplier Actions
Concerning Late DOAs:

  6.11.1   Order(s) which are not Tendered to carriers by the deadlines set out
in Schedule 6.5 will be known as “Late Order(s)”. In the event that at the end
of each of [*****] Days there are [*****] or

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      more Late Order(s) unshipped, and to the extent consistent with Prevailing
Practices, Supplier must at its own expense schedule all qualified employees,
including sufficient available temporary labor, to work the maximum amount of
overtime (either extended hours in a Working Day or on non-Working Days)
permitted under German law or union agreement(s) until there have been no Late
Orders for [*****] Days. Subject to Section 5.15, Supplier will not charge
Customer any amount over and above the prices shown on Schedule 10.1 for the
above. Any Order and all Late Orders remaining outstanding at the end of
[*****]must be shipped during the immediately [*****] with any incremental
expenses due solely to the lateness of such shipments (including overtime or
temporary labor, special shipping charges, etc.) to be at Supplier’s cost .    
6.11.2   Intentionally deleted.     6.11.3   In addition to the requirements set
out in Section 6.11.1, if as a result of any Late Order, Customer incurs any
incremental difference in costs (e.g., late fee penalties imposed by its
customers and paid by Customer), Supplier shall promptly reimburse Customer for
the difference in such costs.

  6.12   No additional or conflicting terms and conditions on any purchase
orders or other documentation provided by Customer or any other Universal Music
Group member incident to any Orders hereunder shall form any part of any
agreement between the parties, including this Agreement, except for purchase
order quantities and descriptions.     6.13   Customer requests to Supplier to
scrap Product from stock will be completed by Supplier within [*****] Days.
Supplier will provide a prompt report on all Product scrapped. Once Customer
requests scrapping any SKU these SKU’s will be excluded from the SKU
stock-holding tariff.     6.14   Intentionally deleted     6.15   Supplier will
provide at a minimum, the value-added services referred to in Section 7.3(a).
Supplier will coordinate with Customer to ensure that enough daily capacity for
each of these activities will be available based on historic figures and on
major expected changes in demand which Customer will notify to Supplier as soon
as such information becomes available to it.     6.16   Intentionally deleted.  
  6.17   Supplier will, on Customer request, pick, pack and ship New Release
Orders separately from other Orders. Outer packaging will clearly indicate the
New Release character of such Orders. The separate processing of

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      New Release Orders will be performed at [*****] cost to Customer. If no
separate New Release handling is required for certain Products, countries or
customers, Customer will inform Supplier accordingly.

7.0   Specific Related Services:

Supplier will provide the services to support the Distribution Orders/Activities
that are set forth in this Article 7.0 (the “Specific Related Services”). Except
as expressly provided herein the Specific Related Services will be performed by
Supplier at no additional charge. Specific Related Services shall be
substantially similar to the current prevailing Supplier practices immediately
prior to the Effective Date, and shall include:

  7.1   Order Processing:

  (a)   Orders shall specify all Customer requirements for Product in a format
and level of detail materially applied at the Effective Date.     (b)   The IT
System will accept Orders placed by the Customer’s customer, Customer or
Universal Music Group companies or its or their designees for Universal Product.
    (c)   As set forth in Section 7.4, Customer shall define a credit limit for
all Direct Export customers and shall advise Supplier, in advance of Supplier’s
fulfillment of any order, of the approved credit limit for each of Customer’s
customers. Supplier shall not fulfill any order for any Direct Export customer
if it has not been credit checked against the available balance of the approved
credit limit advised to Supplier, nor shall Supplier fulfill any order (or
series of orders) to any Direct Export customer for an aggregate amount in
excess of the approved credit limit for that customer. Should Supplier fulfill
an order in breach of this Section it shall be liable to reimburse the Customer
the incremental amount in excess of the approved credit limit.     (d)   For the
avoidance of doubt, the trading terms agreed between Customer and its customers
shall apply to all Orders for Product and Universal Materials accepted by
Supplier and Supplier shall have no authority to change those trading terms.    
(e)   Supplier shall have the capacity to receive Orders by telephone between
[*****] Days and by electronic means at any time. Supplier shall accept and
acknowledge, without unreasonable delay, Orders sent to it by a customer or by
the Customer. Supplier shall clarify all unclear orders, with whoever placed the
order as soon as practicable but in any event not later than working hours of
receipt. All Customer data required to process Orders

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      (including, without limitation, [*****]) shall be received by Supplier and
accepted into its IT System as [*****].     (f)   If a customer has multiple
Orders pending at one time, such Orders shall not be combined for processing or
shipping without Customer’s prior approval. Customer shall use its reasonable
efforts to minimize the number of customer Orders that must be processed and
shipped separately under this Section 7.1(f).     (g)   If an Order cannot be
fulfilled in whole or part from stock (the portion of such Order which cannot be
fulfilled, a “Back Order”), Supplier shall notify Customer. Customer will advise
Supplier on a customer by customer basis as to whether Back Orders should be
cancelled or retained and fulfilled when stock becomes available.

  7.2   Product Receipt and Storage:

  (a)   Customer shall cause to be delivered to Supplier sufficient quantities
of Product to be distributed hereunder together with all Materials whether
required in connection therewith or otherwise and Supplier shall store the same,
at no additional charge, in a secure, protected and temperature controlled
location until the time of shipment to third parties (“Distribution
Components”). [*****]. Customer will review all stocks of Distribution
Components at least [*****], and will propose to Supplier Customer’s desired
disposition (e.g., scrapping) of all such stocks (e.g., scrapping) which have
not been the subject of Orders in the last [*****] months, and shall work with
Supplier in good faith to resolve any storage issues faced by Supplier if not
resolved pursuant to such disposition instructions. All Distribution Components
held by Supplier shall remain the property of Customer. Supplier will provide
Customer daily electronic information regarding inventory activity consistent
with Prevailing Practices as at the Effective Date.     (b)   To the extent
consistent with Prevailing Practices, all Distribution Components shall be
clearly and effectively cataloged and Supplier will maintain and provide to
Customer on hand inventory balance information and will employ systems and
procedures no less effective as those generally used by Supplier during the
12 months prior to the Effective Date such that, at any given time, [*****]% of
said balances per Distribution Component are within +/- [*****]% of the actual
amount on hand. On receipt of deliveries, Supplier shall verify the contents of
the delivery of Product and/or Universal Materials and reconcile them against
the accompanying delivery documents and ordered quantities.

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  (c)   With respect to all Distribution Components for which Supplier has
received an ASN, Supplier will, to the extent consistent with Prevailing
Practices, Book-On all such Distribution Components received from its
manufacturing facilities or received by it from a third party within [*****]
hours of arrival, unless it is prioritized Product, in which case it shall be
Booked-On within [*****] hours. Customer shall have at any time the right to
prioritize among the deliveries made to the Distribution Center on [*****] for
purposes of the preceding sentence, provided that (i) [*****]. [*****].
Notwithstanding the other provisions of this Section 7.2(c), in the case that
extra handling or repacking of such Distribution Components is required, the
foregoing time periods shall not apply and Supplier will undertake to Book-On
the Product in the most time efficient manner practicable. If Supplier has not
received an ASN as to the delivery of Distribution Components, Supplier shall
notify Customer immediately of such delivery, move such Distribution Components
into a clearance zone, and follow Customer’s reasonable instructions as to the
disposition of such Distribution Components.     (d)   Distribution Components
which are not Booked-On in the timescales described in Section 7.2(c), above
will be known as “Late Book-On’s”. In the event that at the end of each of
[*****] there are [*****] or more Late Book-On’s, Supplier must, to the extent
consistent with Prevailing Practices, at its own expense schedule all qualified
employees, including sufficient available temporary labor, to work the maximum
amount of overtime (either extended hours in a Working Day or on non-Working
Days) permitted under German law or union agreement(s) until there have been no
Late Book-On’s for [*****]. This will include night and Saturday shifts. Except
as provided in Section 5.15, Supplier will not charge Customer any amount over
and above the prices shown on Schedule 10.1 for the above. Any and all Late
Book-On’s remaining outstanding at the end of [*****] must be Booked-On during
the immediately succeeding weekend, with any additional expenses related to such
shipments (including overtime or temporary labor, special shipping charges,
etc.) to be at Supplier’s cost.     (e)   Customer can require that certain
Distribution Components are prioritized and Supplier shall also on request
produce goods receipts documents.     (f)   In the event of any discrepancies or
in the event of any Product and/or Universal Materials being damaged upon
receipt, Supplier will notify Customer as soon as possible and provide Customer
with evidence of such discrepancies and/or damage.

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  (g)   [*****]     (h)   To the extent consistent with Prevailing Practices,
Supplier shall undertake a cycle count to maintain an Inventory Location
Accuracy Level of [*****]% or greater. The monthly cycle count program will
review on a random basis a minimum of [*****]% of all warehouse locations in a
manner such that each location is checked at least [*****] per year. In addition
Supplier will check all inventory locations with [*****] stock level whenever
this occurs. Supplier will provide Customer with the resulting monthly inventory
report and [*****] stock check results. If the Inventory Location Accuracy Level
falls below %, Customer may conduct an audit of no less than [*****] locations.
If the Inventory Location Accuracy Level of those locations is under [*****]%,
Customer may require Supplier to complete a full physical inventory within
[*****] days of notification. Said physical inventory will be completed at
Supplier’s expense which Customer may observe at its expense. Customer may amend
the stock control procedure to reflect the express requirements of its auditors
from time to time, or as reasonably required to address any failure to meet the
standards set forth in Section 7.2(h). All adjustments of inventory records
resulting from the cycle count shall be reported by the Supplier to the Customer
within [*****] days from month end.     (i)   Permit Customer to carry out an
audit of all Distribution Components and all other materials owned by Customer
in the custody of Supplier at any time at Customer’s cost, provided that
Customer (i) gives Supplier at least two weeks advance notice; (ii) conducts the
audit during normal business hours; (iii) conducts any such audit without
interference to Supplier’s business operations; and (iv) conducts such an audit
no more than once per year. Supplier shall supply all documentation, logistical
and administrative support reasonably requested by Customer for such audit.
Notwithstanding the above, Customer shall be entitled to make a visual
inspection of the general storage conditions of the Distribution Components at
any time.     (j)   To the extent consistent with Prevailing Practices, Supplier
shall at Customer’s request pay Customer its cost for, any Lost Inventory of
Customer-owned printed or other components in its possession exceeding [*****]%
per SKU of the amount of such inventory delivered to Supplier. Notwithstanding
the foregoing, for certain non-standard, high cost items (by way of example, for
purposes of clarity but without limitation, non-standard, high cost items
including multi-disc box sets and multi-disc booklets) specified from time to
time by Customer, Supplier shall pay for Lost Inventory exceeding [*****]% per
SKU of the amount of such

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      inventory delivered to Supplier. In the event that Customer’s Distribution
Components inventory is damaged or unaccounted for, as presented through
inventory adjustments or physical inventory results, Supplier will reimburse
Customer at the current manufacturing price for all units greater than a net
impact of [*****] units annually.     (k)   Supplier shall for all shipments, in
and outside the Territory, complete and provide all required custom
documentation as applicable from time to time, and include such documentation in
shipments, if required, so that no shipments are delayed by missing or erroneous
required paperwork.     (l)   In addition to meeting the agreed lead times and
cut off times for shipment as described in Section 6.5 and Schedule 6.5,
Supplier’s obligation with respect to shipment includes loading the lorry and
the coordinating and interfacing with the Transportation Services vendors to
ensure that the terms agreed with such Transportation Services vendors provides
for delivery on the required delivery date and at the required times, specified
by Customer, per customer and/or country.     (m)   Supplier will maintain the
stock reservation and country entitlement systems in effect as of the Effective
Date, provided that the Customer shall have the right to update and amend the
provisions of each from time to time on written notice to Supplier.     (n)   At
least twice per Working Day, provide Customer electronically (a) on hand
inventory balances by SKU and (b) receipts by SKU from Customer’s vendors. To
the extent that any Customer changes to any Customer computer systems would
cause Supplier to incur any significant out-of-pocket costs in connection with
adapting to, conforming to, custom programming for, or otherwise interfacing
with such systems in order to facilitate the efficient performance of its
obligations under this Agreement, including without limitation, this Section 7.2
(n), Supplier shall notify Customer of such out-of-pocket costs and the reasons
therefor, and Customer shall within a reasonable time period approve such costs
or work with Supplier to reduce or eliminate such costs. Customer shall
reimburse Supplier for all approved costs chargeable to Customer pursuant to
this Section 7.2(n).

