PT1: Partnerships With #MMAPGX (Print)

GENERAL PARTNERSHIP AGREEMENT

THIS AGREEMENT is entered into as of the __________day of __________, __________, by and among __________. Hereinafter, the parties shall sometimes be referred to collectively as “Partners” and individually as “Partner.”

Recitals

A.The Partners have been operating a business (the “Prior Partnership”) under an oral partnership agreement (the “Prior Agreement”).

B.The Partners desire to enter into a written agreement concerning the business of the Partners, which agreement shall supersede and cancel all prior understandings and agreements, oral or written, concerning such business, including the Prior Agreement.

NOW, THEREFORE, in consideration of the mutual promises contained herein, the parties hereby agree as follows:

Article I Formation of General Partnership

1.1 Type of Business. The Partners hereby agree to establish a general partnership (the “Partnership”) which, in accordance with this agreement, shall engage in the business of utilizing and commercially exploiting their collective talents and personalities as the recording and performing group professionally known as “__________” in all media of public entertainment throughout the world, including phonograph recordings, motion pictures, television, radio, public appearances and performances, advertising, merchandising, literary and dramatic endeavors, publications, and all other similar or related activities, but excluding songwriting and music publishing.

1.2 Name of Partnership. The name of the Partnership shall be “__________, a Tennessee general partnership” and the Partners shall perform, as a recording group (sometimes hereinafter referred to as the “Group”) under the professional name, trademark and service mark “__________” (sometimes hereinafter referred to as the “Group Name”).

1.3 Term of Partnership. The Partnership shall continue until dissolved in accordance with this agreement.

1.4 Place of Business. The principal place of business of the Partnership shall be Nashville, Tennessee, or such other place or places as may be designated by Partnership Vote (as such term is defined in paragraph 6.1 below).

Article II Partnership Capital and Loans

2.1 Initial Capital. The initial capital of the Partnership shall consist of all assets and obligations of the Prior Partnership, including the following:

(a)

all right, title, and interest in and to the Group Name;

(b)

all trademarks, service marks, logos and goodwill of the Prior Partnership;

(c)

that certain recording agreement by and between the Partners and __________, dated __________(the “Recording Agreement”); and

(d)

all equipment and other assets owned by the Prior Partnership, including without limitation, that equipment and other assets set forth in Exhibit “A” hereto.

2.2 Capital Accounts.

(a)

Capital accounts will be maintained for the Partners in accordance with Treasury Regulation Section 1.704-1(b)(2)(iv). The Partners shall decide by Partnership Vote (hereinafter defined) whether to make any elections or adopt any conventions relating to the foregoing.

(b)

The Partners hereby agree that for purposes of valuing the Partners’ capital accounts, the assets specified in paragraphs 2.1(a), (b) and (c) shall be deemed to have zero value.

2.3 Additional Contributions to Capital. No Partner shall be required to make additional contributions to the capital of the Partnership. Any voluntary contributions to the capital of the Partnership must be authorized by Partnership Vote. Except as otherwise determined by Partnership Vote, any such voluntary contributions shall not alter the profit and loss allocations set forth in Article IV.

2.4 Withdrawal of Capital. No Partner shall withdraw any portion of the capital of the Partnership without the unanimous approval of the Partners. Any permitted withdrawal of capital by a Partner shall reduce such Partner’s capital account by the amount of such withdrawal.

2.5 Interest on Capital. No Partner shall be entitled to interest on his share of the capital of the Partnership; provided, however, that this paragraph 2.5 shall not be construed to diminish any Partner’s share of interest earned by the Partnership on Partnership funds.

2.6 Loans to Partnership. No Partner shall loan or advance money to the Partnership without approval by Partnership Vote. Any loan by a Partner to the Partnership shall be separately recorded in the Partnership books as a loan to the Partnership, shall bear interest at a rate determined by Partnership Vote, and shall be evidenced by a promissory note delivered to the lending Partner and executed in the name of the Partnership by one or more non-lending Partners.

Article III Accountings

3.1 Method of Accounting. The accounting books of the Partnership shall be kept on a cash basis.

3.2 Fiscal Year. The fiscal year of the Partnership shall be the calendar year.

3.3 Accountings. As soon as reasonably practicable, but no later than ninety (90) days after the close of each fiscal year, a full and accurate accounting shall be made of the affairs of the Partnership as of the close of such fiscal year. As part of such accounting, the Net Profits and Net Losses (as such terms are hereinafter defined) sustained by the Partnership during such fiscal year shall be ascertained, and credited or debited, as the case may be, to the respective Partners’ capital accounts. As a further part of such accounting, the accountant for the Partnership designated from time to time by Partnership Vote (hereinafter referred to as the “Accountant”) shall furnish to each Partner a copy of a balance sheet of the Partnership as of the last day of such fiscal year, a statement of income or loss of the Partnership for such fiscal year, a statement of allocations pursuant to this agreement for such fiscal year, and a statement of tax allocations for such fiscal year pursuant to the Code.

