UNITED STATES DISTRICT COURT SOUTHERN DISTRICT …classaction.kccllc.net/Documents/SME0001/Stipulation and Agreement... · WHEREAS, on April 27, 2006, plaintiffs Gregg Allman, Jaimoe

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

ELMO SHROPSHIRE, INDIVIDUALLY AND AS A MEMBER OF "ELMO & PATSY"; ON BEHALF OF HIMSELF AND ALL OTHERS SIMILARLY SITUATED, 06 Civ. 3252 (GBD) (KNF)

Plaintiff, ECF CASE

-against-

SONY MUSIC ENTERTAINMENT, A Delaware General Partnership,

Defendant

STIPULATION AND AGREEMENT OF SETTLEMENT

Elmo Shropshire ("Plaintiff'), on behalf of himself and the Class (as defined below), and

defendant Sony Music Entertainment ("Defendant" or "SME"), by and through their attorneys,

hereby stipulate to the dismissal of the claims asserted by Plaintiff and the Class against

Defendant, upon and subject to the terms and conditions of this Stipulation and Agreement of

Settlement (the "Stipulation") set forth below, as of March 6, 2012 subject to the approval of the

Court pursuant to Rule 23 of the Federal Rules of Civil Procedure.

RECITALS

WHEREAS, the above-captioned action (the "Action") was brought as a class action on

behalf of a class of persons who entered into recording or production agreements with labels

affiliated with, or subsidiaries of, SME, and alleged breach of those recording agreements with

respect to the calculation of royalties on permanent digital downloads and ringtones; and

Case 1:06-cv-03252-GBD-KNF Document 94-1 Filed 03/07/12 Page 2 of 42

WHEREAS, on April 27, 2006, plaintiffs Gregg Allman, Jaimoe f/k/a Johnny Lee

Johnson and Butch Trucks, individually, as members of "The Allman Brothers Band," and as

partners in "The Allman Brothers Band Recording Company' ; and, Rick Nielsen, Brad Carlson

p/k/a "Bun E. Carlos", Robin Zander, and Torn Petersson, individually, and as members of

"Cheap Trick"; Elmo Shropshire, individually, and as a member of "Elmo & Patsy" filed the

initial putative class action complaint against Sony BMG Music Entertainment in the US.

District Court for the Southern District of New York (the "Court") asserting causes of action for

breach of contract and declaratory judgment; and

WHEREAS on July 10, 2006, Plaintiffs filed a First Amended Complaint alleging the

same causes of action; and

WHEREAS, on September 11, 2006, SME moved to dismiss the Amended Complaint

pursuant to FRCP 12(b)(6); and

WHEREAS, on June 17, 2008, the Court granted SME's Motion to Dismiss; and

WHEREAS, on June 24, 2008, the Clerk of the Court entered Judgment against

Plaintiffs; and

WHEREAS, on June 30, 2008, Plaintiffs filed a Motion for Reconsideration of the

Court's Order granting SME's Motion to Dismiss, Relief from the Judgment and Leave to

Amend; and

WHEREAS, on August 22, 2008, the Court signed a Stipulation and Order of Voluntary

Dismissal with Prejudice of plaintiffs Rick Nielsen, Brad Carlson p/k/a "Bun E. Carlos", Robin

Zander, and Torn Petersson, individually, and as members of "Cheap Trick"; and

WHEREAS, on March 19, 2009 the Court entered an Order vacating the judgment of

dismissal and granting Plaintiffs an opportunity to file a Second Amended Complaint; and

2


WHEREAS, on March 23, 2009, Plaintiffs filed the Second Amended Complaint which

asserted causes of action for breach of contract, declaratory judgment and otherwise clarified the

pleadings; and

WHEREAS, on April 14, 2009, the Court signed a Stipulation and Order of Partial

Dismissal with Prejudice dismissing the causes of action for declaratory judgment; and

WHEREAS, on April 20, 2009, SME filed its Answer to the Second Amended

Complaint; and

WHEREAS, on May 19, 2009, Magistrate Fox issued a pretrial order which inter alia

bifurcated discovery such that merits discovery be completed before class certification discovery

would commence; and

WHEREAS, on April 16, 2010, Plaintiffs filed the Third Amended Complaint adding the

Aliman Brothers Band Recording Company as a plaintiff; and

WHEREAS, on May 7, 2010, SME filed its Answer to the Third Amended Complaint;

and

WHEREAS, on May 6, 2010 and May 21, 2010, the parties attended mediation sessions

in New York conducted by Eric Van Loon of JAMS and subsequently participated in mediation

sessions by teleconference with Mr. Van Loon on numerous additional occasions; and

WHEREAS, on July 13, 2010 the Parties attended a settlement conference conducted by

Magistrate Fox; and

WHEREAS, on September 15, 2010, the Court signed a Stipulation and Order of

Voluntary Dismissal with Prejudice of plaintiffs Allman Brothers Band Recording Company;

Gregg Allman, Jaimoe f/k/a Johnny Lee Johnson and Butch Trucks, individually, as members of

3


"The Allman Brothers Band," and as partners in "The Allman Brothers Band Recording

Company"; and

WHEREAS, on September 20, 2010, Plaintiff Elmo Shropshire filed a Motion for Partial

Summary Judgment; and

WHEREAS, on January 14, 2011, SME filed a Motion for Summary Judgment; and

WHEREAS, in early March 2011, the parties attended a mediation session in New York

conducted by Eric Van Loon of JAMS; and

WHEREAS, on March 11, 2011 the parties submitted a letter to, and endorsed by,

Magistrate Fox advising the court that the parties had reached a settlement in principle and

requesting an order adjourning all deadlines; and

WHEREAS, the parties participated in mediation sessions by teleconference with Mr.

Van Loon on numerous occasions between March and August, 2011; and

WHEREAS, on August 10 and 11, 2011, the Parties attended mediation sessions in New

York conducted by Eric Van Loon of JAMS during which the parties agreed to a settlement term

sheet; and

WHEREAS, Class Counsel (as defined below) have conducted a thorough investigation

of the underlying events and transactions as alleged in the Third Amended Complaint, including

a review of documents produced by SME, interrogatory responses provided by SME,

depositions, witness interviews, and confirmatory discovery provided by SME pursuant to the

settlement term sheet, and have researched the applicable law with respect to the claims alleged

and the potential defenses thereto; and

WHEREAS, SME denies, all allegations of wrongdoing, fault, or liability or that it has

acted improperly in any way; believes that the complaint and amended complaints in this Action

4


lack merit; would have continued to resist vigorously Plaintiff's claims and contentions and

would have continued to assert its defenses thereto had this Stipulation not been reached; and has

entered into this Stipulation to put the Released Plaintiff Claims to rest finally and forever solely

for the purpose of avoiding prolonged and expensive litigation, without acknowledging in any

way any fault, wrongdoing or liability whatsoever; and

WHEREAS, Plaintiff and Class Counsel believe that the breach of contract and

declaratory judgment claims asserted in the Action are meritorious and that the evidence

developed to date supports the claims asserted, but they have considered and weighed the issues

involved in establishing the validity of their claims and have concluded that, in light of the

uncertainty of the outcome as well as the substantial risks and inevitable delay in proceeding to

trial, compared to the benefits being provided hereby, the terms and conditions set forth herein

are fair and reasonable and should be submitted to the Court for approval.

NOW THEREFORE, without any admission or concession on the part of Plaintiff of

any lack of merit of the Action whatsoever, and without any admission or concession of any

liability or wrongdoing or lack of merit in the defenses whatsoever by Defendant, IT IS

HEREBY STIPULATED AND AGREED, by and among the parties to this Stipulation,

through their respective attorneys, subject to approval of the Court pursuant to Rule 23(e) of the

Federal Rules of Civil Procedure, in consideration of the benefits flowing to the parties hereto

from the Settlement, that all Released Plaintiff Claims (as defined below) as against the Released

Parties (as defined below) and all Released Defendant Claims (as defined below) shall be

compromised, settled, released and dismissed with prejudice and without costs, upon and subject

to the following terms and conditions:

5


CERTAIN DEFINITIONS

1. As used in this Stipulation, the following capitalized terms (not already defined

above or as may be defined below) shall have the following meanings:

(a) "Authorized Past Claimant" means a Class Member on behalf of whom a

timely, valid Claim Form for Past Settlement Relief has been submitted.

(b) "Authorized Future Claimant" means a Class Member (i) who is party to

a Class Contract, at least 28,500 total downloads of recordings attributable to which Class

Contract have been sold in the United States by SME on Apple's iTunes Store from inception

through December 31, 2010, and (ii) on behalf of whom a timely, valid Claim Form for

Prospective Settlement Relief has been submitted in connection with such Class Contract.

(c) "Claim Form" means the form to be sent to potential Class Members

substantially in the form attached hereto as Exhibit A-2

(d) "Class Members" means a person or entity that falls within the definition

of the Settlement Class.

(e) "Class Counsel" means the law firms of Caplan & Ross, LLP, Milberg

LLP, and Probstein, Weiner & Butler.

(f) "Class Contract" means a contract dated between January 11976 and

December 31, 2001 (the "Class Period") that (i) was entered into with CBS Records or Sony

Music Entertainment, including their unincorporated divisions and business units, their United

States subsidiaries as of July 2004, and any predecessor in interest to any of them; (ii) is

currently held by Sony Music Entertainment, including its unincorporated divisions and

business units and United States subsidiaries; (iii) contains a clause providing that SME will

pay to such Class Member 50% of SME's net receipts in respect of any Master Recording

6


leased or licensed by SME to a third party (a "Net Receipts Provision"); (iv) does not contain a

clause capping the amount to be paid under the Net Receipts Provision, such as a clause limiting

payments under the Net Receipts Provision to the amount that would be paid under another

royalty provision contained in the contract; (v) does not contain an express rate for digital

exploitations other than a so-called "Audiophile" or "New Technology" provision; and (vi) was

not modified to include an express rate for digital exploitations or to make any change to the

Net Receipts Provision.

(g) "Class Period" means the period beginning and including January 1, 1976

through and including December 31, 2001.

(h) "Defendant's Counsel" means the law firm of Covington & Burling LLP.

(i) "Effective Date of Settlement" or "Effective Date" means the date upon

which the Settlement contemplated by this Stipulation shall become effective, as set forth in

paragraph 25 below.

(j) "Judgment" means the proposed Order and Final Judgment substantially

in the form attached hereto as Exhibit B.

(k) "Notice" means the Notice of Pendency of Class Actions, Proposed

Settlements of Class Actions, Motions for Attorneys' Fees and Expenses, and Settlement

Hearings, which is to be sent to Class Members substantially in the form attached hereto as

Exhibit A-1.

(1) "Notice Order" means the order substantially in the form attached hereto

as Exhibit A, to be entered by the Court, inter alia, preliminarily approving the terms and

conditions of this Stipulation, directing that Notice be provided to the Settlement Class, and

scheduling a hearing concerning final approval of the Settlement.

7


(m) "Past Settlement Relief' means the agreement by Defendant to pay or

credit royalties on past U.S. permanent digital downloads and ringtones to the royalty accounts

of Authorized Past Claimants as described in paragraph 8(a) below.

(n) "Prospective Settlement Relief' means the agreement by Defendant to

calculate royalties on future U.S. permanent digital downloads and ringtones to the royalty

accounts of Authorized Future Claimants as described in paragraph 8(b) below.

(o) "Publication Notice" means the summary notice of proposed Settlement

and hearing for publication substantially in the form attached hereto as Exhibit A-3.

(p) "Released Defendant Claims" means any and all actions, suits, claims,

demands, rights, liabilities and causes of action, of every nature and description whatsoever,

whether individual, class, representative, legal, equitable, or any other type or in any other

capacity, or concealed or hidden, that were asserted or that could have been asserted (including

without limitation claims for negligence, gross negligence, breach of contract, breach of duty of

care and/or breach of duty of loyalty, fraud, breach of fiduciary duty, or violations of any state

or federal common law, statutes, rules, or regulations), including both known claims and

Unknown Claims, that the Defendant or any of the other Released Parties in the past had, now

has, or might in the future have against the Plaintiff, any of the other Class Members, or their

attorneys, arising from the institution, prosecution, or settlement of the Action; provided,

however, that the definition of Released Defendant Claims shall not in any way impair or

restrict anyone's rights to enforce the terms of the Settlement.

(q) "Released Plaintiff Claims" shall collectively mean any and all actions,

suits, claims, demands, rights, liabilities and causes of action, of every nature and description

whatsoever, whether individual, class, derivative, representative, legal, equitableor any other

8


type or in any other capacity, or concealed or hidden, that were asserted or that could have been

asserted (including without limitation claims for negligence, gross negligencebreach of

contract, breach of duty of care and/or breach of duty of loyalty, fraud, breach of fiduciary duty,

or violations of any state or federal common law, statutes, rules, or regulations), including both

known claims and Unknown Claims, that the Plaintiff, the Settlement Class, any Class Member

or any of them in the past had, now has, or might in the future have against the Released Parties

or any of them on the basis of, connected with, or in any way arising out of any allegation that

any past, present, or future Sales in the United States of permanent digital downloads or

ringtones of sound recordings owned by SME (including its unincorporated divisions and

business units) or its subsidiaries involves a lease or license of such sound recordings for

purposes of calculating royalties or other payments to any Class Member, or that SME

otherwise should calculate royalties on Sales in the United States of permanent digital

downloads or ringtones of recordings attributable to Class Contracts under royalty provisions

other than those that it currently applies to such Sales; provided, however, that the definition of

Released Plaintiff Claims shall not in any way impair or restrict the rights to enforce the terms

of the Settlement. Except as expressly provided in paragraph 16(b) herein, nothing herein shall

be deemed to terminate, modify or cancel any provision of any Class Contract, each of which

shall otherwise continue in full force and effect in accordance with its terms. The release of the

"Released Plaintiff Claims" pursuant to this Settlement is without prejudice to any other rights

or audit rights not involving those claims.