  7.3   Pick, Pack, Ship:

  (a)   Supplier shall pick, pack and ship the Product and/or Materials to
Customer and/or Customer’s customers in fulfillment of the Orders. [*****]. In
the event that Customer requires the building

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     of “pre-packs” and/or multi-packs and such tariffs are not included in
Schedule 10.1, and such building results in incremental out of pocket costs to
Supplier, then the Parties shall negotiate in good faith fees applicable to the
building of such pre-packs or multi-packs and shall agree such fees prior to
Supplier undertaking any work.     (b)   Supplier shall verify each shipment
against the relevant Order and shall prepare all necessary delivery and shipment
documentation and shall ensure that the labels on shipped parcels fulfill
carrier requirements in the most effective way.     (c)   Supplier shall, no
later than the [*****] Day, notify Customer by exception report of any orders
lines placed which are out of stock at the relevant delivery deadline and if
there is a discrepancy between actual stock and book stock, Supplier shall
notify Customer of such discrepancy as soon as it becomes apparent. Supplier
shall also notify Customer of any circumstances which might reasonably lead to
late deliveries as soon as it becomes aware of such circumstances and shall act
in accordance with Customer’s reasonable instructions in such situations.    
(d)   Supplier shall be responsible for responding promptly to all delivery
inquiries from customers in connection with Orders for and shipments of Product
and/or Materials hereunder.     (e)   Supplier shall ensure that the Product
and/or Material is shipped to Customer’s customers within the time periods set
out in Schedule 6.5. Supplier shall load the lorries and coordinate and
interface with the Transportation Services vendors, including tracking and
tracing activity to track satisfaction of such vendors’ delivery obligations
both within and outside the Territory (to the extent the selected carriers
provide such service). Supplier shall respond to and manage any complaints made
by Customer’s customers in relation to the Transportation Services and shall
notify Customer of all such complaints or similar issues. Each shipment of
Product and/or Materials hereunder shall be accompanied by Supplier’s dispatch
note in a form pre-approved by Customer and/or customs documents. Supplier shall
be responsible for obtaining or causing the freight carrier(s) to obtain the
customer’s signature on the carrier’s proof of delivery. The carrier’s proof of
delivery shall be held by Supplier for the longer of six (6) years after
delivery date or such period as is required by applicable laws and regulations
in each country of the Territory and Customer shall be provided with originals
if it so requests.

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  (f)   Product will be dispatched in parcels only with other Product of
Customer. Packaging will be of equivalent form and quality to that applied to
Product by Supplier immediately prior to the Effective Date and Supplier shall
not vary such packaging, including closure tape, without Customer’s prior
written approval.     (g)   Supplier will, upon shipment of any Distribution
Orders, transmit an advance shipping notice (“ASN”) by electronic means to the
applicable customer (on Customer’s request) and to the applicable Universal
Music Group member, which ASN shall contain information as to the quantities
shipped (including reference numbers and dates), on an SKU-by-SKU basis, and the
contents of the individual palettes.

  7.4   Invoicing and Credit Control:

    In relation to Direct Export distribution customers:

  (a)   Supplier will, as agent for Customer, invoice customers in connection
with all shipments of Product and/or Materials hereunder and in accordance with
the instructions of Customer. The invoices will contain [*****].     (b)  
Customer will perform an advance credit check of Direct Export customers and
advise Supplier of the approved credit line for each such Direct Export
customer. Supplier will perform such other credit control functions as Customer
will from time to time require of them to include without limitation collection
of accounts as and when they become due, reconciliation of debtors’ accounts,
maintenance of customer files and debtors’ accounts, allocation of payments
received and credit notes (via autogiro, transfers from banks or such other
method as from time to time designated by Customer), mailing of monthly debtors’
statements, mailing of dunning letters and interest invoices, and at Customer ‘s
request and expense, and subject in all respects to Customer ‘s prior written
approval, arranging legal action at Customer’s expense for collection of overdue
accounts. For the avoidance of doubt, both Parties agree that all invoices for
Products and/or Materials will be produced by the IT System and will be quoted
in Euros unless Customer explicitly requests an alternative currency.     (c)  
In relation to NDU Distribution customers, Supplier will perform all of the
invoicing and credit control functions at the pricing set forth in subsections
[*****].     (d)   Customer may, for any reason, at any time elect to perform
all or any portion of the invoicing and credit control functions set forth

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      in this Section 7.4 itself. In the event Customer elects to perform such
functions itself, (a) Supplier will cease performing such functions as of the
effective date of such change, (b) Customer shall provide Supplier with [*****]
days written notice of its intention to implement this change, (c) Customer
shall reimburse Supplier,[*****] and (d) Supplier and Customer shall agree to a
reduction in the prices on Schedule 10.1 to equitably reflect the corresponding
decrease in Supplier’s ongoing costs. Supplier shall consult with Customer prior
to incurring any costs referred to in (c) above and shall use its best endeavors
to minimize any resulting cost to the Customer under this Section 7.4(d).    
(e)   In relation to Retail Distribution customers, Supplier will not invoice
such customers, nor perform related credit control functions, but instead will
send, as soon as practicable, such Order shipment information to the Universal
Music Group company making the relevant Order sufficient for such Universal
Music Group company to carry out invoicing and credit collection directly with
the customer.

  7.5   Cash Collection:

  (a)   Supplier shall further be responsible for the collection of monies
payable by customers hereunder where an invoice is denominated “payment on
delivery”. Supplier or its designated carrier shall collect “cash on delivery”
payments on delivery of orders and Supplier shall submit such payments to
Customer within [*****] Day of Supplier’s receipt of such monies from its
carrier. Any late payment is subject to interest in accordance with
Section 10.3.1.     (b)   Where invoices are to be paid on delivery, Customer
shall inform its customers that Supplier is authorized to collect checks made
payable only to Customer and crossed “account payee only” or its equivalent in
the Territory.

  7.6   Intentionally deleted.     7.7   Customer Care Helpline:

    Supplier shall provide a telephone support helpline, consistent with current
Supplier practices in place prior to the Effective Date, for all customers
located in Germany. For customers outside Germany but within the Territory,
Supplier shall have a similar service at least with respect to delivery
information and delivery times. Such helplines shall be available at a minimum
between 9:00 a.m. to 6:00 p.m. (Hanover time) on Business Days, but for the
months of October to December inclusive in each year, everyday between the hours
of 8:00 a.m. to 7:00 p.m. (Hanover time), and shall be staffed by trained,
multi-lingual and

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    knowledgeable personnel dedicated to customers. All relevant customers
(including all customers in Germany) shall be informed of the relevant helpline
number and its hours of operation. Such helpline will deal with queries
concerning without limitation order status, delivery times, invoicing and
collection problems not taken care of by the Customer itself.

  7.8   Intentionally deleted.     7.9   Supplier shall maintain the IT System
and interfaces such that any Universal Member Group company making Orders to
Supplier shall have access to it at all times. To the extent that any
substantial Customer changes to the IT System or any other Customer computer
system would cause Supplier to incur any out of pocket costs incremental to
those applicable at the Effective Date in connection with adapting to,
conforming to, custom programming for, or otherwise interfacing with such
systems in order to facilitate the efficient performance of its obligations
under this Agreement, including without limitation, Section 6.1, 7.1(b) or (e),
or this Section 7.9, Supplier shall notify Customer of such costs before
incurring them and if Customer approves such expenditure, Customer shall
reimburse Supplier for all such costs. Should Customer not approve such
expenditure Supplier shall not be in breach of its obligations to maintain the
IT System hereunder to the extent such breach results from the lack of approved
expenditure.     7.10.1   Supplier will, at no additional charge, provide and
maintain certain reports and electronic data feeds on a country by country basis
to the extent available to Customer as of the Effective Date, including but not
limited to:         [*****]         Supplier will supply Customer with access to
such information as Customer shall reasonably require to [*****] Supplier will
in coordination with Customer define a series of reports within [*****] months
of the Effective Date to evaluate and control the service levels provided for
under this Agreement.         Supplier will provide such additional reports and
electronic data feeds as Customer shall reasonably require, and the parties
shall mutually agree upon how additional costs, if any are actually incurred by
Supplier for any such reports or electronic data feeds, will be shared or
allocated.     7.10.2   Supplier shall, also provide the following IT services:
        [*****]     7.11   Intentionally deleted.

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  7.12   Transportation Management Services:

  (a)   Transport costs charged to Supplier in relation to distribution of
Product and Materials (“Transport Services”) shall be charged to Customer
[*****] and on the same payment terms as are provided by the Transport Services
provider to Supplier (“Transport Charges”). Supplier will charge Customer the
.[*****]. Customer will be invoiced by Supplier separately for the Transport
Charges on a country by country basis [*****] per month at the end of Customer’s
calendar month, provided that the transport provider’s payment terms are no less
that [*****] days. In any event and payment terms for Transport Charges are such
that Customer is obliged to pay Supplier a minimum of [*****] days prior to the
date Supplier must meet its payment obligations to transport providers for
Transport Charges.     (b)   Supplier will supply Customer on request with
copies of the invoices relating to Transport Charges per carrier split on a
country by country basis at the time of their receipt by Supplier.     (c)  
Subject to Section 7.12(d), Supplier shall at Customer’s written request
negotiate and contract with transport providers in relation to the distribution
of product and will use its reasonable endeavors to ensure that the net
Transport Charges will be at the lowest levels practicable given the volume and
make-up of dispatched product and to consolidate manufacturing and distribution
shipments where practicable.     (d)   Shipments of Product and Universal
Materials shall be made by carrier(s) pre-approved by Customer on a country by
country basis, provided, however, that Customer shall have the right, in its
sole discretion, to designate an alternative carrier in the event of Customer’s
dissatisfaction with any carrier’s services. Customer and Supplier shall consult
in relation to all agreements with transport providers for distribution of
Product and/or Materials, provided that Customer has absolute discretion to
approve all material terms of such agreements. Supplier is acting as Customer’s
agent in connection with all agreements, arrangements and dealings with such
transport providers.

