EXECUTION COPY

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

INTERNATIONAL MANUFACTURING AND PACKAGING AGREEMENT

between

WEA INTERNATIONAL INC. (“WMI”)

and

WARNER MUSIC MANUFACTURING EUROPE GmbH (to be renamed
CINRAM GmbH) (“Company”)

Dated as of October 24, 2003

Capitalized terms not defined where they appear in the text are defined in Paragraph 14.

1. Appointment. (a)

(i) WMI hereby appoints Company to render, and Company shall render, M&P Services for one hundred percent (100%) of Products in accordance with the terms hereof. Additionally, Company shall have non-exclusive rights to render and shall, at the request of WMI, render M&P Services for Products for WMI and WMI’s affiliates located outside the Territory.

(ii) Notwithstanding anything to the contrary contained in Paragraph 1(a)(i), from and after the effective date of a Recorded Music Major Transaction (the “RMMT Effective Date”), the appointment of Company hereunder shall instead be to render, and Company shall render, M&P Services for at least the Specified Percentage (and, at WMI’s election, more than the Specified Percentage) of Products in accordance with the terms hereof. WMI shall use commercially reasonable efforts to provide that the Combined Entity’s ordering of units of Products and Components hereunder (i.e., mix of New Releases and Catalog Titles and special packaging orders) following the RMMT Effective Date remains generally consistent with WMI’s ordering of units of Products and Components hereunder prior to the RMMT Effective Date. The “Specified Percentage” equals the fraction, expressed as a percentage: (A) the numerator of which shall be one hundred percent (100%) of the number of units of Products manufactured and packaged for sale in the Territory by Company for WMI under this Agreement (and/or by WMI on its own behalf, if applicable) during the twelve (12) complete calendar months immediately preceding the RMMT Effective Date (the “WMI Output”); and (B) the denominator of which shall be the WMI Output plus one hundred percent (100%) of the number of units of Records, in any Optical Disc format, manufactured and packaged for sale in the Territory by or for

the recorded music business of the applicable Major during the same twelve (12)-month period. For the avoidance of doubt, in calculating the WMI Output no units manufactured or packaged by Company (and/or WMI, if applicable) for WHV or its affiliates shall be included.

(iii) Notwithstanding Paragraphs 1(a)(i) and 1(a)(ii), in relation to Excluded Products WMI shall be entitled to appoint a third party manufacturer and packager. WMI shall include Company in the tender process.

(b) Reservation of Rights. WMI hereby reserves all rights in and to Products not otherwise expressly granted to Company herein.

(c) Reports. Company shall prepare for WMI the production, shipments and inventory reports in the same format and details as were received by WMI or its affiliates prior to this Agreement and shall supply WMI and its affiliates with such reports on at least a monthly basis during the Term. If Company provides more detailed reports to any other party during the Term, Company shall, at WMI’s request, provide such more detailed reports to WMI hereunder as of the date that Company commences providing such more detailed reports to such other party but subject to the same terms and conditions under which such reports are provided to such other party (e.g., any additional fees or amounts charged to such party for such more detailed reports). Nothing in such reports shall impart any competitively-sensitive information about Company, Company’s affiliates or any third parties for which Company renders any services or any personal data possessed by Company.

2. Title. Title to units of Components and Products manufactured and packaged hereunder (including all copyrights and trademarks contained therein) shall remain in WMI or WMI’s affiliates. Company acknowledges that Products (including all intellectual property contained therein and relating thereto) are protected under copyright laws and that WMI is the rightful owner or license holder of such copyrights. Company acknowledges that any removal of any such materials from Company’s approved facilities without WMI’s written approval, and any distribution of any such materials in the Territory without WMI’s written approval, is an infringement of WMI’s copyright. Company shall bear the risk of loss for units of Products in Company’s possession, under Company’s control or in transit from Company or its designees to any Facility, provided, however, that WMI shall bear the risk of loss for any units of Products in transit for which WMI is responsible for paying the shipping.

3. Services. (a) Level of Services. [*] In addition, the Services:

(i) shall be rendered on a so-called “label blind” basis;

(ii) shall be rendered in at least the same general manner, subject to at least the same general standards and in at least the same general quality as provided by Company to all other parties whose Records are manufactured and/or packaged by Company in the Territory, [*]. This Paragraph 3(a)(ii) shall not require that Company provide any new services to WMI if the cost of providing such services would be unreasonably burdensome to Company; provided, however, that nothing in this sentence shall limit Company’s obligations set forth in Paragraph 6;

(iii) [*]

(iv) shall be rendered in accordance with “first-class” standards that meet the highest quality available in the industry;

(v) shall be rendered in accordance with, or exceed, each of the service level requirements set forth on Schedule A hereto (the requirements set forth on Schedule A hereto being the “Service Level Requirements”); and

(vi) shall, to the extent rendered for the production of Products in CD or DVD format, be rendered in accordance with the technical specifications set forth on Schedule B hereto (the requirements set forth on Schedule B hereto being the “Technical Specifications”).

Notwithstanding the foregoing, to the extent that the standards set forth in clauses (ii) and (iv) above are not being met as of the commencement of the Term, Company shall have a period of ninety (90) days from the commencement of the Term in which to meet such standards.

(b) Copy Protection and Digital Rights Management. WMI may from time to time require the integration of copy protection and digital rights management technology into certain Products. Company shall use its commercially reasonable efforts to ensure that it is equipped to provide such technology and shall obtain necessary licenses from the supplier therefore. WMI shall, unless otherwise agreed, be responsible for the copy protection or digital rights management technology license fees and the cost of any packaging adaptation necessary to provide notification of the use of such technology as may be required by the applicable law in the country of sale, and (except as otherwise expressly set forth in this Paragraph 3(b)) all other costs relating to copy protection and digital rights management shall be borne by Company. Company shall report units

manufactured and technologies used to WMI on a monthly basis to facilitate the administration of the copy protection and digital rights management license fees. Company shall assist WMI in assessing and testing new copy protection and digital rights management technologies, and on forty-five (45) days’ notice will make provision for new copy protection and digital rights management technologies to be implemented, but only so long as such new technologies are available to Company for use. To the extent that the actual, documented, out-of-pocket, non-overhead cost to Company for the assessment, testing and implementation of such new copy protection and digital rights management technologies exceeds [*] in the aggregate in respect of any Contract Year, then WMI shall reimburse Company for any such excess (but solely to the extent that WMI requested that Company assess, test or implement such new technology). To the extent that any other parties serviced by Company actually utilize any such new copy protection and digital rights management technology, WMI’s obligation to reimburse Company for any such excess shall be reduced pro rata based on the total number of Company’s customers utilizing the new copy protection and digital rights management technology. If WMI has already reimbursed Company pursuant to the preceding sentence and subsequently is entitled to a pro rata reduction as provided herein, Company shall refund such amount within thirty (30) days of the date such other party begins utilizing such new copy protection and digital rights management technology. Implementation of copy protection or digital rights management technology shall not be considered a factor that shall impact capacity or production time downstream of the mastering process. WMI and Company further agree that pursuant to Article 6.4 Directive 2001/29/EC on the Harmonization of Certain Aspects of Copyright and related Rights in the Information Society, each will accommodate statutory privileges relating to use regardless of the use of any such copy protection technology or digital rights management technology.

(c) Fees. The Packaging Services shall be furnished at the prices set forth on Schedule C and Schedule D hereto and as set forth in this Paragraph 3(c), as they may be modified from time to time by operation of Paragraphs 12 and 15 (the “Printing and Packaging Fees”), and the Manufacturing Services shall be furnished at the prices set forth on Schedule D hereto and as set forth in this Paragraph 3(c), as may be modified from time to time by operation of Paragraphs 12 and 15 (the “Manufacturing Fees” and, together with the Printing and Packaging Fees, the “Fees”). Unless otherwise indicated, all amounts set forth in this Agreement including the Schedules hereto are denominated in Euros. [*]

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(d) Subcontracting. Company may subcontract a portion of its obligations under this Agreement to any one or more of the subcontractors on Schedule E hereto (each an “Approved Subcontractor”). Company may subcontract to a subcontractor that is not an Approved Subcontractor only with the prior consent of WMI. Any such subcontracting by Company shall not relieve Company of its obligations hereunder. Orders hereunder shall not be subcontracted to a greater degree than any other orders. In addition, Company shall ensure that any subcontractors comply with all obligations of Company hereunder. WMI may from time, to time designate organizations as prohibited subcontractors under this Agreement if WMI reasonably believes such organizations would not be likely to be able to adhere to the provisions of this Agreement.

(e) Compliance with Law; Code of Conduct. Company shall comply (i) with all laws and regulations in connection with Company’s undertakings under this Agreement, except where the failure to do so individually or in the aggregate is immaterial; and (ii) subject to relevant local laws including privacy laws, with the code of conduct attached as Schedule F hereto.

(f) Delivery of Source Materials. (i) WMI or its affiliates shall, at WMI’s sole expense, deliver to Company (or to such suppliers as Company may designate) all Source Materials. WMI shall retain title to all Source Materials supplied to Company or its designees, including all digital files derived from such Source Materials. Company shall maintain systems at no charge to WMI so as to be able to receive Source Materials, metadata and digital proofs in digital form and online, which shall include Wamnet.

(ii) All products ordered by WMI or its affiliates and manufactured and finished by Company shall be delivered at Company’s expense to Company’s central warehouse located in Alsdorf, Germany, or to the extent that Company elects to re-locate such Facility, then to such relocated Facility.

(g) Ordering. (i) It shall be WMI’s responsibility to determine its production requirements and to order Units of Products. All Orders for Units of Products shall be evidenced by a written purchase order and may be placed by WMI or any of its affiliates or any third party licensees. Orders must include all information necessary to properly identify the Products to be manufactured and packaged, including artist, title, catalog number, full UPC/EAN and quantity. Company shall use the entire UPC or EAN codes to identify all Products.

(ii) Prior to manufacture, an Order must be Workable. Company shall deliver Units of Products to WMI’s designated locations within the applicable time periods set forth on Schedule A hereto. All of the time periods set forth on Schedule A hereto are referred to as the applicable Turnaround Times for the manufacture of Units of Products in each

configuration, respectively, and are measured from the time the Order is Workable.