(r) "Released Parties" means Defendant, including its unincorporated

divisions and business units, and any of its past, present, or future parent entities, associates,

affiliates, or subsidiaries and each and all of their past, present and future officers, directors,

9


stockholders, principals, employees, advisors, agents, attorneysfinancial or investment

advisers, consultants, lenders, insurers, investment bankers, commercial bankers,

representatives, affiliates, associates, parents, subsidiaries, joint ventures, general and limited

partners and partnerships, heirs, executors, trustees, personal representatives, estates,

administrators, trusts, predecessors, successors and assigns.

(s) "Request for Exclusion" means a written request to be excluded from the

Settlement Class submitted by a member of the Settlement Class in such form, in such manner,

and within the time limitation as set forth in the Notice.

(t) "Sales" means any distribution in the United States of permanent digital

downloads or ringtones, whether by sale, license, or otherwiseexcluding, for the avoidance of

doubt, uses of sound recordings attributable to Class Contracts in motion pictures, television,

advertising, or other uses for which SME currently accounts under such Class Contracts' Net

Receipts Provisions.

(u) "Settlement" means the settlement contemplated by this Stipulation.

(v) "Settlement Class" means the settlement class set forth in paragraph 2

below.

(w) "Settlement Hearing" means the final settlement hearing held to

determine, among other things, the fairness, reasonableness, and adequacy of the Settlement.

(x) "Unknown Claims" means any and all Released Plaintiff Claims that the

Plaintiff, the Settlement Class, or any of the Class Members do not know of or suspect to exist

in their favor at the time of the release of the Released Parties and any and all Released

Defendant Claims that Defendant or any of the other Released Parties do not know of or suspect

to exist in their favor at the time of the release of Plaintiff and the Class Members, which, if

10


known by them, might have affected their agreement to the Settlement. With respect to

Unknown Claims, Plaintiff and each Class Member and Defendant and Released Party shall be

deemed to have, and by operation of the Judgment shall have, hereby expressly waive and

relinquish, to the fullest extent permitted by law, the benefits of Section 1542 of the California

Civil Code, which states:

A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor.

Plaintiff and Defendant acknowledge, and Class Members and Released Parties by operation of

law shall be deemed to have acknowledged, that the inclusion of "Unknown Claims" in the

definition of Released Plaintiff Claims and Released Defendant Claims was separately bargained

for and a key element of the settlement of which this release is a part.

SETTLEMENT CLASS

2. Plaintiff shall request that the Court enter a certification order and certify for

settlement purposes only the following Settlement Class: All recording artists and producers

who (a) are parties to a Class Contract and (b) did not provide SME with a release of claims

relating to payment of royalties on downloads or ringtones covering the entire period from

January 1, 2004 through December 31, 2010. Subject to paragraph 5 herein, Defendant shall not

oppose such certification.

3. Excluded from the Settlement Class are the Defendant and any persontrust, firm,

corporation, or other entity affiliated with or related to the Defendant.

4. Also excluded from the Settlement Class are any persons or entities who exclude

themselves by filing a timely Request for Exclusion in accordance with the requirements set

11


forth in the Notice, as defined herein. As to each Class Contract, Requests for Exclusion shall be

valid only if submitted on behalf of all Class Members who are parties to such Class Contract.

OBLIGATIONS OF PARTIES IN FURTHERANCE OF SETTLEMENT

5. As soon as practicable, Plaintiff shall move the Court for entry of the Notice

Order. Defendant agrees, solely for purposes of effectuating the Settlement, not to oppose

certification of the Settlement Class pursuant to Rule 23 of the Federal Rules of Civil Procedure.

Defendant does not waive and expressly reserves the right to contest class action treatment of

Plaintiff's claims if the Effective Date fails to occur for any reason, including without limitation

any possible termination of this Settlement. If the Effective Date fails to occur for any reason, (i)

the certification of the Settlement Class shall be deemed null and void, and each Party shall

retain all of their respective rights as they existed prior to execution of this Settlement

Agreement, (ii) any findings or stipulations regarding certification of the Settlement Class will be

automatically vacated upon notice to the Court of this Stipulation's termination or disapproval

and the Action may proceed as though no final certification of the Settlement Class had occurred,

(iii) Plaintiff shall not raise or rely upon any such findingsstipulations, or certification in

connection with any subsequent request for class certification, and (iv) neither this Settlement

Agreement, nor any of its accompanying exhibits or any orders entered by the Court in

connection with this Settlement Agreement, shall be admissible or used for any purpose.

6. The obligations incurred pursuant to this Stipulation shall be in full and final

disposition of the Action with prejudice, including (a) any and all Released Plaintiff Claims as

against all Released Parties and (b) any and all Released Defendant Claims as against the

Plaintiff, any of the other Class Members, or their attorneys.

12


(a) Upon the Effective Date, the Plaintiff, the Settlement Class, and each

Class Member on behalf of themselves, their heirs, executors, administrators, attorneys,

successors and assigns, and any persons they represent, shall be deemed to have, and by

operation of the Judgment shall have, fully, finally and forever released, relinquished, and

discharged the Released Parties with respect to each and every Released Plaintiff Claim and

shall forever be enjoined from prosecuting any of the Released Plaintiff Claims with respect to

each and every Released Party and covenant not to sue any of the Released Parties with respect

to any of the Released Plaintiff Claims.

(b) Upon the Effective Date, Defendant and each of the other Released

Parties on behalf of themselves, their heirs, executors, administrators, attorneys, successors and

assigns, and any persons they represent, shall be deemed to have, and by operation of the

Judgment shall have, fully, finally and forever released, relinquished, and discharged the

Plaintiff, any of the other Class Members, or their attorneys with respect to each and every

Released Defendant Claim and shall forever be enjoined from prosecuting the Plaintiff, any of

the other Class Members, or their attorneys with respect to each and every Released Defendant

Claim.

(c) In the event that, notwithstanding the provisions of paragraphs 6(a) and

(b) hereof, any of the Released Parties asserts against Plaintiff, any other Class Member or

Class Counsel, any claim that is a Released Defendant Claim, then Plaintiff, such Class Member

or Class Counsel shall be entitled to use and assert such factual matters included within the

Released Plaintiff Claims against such Released Party only in defense of such claim but not for

the purposes of affirmatively asserting any claim against any Released Party.

13


(d) In the event that, notwithstanding the provisions of paragraphs 6(a) and

(b) hereof, Plaintiff, any other Class Member or Class Counsel asserts against any Released

Parties any Released Plaintiff Claims, such Released Parties or their respective counsel shall be

entitled to use and assert such factual matters included within the Released Defendant Claims

against such claimant only in defense of such claim but not for the purposes of affirmatively

asserting any claim against any such claimant.

7. The parties to this Stipulation agree to the entry of Judgment, dismissing the

Action with prejudice and without costs, and providing for the releases above.

SETTLEMENT CONSIDERATION

8. Subject to the other provisions of this Agreement, and subject to Court approval,

Defendant agrees that it will cause the settlement consideration described below to be paid or

credited, as applicable, to the royalty accounts of Authorized Past Claimants and Authorized

Future Claimants as specified in the provisions of paragraph 16 hereof in exchange for the

releases described in paragraph 6.

(a) Past Settlement Relief: For past Sales in the United States of permanent

digital downloads and ringtones:

(1) $4,196,790, less attorneys' fees and expenses as approved by the

Court, to be paid or credited, as set forth in paragraph 16(a)(1), to the royalty accounts of

Authorized Past Claimants with at least 28,500 total downloads of recordings attributable to

Class Contracts and sold in the United States by SME on Apple's iTunes Store from inception

through December 31, 2010.

(2) $164,580 cash to be paid, as set forth in paragraph 16(a)(2), to

Authorized Past Claimants with fewer than 28,500 total downloads of recordings attributable to

14


Class Contracts and sold in the United States by SME on Apple's iTunes Store from inception

through December 31, 2010.

(b) Prospective Settlement Relief: SME shall calculate royalties on Sales in

the United States of permanent digital downloads and ringtones under the royalty provisions

that it currently applies to such Sales, but shall pay an "Additional Royalty," as set forth in

paragraph 16(b)(1) below, in connection with the Sales of U.S. permanent digital downloads

and ringtones as set forth in paragraphs 16(b)(1) and (2) below.

9. Defendant acknowledges and agrees that this Stipulation will not impact upon or

affect in any way whatsoever the other audit rights contained in the Class Contract of any Class

Member, except that no Class Member may audit Defendant with regard to any Released

Plaintiff Claim.

NOTICE TO CLASS MEMBERS

10. Provided that that the Court has preliminarily approved the Settlement and

entered the Notice Order no later than March 15, 2012, SME will mail the Notice and the Claim

Form to each royalty recipient with the royalty account statement issued to such royalty recipient

for the period ended December 31, 2011, except that SME will separately mail the Notice and

the Claim Form no later than April 6, 2012 to those royalty recipients whose royalty account

statements for such period were mailed prior to March 15, 2012. In the event that the Court does

not preliminary approve the Settlement and enter the Notice Order by March 15, 2012, SME will

mail the Notice and the Claim Form to each royalty recipient with the next royalty account

statement issued to such royalty recipient following entry of the Notice Order by the Court,

provided that such preliminary approval is received at least 15 days prior to mailing of the next

royalty account statement.

15


11. (a) Potential Class Members may submit a Claim Form to SME, substantially

in the form attached hereto as Exhibit A-2, within the later of 90 days of the mailing of Notice or

45 days from such Class Members' receipt of contracts from SME pursuant to a timely request

for copies of such contracts as provided for in the Claim Form. SME shall maintain a web site in

connection with the Settlement, which will prominently display a link through which potential

Class Members may submit such request for copies of contracts and may indicate whether they

wish to be contacted by Class Counsel. SME will provide to Class Counsel the names and

contact information of persons who indicate that they wish to be contacted by Class Counsel.

(b) Class Members with at least 28,500 total downloads of recordings

attributable to Class Contracts and sold in the United States by SME on Apple's iTunes Store

from inception through December 31, 2010 who fail to submit a Claim Form within the time

specified in paragraph 11(a) above may submit a Claim Form solely for Prospective Settlement

Relief within two years of the initial mailing of the Notice. SME shall include a single-page,

short-form notice of the deadline for submission of such Claim Forms with each of the three

royalty account statements issued following the initial Notice.

12. SME, at its own expense, will cause the Publication Notice, substantially in the

form attached hereto as Exhibit A-3, to appear in Billboard magazine approximately 30 days

after the initial mailing of the Notice and Claim Form. The Publication Notice will be one-

quarter page in size.

13. SME will bear its own notice and administration costs, including without

limitation SME's costs and expenses associated with identifying members of the Settlement

Class and effecting mail Notice and Publication Notice to the Settlement Class, and the

administration of the Settlement, including without limitation, the actual costs of printing and

16


mailing the Notice and the Claim Form, publication of the Publication Notice, and any

administrative expenses and fees incurred by SME in connection with providing notice,

responding to Class Member inquiries, and processing the submitted Claim Forms. SME agrees

that it will process the Claim Forms in a competent professional manner and will administer the

Settlement subject to the jurisdiction of the Court. SME agrees to review any forms of general

correspondence with the Class Members concerning the Class Members' Claim Forms with

Class Counsel prior to using such correspondence with Class Members generally.

ATTORNEYS' FEES AND EXPENSES

14. Class Counsel will apply to the Court for an award of attorneys' fees and

expenses in an amount not to exceed $1,453,790. Notwithstanding anything contained herein to

the contrary, in the event that the Court does not approve the award of attorneys' fees and

expenses requested by Class Counsel, or the Court awards attorneys' fees and expenses in an

amount less than that requested by Class Counsel, such decision shall not affect the validity and

enforceability of the Settlement and shall not be a basis for anyone to seek to terminate or void

the Settlement or for rendering the entire Settlement null, void, or unenforceable. Class Counsel

retain their right to appeal any decision by the Court regarding the Court's award of attorneys'

fees and costs. The amount awarded by the Court shall be payable by SME to Class Counsel by

delivery of check(s) or other negotiable instrument(s) or by wire transfer(s) within the later of ten

(10) business days after the Effective Date or ten (10) business days after Class Counsel,

following the Effective Date, provide SME with instructions for payment(s). Any fees and

expenses awarded by the Court will be deducted from the amount to be paid or credited to Class

Member or royalty accounts under paragraph 8(a)(1) above.

17


15. Plaintiff will apply to the Court for an award of $15,000 for Plaintiff's service as a

class representative. The amount awarded by the Court shall be payable by SME in cash and

will not be deducted from any amounts to be paid (or credited) to Class Member royalty accounts

under paragraphs 8(a)(1) or (2) above.

DISTRIBUTIONS TO AUTHORIZED CLAIMANTS

16. The Past Settlement Relief and/or Prospective Settlement Relief, as applicable,

will be distributed to Class Members according to the following Plan of Allocation:

(a) Past Settlement Relief

(1) Each Authorized Past Claimant with at least 28,500 total

downloads of recordings attributable to Class Contracts and sold in the United States by SME on

Apple's iTunes Store from inception through December 31, 2010 will receive a fraction of that

portion of the settlement consideration provided for Past Settlement Relief in paragraph 8(a)(1)

above that remains after Class Counsel's fees and expenses have been deducted, the numerator

of which fraction shall be the total revenue from permanent digital downloads of recordings

attributable to such Authorized Past Claimant from such Authorized Past Claimant's Class

Contract(s) with respect to Sales in the United States through Apple's iTunes Store through

December 31, 2010, less any such revenue attributable to any period before December 31, 2010

for which the Authorized Past Claimant has provided SME with a release, and the denominator

of which shall be the total revenue from permanent digital downloads of recordings attributable

to all Authorized Past Claimants from all Authorized Past Claimants' Class Contracts with

respect to Sales in the United States on Apple's iTunes Store through December 31, 2010, less

any such revenue attributable to any period before December 31, 2010 for which any Authorized

Past Claimant has provided SME with a release.