  7.13   Except as otherwise expressly set forth herein, the prices set out in
Schedule 10.1 include, without limitation, compensation for the following items
rendered by Supplier pursuant to this Agreement:         [*****]

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  7.14   Supplier will receive and process specific Customer shipping
instructions that are directed to Supplier’s DJ Promo Department. Supplier will
store the equivalent volume of DJ Promo Input Materials on hand [*****] months
prior to the Effective Date at [*****] additional cost to the Customer. If the
volume of the DJ Promo Input Materials increases above this volume, Supplier
will either continue to store the materials at a monthly fee as noted in
Schedule 10.1, destroy the materials or ship them to a Customer-designated
location via a Customer-designated carrier, as directed by Customer. Customer is
responsible for any carrier fees associated with DJ Promo distribution services.
    7.15   Returns Processing:

  (a)   Supplier will process returns of Products in accordance with this
Section 7.15.     (b)   To the extent consistent with Prevailing Practices,
Supplier shall accept all returns of Products except those which Customer
expressly instructs Supplier not to accept. Customer Pre-Authorized Return
Products will be processed in a manner such that an electronic file is made
available to Customer within [*****] Days of receipt of returned Products save
for in the period 20th December to March 31st in which period the electronic
file may be made available to Customer within [*****] Working Days of receipt of
returned Products. Said electronic file shall contain at a minimum the
information provided by the current Supplier return processing system (i.e.,
prior to the Effective Date), including but not limited to: customer number,
customer’s reference number, selection number returned, quantity returned per
selection number and any other information Customer requires to adequately
process any credit note.     (c)   In the event that a return is not a Customer
Pre-Authorized Return Product, Supplier shall (i) notify Customer immediately
(within the same day) of such fact as set forth in subsection (b) above, (ii)
move such Product into a “clearance zone” in the Distribution Center, and follow
Customer’s reasonable instructions as to the disposition of such Products. Once
Customer has given its instructions Supplier will process the returns in
accordance with (b) above or Customer’s other instructions.     (d)   In
processing returns, Supplier shall follow Customer’s returns policy as it
existed immediately prior to the Effective Date, which may differ on a
country-by-country or customer basis. Customer may, from time to time, and with
reasonable advance notice, alter such policy, provided, however, that to the
extent any such

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      changes cause Supplier to incur any incremental out-of-pocket costs,
Customer shall bear such costs.     (e)   To the extent consistent with
Prevailing Practices, Customer’s policy shall clearly indicate, per country
and/or customer, which returned Products must be scrapped, put back into its
shippable inventory, have to be reworked before being put back into stock, or be
sold as special sales. Returned Products which are to be reworked shall be
reworked and available to return to shippable inventory within [*****] Working
Days after Customer’s indication of such disposition. If reworking or
repackaging is required the other pricing provisions of this Agreement shall
apply.     (f)   Customer may at any time request Supplier to prioritize returns
of certain individual customers or certain Products to make them available for
shipping and/or customer returns more quickly than other returned Product and
Supplier, subject to its capacity, shall prioritize such processing.     (g)  
Customer may at any time request Supplier to delay the returns processing, in
which event no such delays shall be a breach of the time parameters set forth in
this Section 7.15.     (h)   To the extent consistent with Prevailing Practices,
Returns of overstocks from NDU Distribution will be booked on as available
shippable inventory within [*****] after receipt, provided the returned Products
are returned [*****] do not need any reworking and are notified to Supplier by
ASN [*****] day before their receipt. These overstock returns are processed
[*****] to Customer. If reworking or repackaging is required the other pricing
provisions of this Agreement shall apply.

  7.16   Planning:

  (a)   Supplier will carry out Product stock planning in accordance with
Schedule 7.16 (“Stock Planning”). Should the Customer order Product itself (as
opposed to the Supplier ordering Product on the Customer’s behalf) and therefore
defines the order quantity itself, such quantity will prevail over any quantity
resulting from the process described in Schedule 7.16. The orders referred to in
this clause are orders for Finished Product.     (b)   Customer may, for any
reasonable business purpose of Customer, at any time elect to carry out Stock
Planning itself. In the event Customer elects to do so, (a) Customer shall
provide Supplier with [*****] days written notice of its intention to implement
such change, (b) Customer shall reimburse Supplier for [*****] and (c)

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      Supplier and Customer shall agree to an equitable adjustment in the prices
on Schedule 10.1 to reflect the corresponding decrease in Supplier’s ongoing
costs. Supplier shall consult with Customer prior to incurring any costs
referred to in (b) above and shall use commercially reasonable efforts to
minimize any resulting cost to the Customer under this Section 7.16 (a).

  7.17   Claims Administration. Customer’s customers may report freight damage
or undelivered product to Customer. The following process will be used by
Customer and Supplier to resolve these freight claims, and Supplier will act as
described in 7.17.3 through 7.17.5.

  7.17.1   Customer will submit detailed claim reports to Supplier within
[*****] of original date of shipments. Information provided will be in a form to
be agreed to by the Customer and Supplier.     7.17.2   Supplier will make
normal and customary attempts to collect claims payments from carriers. However,
Supplier will not be liable for any claim in part or in whole that is not
approved by the carrier.     7.17.3   All proceeds collected in settlement of
Customer’s reported claims will be paid to Customer within [*****] days of
receipt by Supplier.     7.17.4   Supplier will provide Customer with
documentation as to the cause regarding any claim that is denied or not paid in
full.

8.0   Shipping Quality:

  8.1   Supplier will prepare Product and Material for shipping in a manner
consistent with the current Supplier practices prior to the Effective Date to
minimize damage during transport, and otherwise conform with the quality
standards as required by the applicable Transport Service provider.     8.2   To
the extent consistent with Prevailing Practices, Supplier will perform a weight
control on all packages before tendering and a random check on [*****]% of all
packages before tendering and will maintain an order line accuracy level of
[*****]% or greater. If the line item inspected has the correct item and
quantity, it will be measured as accurate. Supplier will provide Customer with
monthly results of these inspections. If accuracy falls below [*****]%, Customer
at its sole reasonable discretion may require Supplier to increase the quantity
of shipments and lines inspected. Customer shall have the right to require
Supplier to perform an inspections for accuracy on [*****] of the deliveries to
specific customers over a period of time, provided that inaccuracies identified
as a result shall be excluded for KPI calculations.

9.0   Key Failures:

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  9.1   A “Key Failure” is an occurrence of any of the events identified as a
“KPI Repeated Failure Event” on Schedule 9.1 of this Agreement. As soon as it
becomes aware of a Key Failure, Customer or Supplier shall notify the other of
the Key Failure, specifying the nature of the Key Failure and the data sources
used to identify such Key Failure (each such notice is a “Failure Notice”).    
9.2   Any Key Failure which is not cured in accordance with this Section 9.2 is
an “Uncured Key Failure,” provided that Customer has provided Supplier (or
Supplier has provided Customer) with an associated Failure Notice within [*****]
days of the Key Failure. A Key Failure which is cured under this Section 9.2
shall not relieve Supplier of any other remedies to which Customer may be
entitled under this Agreement. In order to cure a Key Failure, Supplier must do
each of the following:

  9.2.1   Within seven calendar days of receipt of a Failure Notice identifying
such Key Failure from Customer, or delivery of a Failure Notice by Supplier,
after consultation with Customer, provide to Customer a detailed, written
correction action plan (“CAP”), with defined and traceable milestones, metrics
and timelines which address the causes of the Key Failure and describes how
Supplier will monitor and manage the relevant business practices/processes to
ensure that the causes of the Key Failure are successfully addressed;    
9.2.2   During the six-week period following the date of Supplier’s receipt or
sending of the Failure Notice (the “Cure Period”), on each Tuesday, provide
Customer with a written report describing the progress on the CAP and any Key
Failures during the preceding Work Week (ending on the immediately preceding
Saturday); and     9.2.3   By the end of the Cure Period, successfully address
the causes of the Key Failure, and provide Customer with a written report of the
relevant business practices/process implemented.

  9.3   The effects of Key Failures and Uncured Key Failures shall be as
follows:

  9.3.1   On the first Uncured Key Failure with respect to which Supplier has
received or delivered a Failure Notice during any [*****]-year period, Customer
shall have the right, as Supplier’s sole liability and as Customer’s sole remedy
for such Key Failure(s), to either (a) source up to [*****]% of its DOAs and/or
at the option of the Customer up to [*****]% of the manufacturing services for
the SKUs whose DOAs are outsourced (such combination of DOA and manufacturing
services as elected by Customer, the “Elected Services”) with any other entity
or

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      entities for a period of [*****] months, or (b) receive from Supplier
liquidated damages in the amount of [*****] payable in the form of a monthly
credit towards Customer’s accounts payable to Supplier in the amount of [*****].
    9.3.2   On the second Uncured Key Failure with respect to which Supplier has
received or delivered a Failure Notice during any [*****]-year period, Customer
shall have the right, as Supplier’s sole liability and as Customer’s sole remedy
for such Key Failure(s), to either (a) source up to [*****]% of its Elected
Services with any other entity or entities for a period of [*****] months, or
for an additional [*****]-month period in the event that Customer is
then-currently exercising a prior sourcing right under any subsection of
Section 9.3, or (b) receive from Supplier liquidated damages in the amount of
[*****] payable in the form of a monthly credit towards Customer’s accounts
payable to Supplier in the amount of [*****].     9.3.3   Notwithstanding
Section 9.3.2, if two Key Failures under “On Time Tendering” on Schedule 9.1
with respect to which Supplier has received or delivered a Failure Notice occur
between September 15th and December 31st of the same calendar year, and whether
cured or not, Customer shall have the right, as Supplier’s sole liability and as
Customer’s sole remedy for such Key Failure(s), to either (a) source up to
[*****]% of its Elected Services with any other entity or entities for a period
of [*****] months, or for an additional [*****] month period in the event that
Customer is then currently exercising a prior sourcing right under any
sub-section of Section 9.3, or (b) receive from Supplier liquidated damages in
the amount of [*****]Euros payable in the form of a monthly credit towards
Customer’s accounts payable to Supplier in the amount of [*****].     9.3.4   If
three Key Failures of the same category (e.g., Picking Accuracy) with respect to
which Supplier has received or delivered a Failure Notice occur during any
rolling [*****]-year period, whether cured or not, Customer shall have the
right, as Supplier’s sole liability and as Customer’s sole remedy for such Key
Failure(s), to either (a) source up to [*****]% of the DOAs with any other
entity or entities for the remainder of the Term, or (b) terminate this
Agreement, or (c) receive from Supplier liquidated damages in the amount of
[*****] Euros payable in the form of a monthly credit towards Customer’s
accounts payable to Supplier in the amount of [*****].     9.3.5   On the fourth
Key Failure with respect to which Supplier has received or delivered a Failure
Notice during any rolling [*****]