(iii) At the times that WMI submits Orders, to the extent that an Order is for multiple selections, WMI shall have the right to determine the priority in which the Orders should be filled (that is, it shall have the right to determine and designate which part of the Order is to be delivered within the shorter of the applicable Turnaround Times and which part of the Order is to be delivered within the longer of the applicable Turnaround Times).

(iv) For each item (i.e., a particular Product) in an Order, there shall be an allowable fulfillment deviation as set forth below:

Order Size in Units	[*]	[*]
0-10,000	[*]	[*]
10,001-50,000	[*]	[*]
50,001-300,000	[*]	[*]
300,001 and up	[*]	[*]

Orders filled within such deviation shall be deemed to be satisfied, and WMI shall pay Company on the actual number of units delivered at the rate(s) charged by Company pursuant to the original Order to which such deviation relates.

(h) Quarterly Meetings. At least once every calendar quarter, WMI may meet with Company’s Chief Executive Officer (or equivalent) and Chief Financial Officer (or equivalent) to assess Company’s performance under this Agreement and its ongoing ability to perform its obligations under this Agreement.

(i) Shipping Costs. Company shall bear the cost and expense of shipping of any and all units of Products, Components or other materials manufactured hereunder from the point of manufacture to Company’s central Facility located in Alsdorf, Germany or to the extent that Company elects to re-locate such Facility, then to such other new Facility. Company shall also be solely responsible for the cost and expense of any shipping between any of Company’s Facilities, so long as such movement is at the direction of Company in its own discretion. Except as otherwise specifically provided herein, WMI shall be responsible for the cost and expense of all other shipments hereunder. To the extent that any shipping costs hereunder are to be borne by WMI but are actually paid by Company, WMI shall only be required to pay Company’s actual, documented, out-of-pocket costs charged by such shipping agent for the shipment of units of Products and/or other materials hereunder and, such costs shall be reimbursed to Company by WMI within [*] following Company’s rendition of such invoice to WMI (but in no event shall WMI be required to make any such payment of such invoice prior to Company’s payment of such invoice to such shipping agent). If WMI is responsible for shipping expenses, should WMI so elect, WMI shall have the right to: (i) select the shipping agent(s) utilized by Company for shipping of units of Products and/or other materials hereunder (and, in doing so, assume the risk of loss for such units

of Products in transit); or (ii) in lieu of selecting such shipping agent(s), require that Company submit to WMI any proposed shipping agent(s) which Company wishes to utilize hereunder for WMI’s prior written approval. If, in a particular instance, WMI is not responsible for shipping expenses or WMI does not exercise its rights pursuant to the preceding sentence, Company shall utilize the same shipping agent(s) utilized by Company for the shipping of a majority of the other products shipped by or on behalf of Company.

(j) No Unauthorized Manufacture. Company acknowledges that WMI may suffer substantial damages as a result of the unauthorized manufacture of Components or Products. Therefore, Company agrees that: (i) Company shall produce only those quantities of units of Components and Products as are specified in a written Order issued by WMI and subject to the terms set forth herein; (ii) Company shall deliver the units of Components and Products specified in each Order only to the recipient and location designated by WMI in such order; and (iii) upon WMI’s request from time to time, Company shall deliver to WMI separate written confirmation of each manufacturing run made of each Product and Component pursuant to each Order, including the date of the manufacturing run and the number of units produced during the run.

(k) Additional Services. At WMI’s reasonable request, Company shall provide WMI with manufacturing and packaging services for “point of sale,” promotional and merchandising materials to be utilized in connection with Products. Such services shall be provided by Company to WMI on a non-exclusive basis only (and only to the extent that WMI so requests any such services) and, to the extent so requested, shall be provided to WMI [*]. Notwithstanding this Paragraph 3(k), Company shall only be required to provide such services if either WMI (either itself or through any of its affiliates) provided such services on its own behalf prior to the commencement of the Term or Company then-currently provides such services to any party (in which case, if WMI requests such services and Company is not contractually prohibited from providing such services to WMI, they shall be provided to WMI on the same terms and conditions as are provided to such other party). If Company provides any Services to WEA under the US Manufacturing Agreement, then Company shall provide such Services to WMI hereunder but only to the extent that it is reasonably feasible for Company to do so at the WMI Facilities.

4. Company’s Financial Obligations. WMI shall not be responsible for payment of any of Company’s (or Company’s affiliates’) indirect or general overhead charges or the salaries of Company’s (or Company’s affiliates’) employees or agents. All costs associated with the rendering of Services shall be borne by Company. Such costs to be borne by Company include any patent royalties or other similar royalties or license fees payable in connection with the manufacture of Products and Components (subject to the provisions of Paragraph 3(c)(i)), which costs, for the avoidance of doubt, exclude mechanical royalties, record royalties and copy protection and digital rights management (i.e., DRM) technology license fees.

5. Other Obligations. (a) Storage of Source Materials and Components. Company shall accept and store all Source Materials and units of Components delivered to or otherwise held by Company hereunder at no charge; provided, however, that with respect to any particular Product, Company shall not be required to store more Source Materials or units of Components than is necessary to satisfy the next [*] demand (such determination as to what constitutes [*] demand shall be made jointly by WMI and Company based, where possible, upon actual, gross units ordered during the prior [*] period and shall be made for all Source Materials and Components no more frequently than semi-annually during the Term commencing no sooner than [*] after the commencement of the Term). With respect to Source Materials and units of Components so determined to be in excess of a [*] demand therefor, Company shall notify WMI of the specific Source Materials and/or units of Components constituting such excess and within [*] following WMI’s receipt of such notice, WMI shall (in WMI’s sole discretion) either: (i) remove such excess Source Materials and/or units of Components (at WMI’s expense); (ii) direct Company to destroy such excess Source Materials and/or units of Components (at WMI’s expense); or (iii) direct Company to store such excess: either (x) at a Facility at a cost to WMI of [*] or (y) offsite at Company’s or Company’s affiliates’ leased facility approved in advance, in writing by WMI and the actual, documented, out-of-pocket expense charged by such facility to Company for such storage shall be reimbursed to Company by WMI. Amounts owing under this Paragraph 5(a) shall be invoiced by Company at month end and shall be payable [*] from the date of the rendition of such invoice; [*]. All Source Materials and all units of Components shall be WMI’s property and shall be kept segregated from any other property. Upon receipt of a written request from WMI, Company shall return to WMI, at WMI’s cost, any materials supplied by WMI which have not been utilized in the manufacture or packaging of units of Components or Products or otherwise pursuant to this Agreement and which are then in Company’s possession or control. The risk of loss, due to any reason, of Source Materials or units of Components in Company’s possession or control shall be borne by Company, as further described herein; provided, however, that to the extent any such loss was directly caused by a WMI Employee, Company shall not bear the risk of loss, except to the extent such loss is or would have been covered by Company’s property insurance as required under this Agreement as set forth on Schedule G hereto. WMI shall own all manufacturing parts (for Components and Products) and all derivatives and/or duplicates thereof fabricated in connection with the production process, including all Components, photographic films and color keys, if any, duplicate audio tapes (analog or digital), glass Masters and running Masters and all digital files derived from any of the foregoing. Company shall not destroy any of the Source Materials, units of Components or elements derived therefrom without prior written authorization from WMI; provided, however, that Company may destroy certain such derived elements (i.e., glass Masters and metal parts) to the extent that such elements are generally destroyed by Company in the ordinary course of production. Company shall also, at Company’s cost, maintain, protect and backup any and all Source

Materials and derivatives in an organized environment to allow for easy access by both Company and WMI.

(b) Insurance. During the Term, Company shall: (i) comply with all provisions set forth on Schedule G hereto; and (ii) at Company’s sole cost and expense, maintain adequate insurance coverage for: (A) all Source Materials and Inventory while such items are in Company’s possession, under Company’s control or in transit to or from Company or its designees to any Facility; and (B) the other matters set forth on Schedule G hereto. The insurance required under this Paragraph 5(b) is not intended to limit Company’s liability as otherwise provided in this Agreement.

(c) Computer Access. In order that WMI and its affiliates are able to monitor daily shipments, receipt, production and inventory activity in connection with Components and Products, Company shall give WMI access to Company’s computer system for the purpose of providing WMI with real-time information stored therein relating to Components and Products at Company’s expense (but no access shall be allowed to information relating to any other party’s products or any personal data possessed by Company). Such system shall provide WMI with all of the same types of reports and information currently provided by, and as may be available from Company’s computer systems in connection with other products and components manufactured and/or packaged by Company. In connection therewith, Company shall work with WMI to ensure that WMI is provided with at least the same level of reports and information that WMI’s own systems provided as of the commencement of the Term. Nothing in such reports or information provided shall impart any competitively-sensitive information about Company, Company’s affiliates or any third parties for which Company renders any services or any personal data possessed by Company. Such access shall be available to WMI [*] at all times during the Term. Notwithstanding anything herein to the contrary, Company may perform system maintenance and upgrades during which such systems may not be available; provided, however, that such downtime does not exceed [*]

(d) Inspection. Subject to the provisions set forth below, during the Term and for a period of [*] following the expiration or termination of the Term, WMI shall have the right to inspect each WMI Facility and any other facility utilized by Company in connection with Components or Products or the provision of Services hereunder, during regular business hours (utilizing either WMI’s own employees, third party advisers or representatives, insurers, or other experts retained by WMI). WMI may conduct such inspections of each WMI Facility or such other facility up to [*].

[*] During any such inspection, WMI may conduct physical inventories of units of Components and Products in Company’s possession or control. WMI shall not have access to any competitively-sensitive information relating to any other party’s products, or any personal data possessed by Company, during the inspections permitted under this Paragraph 5(d).