18


(2) Each Authorized Past Claimant with fewer than 28,500 total

downloads of recordings attributable to Class Contracts and sold in the United States by SME on

Apple's iTunes Store from inception through December 31, 2010 will, regardless of their royalty

account balance, receive a cash payment equal to a fraction of the $164,580 settlement fund for

Past Settlement Relief provided for in paragraph 8(a)(2) above, the numerator of which fraction

shall be one (1) and the denominator of which shall be the total number of Authorized Past

Claimants with fewer than 28,500 total downloads of recordings attributable to Class Contracts

and sold in the United States by SME on Apple's iTunes Store from inception through December

31, 2010.

(b) Prospective Settlement Relief

(1) The Class Contracts of Authorized Future Claimants shall be

deemed to have been modified to provide that, commencing January 1, 2011, SME shall

calculate royalties on Sales in the United States of permanent digital downloads and ringtones of

recordings attributable to such Class Contracts under the royalty provisions that it currently

applies to such Sales, and shall add an additional royalty equal to 3% of the gross amount paid or

credited to SME with respect to each such U.S. permanent digital download or ringtone, with no

deductions of any kind and no reserves held (the "Additional Royalty"). Notwithstanding

anything contained herein to the contrary, such Authorized Future Claimants who submit Claim

Forms within the period set forth in paragraph 12(b), but after the deadline set forth in paragraph

11(a) above, shall receive the Prospective Settlement Relief set forth in this paragraph 8(b)

commencing only from the first royalty accounting period following such submission.

(2) The Class Contracts of Class Members with fewer than 28,500

total downloads of recordings attributable to Class Contracts and sold in the United States by

19


SME on Apple's iTunes Store from inception through December 31, 2010, but who (x) have an

aggregate total of at least $18,000 of royalty earnings attributable to Sales in the United States of

any such recordings on Apple's iTunes Store within any two consecutive royalty accounting

periods after January 1, 2011; and (y) thereafter notify SME in writing of their right to such

Additional Royalty within the period in which such Class Member, under the terms of the

applicable Class Contract, may object to royalty accountings for the later of such two

consecutive royalty accounting periods; shall be deemed to have been modified to provide that,

commencing with the royalty period following such notice of right and continuing thereafter,

SME shall calculate royalties on Sales in the United States of permanent digital downloads and

ringtones attributable to such Class Contracts under the royalty provisions that it currently

applies to such Sales, and shall add an Additional Royalty.

17. The Past Settlement Relief and/or Prospective Settlement Relief, as applicable,

shall be distributed by SME after the Effective Date.

(a) The Past Settlement Relief shall be distributed to each Authorized Past

Claimant by SME with the next royalty account statement issued to such Authorized Past

Claimant that is mailed at least 30 days after: (i) all timely Claim Forms for Past Settlement

Relief have been processed, and all claimants whose Claim Forms have been rejected or

disallowed, in whole or in part, have been notified and provided the opportunity to object to

such rejection or disallowance; (ii) all objections with respect to all rejected or disallowed

claims for Past Settlement Relief have been resolved to the satisfaction of the claimant or by the

Court, and all appeals therefrom have been resolved or the time therefor has expired (or a

reserve has been established, at SME's sole discretion, for such claims in dispute); (iii) the

Class Distribution Order (as defined in paragraph 19(g) below) has been entered, and (iv) all

20


matters with respect to attorneys' fees, costs, and disbursements have been resolved by the

Court, and all appeals therefrom have been resolved or the time therefor has expired.

(b) The Prospective Settlement Relief shall be distributed to each Authorized

Future Claimant by SME with the next royalty account statement issued to such Authorized

Future Claimant that is mailed at least 30 days after: (i) all timely Claim Forms for Prospective

Settlement Relief have been processed, and all claimants whose Claim Forms have been

rejected or disallowed, in whole or in part, have been notified and provided the opportunity to

object to such rejection or disallowance; (ii) all objections with respect to all rejected or

disallowed claims for Prospective Settlement Relief have been resolved to the satisfaction of the

claimant or by the Court, and all appeals therefrom have been resolved or the time therefor has

expired (or a reserve has been established, at SME's sole discretion, for such claims in dispute);

(iii) the Determination Order (as defined in paragraph 19(i) below) has been entered, and (iv) all

matters with respect to attorneys' fees, costs, and disbursements have been resolved by the

Court, and all appeals therefrom have been resolved or the time therefor has expired.

ADMINISTRATION OF THE SETTLEMENT

18. Any Class Member who is not determined to be an Authorized Past Claimant or

an Authorized Future Claimant will not be entitled to receive any of the proceeds from the

Settlement but will otherwise be bound by all of the terms of this Stipulation and the Settlement,

including the terms of the Judgment to be entered in the Action and the releases provided for

herein, and will be barred from bringing any action against the Released Parties concerning the

Released Plaintiff Claims.

21


19. SME shall process the Claim Forms and determine the extent, if any, to which a

Class Member is an Authorized Past Claimant or an Authorized Future Claimant, according to

the following conditions:

(a) Each Class Member shall be required to submit a completed Claim Form,

supported by such documents as are designated therein. As to each Class Contract, Claim

Forms shall be valid only if submitted on behalf of all Class Members who are parties to such

Class Contract.

(b) All Claim Forms must be submitted by the applicable dates specified in

paragraph 11 above for Past Settlement Relief and Prospective Settlement Relief, respectively.

Unless, by order of the Court, a later-submitted Claim Form by such Class Member is approved,

any Class Member who fails to submit a Claim Form by such dates shall be forever barred from

receiving any payment or credit pursuant to this Stipulation, but shall in all other respects be

bound by all of the terms of this Stipulation and the Settlement, including the terms of the

Judgment to be entered in the Action and the releases provided for herein, and will be barred

from bringing any action against the Released Parties concerning the Released Plaintiff Claims.

A Claim Form shall be deemed to have been submitted when posted, if received with a

postmark indicated on the envelope and if mailed by first-class mail and addressed in

accordance with the instructions thereon. In all other cases, the Claim Form shall be deemed to

have been submitted when actually received by SME.

(c) Each Claim Form shall be submitted to and reviewed by SME, which

shall determine in accordance with this Stipulation and the Plan of Allocation contained herein

and, based upon SME's records, the extent, if any, to which the person on whose behalf it was

submitted is an Authorized Past Claimant or an Authorized Future Claimant, subject to review

22


by the Court pursuant to subparagraph (e) below. Claim Forms that do not meet the submission

requirements may be rejected. Any Claim Form indicating on its face that the person on whose

behalf the Claim Form was submitted does not meet the definition of a Class Member shall be

invalid, and such person shall not be an Authorized Past Claimant or an Authorized Future

Claimant. Notwithstanding the foregoing, a determination by SME that a claimant is not an

Authorized Past Claimant or an Authorized Future Claimant is subject to review as described in

subparagraph (e) below. Before SME makes a final determination to reject any Claim Form,

Class Counsel may request from SME a copy of any Claim Form that is proposed to be rejected

and any correspondence related thereto. Class Counsel shall be entitled to advise SME of its

position(s) with regard to the proposed rejection of such Claim Form(s).

(d) SME shall notify, in a timely fashion and in writing, each claimant whose

Claim Form it proposes to reject in whole or in part, with a copy to Class Counsel, setting forth

the reasons therefor, and shall expressly state in such notice that the claimant whom SME has

determined is not an Authorized Past Claimant or an Authorized Future Claimant has the right

to a review by the Court if the claimant so desires and complies with the requirements of

subparagraph (e) below.

(e) If any claimant that SME has determined is not an Authorized Past

Claimant or an Authorized Future Claimant desires to contest such determination, the claimant

must, within twenty (20) days after the date of mailing of the notice required in subparagraph

(d) above, serve upon SME a notice and statement of reasons indicating the claimant's grounds

for contesting the determination along with any supporting documentation, and requesting a

review thereof. SME shall perform the requested review and will inform the claimant whether

it has determined that the claimant is or is not an Authorized Past Claimant or an Authorized

23


Future Claimant, as applicable. If the grounds stated by the claimant indicate, and the requested

review confirms, that the claimant is a party to a contract dated before January 1, 1976 that

otherwise meets the definition of a Class Contract, SME shall treat such contract as a Class

Contract. If a dispute concerning a determination that a claimant is not an Authorized Past

Claimant or an Authorized Future Claimant cannot otherwise be resolved, the claimant may

thereafter file an objection to the proposed Class Distribution Order or Determination Order, as

applicable, on notice to SME and Class Counsel. Claimants who are Class Members and are

involved in such a dispute which is not resolved in their favor shall (i) be forever barred from

receiving any payments for Past or Prospective Settlement Relief pursuant to this Stipulation set

forth herein, but shall in all respects be subject to and bound by this Stipulation, including the

releases provided for in this Stipulation, the Claim Form, and the Judgment; (ii) be conclusively

deemed to have fully, finally and forever released, relinquished, and discharged all Released

Plaintiff Claims; (iii) be conclusively deemed to have, and by operation of the Judgment shall

have, fully, finally, and forever released, relinquished, and discharged the Released Parties and

Class Counsel from all claims, including without limitation, Released Plaintiff Claims or claims

arising out of or in connection with the institution, prosecution, or assertion of the Action or the

Released Plaintiff Claims; (iv) be conclusively deemed to have covenanted not to sue any

Released Party and Class Counsel in any action or proceeding of any nature with respect to the

Released Plaintiff Claims; and (v) forever be enjoined and barred from asserting the Released

Plaintiff Claims against any Released Party and Class Counsel in any action or proceeding of

any nature, whether or not such claimants have filed an objection to the Settlement, Class

Distribution Order, Determination Order, or any application by Class Counsel for an award of

attorneys' fees, expenses and costs, whether or not the claims of such claimants have been

24


approved or allowed, or such objection has been overruled by the Court. Claimants who are

rejected because they do meet the definition of a Class Member and are involved in such a

dispute which is not resolved in their favor shall be forever barred from receiving any payments

for Past or Prospective Settlement Relief pursuant to this Stipulation set forth herein, but are in

no other respects subject to or bound by this Stipulation because they are not Class Members

and therefore are not subject to or bound by this Stipulation.

(f) Within one hundred eighty (180) days after the deadline to submit Claim

Forms in connection with the Past Settlement Relief, SME shall provide to Class Counsel a

proposed accounting, subject to audit by Class Counsel, of payments and credits to Authorized

Past Claimants for the Past Settlement Relief. SME shall also provide the identities of

claimants it determined were not Authorized Past Claimantsas well as the reasons for each

such determination. SME shall retain the originals of all Claim Forms (including any envelopes

with the postmarks) received from claimants, and shall make copies or originals available to

Class Counsel within ten (10) business days upon request.

(g) No sooner than sixty (60) days after SME provides Class Counsel with

the information referred to in subparagraph (f) above, unless Class Counsel consents to an

earlier date after reviewing the information provided, SME will apply to the Court, on notice to

Class Counsel, for an order (the "Class Distribution Order") approving SME's administrative

determination of the Authorized Past Claimants hereunder. SME shall not be liable for any

costs incurred by any other party in connection with the Class Distribution Order or any other

challenge to SME's administrative determinations hereunder, and no penalty shall be assessed

against SME in the event that the Court modifies any administrative determination made by

SME, whether for Past Settlement Relief or Prospective Settlement Relief.

25


(h) Within one hundred eighty (180) days after the deadline to submit Claim

Forms in connection with the Prospective Settlement Relief set forth in paragraph 11(b), SME

shall provide a spreadsheet to Class Counsel that contains sufficient information for the Parties

to determine the identities of the Authorized Future Claimants. SME shall also provide like

information regarding claimants it determined were not Authorized Future Claimants, as well as

the reasons for each such determination. SME shall retain the originals of all Claim Forms

(including any envelopes with the postmarks) received from claimants, and shall make copies or

originals available to Class Counsel within ten (10) business days upon request.

(i) No sooner than sixty (60) days after SME provides Class Counsel with

the information referred to in subparagraph (h) above, unless Class Counsel consents to an

earlier date after reviewing the information provided, SME will apply to the Court, on notice to

Class Counsel, for an order (the "Determination Order") approving SME's administrative

determination of the Authorized Future Claimants hereunder. SME shall not be liable for any

costs incurred by any other party in connection with the Determination Order or any other

challenge to SME's administrative determinations hereunder, and no penalty shall be assessed

against SME in the event that the Court modifies any administrative determination made by

SME.

20. Each claimant shall be deemed to have submitted to the jurisdiction of the Court

with respect to the claimant's claim, and the claim will be subject to investigation and discovery

ordered by the Court. No discovery shall be allowed on the merits of the Action or Settlement in

connection with processing of the Claim Forms.

21. All proceedings with respect to the administration, processing and determination

of claims described by paragraph 19 of this Stipulation and the determination of all controversies

26


relating thereto, including disputed questions of law and fact with respect to the validity of

claims, shall be subject to the jurisdiction of the Court.

TERMS OF ORDER FOR NOTICE AND HEARING

22. Concurrently with their filing of this Stipulation, Class Counsel shall apply to the

Court for preliminary Court approval of the Settlement and entry of the Notice Order,

substantially in the form attached hereto as Exhibit A.

TERMS OF ORDER AND FINAL JUDGMENT

23. If the Court approves the Settlement contemplated by this Stipulation, counsel for

the parties shall request that the Court enter the Judgment, substantially in the form attached

hereto as Exhibit B.