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      year period, whether cured or not, Customer shall have the right, as
Supplier’s sole liability and as Customer’s sole remedy for such Key Failure(s),
to either (a) source up to [*****]% of the DOAs with any other entity or
entities for a period of [*****] months, or for an additional [*****]-month
period in the event that Customer is then current exercising a prior sourcing
right under any sub-section of this Section 9.3, (b) terminate this Agreement,
or (c) receive from Supplier liquidated damages in the amount of [*****] Euros
payable in the form of a monthly credit towards Customer’s accounts payable to
Supplier in the amount of.[*****].     9.3.6   On the fifth key failure with
respect to which Supplier has received or delivered a Failure Notice during any
rolling [*****] year period, whether cured or not, Customer shall have the
right, as Supplier’s sole liability and as Customer’s sole remedy for such Key
Failure(s), to either (a) source up to [*****] of the DOAs with any other entity
or entities for the remainder of the Term, (b) terminate this Agreement, or
(c) receive from Supplier liquidated damages in the amount of [*****] Euros
payable in the form of a monthly credit towards Customer’s accounts payable to
Supplier in the amount of [*****].     9.3.7   For purposes of clarity, the
parties agree that where the provisions of more than one sub-section of
Section 9.3 would provide Customer with a remedy with respect to any new Key
event, Customer may elect only one of such remedies. In addition, to the extent
that an event that would constitute a Key Failure under “Picking Accuracy” on
Section 9.1 is uncured and continuing during the applicable Cure Period, such
event may not constitute another Key Failure until the end of the applicable
Cure Period in accordance with Section 9.2.     9.3.8   Customer’s right to
invoke any remedy available to Customer under the provisions of any sub-section
of Section 9.3 shall be exercised, if at all, in writing and within [*****] days
after the date upon which such right first accrues to Customer (e.g., at the end
of the cure period or on the occurrence of a Key Failure and receipt of a
Failure Notice, as applicable), and any period of loss of exclusive volume under
any sub-section of Section 9.3 shall commence upon such date, except in the case
where a period of loss of exclusive volume under any sub-section of this
Section 9.3 is currently running, in which case the new period shall commence
upon the expiration of the current period.     9.3.9   In the event that
Customer exercises any right to source any volumes with third parties under any
sub-section of this Section

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      9.3, Customer shall provide Supplier with timely notice of such
third-party sourcing, and Supplier’s capacity commitments under this Agreement
shall be reduced by the amount of such third-party sourcing. Upon the conclusion
of any period in which Customer has elected to outsource exclusive volume
pursuant to Sections 9.3.1 through 9.3.6, such exclusive volume shall
automatically revert to Supplier. If Customer elects to source [*****] of the
Manufacturing Services with another entity or entities for the remainder of the
Term under Section 9.3.4 or Section 9.3.6, Supplier shall be relieved of its
capacity and similar commitments under this Agreement for the remainder of the
Term.

  9.4   Notwithstanding any other provision of this Agreement, any failure of
Supplier to perform any of its obligations under this Agreement shall not be
considered a default, breach, Key Failure or Uncured Key Failure to the extent
that such failure is caused by (a) any Customer breach of, or noncompliance with
this Agreement; (b) the failure of Customer to timely provide any required
consents, approvals, instructions or assistance; or (c) any Customer Affiliate
breach of, or noncompliance with, either the Transition Services Agreements, the
International Manufacturing Agreement, the Share Purchase Agreement or the Lease
Agreement.

10.0   Pricing:

  10.1   Base Pricing:

  10.1.1   Schedule 10.1 contains the prices for DOAs. These prices are fixed
through the Term, with the exception(s) described in this Agreement, including
pursuant to Sections 10.5 and 10.6. The Parties agree that Supplier will not
charge, and Customer will not pay for, any service or activity that is not
listed on Schedule 10.1 or elsewhere referenced, excluding prices for
Transportation Services which are described in Section 10.2 or included in this
Agreement unless Customer has approved such services and charges in writing. The
prices in Schedule 10.1 and elsewhere in this Agreement are exclusive of any
applicable VAT or sales tax, which shall be stated separately on each invoice at
the applicable rate and shall be payable by Customer to Supplier at the same
time each such invoice is payable. All prices and other amounts hereunder are to
be charged and paid in Euros unless expressly stated otherwise herein or as
otherwise agreed in writing by the Parties.

  10.2   Intentionally deleted.

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  10.3   Supplier may invoice Customer [*****]. Such invoices shall reflect the
prices contemplated by Section 10.1, or as may be agreed upon by the Parties or
determined pursuant to this Agreement. Each Customer invoice shall identify all
modular charges from Schedule 10.1 and any additional charges agreed upon by the
Parties which are applied to the DOAs and shall apportion such charges on a
country-by-country basis.

  10.3.1   Customer shall pay interest on any amounts (excluding those disputed
in good faith, including without limitation, where the late payment is the
result of Supplier’s action or inaction, e.g. Supplier’s warehouse receipt does
not match Supplier’s invoice) past due under this Agreement at a monthly rate
equal to the lesser of (a) the London Interbank Offered Rate (“LIBOR”) + 0.5% or
(b) the maximum rate permitted by law.     10.3.2   If Customer becomes
delinquent in the payment of any amount (excluding amounts disputed in good
faith) in excess of ,[*****] Supplier shall have the right to suspend some or
all shipments hereunder pending such payment, and any such failure to make
shipments will not be a default, breach, Key Failure or Uncured Key Failure
under this Agreement and will not entitle Customer to terminate this Agreement
or to any other damages or remedy.     10.3.3   In the case of a disputed
invoice, Customer will pay the undisputed amount of the invoice and Customer and
Supplier will work together in good faith to resolve the disputed amount. In the
event an agreement cannot be reached on the disputed amount within [*****] days
of the invoice due date, either Supplier or Customer may submit the matter to
arbitration as provided in Article 14.0 “Dispute Resolution” to resolve the
disputed amount, but without the need for or right to preliminary discussions
provided for in Article 14.0. Upon resolution of the dispute, Customer will pay
the Supplier the amount, if any, determined to be due to Supplier.     10.3.4  
All prices will be Free Carrier (FCA) International Chamber of Commerce
(ICC) International Commercial Terms (INCOTERMS 2000) from Supplier’s
distribution location. However, if Product is sourced from a manufacturing or
distribution location that results in a higher transportation cost than if
produced or stored at the Hanover location, Supplier will issue a credit to
Customer equal to the additional costs to deliver the product to the
Distribution Center.

  10.4   Intentionally deleted

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  10.5   In the event a DOA which is not listed on Schedule 10.1 is required by
Customer or any Universal Music Group member, the following procedure will be
followed by Customer and Supplier to establish a price for said DOAs.

  10.5.1   Customer will request the DOA from Supplier in writing.     10.5.2  
Supplier will propose a price equal to its [*****].     10.5.3   Customer may
accept or reject Supplier’s proposed price.     10.5.4   In the event Customer
accepts Supplier’s proposed price, such DOA and associated price shall be added
to Schedule 10.1.     10.5.5   In the event Customer rejects Supplier’s proposed
price, Customer may [*****]. All such information constitutes confidential
information of Supplier.     10.5.6   An audit may include a [*****]. All such
information constitutes confidential information of Supplier.     10.5.7  
“Market Pricing Information” means the individual prices for each new DOA
obtained within [*****] days before the submission of the Market Pricing
Information from [*****] Qualified Distributors, based on substantially
equivalent volume of Customer’s volume in the previous [*****] months and in
relation to order lot sizes and lead times similar to Customer’s.     10.5.8  
Supplier shall have [*****] days after receipt of the Market Pricing Information
to object to such Market Pricing Information, provided the only grounds for such
objection can be that the Proposed Prices do not meet [*****]. If Supplier makes
such an objection, the matter shall be subject to arbitration as set forth in
Section 10.5.11 below and Section 23.     10.5.9   Following either the audit
and/or the submission of the Market Pricing Information, the Parties will meet
and engage in good faith negotiations to agree on the proposed price, provided
that in no event may the price for the new DOA exceed the Average Market Price.
    10.5.10   “Average Market Price” for each new DOA means the average of each
Qualified Distributor’s price, as included in the Market Pricing Information.  
  10.5.11   In the event an agreement cannot be reached on the proposed price
within [*****] days of Supplier’s proposal of a price, either Supplier or
Customer may invoke Article 14.0 “Dispute

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      Resolution” to determine the price for the DOA not contained in
Schedule 10.1, provided that solely for purposes of resolving a dispute under
this Section 10.5, the procedures set forth in Section 14.0 shall not be used
and the following shall apply (A) there shall be one arbitrator only who shall
be a Certified Public accountant (or equivalent) based in London, England and
then in practice at a recognized public accounting firm which firm shall be
selected by the Parties mutually, and which shall be asked to name the person so
to act; (B) there shall be no discovery, (C) each Party shall submit, on the
[*****] business day after the arbitrator is named, its proposed price and any
support it has for the price as proposed (including, e.g., any documentation
submitted under Sections 10.5.2 and 10.5.5 and the results of any audit under
Section 10.5.5), and (D) the arbitrator shall determine, within [*****] business
days of the submissions under clause (C) the price which is the lower of that
resulting from the formula set forth in Section 10.5.2 as audited pursuant to
Sections 10.5.5 and 10.5.6 and the Average Market Price. Once such price is
determined, such DOA and associated price shall be added to Schedule 10.1.    
10.5.12   The price of a new DOA, whether determined at arbitration or by
agreement pursuant to this Section shall be effective as of the date the
Supplier provided the new DOA.

  10.6   The Parties agree and understand that subsequent to the Effective Date,
but within the Term, Customer may have access to DOA volumes other than for
Universal Music Group Distribution Requirements for distribution in the
Territory, including volumes (a) from non-Universal Music Group companies or
labels with which it currently has no written agreements; and (b) from a party
who becomes a Universal Music Group member by acquisition after the Effective
Date to the extent and for the period that such party’s volumes are
contractually committed to the third party as of the date of signing of the
relevant acquisition agreement. All and any such DOAs, to the extent for
distribution in the Territory, will be hereafter referred to as “Incremental
Volumes”.         On each occasion on which Customer gains access to any
Incremental Volumes which would, if controlled by Customer, be required to be
fulfilled through Supplier (i.e., DOAs to be performed within the Territory),
Customer shall notify Supplier of the volumes and service requirements
(including those which may be country or deal-specific, e.g., landed
lead-times), and any other relevant information related to such Incremental
Volume necessary for Supplier to prepare a proposal to supply such Incremental
Volume to Customer (each such notice, an “Incremental Volume Offer”).
Notwithstanding anything to the contrary in this Agreement, however, Customer
shall not be required to offer any

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      DOA Incremental Volumes unless (i) the DOAs are to be performed within the
Territory (e.g. P&D Agreements requiring Distribution Services outside the
Territory are not required to be notified by Customer to Supplier), and
(ii) Customer can also offer Supplier the associated manufacturing as
“Incremental Volume” under the International Manufacturing Agreement. Within
[*****] days of its receipt of an Incremental Volume Offer, Supplier must advise
Customer of its interest in supplying such Incremental Volume which is the
subject of the Incremental Volume Offer, and set forth in such acceptance its
proposal all the necessary terms for such acceptance, which shall include all
the terms set forth in the Incremental Volume Offer (each such acceptance, the
“Supplier Incremental Volume Proposal”). Supplier’s decision not to submit, or
its failure to provide a Supplier Incremental Volume Proposal within the [*****]
days, shall mean that, notwithstanding Section 4.1, Customer may take the
Incremental Volume subject to the Incremental Volume Offer to any entity.
Notwithstanding the foregoing, Supplier must advise Customer within [*****] Days
of its interest in supplying Incremental Volume for Special Projects.        
[*****]     10.7   Intentionally deleted     10.8   Intentionally deleted    
10.9   Either Party shall have the right to dispute the accuracy of the
Aggregate 2003 Distribution Costs, as a whole, or the Allocated 2003
Distribution Costs, on a line item basis, as follows:

  10.9.1   Either Party may notify the other Party of an error or omission in
the Aggregate 2003 Distribution Costs or any Allocated 2003 Distribution Costs
in writing within [*****] months of the Effective Date and request an adjustment
of the Aggregate 2003 Distribution Costs and/or any Allocated Distribution
Costs, either up or down, as required to accurately reflect the Euro amount of
such error(s) or omission(s) (any such requested adjustments, the “Requested
Cost Adjustment”). A requested Cost Adjustment may only be requested to the
extent it relates to a variance in costs at the Supplier’s Hanover facility in
2003.     10.9.2   Within [*****] days of receiving notification of a Requested
Cost Adjustment, Customer and Supplier will meet and conduct good faith
negotiations and attempt to reach agreement on whether such adjustments are
appropriate and in the correct amount. Either Party may audit the other’s books,
records and supporting documentation supporting the calculation of the data in,
or the data used in preparing, Schedule 10.1 and the

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      Requested Cost Adjustment. Such audits shall be performed with reasonable
advance written notice, during normal business hours, and in a manner not
disruptive of the audited Party’s operations. Once a Requested Cost Adjustment
has been agreed or determined hereunder (the “Final Cost Adjustment”), the
Aggregate 2003 Distribution Costs and the Allocated 2003 Distribution Costs
shall be modified as follows:     10.9.3   If the dispute involves an error in
the allocation of the Allocated 2003 Distribution Costs, the Final Cost
Adjustment shall be added to or subtracted from the existing cost allocation for
any and each disputed line item which contains the cost item and the amount of
the Final Cost Adjustment shall be offset by a subtraction (in the case of an
addition above) or addition (in the case of a subtraction above) for one or more
other cost items in the relevant line items in which such other cost items are
contained such that, had the adjusted costs been used to calculate the Aggregate
2003 Distribution Costs, based on the 2003 Distribution Mix, the Aggregate 2003
Distribution Costs would not have changed.     10.9.4   If the dispute involves
increasing or adding a cost item or amount to the Aggregate 2003 Distribution
Costs, the Final Cost Adjustment for such cost item shall be added to the
Aggregate 2003 Distribution Costs, and to the relevant line items of the
Allocated 2003 Distribution Costs such that, had the adjusted costs been used to
calculate the Aggregate 2003 Distribution Costs, based on the 2003 Distribution
Mix, the Aggregate 2003 Distribution Costs would have increased by the amount of
the Final Cost Adjustment.     10.9.5   If the dispute involves reducing or
removing a cost item or amount from the Aggregate 2003 Distribution Costs, the
Final Cost Adjustment for such cost item shall be subtracted from the Aggregate
2003 Distribution Costs, and from the relevant line items of the Allocated 2003
Distribution Costs such that, had the adjusted costs been used to calculate the
Aggregate 2003 Distribution Costs, based on the 2003 Distribution Mix, the
Aggregate 2003 Distribution Costs would have decreased by the amount of the
Final Cost Adjustment.     10.9.6   Once a Final Cost Adjustment has been made
to the Allocated 2003 Distribution Costs as described in Section 10.9.2, the
Parties shall adjust the prices [*****] shown on Schedule 10.1 to take into
account the adjustments described in Sections 10.9.2.1 through 10.9.2.3. In the
event an agreement cannot be reached on any cost changes or any changes in
Schedule 10.1 within

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      [*****] weeks of the commencement of negotiations under Section 10.9.2,
either Party may invoke Section 14.0 (Dispute Resolution) to determine the
appropriate Schedule 10.1 prices, provided that solely for purposes of resolving
disputes under this Section 10.9, Section 14.0 procedures shall not apply and
the following shall apply: (A) there shall be one arbitrator only who shall be a
certified public accountant (or equivalent) based in London, England and then in
practice at a recognized public accounting firm selected by the Parties
mutually, and the firm shall nominate such person to be the arbitrator,
(B) there shall be no discovery (other than that which has occurred pursuant to
Section 10.9.2), (C) each Party shall submit, on the tenth business day after
the arbitrator is named, its proposal on price adjustments and any support it
has for its position (including, e.g., any documentation submitted under
Section 10.9.1 and the results of any audit under Section 10.9.2), and the
arbitrator shall make a determination, within 10 days of such submissions, of
how the prices on Schedule 10.1 shall be adjusted, provided that such
determination must comply with the parameters set forth in this Section 10.9. If
the Parties fail to invoke the arbitration provision, the prices on
Schedule 10.1 shall remain unadjusted, and if one Party fails to submit its
proposal timely to the named arbitrator, the arbitrator shall accept the other
Party’s proposal, provided such proposal meets the parameters set forth in this
Section 10.9. Once the prices for all DOAs are agreed or determined pursuant to
this Section 10.9, such new prices shall be deemed to amend Schedule 10.1
accordingly, and shall be applied both retroactively (to the Effective Date) and
prospectively, and all amounts owing from one Party to the other as a result of
such adjustment shall be paid within [*****] days of the final determination of
the changes in such prices.     10.9.7   Recourse to the procedures and remedies
set forth in this Section 10.9 shall be Customer’s sole liability, and
Supplier’s sole remedy, in the event of a breach by Customer of its
representation and warranty in Section 12.2(D).

  10.10   Supplier will use its reasonable endeavors to obtain the lowest and
best net price from any third party providers of products and services required
under this Agreement, including transport services and hand packing,
refurbishment and other non-automated services and the cost of any such services
shall be charged by Supplier to Customer at cost. Capacity and resource
permitting, Supplier shall undertake non-automated DOA’s performed for Customer
in-house and shall perform such activities for Customer in-house in priority to
any third party customer.

11.0   Intentionally deleted.

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12.0   Representations of the Parties:

  12.1   Representations of Supplier: As of the Effective Date, and at all times
during the Term, Supplier represents and warrants as follows:

  (a)   Supplier is a valid existing private limited liability stock company
(GmbH) and in good standing under the laws of Germany. Supplier has the
corporate power and authority required to carry on its activities as they are
now conducted.     (b)   Supplier has full legal right and corporate power,
without the consent of any other person to execute, deliver and to perform its
obligations under this Agreement.     (c)   All corporate and other actions
required to be taken by Supplier to authorize the execution, delivery and
performance of this Agreement and all transactions contemplated hereby have been
duly and properly taken. No consent, approval or authorization of, or filing of
any certificate, notice application, report or other document with any
governmental authority is required on the part of Supplier in connection with
the valid execution and delivery of this Agreement or the performance by
Supplier of any of its obligations hereunder.

  12.2   Representations of Customer: As of the Effective Date, and at all times
during the Term, Customer represents and warrants as follows:

  (a)   It is a valid existing limited liability stock company and in good
standing under the laws of the Netherlands. It has the corporate power and
authority required to carry on its activities as they are now conducted.    
(b)   It has full legal right and corporate power, without the consent of any
other person to execute, deliver and to perform its obligations under this
Agreement.     (c)   All corporate and other actions required to be taken by it
to authorize the execution, delivery and performance of this Agreement and all
transactions contemplated hereby have been duly and properly taken. No consent,
approval or authorization of, or filing of any certificate, notice application,
report or other document with any governmental authority is required on the part
of it in connection with its valid execution and delivery of this Agreement or
the performance by it of any of its obligations hereunder.     (d)   The
Aggregate 2003 Distribution Costs accurately reflect Supplier’s actual,
recurring, aggregate stand-alone cost of

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      providing the DOAs for total Supplier distribution volume in 2003 (“Total
Volume”), after certain adjustments mutually agreed upon by Customer and
Supplier, as set forth on Schedule 12.2(d).     (e)   The Allocated 2003
Distribution Costs accurately reflects the allocation of the Aggregate 2003
Distribution Costs allocated over the DOA’s for the Total Volume as set forth in
Schedule 12.2(e).     (f)   Customer has the right to authorize Supplier to
perform the Distribution Services on Customer’s and the Universal Music Group’s
behalf (including, without limitation, the purchase of materials and components
on behalf of Customer and the Universal Music Group).

  12.3   Warranty Disclaimers:

EXCEPT AS EXPRESSLY STATED IN THIS AGREEMENT, ALL WARRANTIES AND CONDITIONS,
WHETHER EXPRESS OR IMPLIED BY STATUTE, COMMON LAW OR OTHERWISE (INCLUDING, BUT
NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE
OR NON-INFRINGEMENT) ARE HEREBY EXCLUDED.

13.0   Termination:

  13.1   This Agreement may be terminated:

  (a)   By mutual written consent of the Parties at any time;     (b)   By
Customer pursuant to Section 9.3.4 or Section 9.3.6;     (c)   In the event
there is a Change of Control during the Term, notwithstanding any other
provision of this Agreement, Customer may terminate this Agreement upon 90
calendar days written notice to Supplier, which notice may only be served in the
period from such Change of Control to three months of Supplier’s written notice
to Customer of such Change of Control;     (d)   By Customer in the event
Supplier is adjudged insolvent, makes a general assignment for the benefit of
its creditors, or files a petition for relief under applicable bankruptcy or
insolvency law; or a receiver is appointed on account of Supplier’s insolvency;
or     (e)   By Customer, if Supplier has materially breached its obligations
under any of Sections 5.5 or 5.7, without cure (after written notice by Customer
and opportunity to do so) of such breaches, [*****] or more times in any [*****]
month period; provided that with respect to 5.7 Supplier shall have [*****] Days
to cure such

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     breaches. For the purposes of this Section 13.1(e), “cure” shall mean
undertaking the same cure process as is set forth in Sections 9.2.1 through
9.2.3 for Key Failures. For purposes of this Section 13.1(e) “material breach”
shall mean that such breach resulted in a material loss to Customer or UMG.    
(f)   By Customer, if Supplier has materially breached its obligations under
Section 18 (with respect to assignment to a Competitor), without cure (after
written notice by Customer and reasonable opportunity to do so) of such
breaches.

  13.2   Effect of Manufacturing Agreement Termination:

In the event that the International Manufacturing Agreement is terminated by
Customer during the Term due to Supplier’s breach, Customer shall have the right
to terminate this Agreement unless Supplier agrees, and does, reimburse Customer
for any additional costs incurred by virtue of the separation of Supplier’s
manufacturing facilities and its Distribution Center.     13.3   Upon any
termination or expiration of this Agreement, all of the provisions of this
Agreement will terminate, except for the following provisions, which will
survive in perpetuity: Sections 13.2, 13.3, 14.0, 15.0, 20.0, 21.0, 24.0 and
31.0. No termination or expiration of this Agreement will relieve Customer or
Supplier of any payment obligations outstanding at the time of such termination
or expiration.     13.4   At the expiration of the Term or upon earlier
termination, Customer will be entitled to repossess all of its property,
including finished goods and packaging components provided (or paid for) by it
to Supplier over the Term. Supplier will pack such property appropriately and
make it available for pick up by Customer with a clear dispatch and content note
per shipment in agreement with Customer. Customer commits to take back such
property within 120 days after the expiration of the Term or earlier
termination. In the event of termination as a result of Supplier’s breach,
Supplier shall bear any packaging, retrieval or storage costs incurred by
Supplier for this service during this period. In the event of any other
expiration or termination, Supplier shall notify Customer of all such costs
prior to incurring them, and Customer and Supplier shall split all such costs
equally.