(e) Security. Company shall maintain security standards that are at least equivalent to those provided by other “first-class” manufacturers and packagers in the Territory, both in the segregated area of the WMI Facilities for property of WMI and throughout the WMI Facilities, and shall at all times employ the utmost care and diligence to prevent loss, damage, theft, disappearance, unauthorized destruction or usage of such property of WMI. Company’s security procedures shall be subject to WMI’s prior written approval. Company shall maintain such procedures as approved by WMI and as may reasonably be given to Company from time to time throughout the Term. Notwithstanding the foregoing, Company’s security measures (which shall include closed-circuit television monitoring, pass-protected access, employee checking and spot searching, etc.) shall be sufficient to ensure that all Source Materials and Inventory and the intellectual property embodied in such Source Materials and Inventory are in no way compromised, stolen, “leaked” to the public (e.g., copying of recordings embodied on Products which may lead to the availability of such recordings to the public via the Internet or similar means) or otherwise made available to any unauthorized parties; provided, however, that for a period of [*] from the commencement of the Term, such security measures need be no more stringent than those currently in place at the Acquired Facilities. Upon discovery of: (i) loss, damage, theft, disappearance, or destruction of Source Materials or Inventory exceeding [*] or (ii) any unauthorized usage of Inventory, Company shall notify WMI as soon as reasonably possible, and in any event within [*] following such discovery, and shall include in such notification sufficient detail to allow WMI to investigate such discovery (each, a “Security Breach Notice”). Regardless of Company’s compliance with all security measures set forth herein or with procedures approved by WMI, Company shall be liable as provided herein for the loss, damage, theft, disappearance, destruction or unauthorized usage of any property of WMI.

(f) Salvage. At all times and regardless of whether Company or its insurers are required to compensate WMI for loss as required under this Agreement, WMI shall retain the sole right to salvage for damaged Inventory. Company shall not surrender damaged Inventory to insurers or any other party for destruction or disposal without obtaining WMI’s prior written consent.

(g) WMI Employees. Company shall throughout the Term, at the request of WMI, provide up to a maximum of [*] full-time employees of WMI or its affiliates (the “WMI Employees”) with, at Company’s expense: (i) reasonable office accommodations at such Facilities of Company utilized for manufacturing and/or

packaging in the Territory as may be specified from time to time by WMI; (ii) individual computers; (iii) copy services and any other similar office services in order to permit them to carry out their functions; (iv) office meal/pantry/refreshment and recreational and similar facilities similar to those provided to Company’s employees at such facilities; and (v) all other reasonable support functions as provided to them as of the date of this Agreement. Company shall also provide telephone, Internet and fax access for each WMI Employee, and WMI shall reimburse Company for Company’s actual, documented, out-of-pocket costs therefor. Amounts owing under this Paragraph 5(g) shall be invoiced by Company at month end and shall be payable [*] from the date of the rendition of such invoice; [*] WMI shall be responsible for the direction of, and all compensation and related obligations for, the WMI Employees. The WMI Employees shall operate in accordance with WMI’s code of conduct and Company’s standard code of conduct contained in its employee policy manual at the applicable WMI Facility (which code of conduct shall be subject to WMI’s reasonable approval) and all other lawful policies adopted by Company from time to time governing the conduct of all of its employees and contractors. In the performance of their tasks, the WMI Employees shall not have access to any competitively-sensitive information relating to any other party’s products or any personal data possessed by Company.

[*]

6. Technology. Throughout the Term, Company shall reasonably update its manufacturing and packaging lines at the WMI Facilities at Company’s cost to keep up with new technology requirements and to maintain at least the same level of technology utilized by other “first-class” manufacturers and packagers of Records in the Territory, including machinery and equipment that is reasonably available to provide automated assembly of packaging, inclusion of inserts and application of stickers, shrinkwrap and security materials. Company shall maintain and update its information and technology capabilities at the WMI Facilities, at Company’s cost, to meet reasonable WMI requirements and maintain competitive services for WMI and its customers. [*]

7. Invoices and Payments. (a) Rendition of Invoices. Except with respect to shipping charges to be borne by WMI as provided in Paragraph 3(i), in the case of WMI affiliates and licensees for each month of the Term, Company shall prepare and render invoices in Euros to such WMI affiliates and licensees on the [*] of each such month setting forth all Fees owed by WMI hereunder with respect to such affiliates and

licensees. The amount due to Company pursuant to each such invoice shall be due and payable in Euros by the WMI affiliates and directly by licensees to Company on or before [*] following Company’s rendition of such invoices [*]. At WMI’s sole election, Company shall prepare and render invoices in Euros to such nominated WMI affiliates and licensees with respect to each completed and shipped Order of Products setting forth all Fees owed by WMI hereunder with respect to such nominated affiliates and licenses. The amount due to Company pursuant to each such invoice shall be due and payable in Euros by the WMI affiliates and directly by licensees to Company on or before [*] following Company’s rendition of such invoices [*]. If any WMI affiliate or licensee disputes an amount contained in an invoice but has already paid to Company such amount, the WMI affiliate or licensees may withhold the disputed amount from amounts otherwise owed to Company hereunder during the pendency of such dispute. The invoices for all units hereunder will follow the same format as current invoices but at a minimum shall contain “per SKU” line item detail with special handling or other miscellaneous charges indicated separately in the form and manner consistent with Company’s general form of invoice. Company shall submit all such invoices to WMI electronically pursuant to instructions given by WMI to Company from time to time (and in paper form, to the extent WMI so requests) and to the extent that Company’s and WMI’s computer systems do not already provide for the electronic submission of all such invoices, Company shall use Company’s reasonable efforts to work with WMI starting upon the commencement of the Term to create a system whereby all such invoices can be submitted electronically to WMI. For the avoidance of doubt, WMI affiliates shall only be liable for any payments hereunder provided that they have received the complete Orders for the relevant finished units of Components and Products reflected in such invoice.

(b) Audits. WMI shall have the right, at WMI’s sole expense, to examine (and/or to appoint representatives to examine) Company’s (and Company’s affiliates’) books and records in order to: (i) verify the correctness of any invoice prepared and rendered by Company in accordance with Paragraph 7(a); (ii) establish the applicability of the provisions contained in Paragraphs 10, 12 and/or 15; or (iii) otherwise establish compliance by Company with its obligations under this Agreement; provided, however, that only independent, third-party auditors (i.e., auditors other than WMI’s then-current outside auditor) shall be utilized for the review of Company’s books and records. Independent third party auditors shall have access to all information necessary to perform their duties, however nothing in any report provided to WMI or its affiliates by any such independent third party auditors shall impart to WMI or its affiliates any competitively-sensitive information about Company, Company’s affiliates or any third parties for which Company renders any services. If any such audit reveals that WMI and/or WMI’s affiliates have been overcharged, Company shall reimburse WMI in the amount of the overcharge. If any such audit reveals that WMI or WMI’s affiliates have been overcharged by an amount exceeding three percent (3%) for the audit period, Company shall reimburse WMI in the amount of the overcharge plus all fees paid by WMI to the

auditors concerned in connection with such audit and any other actual, documented, out-of-pocket expense incurred by WMI in connection with such audit. [*] Regardless of the number of audits conducted hereunder revealing the same specific overcharge to WMI, Company shall not be required to repay WMI the amount of any such overcharge more than once. WMI’s audit right shall survive the expiration or termination of the Term for [*]. Company shall retain all books and records related to the performance of Services hereunder after the expiration or termination of the Term for so long as WMI or its affiliates may need to perform audits hereunder, but in no event for more than [*] the rendition of the invoice with respect to the Services to which such invoice relates, provided, however, that before Company destroys any books or records, Company shall deliver written notice of such intent to destroy to WMI [*] before the intended date of destruction. WMI shall [*] after receipt of such notice to request copies of the books and records to be destroyed, in which case Company shall make copies of such books and records and deliver the same to WMI (but excluding information related to other customers of Company) at WMI’s expense (but at Company’s expense if such copies are of electronic files). As used herein, “books and records” shall include, without limitation, physical data and data stored in any electronic, magnetic or optical format.

8. Post-Term Procedures. (a) Upon the expiration or termination of the Term, Company shall immediately cause the cessation of all Services and shall have no further rights or obligations with respect to Products except as provided herein; provided, however, that upon WMI’s request, Company shall fill any then-currently outstanding orders for units of Components and Products pursuant to the terms of this Agreement. Within [*] following the expiration or termination of the Term, Company shall provide WMI with a list of all Source Materials and units of Components and Products in Company’s possession or control on such date. The mere expiration or termination of the Term shall not affect any obligation of WMI to pay for Services rendered by Company prior to such expiration or termination or any other obligation that is expressly provided herein to survive the expiration or termination of the Term.

(b) Within [*] following the expiration of the Term or [*] following the early termination of the Term, WMI shall remove from the Facilities, at WMI’s expense, or order at WMI’s expense the destruction of: (i) all units of Components and Products in Company’s possession or control; and (ii) all Source Materials in Company’s possession or control. The determination whether to remove or

destroy such items shall be made by WMI in WMI’s sole discretion. Any Source Materials to be returned shall be returned to WMI, at WMI’s cost, and the cost of any return of any Components to be returned shall be the subject of negotiation between the parties hereto unless such Components were supplied by WMI, in which case such Components shall be returned without charge.

9. Warranties, Representations, Covenants and Indemnities. (a) Company warrants, represents and/or covenants, as the case may be, that: (i) Company has the right, power and authority to enter into and fully perform this Agreement; (ii) no agreement of any kind heretofore entered into by Company shall interfere in any manner with the complete performance of this Agreement; and (iii) subject to WMI’s rights in the Products and Components and WMI’s warranties and representations set forth below, any items prepared by or otherwise furnished by Company in connection with Components or Products and Company’s performance of the Services hereunder will not violate any law or infringe upon the rights of any party.

(b) Company agrees to and does hereby indemnify, save and hold WMI and its affiliates, and each of their respective officers, directors and employees (collectively, for the purposes of this Paragraph 9(b) only, “WMI”) harmless to the maximum extent permitted by law from any and all loss and damage (including court costs and reasonable attorneys’ fees as and when incurred) arising out of, connected with or as a result of: (i) any inaccuracy, inconsistency with, failure of, or breach or threatened breach by Company of any warranty, representation, agreement, undertaking or covenant contained in this Agreement; and/or (ii) any and all damages or injuries of any kind or nature whatsoever (including death resulting therefrom) to any persons, whether employees of Company or otherwise, and to any property caused by, resulting from, arising out of or occurring in connection with the execution of the work under this Agreement (including as a result of products liability claims), whether such damages or injuries are or are alleged to be based upon Company’s active or passive negligence or participation in the wrong or upon any breach of any statutory duty or obligation on the part of Company (except to the extent such damages or injuries directly result from any act of WMI’s employees located at Company’s facilities and are not otherwise covered by the property insurance Company is required to maintain hereunder as set forth on Schedule G hereto, or result from a breach of any warranty, representation, agreement, undertaking or covenant of WMI contained herein). The foregoing indemnity shall be applicable only to such claims as have been reduced to judgment or settled with Company’s written approval. WMI shall give Company prompt notice of any claim to which the foregoing indemnity applies and Company shall assume the defense of any such claim through counsel of Company’s choice and at Company’s sole expense; provided, however, that the relevant law on Civil Procedure provides for this procedure. WMI shall have the right to participate in such defense through counsel of WMI’s choice and at WMI’s expense; provided, however, that the relevant law on Civil Procedure provides for this procedure.