OPT-OUT TERMINATION RIGHT

24. Defendant may terminate the Settlement if, after receiving all of the Requests for

Exclusion, it determines that either the number of, or the total wholesale value of permanent

digital downloads and ringtones represented by, recording artists and producers who would

otherwise be members of the Settlement Class, but who have timely and validly submitted

Requests for Exclusion, equals or exceeds a number set forth in a separate "Supplemental

Agreement" signed by the parties (the "Opt-Out Threshold"). Requests for Exclusion from

recording artists and producers who would not otherwise meet the Settlement Class definition do

not count toward the Opt-Out Threshold. The parties intend that the Supplemental Agreement

shall be specifically disclosed to the Court and offered for in camera inspection by the Court at

or prior to entry of the Notice Order, but, subject to the Court's approval, it shall not be filed

with the Court before the deadline for submitting Requests for Exclusion unless a dispute arises

as to its terms or the parties are ordered otherwise by the Court. The parties shall seek to keep

27


the Opt-Out Threshold confidential before the deadline for submitting Requests for Exclusion.

In the event that the Court directs that the Supplemental Agreement be filed prior to the deadline

for submitting Requests for Exclusion, no party shall have any right to any relief by reason of

such disclosure. In the event of a termination of this Settlement pursuant to the Supplemental

Agreement, this Stipulation shall become null and void and of no further force and effect and the

provisions of paragraph 6 shall apply.

EFFECTIVE DATE OF SETTLEMENT, WAIVER AND TERMINATION

25. The Effective Date of Settlement shall be the date when all the following shall

have occurred:

(a) entry of the Notice Order in all material respects in the form appended

hereto as Exhibit A;

(b) approval by the Court of the Settlement, following notice to the

Settlement Class and a hearing; and

(c) entry by the Court of the Judgment, in all material respects in the form

appended hereto as Exhibit B, and the expiration of any time for appeal or review of the

Judgment, or, if any appeal is filed and not dismissed, after the Judgment is upheld on appeal in

all material respects and is no longer subject to review upon appeal or by writ of certiorari, or,

in the event that the Court enters an order and final judgment in a form other than that provided

above ("Alternative Judgment") and none of the parties hereto elects to terminate this

Settlement, the date that such Alternative Judgment becomes final and no longer subject to

appeal.

26. In addition to Defendant's rights under paragraph 24, Defendant or Plaintiff shall

have the right to terminate the Settlement and this Stipulation by providing written notice of their

28


election to do so ("Termination Notice") to counsel for the other party hereto within thirty days

of (a) the Court's declining to enter the Notice Order or modifying the Notice Order in any

material respect not sought or consented to by both Defendant and Class Counsel; (b) the Court's

declining to approve the Settlement embodied in this Stipulation, or any material part of it; (c)

the Court's declining to enter the Judgment or modification of the Judgment in any material

respect; (d) the date upon which the Judgment is modified, reversed, or vacated in any material

respect by the Court of Appeals or the Supreme Court; (e) the date upon which the Court enters

an Alternative Judgment; or (f) the date upon which an Alternative Judgment is modified,

reversed, or vacated in any material respect by the Court of Appeals or the Supreme Court.

27. If Defendant fails to provide the amounts to be paid or credited to Authorized Past

Claimants pursuant to paragraph 16(a) or in the event of the entry of a final order of a court of

competent jurisdiction, in connection with a case commenced under the United States

Bankruptcy Code, determining that such payments or credits by SME are a preference, voidable

transfer, fraudulent transfer or similar transaction and are required to be returned, then, unless

such non-performance is cured within ten (10) business days of written demand from Class

Counsel, Class Counsel shall have the option to move the Court for appropriate relief including,

by way of example and not limitation, specific performance, or to terminate the Settlement by

providing a Termination Notice to Defendant's Counsel within thirty days of any failure of

Defendant to provide the bargained-for consideration set forth in paragraph 16(a).

28. Except as otherwise provided herein, in the event the Settlement is terminated or

the Effective Date fails to occur, then the Settlement shall be without prejudice and none of its

terms shall be effective or enforceable; the parties to this Stipulation shall be deemed to have

reverted to their respective status in the Action as of August 11, 2011; except as otherwise

29


expressly provided, the parties shall proceed in all respects as if this Stipulation and any related

orders had not been entered; and any attorneys' fees and reimbursement of expenses paid by

SME to Class Counsel shall be returned to SME. In the event the Settlement is terminated or

modified in any material respect, Defendant shall be deemed to have retained all rights to object

to the maintenance of the Action as a class action pursuant to Rule 23 of the Federal Rules of

Civil Procedure and shall further be deemed not to have waived, modified, or be estopped from

asserting any additional defenses available to it.

NO ADMISSION OF WRONGDOING

29. SME denies any liability or wrongdoing of any kind associated with the claims

alleged and contends that this Action is not appropriate for class or collection action treatment

pursuant to Rule 23 of the Federal Rules of Civil Procedure or any other federal or state rule,

statute, law, or provision. SME continues to assert that the Action fails to meet the prerequisites

necessary for class or collective action treatment under applicable law, especially, but not solely,

with respect to predominance and manageability because the need to determine individualized

issues make the Action unmanageable consistent with due process. SME further denies that the

Action states a cause of action; that the practice as to which Plaintiff seeks relief violates any law

or is wrongful in any way whatsoever; that SME has breached any contract with Plaintiff or any

member of the Class; and that either Plaintiff or any member of the Class is entitled to any relief

whatsoever. SME further agrees that notwithstanding its good faith belief that it is not liable for

any of the claims asserted, and despite its good faith belief that certification is not appropriate,

SME will not oppose the District Court's certification of the Settlement Class contemplated by

this Agreement solely for purposes of effectuating this Settlement. Other than for purposes of

30


this Settlement, SME does not waive its objections to certification of the Settlement Class, or any

other class, in this Action as a litigation class.

30. Neither this Stipulation, including all exhibits, orders or other documents referred

to herein, nor any terms or provisions of the Stipulation or any of the negotiations or proceedings

related to this Stipulation, whether or not consummated, shall be:

(a) offered or received against Defendant or any other Released Party as

evidence of, or construed as or deemed to be evidence of, any presumption, concession, or

admission by Defendant or any Released Party of the truth of any fact alleged by Plaintiff or the

validity of any claim that has been or could have been asserted in the Action or in any litigation,

or the deficiency of any defense that has been or could have been asserted in the Action or in

any litigation, or of any liability, negligence, fault, or wrongdoing of Defendant or any Released

Party;

(b) offered or received against Defendant or any Released Party as evidence

of a presumption, concession, or admission of any fault, misrepresentation, or omission with

respect to any statement or written document approved or made by Defendant or any Released

Party, or against Plaintiff and the Settlement Class as evidence of any infirmity in their claims;

(c) offered or received against Defendant or any Released Party as evidence

of a presumption, concession, or admission of any liabilitynegligence, fault or wrongdoing, or

in any way referred to for any other reason as against any of the parties to this Stipulation, in

any other civil, criminal, or administrative action or proceeding, other than such proceedings as

may be necessary to effectuate the provisions of this Stipulation; provided, however, that if this

Stipulation is approved by the Court, Defendant or any Released Party may refer to it to

effectuate the liability protection granted hereunder;

31


(d) construed against Defendant or any Released Party or Plaintiff and the

Settlement Class as an admission or concession that the consideration to be given hereunder

represents the amount that could be or would have been recovered after trial; or

(e) construed as or received in evidence as an admission, concession or

presumption against Plaintiff or any of the Class Members that any of their claims are without

merit, or that any defenses asserted by Defendant has any merit, or that damages recoverable

under the complaints and amended complaints filed in the Action would not have exceeded the

Past Settlement Relief and Prospective Settlement Relief.

MISCELLANEOUS PROVISIONS

31. All of the exhibits attached hereto are hereby incorporated by reference as though

fully set forth herein.

32. The parties to this Stipulation intend the Settlement to be a final and complete

resolution of all disputes asserted or that could be or could have been asserted by the Plaintiff,

the Settlement Class, and/or any of the Class Members against the Released Parties with respect

to the Released Plaintiff Claims. Accordingly, Defendant agrees not to assert that the litigation

was brought in bad faith or without a reasonable basis. The parties hereto shall assert no claims

of any violation of Rule 11 of the Federal Rules of Civil Procedure relating to the prosecution,

defense, or settlement of the Action. The parties agree that the amount paid and the other terms

of the Settlement were negotiated at arm's length in good faith by the parties, and relfect a

settlement that was reached voluntarily by the patries after consultation with their respective

experienced legal counsel.

33. This Stipulation may not be modified or amended, nor may any of its provisions

be waived except by a writing signed by all parties hereto or their successors-in-interest.

32


34. The headings herein are used for the purpose of convenience only and are not

meant to have legal effect.

35. The administration and consummation of the Settlement as embodied in this

Stipulation shall be under the authority of the Court, and the Court shall retain jurisdiction for the

purpose of entering orders providing for award of attorneys' fees and expenses to Class Counsel,

authorizing distribution to Authorized Past and Future Claimants, and enforcing the terms of this

Stipulation.

36. If the Settlement is approved by the Court, after the Settlement Hearing on notice,

Plaintiff shall move the Court for entry of the Judgment.

37. All counsel and any other person executing this Stipulation and any of the

exhibits hereto, or any related settlement documents, warrant and represent that they have the full

authority to do so and that they have the authority to take appropriate action required or

permitted to be taken pursuant to the Stipulation to effectuate its terms.

38. This Stipulation shall be binding upon, and inure to the benefit of, the successors

and assigns of the parties hereto.

39. The construction, interpretation, operation, effect and validity of this Stipulation,

and all documents necessary to effectuate it, shall be governed by the internal laws of the state of

New York without regard to conlficts of laws, except to the extent that preemption by federal

law requires that federal law govern.

40. This Stipulation shall not be construed more strictly against one party than

another merely by virtue of the fact that it, or any part of it, may have been prepared by counsel

for one of the parties, it being recognized by the parties that this Stipulation is the result of arm's

33


length negotiations between the parties and that all parties have contributed substantially and

materially to the preparation of this Stipulation.

41. The waiver by one party of any breach of this Stipulation by any other party shall

not be deemed a waiver of any other prior or subsequent breach of this Stipulation. The waiver

by one party of any breach of this Stipulation by any other party shall not be deemed a waiver of

any other prior or subsequent breach of this Stipulation.

42. This Stipulation and its exhibits and the Supplemental Agreement constitute the

entire agreement among the parties hereto concerning the Settlement of the Action, and no

representations, warranties, or inducements have been made by any party hereto other than those

contained and memorialized in such documents.

43. This Stipulation may be executed in one or more counterparts. All executed

counterparts and each of them shall be deemed to be one and the same instrument.

44. No opinion or advice concerning the tax consequences of the proposed Settlement

to individual Class Members is being given or will be given by Class Counsel or Defendant's

Counsel; nor is any representation or warranty in this regard made by virtue of this Stipulation.

Each Class Member's tax obligations, and the determination thereof, are the sole responsibility

of the Class Member, and it is understood that the tax consequences may vary depending on the

particular circumstances of each individual Class Member. Notwithstanding the foregoing,

Defendant may report its payments pursuant to this Settlement in accordance with its ordinary

practices with respect to payments made to its artists.

34


45. The Parties hereto: (a) acknowledge that it is their intent to consummate this

Stipulation; and (b) agree to cooperate to the extent necessary to effectuate and implement all

terms and conditions of this Stipulation and to exercise their best efforts and to act in good faith

to accomplish the foregoing terms and conditions of the Stipulation.

DATED: fvlArekt 2012

CAPLAN & ROSS, LLP

By: /^7 Brian D. Caplan beaplan@cap rco- oss. Jonathan J. R [email protected]

270 Madison Avenue, 13th Floor New York, New York 10016 Telephone: (212) 973-2376 Facsimile: (212) 661-4290

Counsel for Plaintiff

MILBERG LLP

By: Sanford P. Dumain [email protected] Benjamin Y. Kaufman [email protected] Gary S. Snitow [email protected]

One Penn Plaza New York, New York 10119-0165 Telephone: (212) 594-5300 Facsimile: (212) 868-1229


35


45. The Parties hereto: (a) acknowledge that it is their intent to consummate this

Stipulation; and (b) agree to cooperate to the extent necessary to effectuate and implement all

terms and conditions of this Stipulation and to exercise their best efforts and to act in good faith

to accomplish the foregoing terms and conditions of the Stipulation.

DATED: , 2012

CAPLAN & ROSS, LLP

By: Brian D. Caplan [email protected] Jonathan J. Ross jross @caplanross.com

270 Madison Avenue, 13 th Floor New York, New York 10016 Telephone: (212) 973-2376 Facsimile: (212) 661-4290


MILBERG LLP

r By: /"--) cA- /

P. Duniain dd [email protected]

Benjamin Y. Kaufman [email protected] Gary S. Snitow [email protected]

One Penn Plaza New York, New York 10119-0165 Telephone: (212) 594-5300 Facsimile: (212) 868-1229


35


PROBSTE ER & BUTLER 0

By: r ^'' ^- B. Weiner

[email protected] 9696 Culver Blvd., Suite 205 Culver City, California 90232 Telephone: (310) 836-1400 Facsimile: (310) 836-1420


COVINGTON & BURLING LLP

By: Jonathan M. Sperling [email protected]

The New York Times Building 620 Eighth Avenue New York, New York 10018-1405 Telephone: (212) 841-1000 Facsimile: (212) 841-1010

Counsel for Defendant

36


PROBSTEIN, WEINER & BUTLER

By: Gerald B. Weiner [email protected]

9696 Culver Blvd., Suite 205 Culver City, Califonria 90232 Telephone: (310) 836-1400 Facsimile: (310) 836-1420


COVINGTON ING LL

By: J an M. Sperling

[email protected] The New York Times Building 620 Eighth Avenue New York, New York 10018-1405 Telephone: (212) 841-1000 Facsimile: (212) 841-1010

Counsel for Defendant

36


EXHIBIT A




Plaintiff, ECF CASE

-against-


Defendant

PRELIMINARY ORDER FOR NOTICE AND HEARING IN CONNECTION WITH SETTLEMENT PROCEEDINGS

WHEREAS, on March 7, 2012, the parties to the above-entitled action (the "Action")

entered into a Stipulation and Agreement of Settlement (the "Stipulation") which is subject to

review under Rule 23 of the Federal Rules of Civil Procedure and which, together with the

exhibits thereto, sets forth the terms and conditions for the proposed settlement of the claims

alleged in the Third Amended Complaint with prejudice and without costs; and the Court having

read and considered the Stipulation and the accompanying documents; and the parties to the

Stipulation having consented to the entry of this Order; and all capitalized terms used herein

having the meanings defined in the Stipulation;

NOW, THEREFORE, IT IS HEREBY ORDERED, this day of ,

2012 that:

1. The Court hereby preliminarily approves the Stipulation and the Settlement set

forth therein, as being a fair, reasonable and adequate settlement as to all Class Members within


the meaning of Rule 23 of the Federal Rules of Civil Procedure, and as being the product of

informed, extensive, arm's length negotiation by counsel. The Court directs the Parties to

proceed with the Settlement pursuant to the terms and conditions of the Stipulation and exhibits

thereto, subject to further consideration at the Settlement Hearing described below.