14.0   Dispute Resolution:       During the pendency of any dispute, this
Agreement shall continue to be in force and the Parties shall abide by all terms
of this Agreement. Any dispute concerning the interpretation of this Agreement
or any Party’s performance under any provision of this Agreement shall be
discussed by the Parties, and if the

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    Parties are unable to reach agreement concerning such matter, the dispute
shall be settled by arbitration in London by three arbitrators (the “Arbitral
Tribunal”) appointed in accordance with the UNCITRAL Arbitration Rules (the
“UNCITRAL Rules”) in force at the time of commencement of the arbitration. The
language of the arbitration shall be English. The number of arbitrators selected
shall be three. Each Party shall select one arbitrator and the two arbitrators
selected by the Parties shall select the third arbitrator, who shall act as
chairman and shall be a practicing solicitor or barrister admitted in New York
and/or England and Wales for a continuous period of at least 10 years as at the
date of commencement of the arbitration. The arbitration shall take place in New
York or London. Any court of applicable jurisdiction may grant interim relief as
set forth in Section 14.1 (notwithstanding any provision of the UNCITRAL Rules
to the contrary). The Arbitral Tribunal, once fully constituted, shall have the
power to order on a provisional basis any relief which it would have power to
order in a final award. The Arbitral Tribunal shall apply New York law to any
questions regarding the validity of this clause (insofar as any such questions
are separable from questions as to the validity of the agreement of which this
clause forms part) including but not limited to any question as to the authority
of the signatories to this Agreement. The IBA Rules on the Taking of Evidence in
International Commercial Arbitration (the “IBA Rules of Evidence”) shall apply
to any arbitration in accordance with this clause. In case of any inconsistency
with any clause of this Agreement or with the UNCITRAL Rules, the IBA Rules of
Evidence shall prevail but solely as regards the presentation and reception of
evidence. Judgment upon any arbitration award may be entered in any court of
competent jurisdiction. Arbitration shall occur over consecutive business days
and in no event shall an arbitration procedure continue for more than two weeks.

  14.1   Notwithstanding the foregoing, either Party may pursue the remedy of
specific performance of any provision contained herein, or seek a preliminary or
permanent injunction against the breach of any such provision or in aid of the
exercise of any power granted herein, or any combination thereof, in any court
having jurisdiction thereof without resort to arbitration.     14.2   In the
event of any arbitration between the Parties hereto with respect to any of the
transactions contemplated herein or the subject matter hereof, the prevailing
Party shall, in addition to such other relief as the arbitrators may award, be
entitled to recover reasonable attorney’s fees, expenses and costs of
investigation, all as actually incurred, including without limitation,
attorneys’ fees, expenses and costs of investigation incurred in any case or
proceeding under any bankruptcy, insolvency or reorganization proceeding.

15.0   Retention of Rights:       All finished goods, packaging and other
materials provided by Customer in connection herewith, and all rights therein,
shall remain the exclusive property of

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    Customer. Customer shall not provide Supplier with any original or
irreplaceable materials under this Agreement. Notwithstanding the above, to the
extent Customer nevertheless provides Supplier with any such original or
irreplaceable materials, Supplier shall use commercially reasonable endeavors to
ensure the safety and security of such materials but shall not be liable for any
damages other than those specified in Section 21.1 below, in the event that such
materials are lost, damaged, destroyed or stolen.   16.0   Binding Effect and No
Other Agreements:       This Agreement and the International Manufacturing
Agreement together constitute the entire agreement between the Parties on the
subjects herein contained and supersede, cancel and terminate all other
understandings between the parties with respect to the subject matter hereof.  
17.0   Amendments:       No modification of or supplement to this Agreement
shall be effective unless signed in writing by each Party.   18.0   Successors
and Assigns; Assignment:       The rights and obligations of the Parties
hereunder shall attach to their successors and permitted assigns. Supplier shall
have the right to assign this Agreement or any of the rights granted to Supplier
hereunder, including without limitation, the right to assign any interests under
this Agreement to (a) lenders providing financing to Supplier from time to time
and (b) to any third party acquiring all or substantially all of Supplier’s
assets or equity, provided that such third party is not a Competitor and agrees
in writing to assume all of Customer’s obligations hereunder. Except as provided
herein, Supplier shall not assign, or grant any lien or encumbrance on, any
property of Customer (including finished goods). Customer shall not have the
right, without Supplier’s prior written consent, which consent shall not be
unreasonably withheld, conditioned or delayed, to assign this Agreement or any
of the rights, obligations or interests of Customer hereunder, in whole or in
part, by operation of law, pursuant to a change of control, or otherwise;
provided, however, that Customer shall have the right without Supplier’s consent
to assign its rights and obligations under this Agreement to any Affiliate of
Parent or to any third party acquiring all or substantially all of Customer’s
assets or equity, provided that (i) such Affiliate or third party agrees in
writing to assume all of Customer’s obligations hereunder, and (ii) Customer and
such third party have confirmed in writing to Supplier that (A) it then
currently has Distribution Requirements substantially similar to or greater than
Customer’s then current Distribution Requirements, and (B) its then current
forecasts for Distribution Requirements for the remainder of the Term are
substantially similar to or greater than Customer’s then current forecasts for
Distribution Requirements for the remainder of the Term. Notwithstanding the
foregoing, in the event a non-Affiliate third party acquires all or
substantially all

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   of Customer’s assets or equity, such third party shall thereafter only be
bound by the purchase commitment in Section 4.1 for the DOAs that are Customer’s
and any other member of the Universal Music Group’s DOAs (i.e., no Customer
Affiliate not part of the Universal Music Group immediately prior to the
transaction shall be bound by this Agreement).   19.0   Compliance:       Any
waiver by any Party of any breach hereof by the other Party shall not be deemed
a waiver of such Party’s obligation for future compliance with the terms and
conditions in this Agreement, notwithstanding any custom, practice or course of
dealing to the contrary.   20.0   Confidentiality:       Except as may be
required by law, no Party shall disclose to any third party any confidential
information on business or technology of any other Party obtained in connection
with this Agreement for three years from the date of the disclosure of any such
confidential information without the prior written consent of the other Party.
Notwithstanding the foregoing, except as may be required by law, Supplier agrees
to keep confidential (a) all Customer-specific product specifications, and
(b) all Customer order information, in perpetuity.   21.0   Indemnification:  
    Each Party (the “Indemnifying Party”) hereto agrees to and does hereby
indemnify, defend and hold harmless, the other party and its parent,
subsidiaries, affiliated companies, and its and their shareholders, officers,
employees and agents (“Indemnified Party”) from any and all third party claims,
demands, causes of action, liability, judgments, damages, costs and expense
(including reasonable attorney’s fees) asserted against, imposed upon or
suffered by an Indemnified Party to the extent any such claims are caused by the
Indemnifying Party’s performance of this Agreement, including but not limited to
any claims for bodily injury, death or property damage, product liability and
any infringement of any proprietary right, patent copyright or trademark.

  21.1   Subject to Section 7.2(i), Supplier agrees to be expressly and solely
responsible for any property of Customer while such property is in the care or
custody of or under the control of Supplier, whether or not such possession
constitutes a legal bailment, and in the event of any damage to or loss of such
property while in the possession of Supplier, if the property is not an original
or irreplaceable item or items, Supplier shall promptly pay Customer the full
replacement value of such property or the costs to repair the damage or restore
the loss to any such property, as applicable, regardless of cause. If,
notwithstanding Section 15.0, Customer has provided Supplier with original or
irreplaceable items which are damaged or lost while in possession of Supplier,
Supplier shall be liable only for the

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      cost of repair or replacement as if the lost or damaged original were a
copy.

22.0   Favored Nations:

  22.1   As to Significant Companies. In the event Supplier sells any DOAs to a
Significant Company under similar or more favorable (to the other customer)
terms and conditions to those described in Sections 1.0 through 10.0, 13, 21 and
25 herein for net prices for such DOAs (including all discounts, rebates and all
other economic-related considerations) lower than those then in effect for
Customer under Section 10.0 and this Section 22.1, Supplier will lower
Customer’s prices for such DOAs such that they are equivalent to the prices paid
by said Significant Company effective as of the date of the first invoice to the
Significant Company, and for the duration that such Significant Customer
receives such lower prices.     22.2   As To Other Customers. In the event
Supplier sells any DOAs under similar or more favorable terms and conditions to
those described in Sections 1.0 through 10.0, 13, 21 and 25 herein to a customer
other than a Significant Company (an “MFN Customer”) for net prices for such
DOAs (including all discounts, rebates, and all other economic related
considerations) lower than those then in effect for Customer under Section 10.0
and Section 22.1 (said lower configuration price(s) called the “MFN
Configuration Price”), Supplier will:

  (a)   immediately notify Customer in writing of such sale and the pricing
therefor; and     (b)   15 days following the end of each calendar quarter
during which the MFN Customer receives the MFN Configuration Price, issue the
Customer a credit to Customer’s payables equal to the number of units for each
configuration sold to the MFN Customer(s) multiplied times the MFN Factor shown
in Schedule 22.0.

  22.3   For purposes of clarity, only Section 22.1 or Section 22.2 shall apply
to any one sale to another customer, but each section may be used multiple
times, whether for the same or different customers, and both sections may be
operative at the same time (e.g., (1) if Significant Company A receives a lower
price than Customer, Customer’s prices shall be adjusted under Section 22.1, and
if Significant Company B receives an even lower price than Customer’s adjusted
prices, Customer’s prices shall be reduced again; (2) If MFN Customer I receives
a lower price than Customer, Customer shall receive a rebate as to MFN Customer
I under Section 22.2, and if MFN Customer II receives a lower price than
Customer (but not as low as MFN Customer I), Customer shall also receive a
rebate as to MFN Customer II under Section 22.2(calculated for that MFN Customer
II), and (3) if Customer’s prices are lowered as a result of Section 22.1, and
then

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      an MFN Customer receives an even lower price, Customer shall retain the
prices set pursuant to Section 22.1, and shall be entitled to the rebate set
forth in Section 22.2 for the latter sale).

    Notwithstanding any other provision of this Section 22, Customer shall
receive no price adjustment or other benefit under this Section 22: (a) with
respect to orders from other Supplier customers which are Spot Market Orders, or
(b) with respect to orders from other Supplier customers which are not
Significant Companies and which are fulfilled using assets and facilities other
those purchased or leased by Supplier from Customer under the Share Purchase
Agreement or Lease Agreement, or (c) with respect to orders from a Significant
Company if such orders are fulfilled using assets and facilities purchased by
Supplier from such Significant Company.   23.0   Audit Rights:

  (a)   Customer shall have the right to inspect Supplier’s books and records
related to its performance under this Agreement, including Section 22.0 hereof,
provided such right shall not be exercised more than once per calendar year and
provided, further, that any information subject to a confidentiality agreement
with a third party shall only be subject to inspection by an independent third
party auditor hired by Customer that enters into a confidentiality agreement
with Supplier that maintains the confidentiality of third party information and
permits the auditor to report on Supplier’s performance to Customer. Such audits
shall be performed with reasonable advance written notice, during normal
business hours, and in a manner not disruptive of Supplier’s operations.    
(b)   Supplier shall have the right to inspect Customer’s books and records
related to its performance under Section 4.1 of this Agreement, provided such
right shall not be exercised more than once per calendar year and provided,
further, that any information subject to a confidentiality agreement with a
third party shall only be subject to inspection by an independent third party
auditor hired by Supplier that enters into a confidentiality agreement with
Customer that maintains the confidentiality of third party information and
permits the auditor to report on Customer’s performance to Supplier. Such audits
shall be performed with reasonable advance written notice, during normal
business hours, and in a manner not disruptive of Customer’s operations.