(c) WMI warrants, represents and/or covenants, as the case may be, that: (i) WMI has the right, power and authority to enter into and fully perform this Agreement;

(ii) no agreement of any kind heretofore entered into by WMI shall interfere in any manner with the complete performance of this Agreement; and (iii) Material embodied in Products and Components as supplied by WMI shall not violate any law or infringe upon the rights of any third party. As used herein “Material” shall include all musical compositions, names, biographical materials and likenesses, photographic, video or motion picture images, sound recordings, intellectual properties, packaging and artwork.

(d) WMI agrees to and does hereby indemnify, save and hold Company and its affiliates, and each of their respective officers, directors and employees (collectively, for the purposes of this Paragraph 9(d) only, “Company”) harmless to the maximum extent permitted by law from any and all loss and damage (including court costs and reasonable attorneys’ fees as and when incurred) arising out of, connected with or as a result of: (i) any inaccuracy, inconsistency with, failure of, or breach or threatened breach by WMI of any warranty, representation, agreement, undertaking or covenant contained in this Agreement; and/or (ii) any and all damages or injuries of any kind or nature whatsoever (including death resulting therefrom) to any persons, whether employees of Company or otherwise, and to any property caused by, resulting from, arising out of or occurring in connection with any act of WMI’s employees located at Company’s facilities, except to the extent such damages and injuries are covered by the property insurance Company is required to maintain hereunder at set forth on Schedule G hereto. The foregoing indemnity shall be applicable only to such claims as have been reduced to judgment or settled with WMI’s written approval. Company shall give WMI prompt notice of any claim to which the foregoing indemnity applies and WMI shall assume the defense of any such claim through counsel of WMI’s choice and at WMI’s sole expense; provided, however, that the relevant law on Civil Procedure provides for this procedure. Company shall have the right to participate in such defense through counsel of Company’s choice and at Company’s expense; provided, however, that the relevant law on Civil Procedure provides for this procedure.

10. Breach, Cure and Termination. (a) WMI may terminate the Term by written notice to Company following either: (i) a breach of this Agreement by Company that is specified in Paragraph 10(b); or (ii) any other material breach of this Agreement by Company. [*] There shall be a cure period of [*] following written notice to Company, for any breach referred to in Paragraph 10(a)(ii) .

(b) The breaches of this Agreement referred to in Paragraph 10(a)(i) are any of the following:

[*]

of a breach by WMI or the expiration of the term thereunder by passage of time or (y) the termination of the term of the International PP&S Agreement under Paragraph 11(c)(iv) thereof; or (B) any material breach by Company under the International PP&S Agreement (i.e., a breach which would then-currently permit WMI to terminate the term thereof and with respect to which WMI’s right to terminate has not been waived).

(d) Any termination of this Agreement under this Paragraph 10 will not relieve Company of liability for breaches hereof arising prior to such termination nor shall it relieve WMI from any liability to pay for Services rendered prior to such termination.

(e)

(i) If because of an “act of God”, inevitable accident, fire, lockout, strike or other labor dispute, riot or civil commotion, act of public enemy or other cause of a similar nature not reasonably within Company’s control (a “Force Majeure Event”), Company is materially hampered in the performance of its obligations under this Agreement, or its normal business operations are delayed or become impossible or commercially impracticable, then Company shall have the option, by giving WMI written notice, to suspend its obligations under this Agreement affected by such Force Majeure Event, effective upon receipt by WMI of such notice, for the duration of any such contingency. Should Company suspend its obligations under this Agreement pursuant to this Paragraph 10(e), such suspension shall not constitute a breach hereunder and Company shall not be subject to price rebates under Paragraph 15 with respect to any occurrences during the pendency of such suspension. Immediately upon Company’s assertion of its right to suspend its obligations under this Agreement, WMI shall have the right to manufacture and/or package Products itself or through third parties during the pendency of such suspension. Further, should Company suspend its obligations under this Agreement, WMI shall, on and from the date which is [*] after the occurrence of (which may be earlier than Company’s assertion of suspension under) a Force Majeure Event, have the right, in its sole discretion, to: (i) terminate the Term of this Agreement by notice in writing to Company; or (ii) require Company to implement its Disaster Recovery Plan; in each case unless Company has previously by notice in writing to WMI ended the suspension of Company’s obligations under this Agreement. For the avoidance of doubt, should WMI exercise its right of termination under this Paragraph 10(e), no cure period shall be associated with Company’s failure to perform its obligations hereunder. No liability or obligation of Company under any provision hereof, other than those affected by a Force Majeure Event hereunder, shall be in any way limited or forgiven as a result of any Force Majeure Event.

(ii) In addition, [*] of becoming aware of any circumstance or event which may reasonably be anticipated to cause or constitute a Force Majeure Event, Company shall notify WMI of such circumstance or event. For the avoidance of doubt, such notice shall not constitute an assertion by Company of its right to suspend its obligations hereunder.

(iii) If for any reason, Company is unable to provide any Services hereunder in connection with any Order(s) for a period exceeding [*] and such inability is reasonably likely to result in Company being unable to meet the Service Level Requirements set forth herein, WMI shall have the right to immediately contract with a third party to provide all or any portion of such services for such period of time as may be reasonably necessary for WMI to obtain the services required to fulfill any such Order(s). Once WMI is reasonably satisfied that Company is again able to provide the required Services, WMI shall return the contracted Services to Company as soon as it is reasonably able to do so; provided, however, that the return of such Services to Company shall be subject to any reasonable commitment WMI has made to the applicable third party that such Services would remain with such third party for a period of time. Company shall reimburse WMI upon demand for any and all incremental out-of-pocket charges that WMI reasonably incurs as a result of transferring its Services under this Paragraph 10(e)(iii).

(f) If WMI purports to terminate this Agreement under this Paragraph 10, each party hereto shall have the right to seek any remedy or other relief available under applicable law (except as limited by Paragraph 16(n)), and each party hereto shall have the right to assert any defenses available under applicable law; provided, however, that under no circumstances shall any party from whom WMI obtains services in substitution for any or all Services to be provided hereunder have any liability whatsoever to Company arising out of or related to any actual or purported termination of this Agreement by WMI, even if in violation of this Agreement and Company shall take no action against any such party in connection with the provision of such services by such party to WMI.

11. Anti-Piracy Activities. Company (and WMI, to the extent applicable to a content provider) shall at all times use commercially reasonable efforts to comply with industry standard procedures associated with anti-piracy activities including: (i) the IRMA anti-piracy compliance program; (ii) the IFPI anti-piracy compliance program; and (iii) all other measures and procedures described in the RIAA Draft CD Plant Good Business Practices set forth therein.

12. Adjustments. (a) [*]

conditions applicable to such other party (e.g., order volumes, quality requirements and materials used).

(e) Each of WMI and Company agrees to negotiate in good faith to attempt to resolve any disagreement which may arise in connection with the implementation or interpretation of the terms and provisions of this Paragraph 12. In the event that such good faith negotiation does not result in the resolution of any such disagreement within a fifteen (15)-day period, the parties shall retain an arbitrator to make a fair and reasonable determination as to any such disagreement (the “Arbitrator”). The Arbitrator shall be a retired executive or attorney with substantial experience in the field of manufacturing, preferably in the manufacturing of Optical Discs, shall be independent of each of WMI and Company, and shall endeavor to provide a determination of any dispute among the parties within thirty (30) days of being retained, but in each case, as quickly as possible. The parties shall jointly appoint the Arbitrator and the identity of the Arbitrator shall be satisfactory to each of the parties. The parties shall share equally in the cost and expense of retaining the Arbitrator. If the parties cannot agree upon a person to act as the Arbitrator within thirty (30) days of the expiry of the fifteen (15)-day negotiation period specified in this Paragraph 12(e), then the Arbitrator shall be selected by the American Arbitration Association. Any arbitration hereunder shall be conducted in conformance with the rules established by the American Arbitration Association. Any determination made by the Arbitrator shall be final and binding on each of the parties.

13. Confidentiality. (a) Each of Company and WMI shall, and shall cause its affiliates, and its and its affiliates’ directors, officers, employees and agents (each, a “Recipient”) to, maintain in confidence the material terms of this Agreement, except that WMI may disclose this Agreement on a confidential basis in connection with a potential Recorded Music Major Transaction, to a potential assignee under Paragraph 16(c) or to third parties and WMI affiliates as may be necessary in the ordinary course of business (provided, that any such disclosure shall be limited to those persons who agree to be bound by the provisions of this Paragraph). The restriction in the preceding sentence shall not apply to information that: (i) becomes generally available to the public other than as a result of disclosure by such Recipient contrary to this Agreement; (ii) was available to such Recipient on a non-confidential basis prior to its disclosure to such Recipient; (iii) becomes available to such Recipient on a non-confidential basis from a source other than any other Recipient unless such Recipient knows that such source is bound by a confidentiality agreement or is otherwise prohibited from transmitting the information to such Recipient by a contractual obligation; (iv) is independently developed by such Recipient without reference to confidential information received from any other party; (v) is required to be disclosed by applicable law or legal process, provided that any Recipient disclosing pursuant to this clause (v) shall notify the other party at least five (5) days prior to such disclosure so as to allow such other party an opportunity to protect such information through protective order or otherwise; (vi) is required to be disclosed by any listing agreement with, or the rules or regulations of, any security exchange on which securities of such Recipient or any of its affiliates are listed or traded; or (vii) is required to be disclosed by a party in order to perform its obligations under the Agreement; provided, that any such disclosure shall be limited to those persons

who have a need to know such information and who agree to be bound by the provisions of this Paragraph 13. No party hereto shall make a press release or public announcement concerning this Agreement without the prior written consent of the other party hereto.