3.4 Books of Account. Complete and accurate books of all transactions of the Partnership shall be maintained at the principal office of the Accountant or at such other place or places that may be designated by Partnership Vote. Each Partner shall, at all reasonable times, have access to the Partnership’s books and may inspect and copy such books, provided that any such inspection is made in good faith and without intent to damage the Partnership or any of the Partners.

3.5 Bank Accounts. All funds of the Partnership shall be deposited in accounts in the name of the Partnership at such bank or banks that shall be designated by Partnership Vote. All withdrawals therefrom shall be made upon checks or withdrawal slips signed by such person or persons as from time to time shall be designated in writing by Partnership Vote. Until otherwise designated in writing by Partnership Vote, all checks or withdrawal slips of the Partnership shall be signed by the Accountant.

Article IV Profits, Losses, Distributions and Expenses

4.1 Allocation of Profits and Losses. Net Profits and Net Losses (as such terms are defined in paragraph 4.2 below) of the Partnership shall be allocated equally among the Partners.

4.2 “Net Profits” and “Net Losses.” The terms “Net Profits” and “Net Losses” as used herein shall mean and refer to net profits and net losses for federal income tax purposes with such adjustments as required to comply with Treasury Regulation Section 1.704-1(b)(2)(iv). An allocation of Net Profits and Net Losses shall be reflected in each Partner’s capital account.

4.3 Distributions and Draws.

(a)

(i)

Promptly following the rendering of financial statements for each fiscal year of the Partnership, and after consulting with the Accountant, the Partnership shall distribute to the Partners any cash not reasonably necessary for the operation of the Partnership business. The Partnership shall make additional distributions to the Partners on other dates and in amounts to be determined by Partnership Vote.

(ii)

Unless otherwise agreed upon by Partnership Vote, all distributions (other than draws pursuant to paragraph 4.3(b) below) shall be allocated equally among the Partners.

(b)

The Partners shall be entitled to withdraw monthly from the funds of the Partnership, or on such other periodic or non-periodic basis as shall be determined from time to time by Partnership Vote, a sum as shall be determined by Partnership Vote after due consultation with the Accountant (taking into consideration, among other things, the advisability of maintaining a reasonable reserve for future anticipated expenses), and which sum, unless otherwise agreed by the unanimous vote of all the Partners, shall be divided equally among all the Partners.

4.4 Salaries and Guaranteed Compensation.

(a)

Except as otherwise specified in paragraph 4.4(b), and except as otherwise decided by Partnership Vote, no Partner shall be entitled to any salary or guaranteed compensation.

(b)

While performing during any recording session of the Partnership, the Partners shall be treated as royalty artists, and shall receive, as salary, single scale for one session (as such term is commonly used in the music industry) for each recording track they perform on. The amount of any such salary shall constitute a Partnership expense.

4.5 Reimbursement of Expenses. No Partner shall be reimbursed for payments made or liabilities incurred in the conduct of Partnership business or for the preservation of Partnership property unless such reimbursement is approved by Partnership Vote; provided, however, that the Accountant may, without approval by Partnership Vote, reimburse a Partner from Partnership funds for any payment or liability incurred in the conduct of Partnership business or for the preservation of Partnership property to the extent such payment or liability for any such transaction does not exceed $ __________.

Article V Duties of Partners, Rights of Partnership, Outside Activities and Publishing Participation

5.1 Services Furnished and Rights Granted to the Partnership.

(a)

Services Performed. Each Partner shall furnish exclusively to the Partnership, throughout the world, such Partner’s services in all media of public entertainment described in paragraph 1.1 above (except with respect to Outside Activities [as defined and permitted in paragraph 5.2(b) below]) and the results and proceeds thereof, as are necessary to permit the Partnership to carry out its purpose as described in said paragraph 1.1. Without limiting the generality of the foregoing, each Partner shall (i) render all services necessary to enable the Group to satisfy its obligations to perform concerts and other “live” performances, including without limitation, attending all rehearsals scheduled by the Partnership, and (ii) furnish to the Partnership such Partner’s services as a recording artist, which services shall be sufficient to enable the Group to completely satisfy its obligations under the Current Recording Agreement or any successor recording agreement(s) entered into by the Partnership after the expiration or termination of the Current Recording Agreement (individually and collectively “Successor Recording Agreement”) (hereinafter the Current Recording Agreement, any extensions or renewals thereof, and any Successor Recording Agreement shall be sometimes individually and collectively referred to as the “Recording Agreement”). Each Partner shall refrain from taking any action, including any Outside Activities, that would place the Partnership in breach of the Recording Agreement or any other agreement entered into by the Partnership in accordance with this agreement (hereinafter any such agreement entered into by the Partnership, including the Recording Agreement, shall sometimes be referred to as an “Approved Agreement”), and shall otherwise render all services necessary to enable the Partnership to satisfy its obligations under each Approved Agreement.