2. Pursuant to Rules 23(a) and (b)(3) of the Federal Rules of Civil Procedure, and

for the purposes of the Settlement only, this Action is hereby conditionally certified as a class

action on behalf of all recording artists and producers who (a) are parties to a contract dated

between January 1, 1976 and December 31, 2001 (the "Class Period") that (i) was entered into

with CBS Records or Sony Music Entertainment, including their unincorporated divisions and

business units, their United States subsidiaries as of July 2004, and any predecessor in interest to

any of them; (ii) is currently held by Sony Music Entertainment, including its unincorporated

divisions and business units and United States subsidiaries; (iii) contains a clause providing that

SME will pay to such Class Member 50% of SME's net receipts in respect of any Master

Recording leased or licensed by SME to a third party (a "Net Receipts Provision"); (iv) does not

contain a clause capping the amount to be paid under the Net Receipts Provision, such as a

clause limiting payments under the Net Receipts Provision to the amount that would be paid

under another royalty provision contained in the contract; (v) does not contain an express rate for

digital exploitations other than a so-called "Audiophile" or "New Technology" provision; and

(vi) was not modified to include an express rate for digital exploitations or to make any change

to the Net Receipts Provision (a "Class Contract"); and (b) did not provide SME with a release of

claims relating to payment of royalties on downloads or ringtones covering the entire period

from January 1, 2004 through December 31, 2010. Excluded from the Class are the Defendant

and any person, trust, firm, corporation, or other entity afifliated with or related to the Defendant.

2


3. The Court finds, for the purposes of the Settlement onlythat the prerequisites for

a class action under Rules 23(a) and (b)(3) of the Federal Rules of Civil Procedure have been

satisfied in that: (a) the number of Class Members is so numerous that joinder of all members

thereof is impracticable; (b) there are questions of law and fact common to the Class; (c) the

claims of the named representative are typical of the claims of the Class he seeks to represent;

(d) the Plaintiff and Plaintiff s Counsel will fairly and adequately represent the interests of the

Class; (e) the questions of law and fact common to the members of the Class predominate over

any questions affecting only individual members of the Class; and (f) a class action is superior to

other available methods for the fair and efficient adjudication of the controversy.

4. Pursuant to Rule 23 of the Federal Rules of Civil Procedure, and for the purposes

of the Settlement only, Plaintiff Elmo Shropshire is certified as Class Representative and the law

ifrms of Caplan & Ross, LLP, Milberg LLP, and Probstein, Weiner & Butler are certified as

Class Counsel.

5. A hearing (the "Settlement Hearing") pursuant to Rule 23(e) of the Federal Rules

of Civil Procedure is hereby scheduled to be held before the Court on , 2012,

at .m. for the following purposes:

(a) to finally determine whether this Action satisfies the applicable

prerequisites for class action treatment under Rules 23(a) and (b) of the Federal Rules of Civil

Procedure;

(b) to determine whether the proposed Settlement is fair, reasonable, and

adequate, and should be approved by the Court;

3


(c) to determine whether the Order and Final Judgment as provided under the

Stipulation should be entered, dismissing the Third Amended Complaint filed herein, with

prejudice and without costs;

(d) to determine whether the proposed Plan of Allocation for the proceeds of

the Settlement is fair and reasonable, and should be approved by the Court;

(e) to consider Class Counsel's application for an award of attorneys' fees and

expenses and a service award for Plaintiff; and

(f) to rule upon such other matters as the Court may deem appropriate.

6. If the Court approves the Settlement, then following the Settlement Hearing, it

shall enter the Order and Final Judgment, substantially in the form annexed to the Stipulation as

Exhibit B, the terms of which are hereby incorporated by reference.

7. Neither certification of the Settlement Class for settlement purposes only, nor any

other act relating to the negotiation, execution or implementation of the Stipulation, shall be

considered as a factor in connection with any class certification issue(s) if the Stipulation

terminates or the Settlement is not finally approved.

8. The Settlement Hearing may be adjourned by the Court without notice to the

Class other than by an announcement of the adjounrment at the scheduled time of the Settlement

Hearing or at the scheduled time of any adjournment of the Settlement Hearing. The Court may

consider (with the consent of both Plaintiff and Defendant) modifications of the Settlement, the

Plan of Allocation, and/or Class Counsel's application for an award of attorneys' fees and

expenses and a service award for Plaintiff without further notice to the Class.

4


9. The Court reserves the right to enter its Order and Final Judgment approving the

Stipulation and dismissing the Third Amended Complaint with prejudice and without costs

regardless of whether it has awarded attorneys' fees and expenses or a service award to Plaintiff.

10. The Court approves the form, substance and requirements of the Notice of

Pendency of Class Actions, Proposed Settlements of Class Actions, Motions for Attorneys' Fees

and Expenses, and Settlement Hearings (the "Notice") and the Claim Form, annexed hereto as

Exhibits 1 and 2 respectively.

11. Provided that this Order has been entered on or before March 15, 2012, SME shall

cause the Notice and the Claim Form, substantially in the forms annexed hereto, to be mailed to

each royalty recipient on or before April 6, 2012 as provided in the Stipulation.

12. SME shall maintain a web site in connection with the Settlement, which will

prominently display links through which potential Class Members may submit a request for

copies of their contracts and may indicate whether they wish to be contacted by Class Counsel.

SME will provide to Class Counsel the names and contact information of persons who indicate

that they wish to be contacted by Class Counsel.

13. The Court approves the form of Publication Notice of the pendency of this class

action and the proposed settlement in substantially the form and content annexed hereto as

Exhibit 3 and directs that SME shall cause the Publication Notice to appear in Billboard

magazine, one-quarter page in size, within 30 days after the mailing of the Notice and Claim

Form.

5


14. Defendant's Counsel shall, at least 60 days before the Settlement Hearing, file

with the Court proof of mailing of the Notice and Claim Form, and proof of publication of the

Publication Notice.

15. This civil action was commenced after February 18, 2005. The Court directs

Defendant to notify the appropriate Federal and State ofifcials under the Class Action Fairness

Act of 2005, 28 U.S.C. § 1715. Defendant's Counsel shall, at or before the Settlement Hearing,

ifle with the Court proof of compliance with the Class Action Fairness Act of 2005, 28 U.S.C§

1715.

16. The form and content of the Notice, and the method set forth herein of notifying

the Class of the Settlement and its terms and conditions, meet the requirements of Rule 23 of the

Federal Rules of Civil Procedure, due process, and any other applicable law, constitute the best

notice practicable under the circumstances, and shall constitute due and sufficient notice to all

persons and entities entitled thereto.

17. Class Members shall be bound by all determinations and judgments in this

Action, whether favorable or unfavorable, unless such persons submit a Request for Exclusion

from the Class in a timely and proper manner, as hereinafter provided. A Class Member wishing

to make such request shall mail the request in written form by ifrst class mail postmarked no

later than , 2012 to SME, at the Post Office Box indicated in the Notice. Such

Request for Exclusion shall clearly indicate the name, address and telephone number of the artist

(individual or band), producer or company seeking exclusion, that the sender requests to be

excluded from the Class in Shropshire v. Sony Music Entertainment, 06 Civ. 3252 (GBD)

(KNF), and must be signed by such person. Such persons requesting exclusion are also asked

6


(but not required) to provide the date(s) of the Class Contract(s) or any of its amendments and

the royalty account number(s) from their royalty statement(s). The Request for Exclusion shall

not be effective unless it provides the required information and is made within the time stated

above, or the exclusion is otherwise accepted by the Court. As to each Class Contract, Requests

for Exclusion shall be valid only if submitted on behalf of all Class Members who are parties to

such Class Contract.

18. Class Counsel shall submit their papers in support of final approval of the

Settlement, the proposed Plan of Allocation, and their application for attorneys' fees and

expenses and a service award for Plaintiff by no later than , 2012.

19. Any Class Member may be heard and/or appear at the Settlement Hearing to show

cause why the proposed Settlement should not be approved as fair, reasonable and adequate and

why the Order and Final Judgment should not be entered thereon; why the proposed plan of

allocation should not be approved as fair, reasonable and adequate; or why Class Counsel should

not be awarded attorneys' fees and expenses in the amount sought by Class Counsel or the

Plaintiff should not be awarded a service award in the amount sought; provided, however, that no

Class Member shall be heard or be entitled to contest the approval of the terms and conditions of

the proposed Settlement, the Order and Final Judgment to be entered, the proposed plan of

allocation or Class Counsel's application for an award of attorneys' fees and expenses and a

service award for Plaintiff, unless on or before , 2012, the Class Member

has served by hand or by first-class mail written objections and copies of any supporting papers

and briefs (which must contain proof of Class membership) upon Jonathan M. Sperling,

Covington & Burling LLP, The New York Times Building, 620 Eighth Avenue, New York, New

York 10018-1405 on behalf of the Defendant and Brian Caplan, Caplan & RossLLP, 270

7


Madison Avenue, 13 ht Floor, New York, New York 10016 and Benjamin Y. Kaufman, Milberg

LLP, One Penn Plaza, New York, New York 10119-0165 on behalf of the Plaintiff and the

Class, and has filed the objections, papers and briefs showing due proof of service upon all

counsel identified above with the Clerk of the Court, United States District Court for Southern

District of New York, Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, New

York, NY 10007-1312. Attendance at the hearing is not necessary; however, persons wishing to

be heard orally in opposition to the approval of the Settlement, the Plan of Allocation, and/or the

request for attorneys' fees and expenses and a service award for Plaintiff are required to indicate

in their written objection their intention to appear at the hearing. Persons who intend to object to

the Settlement, the Plan of Allocation, and/or Class Counsel's application for an award of

attorneys' fees and expenses and a service award for Plaintiff and who desire to present evidence

at the Settlement Hearing must include in their written objections the identity of any witnesses

they may call to testify and exhibits they intend to introduce into evidence at the Settlement

Hearing. Class Members do not need to appear at the hearing or take any other action to indicate

their approval.

20. Class Counsel shall submit their papers in response to any objections by no later

than , 2012.

21. Any Class Member who does not object to the Settlement and/or the Plan of

Allocation and/or the adequacy of representation and/or Class Counsel's application for an award

of attorneys' fees and expenses and a service award for Plaintiff in the manner prescribed in the

Notice shall be deemed forever to have waived such objection and shall forever be barred from

making any objection to the fairness, adequacy or reasonableness of the proposed Settlement, the

Order and Final Judgment to be entered approving the Settlement, the Plan of Allocation, the

8


adequacy of representation or the application by Class Counsel for an award of attorneys' fees

and expenses and a service award for Plaintiff and from otherwise being heard concerning these

subjects in this or any other proceeding.

22. Pending final determination of whether the Settlement should be approved, the

Plaintiffs, all Class Members, and each of them, and anyone who acts or purports to act on their

behalf, shall not institute, or commence any action which asserts Released Plaintiff Claims

against any Released Party. Pending the Settlement Hearing, the Court stays all proceedings in

the Action, other than those proceedings necessary to carry out or enforce the terms and

conditions of the Stipulation.

23. This Order, the Settlement, and any of their terms, and all negotiations,

discussions and proceedings in connection with this Order and the Settlement, shall not

constitute evidence, or an admission by the Defendant or the other Released Parties, that any acts

of wrongdoing have or have not been committed and shall not be deemed to create any inference

that there is or is not any liability on the part of the Defendant or any other Released Parties.

This Order, the Settlement, and any of their terms, and all negotiations, discussions and

proceedings in connection with this Order and the Settlement, shall not be offered or received in

evidence or used for any other purpose in this or any other proceeding in any court,

administrative agency, arbitration tribunal, or other forum of any kind or character in the United

States or any other country except as necessary to enforce the terms of this Order and/or the

Settlement.

24. In the event the Settlement is terminated or the Effective Date fails to occur, then,

(i) the Stipulation, including any amendment(s) thereof, this Order conditionally certifying the

9


Class, the Class Representative and Class Counsel for purposes of the Settlement, and any

findings or stipulations regarding certification of the Class shall be null and void, of no further

force or effect, and without prejudice to any party, and may not be introduced as evidence or

referred to in any actions or proceedings by any person or entity; (ii) the parties shall be deemed

to have reverted to their respective status in the Action as of August 11, 2011; (iii) except as

otherwise expressly provided, the parties shall proceed in all respects as if the Stipulation and

any related orders had not been entered; and (iv) any attorneys' fees and reimbursements of

expenses paid by SME to Class Counsel shall be returned to SME

25. The Court retains exclusive jurisdiction over the Action to consider all further

matters arising out of or connected with the Settlement.