24.0   Notice:       All notices, requests, claims, demands and other
communications hereunder shall be in writing (in the English language) and shall
be given or made (and shall be deemed to have been duly given or made upon
receipt) by delivery in person, by

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    courier service, by telecopy or by registered or certified mail (postage
prepaid, return receipt requested) to the respective Parties at the following
addresses (or at such other address for a Party as shall be specified in a
notice given in accordance with this Section 24.0):       If to CUSTOMER:      
Universal International Music, B.V.
Gerrit van der Veenlaan 4
3743 DN Baarn
The Netherlands
Attn: The Directors
Fax: 31 35 6245 796       With a copy to:       General Counsel
Universal Music International Ltd
8 St. James’s Square
London SW1Y 4JU
England
Fax: 44 20 7747 4473       If to SUPPLIER:

Entertainment Distribution Company LLC
c/o Glenayre Technologies, Inc.
11360 Lakefield Drive
Duluth, Georgia 30097
Attn: Chief Financial Officer
Fax: (770) 497-3992       With copies to:       Entertainment Distribution
Company LLC
360 Madison Avenue
Suite 500
New York, NY 10017
Attn: Chief Financial Officer
Fax: (212) 869-6418       and       Greenberg Traurig, LLP
3290 Northside Parkway, N.W.
Suite 400
Atlanta, GA 30327
Attn: James Altenbach
Fax: (678) 553-2212

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25.0   Force Majeure:

  25.1   Notwithstanding any provision hereof to the contrary, Supplier shall
not be liable for any damages incurred by Customer or any late fees or credits
hereunder whatsoever due to delays or failures in Supplier’s performance of its
obligations under this Agreement due to a Force Majeure Event, and such delays
or failures shall not be deemed a breach of this Agreement.     25.2  
Immediately upon becoming aware of the Force Majeure Event, Supplier will (a)
use commercially reasonable efforts to end or circumvent the Force Majeure
Event, (b) keep Customer apprised of those efforts on a timely basis, and
(c) communicate with, coordinate with and assist Customer in resolving any
impact on Customer caused by the Force Majeure Event.     25.3   If a Force
Majeure Event continues for a period longer than [*****] business days, then
Customer shall have the right to place orders for DOAs during the pendency of
such Force Majeure Event with other distribution companies, provided that
(a) such orders shall not be for volumes in excess of the volumes Customer would
ordinarily contract for during such period, and (b) upon notice from Supplier
that Supplier can resume performance under the terms of this Agreement, Customer
shall cease placing such orders with such third parties and place them with
Supplier under the terms of this Agreement.     25.4   Notwithstanding the
[*****] business day period in Section 25.3, if there would be no doubt in the
mind of a reasonable person that Supplier would be unable to resume performance
under the terms of this Agreement within [*****] business days of the Force
Majeure Event, then Customer shall have the right to immediately seek the remedy
provided under Section 25.3, without waiting for the [*****] business day period
to elapse; provided, however, that Customer shall consult with Supplier and
coordinate its activities with Supplier’s in such circumstance.

26.0   Designated Person:       Customer and Supplier each agree that each will
designate a single organization, department, and/or person to be the primary
point of contact with the other with the ability to take action as may be
required pursuant to this Agreement.   27.0   Intentionally deleted.   28.0  
Intentionally deleted.   29.0   Consents and Approvals:

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    Neither Party shall unreasonably withhold, condition or delay any consents,
authorizations or approvals required under this Agreement.   30.0   Employee
Purchase Program:       Supplier’s employees located in Hanover will have the
benefit of the employee product purchase plan in effect as of the Effective Date
unless and until modified by Customer. All orders and sales of Product pursuant
to such employee product purchase plan shall be made through Supplier, which
shall be responsible for all payments therefor. Customer shall not be required
to pay any fee in connection with such sales.   31.0   Governing Law:       The
Agreement shall be governed by the laws of the State of New York without giving
effect to any applicable conflict of laws provisions.   32.0   Counterparts:  
    This Agreement may be executed in one or more counterparts (and by
facsimile), all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each of
the Parties and delivered to the other Parties.   33.0   Enforcement:      
Customer shall be entitled to enforce the provisions of this Agreement on behalf
of each member of the Universal Music Group who places orders for DOAs with
Supplier. Customer shall be responsible for all actions or omissions by such
parties as if such actions or omissions were Customer’s hereunder.

              Supplier   Customer
 
           
By:
  /s/ Yorek Koehn      /s/ B. Weichmann   By:   /s/ C. Van Dijk      /s/ Thi
Roos              
 
           
Its:
  Yorek Koehn      Dr. Bodo Weichmann   Its:   Director       Director

           
 
            Date: May 31, 2005   Date: May 31, 2005

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SCHEDULE 2.0
Definitions

The following capitalized terms shall have the meanings attributed to such terms
in the following subsections.

“2003 Distribution Mix” means, the Universal Music Group’s 2003 Distribution
Requirements expressed as a breakdown of DOAs on a DOA-by-DOA basis and included
on Schedule 10.1.

“Affiliate” means, as to any person or entity, any person or entity controlling,
under common control with or controlled by such person or entity.

“Aggregate 2003 Distribution Costs” means the aggregate cost data, after certain
adjustments mutually agreed between the Parties, and set forth on
Schedule 12.2(d).

“Allocated 2003 Distribution Costs” means the Aggregate 2003 Distribution Costs
allocated on a DOA-by-DOA basis over Total Volume , and set forth in
Schedule 12.2(e).

“Book On” means to book onto Supplier’s warehousing computer systems and make
available for pick, pack and ship activities.

“Business Day” means any weekday on which banks in the federal state of Lower
Saxony, Germany are open.

“Catalog” means any packaged item or SKU that is not a New Release.

“Change of Control” means the acquisition by a Competitor, directly or
indirectly, and whether by sale, pledge, proxy agreement or otherwise, of
[*****]% or more of the voting or equity economic interests in Supplier, or the
sale of all or substantially all of Supplier’s assets to a Competitor.

“Competitor” means any entity owned or controlled by a Major Music Company or
one of its Affiliates.

“Customer Pre-Authorized Return Products” means all returned Products other than
those Customer instructs Supplier not to accept pursuant to Section 7.15(b).

“Direct Distributions” has the meaning defined in Section 7.2 of the
International Manufacturing Agreement.

“Direct Export” means distribution of Products to entities which are
non-Universal Music Group members directly to addresses outside of the
Territory.

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“Distribution Center” means a distribution center owned, controlled or managed
by Supplier in the Territory and used to provide DOAs under this Agreement which
shall initially be the RSC.

“Distribution Orders/Activities” or “DOAs” means any specific related service
identified in Section 7, and any service or activity priced on Schedule 10.1.

“Distribution Requirements” means, as applied to a member of the Universal Music
Group, all requirements by the member of the Universal Music Group for DOAs for
its own account or for a third party’s account (for so long as the Universal
Music Group member has the contractual right to order such third party
requirements from Supplier, and such right exists as of the Effective Date) with
respect to all Products (a) manufactured or procured by Supplier under the
International Manufacturing Agreement, except for (i) Special Projects, and
(ii) Direct Distributions; or (b) procured by Customer or Supplier for stock at
the Distribution Center. In addition, if the procurement service under
Section 7.7 of the International Manufacturing Agreement is terminated by
Customer, Customer’s subsequent orders for such Other Existing Formats within
the Territory shall be included in the Distribution Requirements.

“Effective Date” means the date of the Closing of the Share Purchase Agreement,
as such term is defined in the Share Purchase Agreement.

“Facility Fixed Costs” means all fixed cost categories referred to in the
Aggregate 2003 Distribution Costs.

“Force Majeure Event” means fire, flood, storm, earthquake, landslide, volcanic
activity or other acts of God; acts of terrorism or vandalism; riot, war, civil
disturbance or insurrection; strikes, lockout or other labor unrest; power,
transportation, Internet or other utility or carrier delays or outages,
interference by any governmental authority, or any other event(s) beyond the
reasonable control of Supplier (including a computer virus beyond a party’s
reasonable control).

“International Manufacturing Agreement” means that certain International
Manufacturing and Related Services Agreement, by and between Supplier and
Customer and entered into on the Effective Date.

“Inventory Location Accuracy Level” means the number of inventory locations in
which the amount physically counted or verified at a given inventory location
equals the amount shown on an on-hand inventory report for that location,
divided by the total number of inventory locations counted.

“IT System” means the sales order processing system and the system’s supporting
software and operating systems, as such system may be amended, replaced or
otherwise modified.

“Lease Agreement” means that certain Lease Agreement as defined in the Share
Purchase Agreement.

-44-

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“Lost Inventory” shall be calculated on a component reference number by
component reference number basis (each such unique component an “Inventory
Component”), subtracting as of a particular date the Amount Distributed of such
Inventory Components and the Actual Inventory of such Inventory Component from
the Amount Delivered, where (i) “Amount Distributed” means the quantity of such
Inventory Components distributed by Supplier pursuant to a Customer Order prior
to the particular date, (ii) “Amount Delivered” means the quantity of such
Inventory Components delivered by Supplier’s manufacturing facility or
Customer’s vendor to Supplier (based on Customer Orders received by Supplier)
prior to the particular date, and (iii) “Actual Inventory” means the quantity of
such Inventory Components on-hand as determined by a physical count as of the
particular date.

“Major Music Company” means means Sony-BMG Music Entertainment, Inc, EMI Group
Plc and Warner Bros. Records, Inc , or any of their successors.

“Materials” means point-of-sale advertising and marketing materials supplied by
or on behalf of Customer to Supplier and related to Product.

“NDUs” means a distribution facility in any location owned and/or used by the
Universal Music Group.

“NDU Distribution” means distribution to an NDU of Product.

“New Release” means any packaged item or stock keeping unit not yet available
for sale by Customer’s customers in any country in the Territory.

“Other Existing Formats” means means LP vinyl, music cassette, VHS, DVD-Audio,
SACD and Dual Disc and other carriers of audio or audio visual material as
required by Customer from time to time.

“P&D Agreement” means a production and distribution agreement between Universal
Music Group and a non-Universal Music Group third party entered into after the
Effective Date, or any other agreement between Universal Music Group and a
non-Universal Music Group third party entered into after the Effective Date
under which Universal may or does direct the sourcing of any DOA’s for any such
third party.

“Parcel Service” means NDU Distributions made for direct shipment to customers
of the Universal Music Group member outside of the Territory.

“Parent” means Universal Music Group, Inc.