(b) Company shall, and shall cause its affiliates, and its and its affiliates’ directors, officers, employees and agents to, maintain in confidence all information that: (i) is in its or their possession by reason of Company’s performance of Services hereunder; and (ii) relates to the Products. WMI shall, and shall cause its affiliates, and its and its affiliates’ directors, officers, employees and agents to, maintain in confidence all information that: (x) is in its or their possession by reason of Company’s performance of Services hereunder; and (y) relates to the pricing, methods of manufacture or other proprietary information of Company. The restrictions in the two preceding sentences shall not apply to information that: (A) becomes generally available to the public other than as a result of disclosure by such Recipient contrary to this Agreement; (B) was available to such Recipient on a non-confidential basis prior to its disclosure to such Recipient; (C) becomes available to such Recipient on a non-confidential basis from a source other than any other Recipient unless such Recipient knows that such source is bound by a confidentiality agreement or is otherwise prohibited from transmitting the information to such Recipient by a contractual obligation; (D) is independently developed by such Recipient without reference to confidential information received from any other party; (E) is required to be disclosed by applicable law or legal process, provided that any Recipient disclosing pursuant to this clause (E), shall notify the other party at least five (5) days prior to such disclosure so as to allow such other party an opportunity to protect such information through protective order or otherwise; or (F) is required to be disclosed by any listing agreement with, or the rules or regulations of, any security exchange on which securities of such Recipient or any of its affiliates are listed or traded. Notwithstanding anything to the contrary above, WMI and its affiliates shall be permitted to disclose any information on a confidential basis in connection with a potential Recorded Music Major Transaction, to a potential assignee under Paragraph 16(c) or to third parties and WMI affiliates as may be necessary in the ordinary course of business (provided, that any such disclosure shall be limited to those persons who agree to be bound by the provisions of this Paragraph).

(c) The obligations of WMI and Company under Paragraphs 13(a) and 13(b) shall survive for [*] following the expiration or termination of the Term.

(d)

(i) Notwithstanding anything to the contrary set forth in this Paragraph 13, the parties hereby agree that, as of the earliest of: (A) the date of the public announcement of discussions relating to the transactions contemplated by the Stock Purchase Agreement (the “Transaction”); (B) the date of the public announcement of the Transaction; and (C) the date of the execution of an agreement (with or without conditions) to enter into the Transaction, each party (and each employee, representative or other agent of such party) may disclose to any and all persons, without

limitation of any kind, the tax treatment and tax structure of the Transaction and all materials of any kind (including opinions or other tax analyses) that are provided to such party relating to such tax treatment and tax structure.

(ii) The parties acknowledge that: (A)(x) the identity of any existing or future party (or any affiliate of such party) to the Transaction; and (y) any specific pricing information or other commercial terms, including the amount of any fees, expenses, rates or payments arising in connection with the Transaction, are not included in the meaning of the terms “tax treatment” and “tax structure” as referred to in clause (i) of this Paragraph 13(d); and (B) nothing in this Agreement shall in any way limit any party’s ability to consult any tax advisor (including a tax advisor independent from all other entities involved in the Transaction) regarding the tax treatment or tax structure of the Transaction.

14. Definitions. (a) Certain Terms.

(i) “Acquired Facility” shall mean any of the facilities located in Alsdorf, Germany which are being acquired by Company in connection with the Stock Purchase Agreement.

(ii) “Catalog Titles” shall mean any Product (or Component thereof) following such Product’s “street date.”

(iii) “CD Discs” shall mean Optical Discs which are in the CD format.

(iv) “Change of Control” shall mean (i) any merger or consolidation of Company or Parent with a Major or its affiliates or any sale, transfer, issuance or other disposal (in one transaction or in a series of transactions) of all or more than [*] of the shares of capital stock, partnership interests, membership interests in a limited liability company or other equity ownership interests (“Equity Interests”) of Parent or Company (or any subsidiary of Parent or Company engaged in the business of providing M&P Services, whether now owned or hereafter acquired) to a Major or its affiliates; (ii) the failure by Parent to own, directly or indirectly, beneficially and of record, Equity Interests in Company representing at least [*] of each of the aggregate ordinary voting power and aggregate equity value represented by the issued and outstanding Equity Interests in Company; (iii) Parent or Company sells all or substantially all of its assets; or (iv) any other event which results in Parent no longer controlling the direction or management of Company.

(v) “Combined Entity” shall mean the entity or entities formed as a result of any Recorded Music Major Transaction.

(vi) “Components” shall mean the packaging or promotional elements included in the Containers or utilized in connection therewith, including inserts, booklets and inlay cards and stickers.

(vii) “Containers” shall mean the containers (e.g., jewel boxes and snapper boxes) into which Records are collated.

(viii) “Contract Year” shall mean each separate, consecutive one (1)-year period of the Term, the first such period to commence on the first day of the Term.

(ix) “Excluded Products” shall mean the following Products:

(a) single and maxi single configurations in all formats, and

(b) premium configurations in all formats.

(x) “Facility” shall mean any facility owned and/or leased and controlled by Company or one of Company’s affiliates.

(xi) “Hit Titles” shall mean Catalog Titles designated by WMI as such based upon current or anticipated sales and delivery requirements.

[*]

(xiii) “International Administrative Services Agreement” shall mean the International Administrative Services Agreement between WMI and Company dated as of the date hereof.

(xiv) “International PP&S Agreement” shall mean the International Pick, Pack and Shipping Services Agreement between WMI and Company dated the date hereof.

(xv) “Inventory” shall mean all inventory of units of Components and finished units of Products stored in any Facility.

(xvi) “Key Release” shall mean a New Release of which greater than two hundred and fifty thousand (250,000) units and less than five hundred thousand (500,000) units have been Ordered.

(xvii) “Key Release Date” shall mean the date by which the Orders for a Key Release are required to be shipped pursuant to Schedule A hereto.

(xviii) “M&P Services” shall mean Manufacturing Services and Packaging Services.

(xix) “Major” shall mean any one of the following companies: Sony Music Entertainment Inc., Bertelsmann Music Group, EMI Group plc or Universal Music Group (or their successors).

(xx) “Manufacturing Services” shall mean: (i) selected pre-production services (as detailed on Schedule A); (ii) selection of suppliers; (iii) ordering raw materials (including Components) from various suppliers such as pressing plants, duplicators and printers; (iv) assembly; (v) arranging shipment of Components to various points; (vi) arranging shipment of finished units from point of manufacture to WMI’s distributor and to other shipment locations identified by WMI; and (vii) inventory control with respect to the foregoing, all of the foregoing for Optical Discs only.

(xxi) “Manufacturing Source Materials” shall mean, collectively, all materials (other than raw materials such as plastic) necessary to manufacture finished units including Masters and Components, whether in physical or electronic form (as determined by WMI).

(xxii) “Master” shall mean any recording embodied in any form from which Records may be derived.

(xxiii) “New Release” shall mean any Product (or Component thereof) prior to and including such Product’s “street date.”

(xxiv) “Optical Disc” shall mean any kind of optical disc now known or hereafter devised, including a compact disc in any of its forms and a Digital Versatile Disc in any of its forms and any other high-density optical disc. For the purposes of this definition, a compact disc includes

audio CD, CD-ROM, Video CD, CD-I, CD-R, CD-RW, Photo CD, Enhanced CD and CD+G, as each such term is commonly used and understood. For the purposes of this definition, a Digital Versatile Disc includes DVD-Audio, DVD-Video, DVD-ROM, DVD-R, DVD-RW and DVD-RAM, as each such term is commonly used and understood. “Optical Disc” shall not include so-called “high definition” Digital Versatile Discs (“HD-DVDs”); provided, however, that if WMI’s total production of units of Products in HD-DVD format for any Contract Year exceeds [*] of WMI’s total production of units of Products in all formats for such Contract Year (including units of Products in HD-DVD format), then thereafter during the Term, on a prospective basis, HD-DVDs shall be deemed to be “Optical Discs” hereunder.

(xxv) “Order” shall mean a request made by WMI for the manufacture and/or packaging of units of Products, Components or any other materials hereunder. An “Order” may be for individual Products, Components or other materials, may be for multiple Products, Components or other materials and may specify multiple quantities of the same Product, Component or other materials to be produced for delivery to single and/or multiple locations. An “Order” shall wherever possible include a “bill of materials” or “BOM” as said term is utilized in the manufacturing industry.

(xxvi) “Packaging Services” shall mean (i): selected pre-production services (as detailed on Schedule A); (ii) selection of raw material suppliers; (iii) ordering raw materials from various suppliers; (iv) assembly; (v) arranging shipment of finished units of Components from point of manufacture to shipment locations identified by WMI; and (vi) inventory control with respect to the foregoing, all of the foregoing for Optical Discs only.

(xxvii) “Packaging Source Materials” shall mean, collectively, all materials (other than raw materials such as ink and paper) necessary to manufacture Components, whether in physical or electronic form (as determined by WMI).

(xxviii) “Parent” shall mean Cinram International Inc.

(xxix) “Platinum Release” shall mean a New Release for which greater than [*] units have been Ordered.

(xxx) “Platinum Release Date” shall mean the date by which the Orders for a Platinum Release are required to be shipped pursuant to Schedule A hereto.

(xxxi) “Products” shall mean all Records intended for sale in the Territory for which WMI requires M&P Services to be performed during the Term and for which WMI has the unilateral right to control the identity

of the party who renders such M&P Services. Following a Recorded Music Major Transaction, “Products” shall mean all Records intended for sale in the Territory for which the Combined Entity requires M&P Services to be performed during the Term in the Territory and for which the Combined Entity has the unilateral right to control the identity of the party who renders such M&P Services. “Products” shall be deemed to include Hybrid CD/DVD configurations or any other new physical formats of Optical Discs; provided, however, [*]. It has been WMI’s general custom to use its commercially reasonable efforts to acquire the unilateral right to control the identity of the party who renders M&P Services in connection with Records. WMI shall continue to do so during the Term, in accordance with past practice. To the extent that WMI or WMI’s affiliates request M&P Services hereunder for Records intended for sale outside the Territory pursuant to Paragraph 1(a)(i) hereof, such Records shall also constitute “Products” hereunder. In every instance, “Products” shall not include the “Excluded Products”. Records sold through so-called “kiosks” shall not constitute “Products” hereunder.