(b)

Grant of Rights. Each Partner hereby grants to the Partnership all rights in and to the results and proceeds of such Partner’s services performed under this agreement, and all rights in and to such Partner’s name, photograph, likeness, voice, and biographical materials for use in the exploitation of products and services of the Partnership. Without limiting the generality of the foregoing, each Partner shall execute and deliver any and all inducement letters and other documents required under the Recording Agreement.

5.2 Time Devoted to Partnership, Outside Activities, and Extended Absences.

(a)

The Partners shall render their services under this agreement to the best of their ability and talents, and shall comply with all reasonable scheduling requirements established by Partnership Vote. The Partners hereby acknowledge and agree that the needs and requirements (including all scheduling requirements) of the Partnership shall take precedence over all other business and personal activities of the Partners.

(b)

Notwithstanding anything to the contrary contained herein, the Partners shall be permitted to engage in business activities other than those required hereunder, including, without limitation, (i) songwriting and music publishing activities, as those terms are commonly defined in the music industry; (ii) performing as sidemen musicians or background vocalists for other artists; (iii) producing records of other artists; (iv) managing artists; (v) recording so-called “solo” albums and rendering live performances in connection therewith; and (vi) rendering services of any kind unrelated to the Group or the Group Name in an entertainment medium other than the music field (e.g., acting, directing, writing, commercials, etc.) (hereinafter all such activities shall be collectively referred to as “Outside Activities”); provided, however, that no Partner shall engage in any Outside Activity that would conflict with such Partner’s complete performance of all services under this agreement, including, without limitation, the Partnership’s complete performance of its obligations under the Recording Agreement.

(c)

Except as otherwise provided in this agreement, any and all monies or other assets derived or created by any Partner or Partners during the term hereof as a result of those activities described in paragraph 1.1, but excluding all Outside Activities engaged in by such Partner or Partners in accordance with paragraph 5.2(b) above, shall belong solely to the Partnership; any and all monies or other assets derived or created by any Partner or Partners as a result of Outside Activities engaged in by such Partner or Partners in accordance with paragraph 5.2(b) above shall belong solely to such Partner or Partners.

(d)

If a Partner is unable to devote such time and attention to the Partnership business as is necessary to fully and completely perform the services to be performed for the Partnership hereunder due to physical or mental illness or incapacity (unless such illness or incapacity is self-induced), such Partner shall, subject to paragraph 7.2 below, continue to receive its share of the Net Profits of the Partnership for a period of three (3) months from the date such disability commences. If such illness or incapacity continues beyond such three (3) month period, then the remaining Partners may, by Partnership Vote (excluding the disabled Partner), agree upon a full or reduced share of the Partnership’s Net Profits and Net Losses for such disabled Partner during the continuance of such illness or incapacity.

5.3 Music Publishing Participation.

(a)

The Partners hereby acknowledge and agree that each Partner shall be the sole and exclusive owner of an individual publishing company (hereinafter referred to as a Partner’s “publishing company designee”) which shall solely and exclusively own all of such Partner’s copyright interest in and to all musical compositions written or co-written, in whole or in part, by such Partner (hereinafter each such musical composition, or the applicable portion thereof, which is embodied on a recording featuring the performances of the Group [each a “Group Recording”], is referred to as a “Partner Composition”).

(b)

Each Partner and his respective publishing company designee shall concurrently herewith enter into a Participation Agreement with the Partnership (in the form of Exhibit “B”, attached hereto and incorporated herein by this reference) pursuant to which the Partnership shall receive a Percentage (as determined in subparagraph 5.3(c) below) of the so-called “publisher’s share” of income derived from exploitation of the applicable Partner’s Partner Compositions as embodied on Group Recordings only (hereinafter such income received by the Partnership is referred to as the “Partnership Publishing Participation”).

(c)

The Percentage, with respect to each particular Group Recording, shall equal ten percent (10%) times the number of Partners in the Partnership at the time such Group Recording was recorded; except the Percentage shall be reduced by ten percent (10%) for any participating Partner who subsequently becomes a Terminated Partner (as hereinafter defined), effective upon the Valuation Date (as hereinafter defined) for such Terminated Partner. For example, if at the time a particular Group Recording was recorded there were four (4) Partners, then the Percentage with respect to the Partner Composition, if any, as embodied on such Group Recording would be forty percent (40%) and if one of such participating Partners later became a Terminated Partner, from and after the Valuation Date for such Terminated Partner the Percentage would be reduced to thirty percent (30%).

(d)

Each Partner shall be entitled to a fraction of the Partnership Publishing Participation derived from the Partner Compositions as embodied on Group Recordings recorded while such Partner was a Partner in the Partnership, the numerator of which is “one” and the denominator of which is the then current number of Partners in the Partnership.

(e)

For purposes of clarification and notwithstanding anything to the contrary set forth above:

(i)

The Partnership shall have no ownership interest of any kind in the Partner Compositions of the Partners.

(ii)

No Partner shall have any ownership interest of any kind in the Partner Compositions of another Partner.

(iii)

The Partnership shall not be entitled to any participation in a Partner Composition under this paragraph 5.3 to the extent attributable to the use of such Partner Composition on a non-Group Recording.