Dated: New York, New York , 2012

Honorable George B. Daniels UNITED STATES DISTRICT JUDGE

10


EXHIBIT A- 1


UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK

Notice of Pendency of Class Actions, Proposed Settlements of Class Actions, Motions for Attorneys' Fees and Expenses, and Settlement Hearings

To all persons entitled to royalty payments for permanent digital downloads and ringtones under contracts currently held by CBS Records or Sony Music Entertainment ("SME") or by Arista Music, formerly known as BMG Music ("Arista"):

This Notice summarizes Class Members' rights under the proposed settlements of two class action lawsuits as described below. You are eligible for payment if (1) you are a Class Member (See the section titled "Who is a Class Member?" below), (2) you do not exclude yourself, or "opt out" (See the section titled "Opt-Out of the Settlement Classes" below), and (3) you submit a valid Claim Form (See the section titled "Participate in the Settlements" below).

These actions challenged the calculation of royalty payments due to Class Members for sales of permanent digital downloads and ringtones of recordings under Class Contracts. The proposed settlements (1) make $7.95 million available to all Class Members in connection with sales in the U.S. of permanent digital downloads and ringtones through December 31, 2010 and (2) provide for an increase in the royalty rate for certain Class Members for such sales atfer January 1, 2011.

THIS NOTICE COULD AFFECT YOUR RIGHTS — PLEASE READ IT CAREFULLY

This Notice is provided to you by orders of the United States District Court, Southern District of New York. This summarizes the proposed settlements of two class-action lawsuits (Shropshire v. Sony Music Entertainment, 06 Civ. 3252 (GBD) (KNF) (the "SME Action") and Youngbloods v. BMG Music, 07 Civ. 2394 (GBD) (KNF) (the "BMG Action")) asserting breach of contract claims relating to the calculation by SME and Arista of royalty payments due to Class Members for sales of permanent digital downloads and ringtones under Class Contracts. SME and Arista deny all allegations of wrongdoing and have asserted many defenses. The settlements are not an admission of wrongdoing.

Who Is A Class Member?

You are a Class Member if you: (a) are a party to a "Class Contract" (as defined below) and (b) did not provide SME or Arista with a release of claims relating to payment of royalties on downloads or ringtones covering the entire period from January 1, 2004 through December 31, 2010.

"Class Contract" means a contract dated between January 1, 1976 and December 31, 2001 (the "Class Period"), that (i) was entered into with CBS Records or SME or with BMG Music (now known as Arista), including their unincorporated divisions and business units, their United States subsidiaries as of July 2004, and any predecessor in interest to


any of them; (ii) is currently held by SME or Arista, including their unincorporated divisions and business units and United States subsidiaries; (iii) contains a clause providing that SME or Arista will pay to such Class Member 50% of SME's or Arista's net receipts in respect of any Master Recording leased or licensed by SME or Arista to a third party (a "Net Receipts Provision"); (iv) does not contain a clause capping the amount to be paid under the Net Receipts Provision, such as a clause limiting payments under the Net Receipts Provision to the amount that would be paid under another royalty provision contained in the contract; (v) does not contain an express rate for digital exploitations other than a so-called "Audiophile" or "New Technology" provision; and (vi) was not modified to include an express rate for digital exploitations or to make any change to the Net Receipts Provision.

For the Class in the SME Action, the Class Labels are those that were affiliated with or subsidiaries of CBS Records or Sony Music Entertainment as of July 2004, including but not limited to Columbia Records and Epic RecordsFor the Class in the BMG Action, the Class Labels are those that were affiliated with or subsidiaries of BMG Music as of July 2004, including but not limited to Arista Records, Jive Records, and RCA Records.

Only contracts with these Class Labels dated between January 1, 1976 and December 31, 2001 are covered by these settlements. If you have a contract dated before January 1, 1976 that otherwise meets the definition of a Class Contract it may be treated as a Class Contract.

Each person to whom this Notice is being sent should review his or her contract(s) and any amendments to determine whether he, she or it is a Class Member. If you do not have your contract or any of its amendments, you may contact SME or Arista to request a copy. Visit the settlement website at [www. .com] for links to request for copies of your contract(s) and to indicate whether you wish to be contacted by Class Counsel.

What Are The Terms Of The Proposed Settlements?

This Notice is only a summary of the proposed settlements. The complete terms of each proposed settlement are set forth in two formal Stipulations and Agreements of Settlement (together, the "Stipulations") which are on file with the Court for each case and are also available by visiting the settlement website at [www. .com] or through Class Counsel.

The Court did not decide in favor of Plaintiffs or Defendants. Instead, both sides, with the assistance of a mediator, agreed to these settlementsSettlement avoids the costs of a trial, and assures that settlement benefits go to Class Members. The Class Representatives and their attorneys think these settlements are in the best interests of the Classes.

The settlements are summarized below.

The Settlement Funds for Sales Through December 31, 2010 (Past Settlement Relief)

2


$7.65 million, less Plaintiffs' attorneys' fees and expenses as may be approved by the Court, is available for Class Members (1) who are parties to a Class Contract under which at least 28,500 total downloads of recordings were sold in the United States on Apple's iTunes Store from inception through December 31, 2010 and (2) who submit a valid Claim Form. These funds would be paid or credited, as applicable, pro rata to the royalty accounts of qualifying Class Members

$300,000 cash, without any deduction of fees or expenses, is being made available to all Class Members, regardless of their royalty account balance, (1) who are parties to a Class Contract under which fewer than 28,500 total downloads of recordings were sold in the United States on Apple's iTunes Store from inception through December 31, 2010 and (2) who submit a valid Claim Form. The cash would be paid equally per capita among qualifying Class Members.

The proposed settlements allocate the $7.65 million and $300,000 Past Settlement Relief amounts between the SME Action and the BMG Action based on the relative proportion of sales by SME artists to sales by Arista artists in the US. on Apple's iTunes Store through December 31, 2010.

Based on this sales data, 54.86% is attributed to the settlement with SME ($4,196,790 of the $7.65 million fund and $164,580 of the $300,000 fund) and 45.14% is attributed to the settlement with Arista ($3,453,210 of the $7.65 million fund and $135,420 of the $300,000 fund).

Additional Royalty for Sales atfer December 31, 2010 (Prospective Settlement Relief)

SME and Arista have agreed to modify the Class Contracts of Class Members who submit a valid Claim Form and who qualify for Prospective Settlement Relief to provide that SME and Arista will calculate royalties on Sales' in the United States of permanent digital downloads and ringtones of recordings attributable to Class Contracts under the royalty provisions that it currently applies to such Sales, and shall add an additional royalty equal to 3% of the gross amount paid or credited to SME or Arista with respect to each such U.S permanent digital download or ringtone, with no deductions of any kind and no reserves held (the "Additional Royalty").

The Additional Royalty is available to Class Members who are party to a Class Contract under which:

For purposes of these settlements, "Sales" means any distribution in the United States of permanent digital downloads or ringtones, whether by sale, license, or otherwise, excluding, for the avoidance of doubt, uses of sound recordings attributable to Class Contracts in motion pictures, television, advertising, or other uses for which SME or Arista currently accounts under such Class Contracts' Net Receipts Provisions.

1

3


(i) at least 28,500 total downloads of recordings were sold in the United States on Apple's iTunes Store from inception through December 31, 2010 (such Additional Royalty to be applied to all Sales after January 1, 2011); or

(ii) fewer than 28,500 total downloads of recordings were sold in the United States on Apple's iTunes Store from inception through December 31, 2010, but who (x) have at least $18,000 of royalty earnings attributable to Sales in the United States of any such recordings on Apple's iTunes Store within any two consecutive royalty accounting periods atfer January 1, 2011; and (y) thereafter notify SME or Arista in writing of their right to such Additional Royalty within the period in which such Class Member, under the terms of the applicable Class Contract, may object to royalty accountings for the later of such two consecutive royalty accounting periods (provided that SME and Arista shall owe such Additional Royalty only commencing with the royalty period following such assertion of right).

Class Counsel Fee and Expense Requests

In the SME Action, the Court preliminarily ordered that the law firms of Caplan & Ross, LLP and Milberg LLP in New York, NY and Probstein, Weiner & Butler in Culver City, CA will represent the Class.

In the BMG Action, the Court preliminarily ordered that the law firms of Caplan & Ross, LLP and Milberg LLP in New York, NY and Law Offices of Thomas A. Cohen in Mill Valley, CA will represent the Class.

These lawyers are called Class Counsel. You will not be separately charged for these lawyers. If you want to be represented by your own lawyer, you may hire one at your own expense.

Class Counsel are moving the Court to award them attorneys' fees and expenses in the amounts of $1,453,790 in the SME Action and $1,196,210 in the BMG Action.

The Court will determine what amount of attorneys' fees and expenses shall be payable to Class Counsel. The amounts awarded by the Court will be payable solely from the Past Settlement Relief available to Class Members who are parties to Class Contracts under which at least 28,500 total downloads of recordings were sold in the United States on Apple's iTunes Store as of December 31, 2010. The fees and expenses will not be sought from the Past Settlement Relief available to Class Members who are parties to Class Contracts under which fewer than 28,500 total downloads of recordings were sold in the United States on Apple's iTunes Store as of December 31, 2010.

4


Class Counsel are also moving the Court to award $15,000 to Elmo Shropshire and $15,000 to The Youngbloods for their services as Class Representatives.

The amounts awarded by the Court to the Class Representatives will be paid by SME and Arista in cash and will not be deducted from any of the available Past Settlement Relief.

The Court will determine the appropriate amount of these awards. The settlements are not conditioned upon approval of any of the attorneys' fees and expenses or Class Representative award amounts.

Class Counsel will file their papers in support of ifnal approval of the Settlements and their application for attorneys' fees and reimbursement of expenses, and for payments to the Class Representatives, by no later than , 2012. These papers will also be posted on the settlement website ([www. .com]).

Payments to Settlement Class Members

If the settlements are approved by the Court, then:

Class Members who (1) are parties to a Class Contract under which at least 28,500 total downloads of recordings were sold in the United States on Apple's iTunes Store from inception through December 31, 2010 and (2) submit a valid Claim Form, will receive their pro rata share of the Past Settlement Relief. 2 They will also receive the Additional Royalty for Sales atfer December 31, 2010.

Class Members who (1) are parties to a Class Contract under whichfewer than 28,500 total downloads of recordings were sold in the United States on Apple's iTunes Store from inception through December 31, 2010 and (2) submit a valid Claim Form will receive aper capita share of the Past Settlement Relief. 3 They are not eligible to receive the Additional Royalty unless they (x) have an aggregate total of at least $18,000 of royalty earnings attributable to sales in the United States of any such recordings on Apple's iTunes Store within any two

2 The pro rata share will be a fraction, the numerator of which is the total revenue from permanent digital downloads of recordings attributable to the claimant's Class Contract(s) with respect to Sales in the U.S. through Apple's iTunes Store through December 31, 2010, less any such revenue attributable to any period before December 31, 2010 for which the claimant has provided SME or Arista with a release, and the denominator of which is the total revenue from permanent digital downloads of recordings attributable to all such claimants' Class Contracts from Sales in the U.S. on Apple's iTunes Store through December 31, 2010, less any such revenue attributable to any period before December 31, 2010 for which any such claimant has provided SME or Arista with a release.

3 The per capita share be a fraction, the numerator of which is one (1), and the denominator of which is the total number of Class Members who submit a valid Claim Form and who had fewer than 28,500 total downloads of recordings attributable to Class Contracts and sold in the United States by SME or BMG (n/k/a Arista) on Apple's iTunes Store from inception through December 31, 2010.

5


consecutive royalty accounting periods after January 1, 2011 and (y) thereafter notify SME or Arista in writing of their right to such Additional Royalty in the period within which such Class Member, under the terms of the applicable Class Contract, may object to royalty accountings for the later of such two consecutive royalty accounting periods. SME and Arista will owe such Additional Royalty starting with the next royalty period following the assertion of right.

PLEASE NOTE THAT Class Members must submit a valid Claim Form to receive any benefits under the settlements. If you are a Class Member and do not submit a valid Claim Form, you will not receive any benefits under the settlements, but you nevertheless will be bound to the terms of the settlement(s) by the judgment of the Court.

What Happens Next?

The Court will hold Settlement Hearings on day, , 2012, at .m. at the United States District Court, Southern District of New York, 500 Pearl Street,

Courtroom 21D, New York, NY 10007-1312, to hear any objections and to consider whether to give final approval to the settlements. The Coutr will hear objections at the hearings from those who timely object to the settlements (see below). You may patricipate in a Settlement Hearing with or without an attorney, but if you choose to be represented by an attorney you must do so at your own expense. YOU DO NOT HAVE TO APPEAR AT A HEARING TO RECEIVE THE BENEFITS OF A SETTLEMENT. YOU DO HAVE TO SUBMIT A CLAIM FORM TO RECEIVE THE BENEFITS OF A SETTLEMENT.

What Are Your Options?

Participate in the Settlements. If you are a Class Member and wish to receive payment of the Past Settlement Relief, you must mail a completed Claim Form postmarked on or before the later of , 2012 or 45 days from your receipt of contracts from SME or Arista pursuant to a timely request for copies of such contracts as provided for in the Claim Form. A Claim Form is enclosed with this Notice. A Claim Form is also available at the settlement website at [www. .com]. This is the only deadline for Past Settlement Relief.

As to each Class Contract, Claim Forms shall be valid only if submitted on behalf of all Class Members who are parties to such Class Contract.

Class Members who submit valid Claim Forms for the Past Settlement Relief and who are parties to a Class Contract under which at least 28,500 total downloads of recordings were sold in the United States on Apple's iTunes Store from inception through December 31, 2010 will automatically receive any Prospective Settlement Relief to which they are entitled.

Class Members who submit valid Claim Forms for the Past Settlement Relief and who are parties to a Class Contract under which fewer than 28,500 total

6


downloads of recordings were sold in the United States on Apple's iTunes Store from inception through December 31, 2010 will not automatically be considered for any Prospective Settlement Relief to which they may become entitled based on their post-December 31, 2010 royalty earnings. If their post-December 31, 2010 royalty earnings would meet the threshold to qualify them to receive the Additional Royalty increase, they will need to assert their right to such Additional Royalty as described above.