(xxxii) “Recorded Music Major Transaction” shall mean a joint venture, merger, or other combination of all or a substantial portion of the recorded music businesses of Warner Music Group with all or a substantial portion of the recorded music businesses of any Major.

(xxxiii) “Records” shall mean all physical forms of recording and reproduction by which sound may be recorded now known or which may hereafter become known, manufactured or sold primarily for home use, jukebox use, or use on or in means of transportation, including magnetic recording tape, film, electronic video recordings and any other physical medium or device for the production of artistic performances manufactured or sold primarily for home use, jukebox use or use on or in means of transportation, whether embodying: (i) sound alone; or (ii) sound synchronized with visual images, e.g., “sight and sound” devices, but only so long as such forms of recording and reproduction contain performances of works by recording artists.

(xxxiv) “Services” shall mean the M&P Services and all other services to be provided by Company under this Agreement.

(xxxv) “Source Materials” shall mean Manufacturing Source Materials and Packaging Source Materials.

(xxxvi) “Stock Purchase Agreement” shall mean the Stock Purchase Agreement among AOL Time Warner Inc., Parent and Company dated as of July 18, 2003.

(xxxvii) “Term” shall mean the [*] commencing on the Closing Date, as such term is defined in the Stock Purchase Agreement, subject to earlier termination in accordance with Paragraph 10.

(xxxviii) “Territory” shall mean wholly-owned WMI affiliate companies located in Austria, Belgium, Denmark, Eire, Finland, France, Germany, Greece, Italy, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom.

(xxxix) “Turnaround Times” shall mean the elapsed time between receipt of an order for a workable product and the time of receipted delivery of all the finished units of the complete order by the delivery point designated by WMI.

(xl) “Unit” shall mean a finished product in a form that is delivered to end consumers, carries a unique identifier code (UPC/EAN/promo no.) and is warehoused as a Stock Keeping Unit (SKU).

(xli) “US Manufacturing Agreement” shall mean the US Manufacturing and Packaging Agreement between WEA and Company dated as of the date hereof.

(xlii) “US PP&S Agreement” shall mean the US Pick, Pack and Shipping Services Agreement between WEA and Company dated as of the date hereof.

(xliii) “WEA” shall mean Warner-Elektra-Atlantic Corporation.

(xliv) “WHV” shall mean Warner Home Video Inc.

(xlv) “WMI Facility” shall mean any Facility at which Company provides or has provided Services to WMI hereunder.

(xlvi) “WMME” shall mean Warner Music Manufacturing Europe GmbH.

(xlvii) “Workable” shall mean: (i) for orders of Manufacturing Services, an Order for which all of the items to be furnished by WMI (such as Source Materials and similar materials) reasonably necessary to complete manufacturing of finished units of Products have been received by Company in reasonably sufficient quantities; and (ii) for orders of Packaging Services, an Order for which all of the items to be furnished by WMI (such as Source Materials and similar materials) reasonably necessary to complete manufacturing of Components have been received by Company in reasonably sufficient quantities.

(b) Other Definitional and Interpretative Provisions.

(i) The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Paragraph and Schedule references are to this Agreement unless otherwise specified.

(ii) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.

(iii) Unless the context requires otherwise, other grammatical forms of defined words or expressions used herein have corresponding meanings.

15. [*]

(b) [*] This Paragraph 15 shall not limit WMI’s other rights against Company for breach hereof, but any amounts paid by Company pursuant to this Paragraph 15 shall reduce any amounts otherwise payable by Company with respect to such breach.

16. Miscellaneous. (a) Entire Agreement, Modification. This Agreement contains the entire understanding of the parties hereto relating to the subject matter hereof and supersedes all previous agreements or arrangements between the

parties, both written and oral, hereto relating to the subject matter hereof, except that nothing in Paragraph 3 shall limit the obligations of Company under the International PP&S Agreement. This Agreement cannot be changed except by an instrument signed by the authorized signatories of the parties hereto.

(b) Waiver. Any party to this Agreement may: (i) extend the time for the performance of any of the obligations or other acts of the other party hereto; (ii) waive any inaccuracies in the representations and warranties of the other party contained herein or in any document delivered by the other party pursuant hereto; or (iii) waive compliance with any of the agreements or conditions of the other party hereto contained herein. Any such extension or waiver shall be valid only if set forth in an instrument in writing signed by the party to be bound thereby. Any waiver of any term or condition shall not be construed as a waiver of any subsequent breach or subsequent waiver of the same term or condition, or a waiver of any other term or condition of this Agreement. The failure of either hereto party to assert any of its rights hereunder shall not constitute a waiver of any of such rights.

(c) Assignment. Company shall not have the right without WMI’s prior written consent (which consent may be granted or withheld in the sole discretion of WMI) to assign this Agreement or any of the rights granted to Company hereunder; provided, however, that Company shall be permitted to assign this Agreement to its Parent or any wholly owned subsidiary. WMI shall have the right without Company’s consent to assign this Agreement, in whole or in part, to any subsidiary, parent company or affiliate of WMI, or to any third party acquiring all or substantially all of WMI’s assets or equity; provided, however, that in each case, notwithstanding such assignment, WMI at all times shall remain directly and fully liable to Company for the performance of the obligations of WMI hereunder.

(d) Further Assurances. Company and WMI each agree to execute and deliver all such other and additional instruments and documents and to do such other acts and things as may be necessary to more fully effectuate this Agreement.

(e) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of, and shall be enforceable by, each of the parties hereto and their respective permitted assigns.

(f) Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by 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 Paragraph 16(f)):

WMI:		WEA International Inc.
		c/o Warner Music Group Inc.
		75 Rockefeller Plaza
		New York, New York 10019
		Attn: EVP & General Counsel
		Fax: (212) 258-3092

		with a copy to:

		Warner Music International Services Ltd.
		83 Baker Street
		London W1U 6LA
		Attention: SVP of Business & Legal Affairs
		Fax: 44 207 535 9050

Company:		Cinram International Inc.
		2255 Markham Road
		Scarborough, Ontario M1B 2W3
		Canada
		Attn: Dave Rubenstein, President
		Fax: (416) 298-0612

with a copy to
		Ervin, Cohen & Jessup LLP
		9401 Wilshire Boulevard, 9^th Floor
		Beverly Hills, California 90212
		Attn: Howard Z. Berman, Esq.
		Fax: (310) 859-2325

(g) Headings. The descriptive headings contained in this Agreement are for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement.

(h) Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any federal, state, local or foreign statute, law, ordinance, regulation, code, order, other requirement or rule of law or by public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party hereto. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties hereto as closely as possible in an acceptable manner in, order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.

(i) No Agency. WMI and Company each shall have the status of an independent contractor and nothing herein contained shall contemplate or constitute WMI as Company’s agent or employee or Company as WMI’s agent or employee. This Agreement does not constitute or acknowledge any partnership or joint venture between WMI and Company.

(j) No Third Party Beneficiaries. Except for the provisions of Paragraphs 9(b) and 9(d) relating to indemnified parties, this Agreement shall be binding upon and inure solely to the benefit of the parties hereto and their permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other party any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

(k) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, APPLICABLE TO CONTRACTS EXECUTED IN AND TO BE PERFORMED ENTIRELY WITHIN THAT STATE. EXCEPT AS PROVIDED IN PARAGRAPH 12(e) OR SCHEDULE G HERETO, ALL ACTIONS AND PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE HEARD AND DETERMINED IN ANY NEW YORK STATE OR FEDERAL COURT SITTING IN THE CITY OF NEW YORK, AND THE PARTIES HERETO HEREBY IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS IN ANY SUCH ACTION OR PROCEEDING AND IRREVOCABLY WAIVE THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF ANY SUCH ACTION OR PROCEEDING. EACH PARTY HERETO IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES OF SUCH PROCESS TO SUCH PARTY AT ITS ADDRESS SPECIFIED IN PARAGRAPH 16(f). THE PARTIES HERETO AGREE THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS PARAGRAPH 16(k) SHALL AFFECT THE RIGHT OF EITHER PARTY HERETO TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. THE CONSENTS TO JURISDICTION SET FORTH IN THIS PARAGRAPH 16(k) SHALL NOT CONSTITUTE GENERAL CONSENTS TO SERVICE OF PROCESS IN THE STATE OF NEW YORK AND SHALL HAVE NO EFFECT FOR ANY PURPOSE EXCEPT AS PROVIDED IN THIS PARAGRAPH 16(k) AND SHALL NOT BE DEEMED TO CONFER RIGHTS ON ANY PARTY OTHER THAN THE PARTIES HERETO.

(l) WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN

If the foregoing is acceptable, please acknowledge the same by signing in the appropriate places below.

WEA INTERNATIONAL INC.


By:	/s/ David H. Johnson
Name:		David H. Johnson
Title:		Vice President


WARNER MUSIC MANUFACTURING EUROPE GMBH (TO BE RENAMED CINRAM GMBH)


By:	/s/ Lewis Ritchie
Name:		Lewis Ritchie
Title:		Authorized Signatory

A) CD - Formats

AA) Discs

AA 1) 5” (12cm) Ø CD

1. Physical dimensions discs

Diameter	120 mm	+ 0,3	mm
Centerhole	15 mm	+ 0,1/- 0	mm
Thickness	1,2 mm	+ 0,3 / - 0,1	mm

Disc shape see technical standards

2. Materials

Standard

a)	Carrier	:	clear polycarbonate			dimensions see 1.

b)	reflective layer	:	Aluminium			Inner Ø	38
						outer Ø	118
c)	protective layer	:	clear coating lacquer

Specials

a)	carrier	:		coloured polycarbonate		• on specific request
b)	reflective layer	:		•	other materials	• on specific request
				•	different masking shapes	• on specific request

3. Technical Specifications

CD Audio	=>	see SONY / PHILIPS		Red Book
CD ROM	=>	“	“	Yellow Book
Enhanced CD-Audio	=>	“	“	Enhanced Music CD Specs.