(iv)

All obligations of a Terminated Partner to pay to the Partnership such Partner’s applicable Partnership Publishing Participation under paragraph 5.3(b) above shall cease as to future earnings from such Terminated Partner’s Partner Compositions effective upon the Valuation Date for such Terminated Partner. In addition, such Terminated Partner’s right to participate in the Partnership Publishing Participation thereafter received by the Partnership from the other Partner’s Partner Compositions shall also cease upon the Valuation Date.

Article VI Management and Control

6.1 Partnership Vote. Only the Voting Partners (herein defined) shall participate in the control, management, and direction of the Partnership. Except as expressly provided otherwise in this agreement, all matters within the ordinary course of the Partnership business shall be decided by majority vote of the Voting Partners including, in each instance (except as otherwise expressly set forth in this agreement), the vote of any Partner with an interest in the result of such vote (such majority vote is referred to in this agreement as a “Partnership Vote”). All matters outside the ordinary course of the Partnership business shall be decided by, and any acts in contravention of this agreement, may only be authorized by, unanimous vote of the Voting Partners. Until designated otherwise by the unanimous consent of the Voting Partners, the Voting Partners, who shall each have one vote, shall be __________. Upon the Termination (as defined in paragraph 7.3 below) of a Voting Partner, although this paragraph 6.1 shall permit the remaining Voting Partners to elect a replacement Voting Partner by the unanimous consent of the remaining Voting Partners, the remaining Voting Partners shall not be obligated to elect any replacement Voting Partner.

6.2 Managing Partner. Pursuant to the unanimous written consent of the Voting Partners, the Voting Partners may, from time to time, designate a managing partner with such powers and duties and subject to removal upon such terms and conditions designated by the Voting Partners. The Partnership’s right of consent or approval under any Approved Agreement may be exercised by the managing partner or any other person designated by Partnership Vote.

6.3 Power to Incur Liabilities. No Partner shall have authority to bind the Partnership in the ordinary course of its business, by making contracts and/or otherwise incurring obligations in the name or on the credit of the Partnership, except as authorized by Partnership Vote. Any Partner who enters into any contract or incurs any obligation in the name or on the credit of the Partnership in violation of this paragraph may be held individually liable by the other Partners for the entire amount of the obligation or loss thus incurred by such Partner.

6.4 Limitations on Authority. Without the unanimous consent of the Voting Partners, neither the Partnership nor any individual Partner shall have the authority to:

(a)

Borrow money in the Partnership’s name;

(b)

Loan Partnership funds;

(c)

Transfer, mortgage, pledge, assign, hypothecate, or otherwise grant, dispose of, or encumber any Partnership assets, including goodwill;

(d)

Enter into any agreement that would place a Partner in conflict with, or in breach of, any provision of this agreement, or any Approved Agreement;

(e)

Perform any act that would make it impossible to carry on the ordinary business of the Partnership;

(f)

In the name of the Partnership, confess a judgment, submit a Partnership claim or liability to arbitration (except as provided in paragraph 6.3 above), endorse any note or act as an accommodation party, or otherwise become surety for any person;

(g)

Assign, mortgage, encumber, transfer or sell its share of the Partnership or in the capital assets or property of the Partnership or enter into any agreement as the result of which any person shall become interested with such Partner in the Partnership;

(h)

Admit a new partner to the Partnership; or

(i)

Bind the Partnership by making contracts or incurring obligations in the name or on the credit of the Partnership, which contracts and/or obligations are outside of the ordinary course of the Partnership business.

6.5 Personal Liability. Any Partner who enters into any contract or incurs any obligation on behalf of, or on the credit of, the Partnership in violation of the provisions of this agreement, or otherwise violates the prohibitions of paragraph 6.4 above, shall indemnify the other Partners for any and all losses or expenses incurred pursuant to such contract or obligation.

Article VII Termination or Admission of a Partner

7.1 Withdrawal of a Partner.

(a)

Any Partner may voluntarily withdraw from the Partnership by giving all the other Partners at least one hundred and twenty (120) days prior written notice of his intention to do so; provided, however, that the Partnership shall have no obligation to continue to use the services of such withdrawing Partner during the one hundred and twenty (120) day period following the date of any such notice. In the event the Partnership elects not to use the services of any withdrawing Partner during all or any remaining portion of the one hundred and twenty (120) day period following the date of notice of any such withdrawal, then the Valuation Date, as hereinafter defined, shall be deemed to be the date on which the Partnership notifies such Partner of its intention not to continue to use such Partner’s services.

(b)

Should any Partner withdraw from the Partnership as aforesaid and fail or refuse to perform during all or any portion of the required one hundred and twenty (120) day prior notice period (unless such failure or refusal is caused by reasons beyond such withdrawing Partner’s control or is expressly requested by the Partnership or agreed to by Partnership Vote, excluding the non-withdrawing Partner), then

(i)

such Partner shall be liable to the remaining Partners for any and all damages suffered by the Partnership by reason of such failure or refusal (e.g., losses resulting from cancelled concert engagements, television performances, recording sessions, etc.) and

(ii)

the Valuation Date shall be deemed to be the date on which such failure or refusal commenced.

