Series Music Asset

Assets to be acquired by Series Music and related liabilities, include ownership and/or income and collection rights to sound recordings and musical compositions and the royalties derived from the exploitation of those sound recordings and musical compositions, which may include individual recordings and compositions, catalogs of recordings and compositions, music publishing royalties such as mechanical royalties, synchronization income and both the writer’s and music publisher’s share of public performance income and so-called neighboring rights royalties, such as SoundExhange income, attributable to the performance and other uses and exploitations of sound recordings.

However, the Asset Manager may modify this criteria in its sole discretion.

For each calendar year, the Managers or their Affiliates shall receive a service fee (the “Service Fee”) from Excess Free Cash Flow equal to:

·      an amount equal to a cumulative, non-compounded, preferred annual return based on 2% on the aggregate Capital Contributions made by the Economic Members as of the last day of such period, determined by taking into account the dates on which all such Capital Contributions and distributions were made (“Catch-Up Fee”);

·      any Catch-Up Fee accrued in prior years but not paid; and

·      50% of the amount remaining from the Excess Free Cash Flow after subtracting any Catch-up Fee paid (including amounts paid for amounts accrued in prior years).

Half of the Services Fee will be paid to the Asset Manager and half of the Service Fee will be paid to the Administrative Manager. The Service Fee will be paid at the same time as the distributions under Section 7.01(b)(ii).

Preferred Return Rate

4%

50 Shares per Member.