4. Maximum Playing time

Standard
CD-Audio	:	78 min
CD-ROM	:	850 MByte

Specials
CD-Audio	:	extended playing time up to max. 79:30 min

5. Copy Control Technologies

Application of copy control technologies technically means leaving the SONY / PHILIPS Red Book standard for CD-Audio and depending on applied technology entering into mixed CD-Audio / CD-ROM formats => Enhanced CD-Audio

Copy control technologies are subject to specific license agreements / fees available copy control technologies and max. playing times for CD-Albums:

•	MACROVISION CDS 200 69 min + 128 k bit quality compressed audio
•	MACROVISION CDS 100 74 min	(without compressed audio for PC playability)

other copy control technologies			• on specific request

5. Labelartwork

Surface for labelartwork
inner Ø	21 mm
outer Ø	116 mm
with non-printed ring-shaped segment (stacking ring area)
Ø min.	33,9 mm
Ø max.	35,2 mm

Standard Labelprint
a)screen print	4 standard colours PANTONE
b)offset print	white ground + 4 standard CMYK offset colours

Specials

• 5th colour

• 6th colour (screen print only)

• special colours (i.e. metallic, dayglow)

• varnish

• special requests

AA 2) 3” (8 cm) Ø CD

NOT AVAILABLE

B) DVD - Formats

BA) Discs

BA 1) 5” (12 cm) Ø DVD

1. Physical dimensions discs

Diameter	120	mm		+ 0,3	mm
Centerhole	15	mm		+ 0,1/ - 0	mm
Thickness	1,2		mm	+ 0,3/ - 0,1	mm

Disc shape	see DVD physical specifications

2. Materials

Standard
carrier	:	clear polycarbonate
reflective layer	:	dimensions			inner Ø	38
					outer Ø	118
		material	DVD5
			DVD10
			DVD9	aluminium / silver or silicon (semi-reflective layer)


Specials
NOT YET AVAILABLE

3. Technical Specifications

DVD physical specification	=>	DVD specifications for Read only discs, Part 1
DVD logical specification	=>	DVD-Video / DVD-Audio / DVD-ROM Specifications

4. Max. Data Capacity

DVD5	4,7 GByte
DVD10	2 x 4,7GByte
DVD9	8,5 GByte

5. Copy Control Technologies

copy control technologies are subject to specific license agreements / fees

Standard
•	MACROVISION	analog video copy protection for DVD-Video
•	CSS	digital content copy protection for DVD-Video
•	CPPM	digital content copy protection for DVD-Audio

Specials
NOT YET AVAILABLE

5. Labelartwork

a) surface / dimensions for labelartwork
DVD5 and DVD9	Ø inner	18 mm
	Ø outer	116 mm
DVD10	Ø inner	38 mm
	Ø outer	44 mm

b) labelartwork technologies

Standards

DVD5	:	-	pitart
		or
		-	screen print	4 standard colours PANTONE
		or
		-	offset print	white ground +4 standard offset CMYK colours

DVD10	:	-	screen print ‘donut type’ on both sides max. 3 colours/side, standard colours PANTONE

DVD9	:	-	screen print	4 standard colour PANTONE
		or
		-	offset print	white ground + 4 standard offset CMYK colours

Specials
•	5th colour
•	6th colour	(screen print only)
•	special colours	(i.e. metallic, dayglow)
•	varnish
•	special requests

BA 2) 3” (8 cm) Ø DVD

NOT AVAILABLE

AB) Printcomponents

all print component dimensions + 0,5 mm printing / finishing tolerances

AB 1) “CD Audio Single”

Cardboard sleeve (as combined print and packaging component)
Dimensions	:	123,0 x 123,0 mm
Paper	:	250 g/m²
colours	:	4 colours, CMYK + waterbased varnish

AB 2) “CD Audio MaxiSingle”

Insert

dimensions	:	120,5 x 155,0 mm	without flap
Paper	:	160 g/m²
colours	:	4/4, CMYK	(without varnish)

AB 3) “CD Audio Album”

a)	inlay

	dimensions	:	117,5 x 151,0 mm
	paper	:	160 g/m²
	colours	:	4/4, CMYK	(without varnish)

b) booklet

dimensions	:	119,5 x 120,5 mm
standard productsfor machine packaging
pages	:	up to 32 pages, stapled
paper	:	outer pages		:	160 g/m², coated paper
		inner pages		:	100 g/m², coated paper
colours	:	4/4, CMYK (without varnish)

special products			folded
paper	:		160 g/m², 135 g/m²,100 g/m²
			depending on specific type of folding
			(i.e. concertina fold, cross fold, ...)
colours	:		4/4, CMYK (without varnish)

other specials			• more than 32 pages
			• special colours
			• hot foil
			• varnish
			• special paper quality

AB 4) “CD Audio Double Album”

print components

see AB 3)

BB) Printcomponents

BB 1) “DVD Audio” in SJB Plus

(manual packaging)

a)	inlay		dimensions	151,6 x 162,6 mm
			paper	160 g/m² coated paper
			colours	4/4, CMYK

b)	booklet		dimensions	140,5 x 120,0 mm
			paper	outer pages 160 g/m²
				inner pages min. 100 g/m², coated
			pages	max. 32, stapled
			colours	4/4, CMYK

	special products		folded
	paper	:	160 g/m², 135 g/m²,100 g/m²
			depending on specific type of folding
			(i.e. concertina fold, cross fold, ...)
	colours	:	4/4, CMYK (without varnish)

	specials	• more than 32 pages
		• special colours
		• hot foil
		• varnish
		• special paper quality

BB 2) “DVD Video in Amaray style box”

a)	slipsheet	dimensions		183 x 272 mm
		paper		160 g/m²
		colours		up to 4/4, CMYK

b)	booklet	dimensions		120 x 178 mm
	standard products	for machine packaging
		pages		up to 32, stapled
		paper		outer pages 160 g/m²
				inner pages min 100 g/m²
		colours		up to 4/4, CMYK

	special products	folded
	paper	:	160 g/m², 135 g/m²,100 g/m²
			depending on specific type of folding
			(i.e. concertina fold, cross fold, ...)
	colours	:	4/4, CMYK (without varnish)

	specials	• more than 32 pages
		• special colours
		• hot foil
		• varnish
		• special paper quality

BB 3) Cardboards for Snapper Type Packaging

4 panel	dimensions	187,5 x 289,5 mm
	paper		330 g/m²
	colours		4/0, CMYK

6 panel	dimensions	187,5 x 289,5 mm
	paper		330 g/m²
	colours		4/4, CMYK

C) Packaging Element Standards for machine packaging

all products to be assembled by machine can be supplied with / without 25 m foil thickness cellophane wrap.

C 1) 2-piece Jewelbox

typically for CD-Audio Maxi


material		polystyrene
dimensions		142 x 125 x 7 mm
colours	standard	clear
	special	other colours– on specific request

C 2) Standard Jewelbox

	material		polystyrene
a) box	dimensions		142 x 125 x 10 mm
	colours	standard	clear
			with / without - Logo
		special	other colours – on specific request

b) tray		standard	black or clear
			with / without - Logo
		special	other colours – on specific request

C 3) Slimline Double Jewelbox

	material		polystyrene
a) box	dimensions		142 x 125 x 10 mm
	types		hinge right or left
			with / without - Logo
	colours	standard	clear
		special	other colours – on specific request

b) tray	colours	standard	black or clear
			with / without imprint “2 CD”
		special	other colours – on specific request

C 4) Soft Box

(Amaray Style Box)

material		polypropylene
dimensions		190 x 135 x 14 mm
colours	standard	grey or clear
	special	other colours– on specific request

C 5) Double Slim Soft Box (Amaray Style Box)

	material		polypropylene
a) box	dimensions		190 x 135 x 14 mm
	colours	standard	grey or clear
		special	other colours – on specific request

b) tray	to be inserted in hinge, box spine
	colours	standard	grey or clear
		special	other colours – on specific request

C 6) Tray for Snapper Packaging

material		polypropylene
dimensions		190 x 141 x 113 mm
colours	standard	grey or clear
	special	other colours – on specific request

Schedule F

Code Of Conduct For Manufacturers

At Warner Music International, we are committed to:

• a standard of excellence in every aspect of our business and in every corner of the world;

• ethical and responsible conduct in all of our operations;

• respect for the rights of all individuals; and

• respect for the environment.

We expect these same commitments to be shared by all manufacturers of Warner Music’s products and merchandise. At a minimum, we require that all manufacturers of WMI products and merchandise meet the following standards:

Child Labor	Manufacturers will not use child labor.

	The Term “child” refers to a person younger than 15 (or 14 where local law allows) or, if higher, the local legal minimum age for employment or the age for completing compulsory education.

	Manufacturers employing young persons who do not fall within the definition of “children” will also comply with any laws and regulations applicable to such persons.

Involuntary Labor	Manufacturers will not use any forced or involuntary labor, whether prison, bonded, indentured or otherwise.

Coercion and Harassment	Manufacturers will treat each employee with dignity and respect, and will not use corporal punishment, threats of violence or other forms of physical, sexual, psychological or verbal harassment or abuse.

Nondiscrimination	Manufacturers will not discriminate in hiring and employment practices, including salary, benefits, advancement, discipline, termination or retirement, on the basis of race, religion, age, nationality, social or ethnic origin, sexual orientation, gender, political opinion or disability.

Association	Manufacturers will respect the rights of employees to associate, organize and bargain collectively in a lawful and peaceful manner, without penalty or interference.

Health and Safety	Manufacturers will provide employees with a safe and healthy workplace in compliance with all applicable laws and regulations, ensuring at a minimum reasonable access to potable water and sanitary facilities; fire safety; and adequate lighting and ventilation. Manufacturers will also ensure that the same standard of health and safety are applied in any housing that they provide for employees.

Compensation	We expect manufacturers to recognize that wages are essential to meeting employees’ basic needs. Manufacturers will, at a minimum, comply with all applicable wage and hour laws and regulations, including those relating to a minimum wages, overtime, maximum hours, piece rates and other elements of compensation, and provide legally mandated benefits. Except in extraordinary business circumstances, manufacturers will not require employees to work more than the lesser of (a) 48 hours per week and 12 hours overtime or (b) the limits on regular and overtime hours allowed by local law or, where local law does not limit the hours of work, the regular work week plus 12 hours overtime. In addition, except in extraordinary business circumstances, employees will be entitled to at least one day off in every seven-day period.

	Manufacturers will compensate employees for overtime hours at such premium rate as is legally required or, if there is no legally prescribed premium rate, at a rate at least equal to the regular hourly compensation rate.

	Where local industry standards are higher than applicable legal requirements, we expect manufacturers to meet the higher standards.