7.2 Expulsion of a Partner. For any reason whatsoever, the Partnership may expel a Partner from the Partnership by unanimous vote of all Voting Partners other than the Partner proposed to be expelled. Such expulsion shall be effective on the day on which the Partnership delivers notice of such expulsion to the expelled Partner.

7.3 Purchase and Sale of Partnership Interest in the Event of Withdrawal, Expulsion or Death. Upon the withdrawal, expulsion or death (hereinafter collectively referred to as the “Termination”) of any Partner (hereinafter, any such withdrawn, expelled, or deceased Partner shall be referred to as a “Terminated Partner”), such Terminated Partner or such Terminated Partner’s estate, as applicable, shall, in accordance with Article VIII, sell to the Partnership, and the Partnership shall purchase, for an amount calculated in accordance with Article VIII, the Terminated Partner’s interest in the Partnership; provided, however, that no such obligations shall exist if, upon such Termination, the Partnership elects by Partnership Vote, within one hundred twenty (120) days after such Termination, to liquidate and wind up in accordance with this Agreement.

7.4 Bankruptcy, Incompetency or Insolvency. For purposes of this agreement, a judicial declaration of the incompetency, bankruptcy, or insolvency of a Partner shall, absent the unanimous vote of the Voting Partners to the contrary, automatically constitute a withdrawal of such Partner from the Partnership, to which withdrawal the provisions of paragraph 7.1 shall apply, effective as of the last day of the month during which any such event occurs.

7.5 Continuation of Partnership. The death, withdrawal, or termination of a Partner shall not cause the winding up of the Partnership as to the other Partners, nor shall it cause any interruption in the conduct of the Partnership business, nor shall it affect the continuity of the Partnership and its business, or the continued use of the Partnership name in the conduct of such business.

7.6 Restrictions on Transfer. No Partner shall transfer any or all of such Partner’s interest in the Partnership, whether voluntarily or involuntarily (including by way of sale, assignment, transfer to a trust, gift, will, intestate succession, marital dissolution, or death of a spouse), to any person (including any other Partner) without the prior unanimous consent of the Voting Partners. If a Partner purports to transfer any or all of his interest in the Partnership to any transferee without such consent, then such purported transfer shall constitute a withdrawal of such Partner from the Partnership, to which withdrawal the provisions of paragraph 7.1 shall apply, and such purported transferee shall not receive any interest in either the Partnership or any Partnership assets.

7.7 New Partners. No new person shall be admitted as a partner to the Partnership except by unanimous vote of all Voting Partners. Any person so admitted to the Partnership as a partner shall (a) agree in writing to be bound by each and every term of this agreement and such additional terms, if any, as shall be determined by the unanimous vote of the Voting Partners, and (b) contribute to the capital of the Partnership such sum, if any, determined by the unanimous vote of the Voting Partners. Unless designated otherwise by unanimous vote of the Voting Partners, any newly admitted Partner shall be deemed a non-voting Partner.

Article VIII Purchase Price of a Partnership Interest

8.1 Partnership Obligation. The full purchase price required to be paid by the Partnership for a Terminated Partner’s interest in the Partnership shall be an obligation payable solely from Partnership assets (both present and future) and not a personal obligation of the Partners, and shall consist solely of the amounts (regardless of any ongoing royalty participations to which the Partnership may be entitled), and be payable in the manner, specified in this Article VIII.

8.2 Elimination of Capital Account.

(a)

As of the effective date of the Termination of a Partner (hereinafter the effective date of a Termination [which, in the event of a Partner’s death, shall be the date of death] shall be referred to as the “Valuation Date”), the Terminated Partner’s individual capital account shall be adjusted to reflect the Terminated Partner’s share of Net Profits or Net Losses of the Partnership from the beginning of the fiscal year in which such Termination occurs through the Valuation Date, taking into account for such purpose all Partnership expenses paid or accrued during such period. The Partnership shall use the so-called “interim closing of the books method” for tax and accounting purposes. Such capital account shall be further adjusted by taking into account such Terminated Partner’s share of the book value of any tangible assets (or any liabilities) of the Partnership as of the Valuation Date (excluding, however, any interest of the Partnership in any master recordings, videots, films or other recordings of any kind embodying the performances of the Group or any one or more of the Partners); provided, however, that in making such computation no value shall be allocated to any interest of such Partner in or to any Approved Agreement. If, after such adjustment, there remains a credit balance in the Terminated Partner’s capital account, then such credit balance shall be paid to the Terminated Partner (if a Terminated Partner is deceased, then any reference in this agreement to either (i) payments to or from, or (ii) statements submitted to, such Terminated Partner shall be interpreted as (I) payments to or from, or (II) statements submitted to, such Terminated Partner’s estate and heirs, as applicable) in accordance with paragraphs 8.2(a)(i), (ii), and (iii) below.

