WAREHOUSING AND DELIVERY OPERATIONS

AGREEMENT

THIS AGREEMENT (“Agreement”) is entered into this __day of September

2003, by and between:

UNIVERSAL MUSIC Philippines, Inc. (“UNIVERSAL”), a corporation

organized and existing under Philippine law with offices at 28 Manga Rd., Brgy.
Kaunlaran, Aurora Blvd., Cubao, Quezon City, Philippines, duly represented
herein by its Managing Director, Mr. Delfin Sabido, and hereinafter referred to as
“UNIVERSAL”

- and -

SONY MUSIC ENTERTAINMENT Philippines, Inc. (“SONY”), a corporation

organized and existing under Philippine law with offices at GDC 1A Bldg., 750
Shaw Blvd., Mandaluyong City, Philippines, duly represented herein by its
Managing Director, Mr. Wallace S. Chamsay, and hereinafter referred to as
“SONY”

WITNESSETH:

WHEREAS, SONY currently leases a portion of a two story concrete

office/warehouse building known as the FMF Business Center located along
Pioneer Street, Mandaluyong City and SONY, for the purpose of reducing costs,
is agreeable to share a portion of the same to UNIVERSAL;

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WHEREAS, UNIVERSAL, for the purpose of reducing costs, desires to share a
portion of SONY’s current warehouse as specifically made available to
UNIVERSAL by SONY.

WHEREAS, UNIVERSAL and SONY likewise desire to share costs in the

picking, packing, delivery and shipment of their respective Products, using the
existing distribution network and facility of SONY for such purpose.

NOW, THEREFORE, in consideration of the mutual promises and covenants

contained herein, SONY and UNIVERSAL hereby agree as follows:

1. DEFINITIONS

As used in this Agreement, the following terms are defined as set forth below:

(a) “Products” shall mean all physical forms of reproduction, transmission or

communication of recordings now or hereafter known, manufactured,
distributed, transmitted or communicated primarily for home use, school
use, juke box use, or use in means of transportation, including Records
embodying or producing sound alone and audiovisual records (including
but not limited to magnetic analogue tape records (MC) and five inch
compact disc records (CD) forms.).

(b) “Premises” shall mean approximately four hundred ninety-four (494)

square meters which is a portion of nine hundred eighty-eight (988)
square meters of warehouse space at Level B of the FMF Business
Center located at 126 Pioneer Street, Mandaluyong City. The Premises is
more particularly described in Annex A of this Agreement.

(c) “Regular Routing Schedule” shall mean routes and delivery schedules
mutually agreed upon, specifying places of delivery including the dates

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 and times of pick-up in accordance with the initial schedule to be agreed
upon by both parties.

(d) “Special Pull-Outs” refers to pick up of Products from customers’ stores,

outlets, warehouses or other places specified by customers for transport
back to the warehouse where such places are not part of the Regular
Routing Schedule, or where places are part of the Regular Routing
Schedule but the date/time of pick-up is other than the one stated in the
Regular Routing Schedule.

(e) “Territory” refers to the Republic of the Philippines.

2. SUBJECT MATTER OF AGREEMENT:

The Parties agree to perform the following obligations, subject to the terms and
conditions of this Agreement:

(a) SONY hereby agrees to share the Premises to UNIVERSAL, and the latter
agrees to share such Premises with SONY. Provided, that UNIVERSAL
shall share in the building and occupancy costs of SONY, at a rate of fifty
percent (50%) in relation to the entire warehouse space occupied by
SONY at the FMF Business Center. Lessor FMF Development
Corporation (“FMF”) has agreed to this cost sharing agreement between
SONY and UNIVERSAL.

(b) SONY hereby agrees to share its distribution network and facility with
UNIVERSAL and the latter agrees to share such distribution network and
facility with SONY in the distribution of their respective Products within the
Territory. Provided, that UNIVERSAL shall share in the distribution costs
of SONY at the rate specifically provided for in Clause 6.1(d) below.

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3. TERM

Unless earlier terminated as provided herein, this Agreement is entered into for
an initial period of two (2) years, commencing October 15, 2003 and ending
November 15, 2005 (the “Term”). Upon the mutual agreement of the parties, the
Term may be extended for a period of one (1) year, under the same terms and
conditions herein set forth; provided, that the extension of the Term is
conditioned on the exercise of SONY’s renewal option with FMF.