Class Members who are parties to a Class Contract under which at least 28,500 total downloads of recordings were sold in the United States on Apple's iTunes Store from inception through December 31, 2010 who fail to submit a timely Claim Form to receive Past Settlement Relief may still submit a Claim Form by

, 2014 to receive Prospective Settlement Relief. The Prospective Settlement Relief for such eligible Class Members will only apply beginning with the royalty accounting period following submission of the Claim Form, so missing the deadline for Past Settlement Relief means missing the 3% Additional Royalty for the upcoming royalty accounting period.

If you are a Class Member and do not submit a valid Claim Form, then you will not share in any of the Past Settlement Relief or Prospective Settlement Relief but you nevertheless will be bound to the terms of the settlement(s) by the judgment of the Court.

Opt Out of the Settlement Classes. You and the other parties to your Class Contract(s), if any, may exclude yourselves from the settlements. If you choose to exclude yourself,

" please provide a written statement that includes: (1) your full name; (2) or "opt out, your address; (3) your telephone number; (4) the name of the artist (individual or band), producer or company seeking exclusion (if any different from your name); (5) the date(s) of the Class Contract(s) or any of its amendments and the royalty account number(s) from your royalty statement(s); (6) a sentence certifying that you are a Class Member; and (7) a statement that you "request to be excluded from the class settlements in the SME Action and the BMG Action." You must personally sign your written "opt-out" statement and mail it postmarked by , 2012 to the following address:

SME and Arista Music Class Settlements EXCLUSIONS P.O. Box City, ST ZIP

As to each Class Contract, Requests for Exclusion shall be valid only if submitted on behalf of all Class Members who are parties to such Class Contract.

If you meet the deifnition of a Class Member and you do not opt out, you will be bound to the terms of the settlement(s) by the judgment of the Court.

7


If you opt out, you will not get any settlement payment, you cannot object to the settlements, and you will not be bound to the terms of the settlement(s) by the judgment of the Court.

Defendants may withdraw from and terminate the Settlements if certain threshold levels of persons who would otherwise be Class Members timely and validly request exclusion from the Classes.

Object to the Settlements. If you are a Class Member, you may remain a Class Member, but object to the terms of the settlements. You may object to all or any portion of a settlement at a Settlement Hearing, but you must first submit your objections in writing. All objections must include: (1) your name, address and telephone number; (2) the date(s) of the Class Contract(s) or any of its amendments and the royalty account number(s) from your royalty statement(s); (3) a sentence confirming, under penalty of perjury, that you believe you are a Class Member; (4) the factual basis and legal grounds for your objection; (5) the identity of any witnesses whom you may call to testify at a Settlement Hearing; and (6) copies of any exhibits you intend to offer into evidence at a Settlement Hearing. To be considered, objections must be filed with the Court and mailed to the lawyers handling the case for each side postmarked no later than

, 2012 at the following addresses:

COURT CLASS COUNSEL DEFENSE COUNSEL

Clerk of the Coutr United States District Court for the Southern District of New York Daniel Patrick Moynihan United States Courthouse

Brian Caplan Caplan & Ross, LLP 270 Madison Avenue, 13 th

Jonathan M. Sperling Covington & Burling LLP The New York Times Building

Floor 620 Eighth Avenue New York, NY 10016 New York, NY 10018-1405

500 Pearl Street New York, NY 10007-1312 Benjamin Y. Kaufman

Milberg LLP One Penn Plaza New York, NY 10119-0165

You have the right to consult with your own attorney, at your own expense, before deciding how best to proceed.

What Claims Will Be Released By These Settlements?

If the settlements receive final approval from the Court, the settlements will be legally binding on all Class Members, including Class Members who object. If you, or someone acting on your behalf, are currently litigating claims against SME or Arista or the other Released Parties, you will be barred from pursuing the claims released by these settlements unless you validly "opt out" as described above. The full terms of the release, which will bind all Class Members as to certain claims against SME or Arista and the other Released Parties, are set forth in the

8


Stipulations on file with the Court and available online at [www. .com]. In summary, Class Members will release claims that any past, present, or future Sales in the United States of permanent digital downloads or ringtones of sound recordings owned by SME or Arista (including its unincorporated divisions and business units) or its subsidiaries involve a lease or license of such sound recordings for purposes of calculating royalties or other payments to any Class Member, or that SME or Arista otherwise should calculate royalties on Sales in the United States of permanent digital downloads or ringtones of recordings attributable to Class Contracts under royalty provisions other than those that SME or Arista currently apply to such Sales; provided, however, that this release shall not in any way impair or restrict the rights to enforce the terms of the Settlement and is without prejudice to any other rights or audit rights not involving those claims. Except as expressly provided in connection with the Prospective Settlement Relief, nothing in this release shall be deemed to terminate, modify or cancel any provision of any Class Contract, each of which shall otherwise continue in full force and effect in accordance with its terms. See the Stipulations for the precise release language. If you are currently litigating claims against SME or Arista or the other Released Parties, speak to your lawyer in that matter immediately.

MORE INFORMATION IS AVAILABLE

This Notice is only a summary of the settlements and the Stipulations. If you have questions regarding the settlements, or would like to review a copy of the Stipulations, please visit the settlement website, [www. .com], contact Class Counsel, or write to:

SME and Arista Music Class Settlements P.O. Box City, ST ZIP

You may also review the Court's file during regular court hours at:

U.S. District Court, Southern District of New York 500 Pearl Street New York, NY 10007-1312

PLEASE DO NOT TELEPHONE THE COURT, THE JUDGE, OR THE CLERK OF THE COURT.

By Order of the United States District Court, Southern District of New York

1-

9


EXHIBIT A-2


CLAIM FORM

CLASS ACTION SETTLEMENTS

If you fail to return this Form, you may lose valuable rights under the Settlements.

You May Be Eligible for Increased iTunes Payments (or Other Permanent Digital Download or Ringtone Royalties) as Part of the Settlements of Class Action Lawsuits.

If you wish to participate in the settlement consideration, please complete, sign, and return this Form, postmarked by the later of , 2012, or 45 days after you receive a copy of your contracts in response to a timely request for them as detailed in 2 below, and mailed to [Mailing Address]

These Settlements apply to certain persons who have signed or who have rights under a contract with any record label that is now a part of Sony Music Entertainment or its subsidiaries. All such labels are referred to in shorthand on this Form as SME. If you receive royalty statements from SME, then you may be such a person. If you cannot locate a copy of your contract(s), SME will provide you a copy as detailed in 2 below.

1. Please identify the artist (individual or band), producer, or company that signed a recording contract with SME and on whose behalf you're responding.

Name:

2. DO YOU HAVE A COPY OF YOUR CONTRACT? Yes No

IF YOU DO NOT HAVE A COPY, PLEASE GO TO [www. .com I NO LATER THAN , 2012 TO REQUEST ONE.

PLEASE LOOK THROUGH YOUR CONTRACT AND ANY AMENDMENTS TO IT TO ANSWER THE FOLLOWING QUESTIONS:

3. Is the original contract or any of its amendments dated after 1975? Yes No

4. Is the original contract dated after 2001? Yes No

5. Does the contract or any of its amendments specify that the record label will pay 50% of its receipts from any licenses or leases to third parties (such as a license for a compilation album), other than film or television licenses?

Yes No


6. Does the contract or any of its amendments specify a royalty rate for digital downloads?

Yes No I Don't Know

7. Have you audited royalties paid under the contract since 2003? Yes No I Don't Know

8. A. Are you the artist, the authorized representative of the artist, or Yes No the authorized representative of a company that signed a recording contract with SME?

B. Are you a successor-in-interest (e.g., the heir, estate, or assignee) to the artist or company that signed a recording contract with SME, or an authorized representative of a successor-in-interest to the artist or company that signed a recording contract with SME?

Yes No

Yes No C. Are you a producer that signed a contract directly with SME, or an authorized representative of such a producer? Ify ou only receive a share of an artist's royalties under a letter of direction or a contract between you and an artist, check "No."

Yes No D. Are you a successor-in-interest (e.g., the heir, estate, or assignee) to a producer that signed a contract directly with SME, or an authoirzed representative of such a successor? Ify ou only

royalties under a letter of direction or receive a share of an artist's a contract between you and a producer or artist, check "No."

If you are unsure about how to answer any question on this Form or have questions about your rights as a class Member under this Settlement, please contact Class Counsel:

Brian D. Caplan Tom Cohen Law Offices of Thomas A. Cohen 591 Redwood Highway, Suite 2320 Mill Valley, Califonria 94941

Caplan & Ross, LLP 270 Madison Avenue, 13th Floor New York, New York 10016 Telephone: (212) 973-2376 Telephone: (415) 777-1997 e-mail address: [email protected] e-mail address: [email protected]

2


I affirm under penalty of perjury that the foregoing information is true and correct to the best of my information and belief.

Date:

Signature

Printed Name

Mailing Address

Email Address

Phone Number

3


EXHIBIT A-3


SUMMARY NOTICE OF PROPOSED SETTLEMENTS OF CLASS ACTIONS

To all persons entitled to royalty payments for permanent digital downloads and ringtones under contracts currently held by CBS Records or Sony Music Entetrainment ("SME") or by Arista Music, formerly known as BMG Music ("Arista"):

If you are a party to certain recording contracts currently held by CBS Records, SME, or Arista, then you may be entitled to benefits under these class action settlements.

The United States District Court for the Southern District of New York authorized this Notice.

This is not a solicitation from a lawyer.

This is only a summary of the Notice. The Notice and the Claim Form are being mailed to all royalty account statement recipients. If you did not receive a copy of the Notice and the Claim Form, please visit [www. .com] or call toll-free 1- - - to obtain copies.

Settlements are proposed for two class action lawsuits (Shropshire v. Sony Music Entertainment, 06 Civ. 3252 (GBD) (KNF) (the "SME Action") and Youngbloods v. BMG Music, 07 Civ. 2394 (GBD) (KNF) (the "BMG Action")) asserting breach of contract claims relating to royalty payments due to Class Members for digital download and ringtone compensation. SME and Arista deny all allegations of wrongdoing and have asserted many defenses. The settlements are not an admission of wrongdoing.

The proposed settlements (1) make $7.95 million available to all Class Members in connection with sales in the U.S. of permanent digital downloads and ringtones through December 31, 2010 and (2) provide for an increase in the royalty rate for certain Class Members for such sales atfer January 1, 2011.

Who is Affected by these Class Actions?

You are a Class Member if you: (a) are a party to a Class Contract (defined below) and (b) did not provide SME or Arista with a release of claims relating to payment of royalties on downloads or ringtones covering the entire period from January 1, 2004 through December 31, 2010.

"Class Contract" means a contract dated between January 1, 1976 and December 31, 2001 (the "Class Period") that (i) was entered into with CBS Records or SME or with BMG Music (now known as Arista), including their unincorporated divisions and business units, their United States subsidiaries as of July 2004, and any predecessor in interest to any of them; (ii) is currently held by SME or Arista, including their unincorporated divisions and business units and United States subsidiaries; (iii) contains a clause providing that SME or Arista will pay to such Class Member 50% of SME's or Arista's net receipts in respect of any Master Recording leased or licensed by SME or Arista to a third party (a "Net Receipts Provision"); (iv) does not contain a clause capping the amount to be paid under the Net Receipts Provision, such as a clause limiting payments under the Net Receipts Provision to the amount that would be paid under another royalty provision contained in the contract; (v) does not contain an express rate for digital exploitations other than a so-called "Audiophile" or "New Technology" provision; and (vi) was


not modified to include an express rate for digital exploitations or to make any change to the Net Receipts Provision.

To determine whether you are a Class Member, you should review your contract(s) and any amendments . If you do not have your contract or any of its amendments, you may request a copy through the settlement website at [www. .com].

What Can Class Members Get From the Proposed Settlements?

1. Past Settlement Relief. All Class Members who submit a valid Claim Form will get a share of $7.95 million in settlement funds, allocated based on their permanent digital downloads sold in the U.S. on Apple's iTunes Store through December 31, 2010.

2. Prospective Settlement Relief. Certain Class Members who submit a valid Claim Form will get an additional 3% royalty for permanent digital downloads and ringtones sold in the U.S. after January 1, 2011.

How Do You Receive a Benefit?

Instructions on how to qualify and submit a Claim Form are available in the Notice and posted at the settlement website ([www. .com]) or by calling toll-free 1- - - , or writing to SME and Arista Music Class Settlements, P.O. Box , City, ST ZIP.

What Are Your Other Options?

If you are a Class Member and you don't want to receive a payment as described above and you don't want to be legally bound by the settlements, you must exclude yourself by

, 2012, or you won't be able to sue, or continue to sue, SME or Arista about the legal claims in these cases. If you exclude yourself, you can't receive a payment under these settlements. If you remain a Class Member, you may object to the settlements by

, 2012. The Notice describes how to exclude yourself or object.

The Court will hold hearings in these cases on , 2012, to consider whether to approve the settlements. The Court will also consider Class Counsel's motion for attorneys' fees and expenses and for service awards to the Class Representatives. You may appear at the hearings, but you don't have to.

1-

2


EXHIBIT B




Plaintiff, ECF CASE

-against-


Defendant

ORDER AND FINAL JUDGMENT

On the day of , 2012, a hearing having been held before this

Court to determine: (1) whether the terms and conditions of the Stipulation and Agreement of

Settlement dated March 7, 2012 (the "Stipulation") are fair, reasonable, and adequate for the

settlement of all claims asserted by the Class against the Defendant in the Third Amended

Complaint now pending in this Court under the above caption, including the release of the

Defendant and the Released Parties, and should be approved; (2) whether judgment should be

entered dismissing the Third Amended Complaint with prejudice and without costs in favor of

the Defendant and as against all persons or entities who are members of the Class herein who

have not requested exclusion therefrom; (3) whether to approve the Plan of Allocation as a fair

and reasonable method to allocate the settlement proceeds among the members of the Class; and

(4) whether and in what amount to award Class Counsel attonreys' fees and reimbursement of

expenses. The Court having considered all matters submitted to it at the hearing and otherwise;

and it appearing that a notice of the hearing substantially in the form approved by the Court was


mailed to all Sony Music Entertainment ("SME") royalty recipients, at the respective addresses

set forth in SME's records, and that a summary notice of the hearing substantially in the form

approved by the Court was published in Billboard magazine pursuant to the specifications of the

Court; and the Court having considered and determined the fairness and reasonableness of the

Settlement, the Plan of Allocation, and the award of attorneys' fees and expenses requested; and

all capitalized terms used herein having the meanings as set forth and defined in the Stipulation.