(i)

Where such credit balance is equal to or less than $ __________, such sum shall be paid, with interest on the unpaid balance at the applicable federal rate as defined in Section 1274 of the Code, prevailing on the Valuation Date (herein referred to as the “Applicable Federal Rate”), as follows: (A) the initial $ __________, plus interest, shall be paid six (6) months from the Valuation Date; and (B) the remaining balance thereof, plus interest, shall be paid twelve (12) months from the Valuation Date. The foregoing payment(s) shall be evidenced by a promissory note executed by the Partnership as thereafter reconstituted.

(ii)

Where such credit balance is greater than $ __________, such sum shall be paid, with interest on the unpaid balance at the Applicable Federal Rate as follows: (A) one-half (1/2) or the initial $ __________thereof, whichever sum is greater, shall be paid in two (2) equal installments, plus interest, six (6) months and twelve (12) months, respectively, from the Valuation Date; and (B) the remaining balance thereof shall be paid in two (2) equal installments, plus interest, eighteen (18) months and twenty-four (24) months, respectively, from the Valuation Date. The foregoing payments shall be evidenced by a promissory note executed by the Partnership as thereafter reconstituted.

(iii)

Notwithstanding subparagraphs (a)(i) and (a)(ii) of this paragraph 8.2, the amount of any such promissory notes referenced therein shall be reduced by the amount, if any, of the Terminated Partner’s obligations to the Partnership under this agreement, and the Partnership (A) shall always have the option to pay, without penalty, the payments therein provided at a date earlier than required in said subparagraphs, and (B) shall be obligated to use its reasonable efforts to pay each of such payments at the earliest date possible consistent with the best business judgment of the Partnership exercised in good faith and in consultation with the Accountant.

(b)

If there remains a debit balance, such debit balance shall be paid to the Partnership by the Terminated Partner at the earlier of (i) the time required pursuant to Treasury Regulation Section 1.704-1(b)(2)(ii)((b)(3), or (ii) in the same manner as provided in subparagraphs (a)(i) through (a)(iii) of this paragraph 8.2, as if such debit balance were a credit balance. In addition, the Partnership shall have the option, at its sole election, to withhold payment to the Terminated Partner of any sums payable to such Terminated Partner pursuant to paragraph 8.3 below in any amount not in excess of the amount then owing by the Terminated Partner to the Partnership pursuant to this paragraph 8.2. The amount so withheld shall be treated as having been paid to the Terminated Partner pursuant to paragraph 8.3 and then recontributed to the Partnership by the Terminated Partner in satisfaction of the obligation to restore the debit balance in the capital account, and in the case of any obligation of the Terminated Partner to make payments to the Partnership in the future, such withheld amounts shall be treated as made in satisfaction of the obligations to pay amounts due at the time or times furthest in the future.

8.3 Payment of Future Partnership Income.

(a)

Within forty-five (45) days after receipt by the Partnership of the following revenues only, the Partnership shall pay to the Terminated Partner his applicable pro rata share of such revenues:

(i)

Records. Royalties and other sums received by, or credited (by reason of a prior advance) to the account of, the Partnership on or after the Valuation Date pursuant to the Recording Agreement on account of the exploitation of master recordings of the Group (whether or not such master recordings embody the performance of the Terminated Partner) which were substantially completed prior to the Valuation Date and while the Terminated Partner was a Partner (hereinafter referred to as “Participation Masters”), following the deduction of (A) any and all cash advances received by the Partnership prior to the Valuation Date and while the Terminated Partner was a Partner, which have not been recouped prior to the Valuation Date, (B) any and all recoupable costs and expenses incurred in connection with the production of such Participation Masters (including recording costs incurred on or after the Valuation Date but in connection with a Participation Master) which have not been recouped prior to the Valuation Date, and (C) any and all other advances and recoupable costs and expenses (e.g. video production costs, “tour support” advances and advances for independent record promotion) received by or incurred on behalf of the Partnership prior to the Valuation Date and while the Terminated Partner was a Partner (except that video production costs incurred on or after the Valuation Date but in connection with a Participation Master shall be included in this subsection (C)), which have not been recouped prior to the Valuation Date; provided, however, that (I) the aforesaid royalties payable to any such Terminated Partner shall be computed without regard to any royalty increases or improved royalty calculation provisions in the Recording Agreement secured by the Partnership on or after the Valuation Date, and (II) the aforesaid income of the Partnership and deductions therefrom shall be calculated separately with respect to those Participation Masters recorded under each Recording Agreement and there shall be no cross-collateralization between such Recording Agreements. Whenever Participation Masters are coupled on a record with other master recordings, those royalties attributable to the Participation Masters shall be determined by multiplying the gross royalties derived from such record by a fraction, the numerator of which is the number of Participation Masters on such record and the denominator of which is the total number of master recordings (including the Participation Masters) on such record;

(ii)

Concerts. Income received by the Partnership after the Valuation Date and derived from concert performances in which the Terminated Partner performed less all expenses attributable thereto, including without limitation, costs of travel and accommodations, equipment, rental lighting and sound, opening acts, stage crew, musicians, singers and other personnel, publicity and promotion;