“Prevailing Practices” means the procedures, timeframes, service levels or
response times generally followed and with respect to section 6.5 generally and
in aggregate equivalent to those followed by Supplier during the 12 months prior
to the Effective Date.

-45-

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“Product” means all audio or audio-visual carriers (whether optical disc or
otherwise) and their packaging subject to Orders under this Agreement.

“Qualified Distributors” means any company [*****].

“Regional Music Company” means as to each country in the Territory, any recorded
music company whose market share in such country is 35% or more of the Universal
Music Group’s market share for music in such country, in each case as measured
in the most recently ended calendar year.

“Retail Distribution” means distribution of Products directly to customers of
Universal Music Group members at addresses within the Territory.

“RSC” means the Distribution Center located as of the Effective Date at Hanover,
Germany.

“Significant Customers” means the entities listed on Schedule 35.

“SKUs” means stock keeping units.

“Special Projects” means (a) joint venture repertoire product which involves a
profit sharing arrangement with any non-Universal Music Group member third party
([*****]); (b) so called non-traditional product such as kiosk sales, premiums,
cover mounts, give-aways and music club product, which are (i) generally
distributed outside normal Universal Music Group retail or wholesale channels,
and (ii) distributed in the Territory; and (c) non-commercial promotional
product for distribution in territories outside Germany.

“Share Purchase Agreement” means that certain Share Purchase Agreement entered
into between Blitz 05-107 GmbH, Supplier and Universal Music GmbH.

“Tender” means making Optical Discs available to RSC or to the selected carrier
for distribution from the Supplier’s facilities and coordinating with and
assisting such carrier, in a manner consistent with Supplier’s prevailing
practices, but does not include actual transportation of the Optical Discs from
the Supplier’s facility.

“Territory” means Germany, Austria, Switzerland, Czech Republic, Slovak
Republic, The Netherlands, Belgium and Luxemburg.

“Transition Services Agreements” means the Bilateral Information Technology
Transition Services Agreement between Supplier and Universal Music International
Ltd..

“Universal Music Group” means (i) Parent, (ii) Customer, (iii) each subsidiary
or Affiliate, directly or indirectly, more than [*****]% owned by Parent or
Customer (or any of their respective successors or assigns. For purposes of
clarity, (i) no entity whose Products are distributed by a member of the
Universal Music Group (but which is not directly or indirectly more than
[*****]% owned

-46-

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by Parent or Customer) shall be a member of the Universal Music Group, and
(ii) on the date on which an entity is no longer directly or indirectly more
than [*****] owned by Parent or Customer, or their respective successors or
permitted assigns, it shall cease to be a member of the Universal Music Group.

“Working Day” means those days as agreed by Customer and Supplier set forth at
the commencement of the Term as Schedule 2.11 hereto and updated as mutually
agreed upon by Customer and Supplier.

“Work Week” means a seven-day period commencing on each Sunday during the term
and ending at 11:59 p.m. the next Saturday (regardless of whether any day
therein is a Working Day or Business Day).

-47-

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The following terms have the meanings set forth in the Sections indicated.

          Term   Section  
AAA
    14.0  
Additional Territories
    4.2  
Agreement
    1.0  
CAP
    9.2.1  
Carrier
    10.2.6  
Cure Period
    9.2.2  
Customer
    1.0  
Elected Services
    9.3.1  
Excess Order
    6.10  
Failure Notice
    9.1  
Incremental Volume Offer
    10.6  
Incremental Volumes
    10.6  
Indemnified Party
    21.0  
Indemnifying Party
    21.1  
Key Failure
    9.1  
Late Orders
    6.11  
LTL
    7.7  
New Transportation Prices
    10.2.3  
Parties
    1.0  
Specific Related Services
    7.0  
Supplier Incremental Volume Proposal
    10.6  
Supplier
    1.0  
Term
    3.1  
Transportation Services
    10.2.1  
Uncured Key Failure
    9.2  

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SCHEDULE 2.11
Working Days

Universal Manufacturing & Logistics GmbH
Hanover

Working days Distribution Plan CY 2004

                                                                               
                                                                               
                                                             
Working Days
    JAN     FEB     MAR     APR     MAY     JUN     JUL     AUG     SEP     OCT
    NOV     DEC                                                                
                                     
Monthly
      31         29         31         30         31         30         31      
  31         30         31         30         31       Total                    
                                                                   
Of it:
      5.0         4.0         4.0         4.0         5.0         4.0        
5.0         4.0         4.0         5.0         4.0         4.0         52.0    
 
- Saturdays
      4.0         5.0         4.0         4.0         5.0         4.0        
4.0         5.0         4.0         5.0         4.0         4.0         52.0    
 
- Sundays
      21.0         20.0         23.0         20.0         19.0         22.0    
    22.0         22.0         22.0         21.0         22.0         23.0      
  257.0      
- Regular working days
      1.0                             2.0         2.0                          
                                                    5.0      
- Holiday
                                                                               
                                                                               
                                                         
Other downtimes,
                                              1.0                              
        0.3                             4.3         7.8      
adjustments
                                    2.3                                        
                                                       
 
                                                                               
                                                     
Plant holidays
                                                                               
                                                     
Working on holidays
                                                                               
                                                     
Adjustment working day
                                                                               
                                                     
 
                                                                               
                                                     
 
                                                                               
                                    1.3         1.3      
Holidays on Saturdays
                                    1.0         1.0                            
                                        2.0         4.0      
Holidays on Sundays
                                    1.0                                        
                                      1.0         2.0      
Employee meeting
                                    0.3                                        
        0.3                                       0.5                          
                                                               
Available working days
      30.0         29.0         31.0         25.8         28.0         30.0    
    31.0         31.0         29.8         31.0         30.0         21.7      
  353.2      
 
                                                                               
                                                     
Regular working days
      21.0         20.0         23.0         19.8         19.0         22.0    
    22.0         22.0         21.8         21.0         22.0         2.0        
255.2      
Saturdays
      5.0         4.0         4.0         4.0         4.0         4.0        
5.0         4.0         4.0         5.0         4.0         3.0         48.0    
 
Sundays
      4.0         5.0         4.0         5.0         5.0         4.0        
4.0         5.0         4.0         5.0         4.0                   50.0      
 
                                                                               
                                                                               
                                                         
Shifts beyond 5 days operation time a week:
      5.0         4.0         4.0         3.0         4.0         4.0        
5.0         4.0         4.0         5.0         5.0         5.0         52.0    
 
 
                                                                               
                                                     
on Saturdays
      5.0         4.0         4.0         3.0         4.0         4.0        
5.0         4.0         4.0         4.0         4.0         2.0         48.0    
 
on Sundays
                                                                               
                          1.0         3.0         4.0                          
                                                               
Operational working day
      22.7         21.3         24.3         20.8         20.3         23.3    
    23.7         23.3         23.1         22.7         23.7         23.3      
  272.5                                                                        
               

Remark:  Saturdays are planned with one early shift. These can be cancelled on a
week by week basis.

Sundays are planned for the last four weeks before Christmas.

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SCHEDULE 5.4
Pre-Approved Subcontractors

                                                    Sorting for Waste     Off
Site Storage     Legal Name of                 Disposal / Recycling     Price
per Pallet     Company     Address     Hand packing (€)     (€)     and Month in
€    

[*****]
   

[*****]    

[*****]          

[*****]    

[*****]
   

[*****]                

[*****]    

[*****]
   

[*****]    

[*****]                

[*****]
   

[*****]          

[*****]          

[*****]1)
   

[*****]    

[*****]          

[*****]    

--------------------------------------------------------------------------------

1)   “Hourly rate depends on the volume of hours purchased per annum; over
[*****] hours the rate will go down. The pallet store of [*****] can only be
used as interim and in the case [*****] is full.”

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SCHEDULE 6.5
Order and Tender Deadlines

[*****]

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SCHEDULE 7.16
Finished Product Stock Planning

Supplier will plan Customers International Products for stockholding in RSC,
based on the following principles.

Excluded from this process will be those Products as indicated by Customer and
for which customer will order and re-order all orders during a specific period
of time (as per Effective Date these Products are directly controlled by
Customer’s Virtual Factory department (“VF Products”)).

Initial Quantities all Products

For all Products, Customer will determine and order the initial quantities and
Supplier will order from the relevant suppliers such quantities. As
clarification all Products do include International and National Products.

Re-Ordering for National Products

Customer will determine order quantities and Supplier will order these
quantities on behalf of Customer at the relevant supplier.

Re-Ordering for International Products (Stockholding at RSC)

Except for VF Products, for which Customer shall determine the order quantities,
Supplier shall plan re-orders, on behalf and for the account of Customer, for
all other Customers International Products in accordance with the principles
below:

Re-Ordering (manual in first [*****] days) Policy:

  •   [*****] weeks stock ratio A items     •   [*****] weeks stock ratio B/C
items     •   Minimum order size [*****] units

Re-Ordering (SAP R.3 Forecast)

(First system calculated forecast available [*****])

      Following parameters are used by Supplier for Customer’s Business     •  
Product Classification (A, B, C items regarded to shipment)     •   Service
degree (x %) (Product availability)     •   Stock Ratio (x weeks) (Stock Level)
    •   Safety Stock (machine calculated) (Stock Level)     •   Re-ordering
Quantity (machine calculated)     •   Forecasting Model: Exponential smoothing

Customer and Supplier shall continuously evaluate these re-order parameters and
algorithm in order to achieve the optimal balance between lowest stocks levels
and obsolescence and highest Product availability. As from Effective Date the
initial parameters to be used will be those in place just before.

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SCHEDULE 9.1
Key Failure Events (Distribution)

                                Definition As Described     KPI Repeated Failure
    KPI     in Contract Section:     Event    
Picking Accuracy
      8.2       Monthly order line accuracy is below [*****] for more than
[*****] month in a [*****] month rolling period    
On Time Tendering
    6.5.1
6.5.2
6.5.3
6.5.4     On time tendering falls below the required rate for any Product type
more than [*****] in a rolling [*****] month period OR on time tendering is
below [*****] for any Product type in a rolling [*****] month period    
Booking-On On Time
      7.2 (c)     Supplier fails to Book-On [*****]% of the Distribution
Components within the time requirements of Section 7.2(c) in any given [*****]
and for more than [*****]1    
Return Processing
    7.15 (b)
7.15 (e)
7.15 (h)     Supplier fails to make electronic file available to Customer within
time frame stipulated in Section 7.15(b) more than [*****] a rolling [*****]
month period. Supplier fails to take returns back into stock within time frame
stipulated in Section 7.15(e) more than [*****] in a rolling [*****] month
period. Supplier fails to take NDU overstock returns back into stock within time
frame stipulated in Section 7.15(h) more than [*****] in a rolling [*****] month
period.    
Stock Security
    7.2 (b)
7.2 (h)     Accuracy of inventory balance falls below level stipulated more than
[*****] in any rolling [*****] month period. Inventory Location Accuracy Level
falls below level stipulated more than [*****] in any rolling [*****] month
period.    

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1   A KPI Repeated Failure Event in relation to Booking-On will not have
occurred to the extent such failure results solely [*****].

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SCHEDULE 10.1
Pricing

              [*****]            

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SCHEDULE 12.2d

[*****]

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SCHEDULE 12.2e

[*****]

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SCHEDULE 35

Significant Companies

Each Major Music Company

Each Regional Music Company

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