NOW, THEREFORE, IT IS HEREBY ORDERED THAT:

1. The Court has jurisdiction over the subject matter of the Action, Plaintiff, all

Class Members, and Defendant.

2. The Court finds that the prerequisites for a class action under Federal Rules of

Civil Procedure 23 (a) and (b)(3) for settlement purposes have been satisfied in that: (a) the

number of Class Members is so numerous that joinder of all members thereof is impracticable;

(b) there are questions of law and fact common to the Class; (c) the claims of the Class

Representative are typical of the claims of the Class he seeks to represent; (d) the Class

Representative and Class Counsel have and will fairly and adequately represent the interests of

the Class; (e) the questions of law and fact common to the members of the Class predominate

over any questions affecting only individual members of the Class; and (f) a class action is

superior to other available methods for the fair and efficient adjudication of the controversy.

3. Pursuant to Rule 23 of the Federal Rules of Civil Procedure, this Court hereby

finally certifies this action as a class action for settlement purposes on behalf of all recording

artists and producers who (a) are parties to a contract dated between January 1, 1976 and

December 31, 2001 (the "Class Period") that (i) was entered into with CBS Records or Sony

Music Entertainment, including their unincorporated divisions and business units, their United

2


States subsidiaries as of July 2004, and any predecessor in interest to any of them; (ii) is

currently held by Sony Music Entertainment, including its unincorporated divisions and business

units and United States subsidiaries; (iii) contains a clause providing that SME will pay to such

Class Member 50% of SME's net receipts in respect of any Master Recording leased or licensed

by SME to a third patry (a "Net Receipts Provision"); (iv) does not contain a clause capping the

amount to be paid under the Net Receipts Provision, such as a clause limiting payments under

the Net Receipts Provision to the amount that would be paid under another royalty provision

contained in the contract; (v) does not contain an express rate for digital exploitations other than

a so-called "Audiophile" or "New Technology" provision; and (vi) was not modified to include

an express rate for digital exploitations or to make any change to the Net Receipts Provision (a

"Class Contract"); and (b) did not provide SME with a release of claims relating to payment of

royalties on downloads or ringtones covering the entire period from January 1, 2004 through

December 31, 2010. Excluded from the Class are the Defendant and any person, trust, firm,

corporation, or other entity affiliated with or related to the Defendant. [Also excluded from the

Class are the persons and/or entities who submitted Requests for Exclusion as listed on

Exhibit 1 annexed hereto OR No timely and valid Requests for Exclusion from the Class

were received.]

4. Pursuant to Rule 23 of the Federal Rules of Civil Procedure, this Court hereby

finally certifies Plaintiff Elmo Shropshire as Class Representative for settlement purposes.

5. Notice of the pendency of this Action as a class action and of the proposed

Settlement was given to all Class Members who could be identified with reasonable effort. The

form and method of notifying the Class of the pendency of the action as a class action and of the

terms and conditions of the proposed Settlement met the requirements of Rule 23 of the Federal

3


Rules of Civil Procedure, the Class Action Fairness Act of 2005, 28 U.S.C. § 1715, due process,

and any other applicable law, constituted the best notice practicable under the circumstances, and

constituted due and sufficient notice to all persons and entities entitled thereto. Defendant's

Counsel has ifled with the Court proof of mailing of the Notice and Claim Form and proof of

publication of the Publication Notice. Defendant's Counsel has also filed with the Court proof of

compliance with the Class Action Fairness Act of 2005.

6. The Settlement is approved as fair, reasonable, and adequate, and the Class

Members and the parties are directed to consummate the Settlement in accordance with the terms

and provisions of the Stipulation.

7. The Third Amended Complaint is hereby dismissed with prejudice and without

costs, except as provided in the Stipulation, as against the Defendant.

8. Plaintiff, the Class, and each Class Member on behalf of themselves, their heirs,

executors, administrators, attorneys, successors and assigns, and any persons they represent,

hereby fully, finally and forever release, relinquish, and discharge the Released Parties with

respect to each and every Released Plaintiff Claim and shall forever be enjoined from

prosecuting any of the Released Plaintiff Claims with respect to each and every Released Party

and covenant not to sue any of the Released Parties with respect to any of the Released Plaintiff

Claims.

(a) "Released Parties" means Sony Music Entertainment, including its

unincorporated divisions and business units, and any of its past, present, or future parent entities,

associates, afifliates, or subsidiaries and each and all of their past, present and future officers,

directors, stockholders, principals, employees, advisors, agents, attonreys, financial or

4


investment advisers, consultants, lenders, insurers, investment bankers, commercial bankers,

representatives, affiliates, associates, parents, subsidiaries, joint ventures, general and limited

partners and partnerships, heirs, executors, trustees, personal representatives, estates,

administrators, trusts, predecessors, successors and assigns.

(b) "Released Plaintiff Claims" shall collectively mean any and all actions,

suits, claims, demands, rights, liabilities and causes of action, of every nature and description

whatsoever, whether individual, class, derivative, representative, legal, equitable, or any other

type or in any other capacity, or concealed or hidden, that were asserted or that could have been

asserted (including without limitation claims for negligence, gross negligence, breach of

contract, breach of duty of care and/or breach of duty of loyalty, fraud, breach of fiduciary duty,

or violations of any state or federal common law, statutes, rules, or regulations), including both

known claims and Unknown Claims, that the Plaintiff, the Settlement Class, any Class Member

or any of them in the past had, now has, or might in the future have against the Released Parties

or any of them on the basis of, connected with, or in any way arising out of any allegation that

any past, present, or future Sales in the United States of permanent digital downloads or

ringtones of sound recordings owned by SME (including its unincorporated divisions and

business units) or its subsidiaries involves a lease or license of such sound recordings for

purposes of calculating royalties or other payments to any Class Member, or that SME otherwise

should calculate royalties on Sales in the United States of permanent digital downloads or

ringtones of recordings attributable to Class Contracts under royalty provisions other than those

that it currently applies to such Sales; provided, however, that the definition of Released Plaintiff

Claims shall not in any way impair or restrict the rights to enforce the terms of the Settlement.

Except as expressly provided in paragraph 16(b) of the Stipulation, nothing herein shall be

5


deemed to terminate, modify or cancel any provision of any Class Contract, each of which shall

otherwise continue in full force and effect in accordance with its terms. The release of the

"Released Plaintiff Claims" pursuant to this Settlement is without prejudice to any other rights or

audit rights not involving those claims.

9. Defendant and each of the other Released Parties on behalf of themselves, their

heirs, executors, administrators, attorneys, successors and assigns, and any persons they

represent, hereby fully, finally and forever release, relinquish, and discharge the Plaintiff, any of

the other Class Members, or their attorneys with respect to each and every Released Defendant

Claim and shall forever be enjoined from prosecuting the Plaintiff, any of the other Class

Members, or their attonreys with respect to each and every Released Defendant Claim.

(a) "Released Defendant Claims" means any and all actions, suits, claims,

demands, rights, liabilities and causes of action, of every nature and description whatsoever,

whether individual, class, representative, legal, equitable, or any other type or in any other

capacity, or concealed or hidden, that were asserted or that could have been asserted (including

without limitation claims for negligence, gross negligence, breach of contract, breach of duty of

care and/or breach of duty of loyalty, fraud, breach of fiduciary duty, or violations of any state or

federal common law, statutes, rules, or regulations), including both known claims and Unknown

Claims, that the Defendant or any of the other Released Parties in the past had, now has, or might

in the future have against the Plaintiff, any of the other Class Members, or their attonreys, arising

from the institution, prosecution, or settlement of the Action; provided, however, that the

definition of Released Defendant Claims shall not in any way impair or restrict anyone's rights

to enforce the terms of the Settlement.

6


10. Notwithstanding the provisions of Ili 8 and 9 of this Order and Final Judgment, (i)

in the event that any of the Released Parties asserts against Plaintiff, any other Class Member or

Class Counsel, any claim that is a Released Defendant Claim, then Plaintiff, such Class Member

or Class Counsel shall be entitled to use and assert such factual matters included within the

Released Plaintiff Claims against such Released Party only in defense of such claim but not for

the purposes of affirmatively asserting any claim against any Released Party; and (ii) in the event

that Plaintiff, any other Class Member or Class Counsel asserts against any Released Parties any

Released Plaintiff Claims, such Released Parties or their respective counsel shall be entitled to

use and assert such factual matters included within the Released Defendant Claims against such

claimant only in defense of such claim but not for the purposes of affirmatively asserting any

claim against any such claimant.

11. Neither this Order and Final Judgment, the Stipulation, including any exhibits, nor

any of its terms and provisions, nor any of the negotiations or proceedings connected with it, nor

any of the documents or statements referred to therein shall be:

(a) offered or received against Defendant or any Released Party as evidence

of, or construed as or deemed to be evidence of, any presumption, concession, or admission by

Defendant or any Released Party of the truth of any fact alleged by Plaintiff or the validity of any

claim that has been or could have been asserted in the Action or in any litigation, or the

deficiency of any defense that has been or could have been asserted in the Action or in any

litigation, or of any liability, negligence, fault, or wrongdoing of Defendant or any Released

Party;

7


(b) offered or received against Defendant or any Released Party as evidence

of a presumption, concession, or admission of any fault, misrepresentation, or omission with

respect to any statement or written document approved or made by Defendant or any Released

Party, or against Plaintiff and the Class as evidence of any infirmity in their claims;

(c) offered or received against Defendant or any Released Party as evidence

of a presumption, concession, or admission of any liability, negligence, fault or wrongdoing, or

in any way referred to for any other reason as against any of the parties to this Stipulation, in any

other civil, criminal, or administrative action or proceeding, other than such proceedings as may

be necessary to effectuate the provisions of this Stipulation; provided, however, that if this

Stipulation is approved by the Court, Defendant or any Released Party may refer to it to

effectuate the liability protection granted hereunder;

(d) construed against Defendant or any Released Party or Plaintiff and the

Class as an admission or concession that the consideration to be given hereunder represents the

amount that could be or would have been recovered atfer trial; or

(e) construed as or received in evidence as an admission, concession or

presumption against Plaintiff or any of the Class Members that any of their claims are without

merit, or that any defenses asserted by Defendant has any merit, or that damages recoverable

under the complaints and amended complaints filed in the Action would not have exceeded the

Past Settlement Relief and Prospective Settlement Relief.

12. The Plan of Allocation is approved as fair and reasonable, and Defendant's

Counsel and Class Counsel are directed to administer the Stipulation in accordance with its terms

and provisions.

8


13. Class Counsel are hereby awarded attorneys ' fees and expenses in the amount of

$ , which sum the Court finds to be fair and reasonable, to be

paid in accordance with the terms of the Stipulation.

14. Plaintiff Elmo Shropshire is hereby awarded $ for Plaintiff s

service as a class representative, which sum the Court finds to be fair and reasonable, to be paid

in accordance with the terms of the Stipulation.

15. In making this award of attorneys' fees and reimbursement of expenses, the Court

has considered and found that:

(a) The Settlement provides Past Settlement Relief of $4,196,790 in cash and

credits and $164,580 in cash and provides Prospective Settlement Relief and numerous Class

Members who submit acceptable Claim Forms will benefit from the Settlement created by Class

Counsel;

(b) The Notice to Class Members indicated that Class Counsel were moving

for attorneys' fees and expenses in the amount $1,453,790 and [ objections were

filed against the terms of the proposed Settlement or the ceiling on the fees and expenses

requested by Class Counsel contained in the Notice;

(c) Class Counsel have conducted the litigation and achieved the Settlement

with skill, perseverance and diligent advocacy;

(d) The action involves complex factual and legal issues and was actively

prosecuted over more than five years and, in the absence of a settlement, would involve further

lengthy proceedings with uncertain resolution of the complex factual and legal issues;

9


(e) Had Class Counsel not achieved the Settlement there would remain a

significant risk that the Class may have recovered less or nothing from the Defendant;

(0 Class Counsel have devoted over hours, with a lodestar value of

$ , to achieve the Settlement; and

(g) The amount of attorneys' fees and expenses awarded are fair and

reasonable and consistent with awards in similar cases.

16. Exclusive jurisdiction is hereby retained over the parties and the Class Members

for all matters relating to this Action, including the administration, interpretationeffectuation or

enforcement of the Stipulation and this Order and Final Judgment, and including any application

for fees and expenses incurred in connection with administering and distributing the settlement

proceeds to the members of the Class.

17. Without further order of the Court, the parties may agree to reasonable extensions

of time to carry out any of the provisions of the Stipulation.

18. There is no just reason for delay in the entry of this Order and Final Judgment and

immediate entry by the Clerk of the Court is expressly directed pursuant to Rule 54 (b) of the

Federal Rules of Civil Procedure.

Dated: New York, New York , 2012

Honorable George B. Daniels UNITED STATES DISTRICT JUDGE

10


EXHIBIT 1

List of Persons and Entities Requesting Exclusion from the Class in Shropshire v. Sony Music Entertainment, 06 Civ. 3252 (GBD) (KNF)

The following persons and entities have properly requested exclusion from the Class in Shropshire v. Sony Music Entertainment, 06 Civ. 3252 (GBD) (KNF) and are not members of the Class bound by this Order and Judgment:

11