(iii)

Merchandise. Income received by, or credited (by reason of a prior advance) to the account of, the Partnership after the Valuation Date and derived from any tour and/or retail merchandising agreements entered into by the Partnership prior to the Valuation Date and while the Terminated Partner was a Partner, but solely with respect to sales occurring thereunder prior to the Valuation Date, following the deduction of (A) all recoupable costs and expenses paid or incurred under such agreements prior to the Valuation Date and while the Terminated Partner was a Partner, which have not been recouped prior to the Valuation Date, and (B) all cash advances received by the Partnership under such agreements prior to the Valuation Date and while the Terminated Partner was a Partner, which have not been recouped prior to the Valuation Date; and

(iv)

Partnership Publishing Participation. Partnership Publishing Participation received by the Partnership on or after the Valuation Date and derived from Partner Compositions as embodied on Group Recordings recorded before the Valuation Date and while the Terminated Partner was a Partner, following the deduction (in the following order and to the extent not already deducted hereunder) of (A) any and all cash advances received by the Partnership in connection with the applicable Partner Compositions prior to the Valuation Date and while the Terminated Partner was a Partner which have not been recouped prior to the Valuation Date, and (B) any and all recoupable costs and expenses incurred with respect to the applicable Partner Compositions which have not been recouped prior to the Valuation Date.

(v)

Miscellaneous. Income received by, or credited (by reason of a prior advance) to the account of, the Partnership after the Valuation Date and derived from any materials, projects or items other than those described in paragraphs 8.3(a)(i), (ii) or (iii) above (e.g., motion pictures, videos, television and radio programs and master recordings recorded for a motion picture soundtrack album) substantially created or completed by the Partnership prior to the Valuation Date and containing the Terminated Partner’s performances and/or creative input as a member of the Group, following the deduction of (A) all recoupable or deductible production costs and expenses (including all expenses of exploitation) paid or incurred in connection with such materials, projects or items, which have not been recouped or deducted prior to the Valuation Date, and (B) all cash advances received by the Partnership in connection with such materials, projects or items prior to the Valuation Date and while the Terminated Partner was a Partner, which have not been recouped prior to the Valuation Date. If any such materials, projects or items are coupled with other materials, projects or items in which the Terminated Partner does not participate hereunder and are exploited together as a package (e.g. a compilation video), a fair allocation of the income derived therefrom shall be made in good faith by the Accountant.

(b)

For purposes of the foregoing paragraph 8.3(a): (i) Each agreement, material, project and/or item under paragraphs 8.3(a)(iii), (iv), and (v) above shall be treated separately and shall not be cross-collateralized in calculating what is due the Terminated Partner; (ii) prior to the calculation of the Terminated Partner’s share of each respective source of income described in paragraphs 8.3(a)(i), (ii), (iii), (iv), and (v) above, there shall first be deducted from the otherwise applicable amount of such income in question any and all collection costs (including attorneys’ fees), accounting and audit costs, bona fide third party payments (including without limitation, record producer’s, recording engineer’s and video director’s royalties), production, exploitation and other costs expended or incurred by or on behalf of the Partnership and/or the Partners (or any of them), legal fees and costs, and management, business management and agency commissions, which are attributable thereto (collectively “Expenses”); and (iii) the Terminated Partner’s “pro rata share” shall equal a fraction, the numerator of which is “one” and the denominator of which is the total number of Partners participating in the particular source of income in question.

(c)

As provided in paragraph 5.3 above, and notwithstanding anything else to the contrary set forth above, a Terminated Partner shall not participate in any Partner Publishing Income received by the Partnership more than six (6) months after the Valuation Date.

8.4 Audits. In the event the Partnership shall undertake an audit or examination of the books and records of any payor of royalties or any other sums referred to in paragraphs 8.3(a)(i), (ii), (iii) and (iv) above, the Terminated Partner shall receive the Terminated Partner’s applicable share hereunder of any resulting recovery within forty-five (45) days after the Partnership’s receipt thereof, after first subtracting therefrom that portion of all applicable Expenses attributable thereto determined by multiplying the amount of such Expenses by a fraction, the numerator of which is the Terminated Partner’s share of such recovery and the denominator of which is the total amount of such recovery.

8.5 Overpayments. Notwithstanding anything to the contrary contained herein, if, at any time after the Valuation Date, the actual income of the Partnership (as reflected on statements received by the Partnership, audits conducted on behalf of the Partnership, or otherwise) indicates that any Terminated Partner received, prior to the Valuation Date, an allocation of an advance or other income described in Article IV that is disproportionately greater than such Terminated Partner’s share of such actual income, then, to the extent the Partnership is required to repay all or a portion of the applicable advance or other income, such Terminated Partner shall promptly repay to the Partnership the amount of the excess advance or other income paid to such Terminated Partner. In the event that a Terminated Partner fails to make any payment required by this paragraph 8.5, then, without limiting any of the Partnership’s other remedies, the Partnership shall have the right to deduct the amount of such payment from any and all monies otherwise payable to the Terminated Partner.