Protection of the Environment	Manufacturers will comply with all applicable environmental laws and regulations

Other Laws	Manufacturers will comply with all applicable laws and regulations, including those pertaining to the manufacture, pricing, sale and distribution of merchandise. All references to “applicable laws and regulations” in this Code of Conduct include local and national codes, rules and regulations as well as applicable treaties and voluntary industry standards.

Subcontracting	Manufacturers will not use subcontractors for the

	manufacture of Warner Music products and merchandise or components thereof without Warner Music International’s express written consent, and only after the subcontractor has entered into a written commitment with Warner Music International to comply with this Code of Conduct.

Monitoring and Compliance	Manufacturers will authorize Warner Music International and its designated agents (including third parties) to engage in monitoring activities to confirm compliance with this Code of Conduct, including unannounced on-site inspections of manufacturing facilities and employer-provided housing; reviews of books and records relating to employment matters; and private interviews with employees. Manufacturers will maintain on site all documentation that may be needed to demonstrate compliance with this Code of Conduct.

Publication	Manufacturers will take appropriate steps to ensure that the provisions of this Code of Conduct are communicated to employees, including the prominent posting of a copy of this Code of Conduct, in the local language and in a place readily accessible to employees, at all times.

Schedule G

Insurance Coverage

NOTE: The following insurance requirements are intended to provide insurance coverage under this Agreement and each of the other service agreements being entered into between the parties hereto and their affiliates as of the date hereof. Accordingly, to the extent any such other agreements require insurance coverage thereunder that is duplicative of the insurance coverage provided for below, such insurance coverage need not be duplicated under such other agreements.

Property Insurance, Including Extra Expense and Business Interruption: Company at all times and at its own cost and expense shall insure WMI’s property as defined and required in this Agreement under so-called “all risk” policies of insurance, including but not limited to coverage for extended perils, earthquake, windstorm, flood, and collapse; open cargo, war risk cargo and terrorism. Company shall purchase an insurance policy that indemnifies WMI for non-physical damage to source material, if available on a commercially reasonable basis and is warranted by the risk profile of the Company. WMI’s property shall consist of and not be limited to source material, finished goods and inventory, returned stock, master recordings, digital files, DVDs, CDs and all printing and packaging material.

Either dedicated policies or portfolio (blanket) coverage forms may provide the “all risk” property insurance, providing that the per occurrence limit of insurance available with respect to the WMI property at any Company location for property damage, business interruption, and extra expense shall not be less than five hundred million dollars ($500,000,000) except, that coverage for California Earthquake shall be no less than one hundred fifty million ($150,000,000) per occurrence and in aggregate; and Terrorism for WMI Manufacturing Alsdorf shall be no less than two hundred fifty-five million ($255,000,000) per occurrence and in aggregate. Further, the limits of insurance applicable to the extended perils and the perils of earthquake, flood and terrorism shall be an annual aggregate. The deductible on said policies shall be the sole responsibility of Company and be of no greater amount than is commercially reasonable for a company of its financial standing. These policies shall be primary to any policy maintained by or on behalf of WMI. WMI may, at any time, review the amount of insurance required hereunder, and may, from time to time, but in no event more than annually, require a lower or higher amount depending on the best available estimate of the aggregate exposure to loss arising from damage to WMI’s property under this Agreement.

The open cargo and war risk cargo insurance policies shall provide per shipment limits of indemnity of no less than five million dollars ($5,000,000) and contain a warehouse coverage endorsement. In the event that the five million dollars ($5,000,000) limit of insurance is not adequate to fully insure any given shipment under this Agreement, Company shall purchase additional insurance to cover the full replacement cost of the shipment. The deductible on these policies shall be no greater than what is commercially reasonable for an enterprise with Company’s financial standing. The

deductible shall be the responsibility of Company and this coverage shall be primary to any coverage maintained by WMI.

All policies shall provide for a reimbursement value with respect to WMI’s property at replacement cost for new property of like kind and quality, with no deduction for depreciation, and shall include WMI, its partners, officers, employees, and affiliates as loss payees under the policies as their interest may appear, and shall provide that no act or omission on the part of Company as the title insured shall prejudice a direct claim by the additional insured. All property policies shall include a waiver of subrogation in favor of WMI. Further, Company agrees to secure terms with its insurer that in the event that Company fails to pay premium resulting in a cancellation of coverage that WMI will be given the opportunity to maintain coverage for its insured property under the policy; and Company will reimburse WMI within ten (10) days of notice for the expense incurred.

Public Liability Insurance: Company shall also be required to obtain and maintain comprehensive general liability insurance and a follow-form “umbrella liability” policy, providing insurance against claims for bodily injury, including death, property damage, personal and advertising injury, blanket contractual liability, broad form property damage liability, explosion, collapse and underground hazard, and products and completed operations, for such claims occurring or alleged to have occurred in the course of any operations or activities contemplated by this Agreement, in such amounts as from time to time are carried by prudent owners of comparable operations, but in no event less than twenty five million dollars ($25,000,000) per occurrence and one hundred million dollars ($100,000,000) in the annual aggregate, and covering as additional insureds all the WMI individuals and entities for which and to the extent it is responsible under this Agreement.

Workers’ Compensation and Employers’ Liability Insurance:

The Workers’ Compensation policy shall include the following coverage:

1.	Coverage A	Statutory
2.	Coverage B	Employers’ Liability

Bodily Injury by Accident		$	1,000,000 each accident
Bodily Injury by Disease		$	1,000,000 policy limit
Bodily Injury by Disease		$	1,000,000 each employee

Company shall maintain any other employment related insurance coverage required by any jurisdiction having control over any employees or operations used in connection with this Agreement.

Automobile Liability Insurance: Company shall purchase and maintain automobile liability and follow-form “umbrella liability” insurance for all owned, non-owned and hired vehicles with limits of not less than one hundred million dollars ($100,000,000) combined single limit for bodily injury and property damage. This insurance coverage must include all automotive and truck equipment used in the

performance of the work under this Agreement, and must include the loading and unloading of same.

Environmental Liability Insurance: In the event Company encounters and must perform or engage a contractor to perform work related to the remediation or abatement of “hazardous material” which includes, without limitation, any flammable explosives, radioactive materials, hazardous materials, hazardous waste, hazardous or toxic substances, or related materials defined in the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (42 U.S.C. Section 9601, et seq.), the Superfund Amendments and Reauthorization Action of 1986 (Pub. L. No. 99-499, 100 stat. 1613 (1986)), the Hazardous Material Transportation Act, as amended (49 U.S.C. Section 1801, et seq.) and in the regulations adopted and publications promulgated pursuant thereto, or any other federal, state or local environmental law, ordinance, rule, or regulation (or applicable law in any jurisdiction outside the US), Company, or any contractor performing such work on behalf of Company, shall provide “contractor’s pollution liability” insurance, as applicable to the work to be performed, covering claims from third party injury and property damage as a result of pollution conditions emanating from on-site, under the site, or off the site arising out of its operations and completed operations. Completed operations coverage shall remain in effect for no less than five (5) years after final completion. Minimum liability limits, including excess liability coverage, shall be five million dollars ($5,000,000) each occurrence and ten million dollars ($10,000,000) in the aggregate.

The automobile liability insurance must contain provisions for thirty (30) days prior written notice of cancellation, nonrenewal, material change or reduction of insurance sent by certified mail return receipt requested, and waiver of subrogation in favor of WMI, additional insureds and all other such entities, as may be reasonably requested by WMI.

Provisions Applicable to All Policies of Insurance Required Hereunder: Policies of insurance shall be underwritten by an insurer with an AM Best rating of no less than A- and a financial size class of VII or better (or an equivalent rating from an alternate rating agency), and may be an admitted or non-admitted carrier. Any insurer not meeting these criteria must be approved in writing by WMI’s risk management department whose authorization shall not be unreasonably withheld. Satisfactory evidence of insurance shall be provided before the commencement of this Agreement and shall be evidenced at each renewal by a binder and certificate of insurance at least ten (10) days before expiration of coverage and upon request of WMI, on an annual basis or as necessitated by a material change in coverage or legal action. Company shall forward to WMI a copy of all required policy forms upon request. With respect to property located outside the U.S, any loss payable to WMI shall be adjusted and paid in the currency of the United States of America, subject to the rate of exchange published in The Wall Street Journal on the date of the loss. If Company elects to maintain insurance for property located outside the US, where the policy is denominated in a currency other than the US dollar, such policy limits and deductibles shall at all times be sufficient to meet the US dollar denominated requirements set forth on this Schedule G.

Each of WMI and Company agrees to negotiate in good faith to attempt to resolve any disagreement which in any way affects any insurance required to be carried hereunder. In the event that such good faith negotiation does not result in the resolution of any such disagreement within a fifteen (15) day period, the parties shall retain an arbitrator to make a fair and reasonable determination as to any such disagreement (the “Insurance Arbitrator”). The Insurance Arbitrator shall be a retired executive or attorney with substantial experience in the insurance industry, preferably in the field of manufacturing, shall be independent of each of WMI and Company, and shall endeavor to provide a determination of any dispute among the parties within thirty (30) days of being retained, but in each case, as quickly as possible. The parties shall jointly appoint the Insurance Arbitrator and the identity of the Insurance Arbitrator shall be satisfactory to each of the parties. The parties shall share equally in the cost and expense of retaining the Insurance Arbitrator. If the parties cannot agree upon a person to act as the Insurance Arbitrator within thirty (30) days of the expiry of the fifteen (15) day negotiation period specified in this Paragarph 6, then the Arbitrator shall be selected by the American Arbitration Association. Any arbitration hereunder shall be conducted in conformance with the rules established by the American Arbitration Association. Any determination made by the Insurance Arbitrator shall be final and binding on each of the parties. For the avoidance of doubt, Company shall at all times including during the pendency of any dispute and until such time as such dispute is resolved be required to continue to procure insurance policies as its sole expense in full force and effect as required in this Agreement and as specified herein.

Schedule A:	Service Level Requirements
Schedule B:	Technical Specifications
Schedule C:	Additional Printing and Packaging Charges
Schedule D:	Manufacturing Charges
Schedule E:	Approved Subcontractors
Schedule F:	Code of Conduct for Manufacturers
Schedule G:	Insurance Coverage