8.6 Goodwill. Upon any Termination or dissolution of the Partnership, the goodwill, if any, of the Partnership, including any goodwill associated with the Group Name, shall not be considered an asset of the Partnership for purposes of valuation or division of the Partnership assets under this Article VIII or under Article X below.

8.7 Complete Termination of Partner’s Interest. The payment of the amounts set forth in this Article VIII shall constitute a complete buyout, settlement, and liquidation of any and all right, title, and interest that a Terminated Partner may have in, to, or against the Partnership or the Partners. Without limiting the generality of the foregoing, except as specifically provided in this Article VIII, no Terminated Partner shall have any interest in income received by the Partnership after the Valuation Date. Payments under paragraph 8.2 shall be treated as payments for a Terminated Partner’s interest in Partnership property, as described in Section 736(b) of the Code. Payments under paragraph 8.3 shall be treated as payments of the Terminated Partner’s distributive share of Partnership income, as described in Section 736(a) of the Code.

Article IX Additional Provisions Regarding Termination

9.1 Statements and Inspection of Records. In connection with ongoing payments that may be required to be made to a Terminated Partner pursuant to Article VIII, the Accountant shall furnish to the Terminated Partner semi-annual statements regarding any such payments made during the prior six (6) month period, and the basis of such payments. Each such statement shall be binding upon the Terminated Partner, unless (a) an objection is made in writing stating the basis therefor and notice of such objection is delivered to the Partnership within three (3) years after the date of such statement, and (b) if the Partnership denies the validity of such objection, then suit is instituted within one (1) year after the date notice of such objection is delivered to the Partnership. During said three (3) year period, upon reasonable advance notice and at reasonable times, the Terminated Partner, shall, at the Terminated Partner’s sole cost and expense, have the right to inspect the portion of the Partnership’s books and records that relate to monies payable to such Terminated Partner.

9.2 Third Party Books and Records. It is agreed and understood that in rendering the statements and making the payments required by Articles VIII and IX hereof, the Partnership shall rely on statements it receives from third parties; accordingly, the Partnership shall have no liability to any Terminated Partner if such payments or statements are accurately based on the information supplied to the Partnership by such third parties. The Partnership shall make available to the Terminated Partner copies of the portions of such third party statements that relate to monies payable under Articles VIII and IX hereof. Moreover, if the Partnership does not, prior to the Trigger Date (hereinafter defined), conduct an examination or audit of any particular third party’s books and records in respect of a particular royalty or income statement rendered by such third party, then the Terminated Partner shall have the right, by written notice to the Partnership during the four (4) month period following the Trigger Date, to require the Partnership to conduct, at the Terminated Partner’s sole expense and with a certified public accountant of the Terminated Partner’s choice, such an audit or examination (hereinafter referred to as a “Termination Audit”). The Partnership shall, within thirty business (30) days after the Partnership receives any monies from any third party pursuant to a particular Termination Audit, pay to the Terminated Partner an amount equal to the “Termination Share.” As used herein, the term “Termination Share” shall mean the amount of Net Monies (hereinafter defined) multiplied by a fraction, the numerator of which is the amount of money paid by such third party to the Partnership as a result of such Termination Audit that is allocable to the Terminated Partner pursuant to this Agreement, and the denominator of which is the total amount of money paid by such third party to the Partnership as a result of such Termination Audit. As used herein, the term “Net Monies” shall mean the gross monies paid by third parties to the Partnership pursuant to a Termination Audit, less any and all expenses incurred by the Partnership or the Terminated Partner pursuant to the foregoing. The party incurring any such expenses shall be reimbursed therefor from the first Net Monies received by the Partnership. As used herein, the term “Trigger Date” shall mean that date four (4) months before the last date on which the Partnership shall, under the Partnership’s agreement with any such third party, have the right to conduct an examination of the applicable books and records of such third party.

9.3 Damages and Liabilities. Notwithstanding anything to the contrary contained in this agreement, (a) in the event a Partner is expelled by the Partnership for a breach of a material provision of this agreement, excluding the withdrawal of a Partner earlier than permitted under paragraph 7.1(a) (which is subject to the provisions of paragraph 7.1(b)), then such Partner (or his estate and heirs, as applicable) shall be liable for any damages suffered by the Partnership from such material breach, and (b) each Terminated Partner (or his estate and heirs, as applicable) shall be liable for payment to the Partnership for such Partner’s allocable share of any claim, action, liability, damage, cost, or expense arising out of, or in connection with, any Participation Masters, or any materials, projects, or transactions acquired, produced, consummated, or completed by the Partnership on or before the Valuation Date (“Pre-Valuation Liabilities”). Such Partner’s allocable share of Pre-Valuation Liabilities shall be based on such Partner’s allocable share of Net Profits and Net Losses at the time such Pre-Valuation Liabilities were incurred. Without limiting any of the Partnership’s other rights or remedies, any such damages or Pre-Valuation Liabilities shall be