UNIVERSAL and SONY shall review the agreement sixty (60) days prior to such
expiry, UNIVERSAL having the option to extend the Term under the same terms
set forth in this Agreement.

4. SERVICES

SONY shall share its warehouse facility and distribution network with
UNIVERSAL to distribute the latter’s Products within the Territory, under the
following procedure:

4.1 Warehousing

(a) SONY shall manage the warehousing facilities to properly store

UNIVERSAL’s products to enable a systematic and efficient receiving and
shelving of UNIVERSAL’s products and enable fulfillment of
UNIVERSAL’s shipping orders promptly.

(b) SONY shall undertake an annual physical stock-take under the

supervision of UNIVERSAL personnel.

4.2 Picking and Packing

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(a) UNIVERSAL shall dispatch to SONY shipping documents to fulfill
UNIVERSAL’s shipping order.

(b) SONY shall prepare UNIVERSAL’s products using its picking and packing
facilities as required to fulfill UNIVERSAL’s shipping orders, packed and
complete with relevant shipping documents received from UNIVERSAL.

4.3 Shipment

(a) SONY, using its own distribution network and facility, shall deliver all
packed UNIVERSAL Products according to the agreed Regular Routing
schedule in Metro Manila. In the event SONY shall use the services of a
third party shipper in delivering UNIVERSAL Products in Metro Manila, the
same routing schedule shall be followed by the third party shipper.

For Metro Manila deliveries, upon receiving of the UNIVERSAL Product by

the customer, SONY shall verify the quantity of all packed
boxes/packages and shall reconcile them against the accompanying
delivery document and immediately identify any discrepancies. All
shipping documents shall be signed by the customer and returned to
UNIVERSAL no later than the working day following the delivery.

(b) For Provincial deliveries, SONY shall dispatch to a carrier all packed
UNIVERSAL Products intended for provincial outlets in accordance with
the pick-up and routing schedule of such carrier. Such UNIVERSAL
Products dispatched to provincial outlets shall be delivered/shipped via a
carrier preferred and pre-approved by UNIVERSAL. UNIVERSAL shall
pay for the actual freight charges directly to their assigned carrier.

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(c) In accordance with this Agreement, SONY shall submit the Regular
Routing Schedule for a specific calendar month at least 15 days prior to its
effectivity.

In the event of an amendment to the current Regular Routing Schedule,

such amendment shall be agreed to in writing by SONY and UNIVERSAL
and shall be effective five (5) days thereafter. Where third party carriers
are engaged, said carriers shall be properly notified of amendments to the
routing schedules resulting from Special Deliveries/Pull-outs.

(d) SONY shall maintain delivery and dispatch records and reports and
submitted to authorized UNIVERSAL personnel.

4.4 Losses in Transit

SONY shall be liable for any losses of UNIVERSAL’s Products while in transit
within the Territory, except in the event that such losses are due to: (a) the fault
or negligence of UNIVERSAL; (b) flood, storm, earthquake or any other natural
calamity; (c) the character of the goods or defects in the packaging or
containers; or (d) order or act of competent public authority. SONY’s liability for
loss shall cease upon the customer’s acceptance of the UNIVERSAL Products
duly delivered at the point of destination.

4.5 Stock Shrinkage (We have to discuss the operating procedures to

ensure losses are not unfairly charged to SONY)

SONY shall be liable for any stock shrinkage of UNIVERSAL’s Products up to 5%

of UNIVERSAL’s total stock as assessed after the annual stock take, except in
the event that such losses are due to: (a) the fault or negligence of UNIVERSAL;
(b) flood, storm, earthquake or any other natural calamity; (c) the character of

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the goods or defects in the packaging or containers; or (d) order or act of
competent public authority.

4.6 Returns

SONY shall pick up all returns of UNIVERSAL Products on a timely basis and as
per agreed regular routing schedule. SONY shall not accept any returns without
the prior written approval of UNIVERSAL.

5. PRIORITY

In sharing its distribution network and facility with UNIVERSAL, SONY agrees to
provide all services required hereunder and to plan total shipping capacity
allocations with a level of service and on a priority basis equal to that provided by
SONY to its own Products or to the products of any other third party. Any
preferential treatment given to its own Product by SONY or to any other product
serviced by SONY shall be deemed as a breach of this Agreement.

6. FEES AND EXPENSES

6.1 Costs to be shared by UNIVERSAL:

In consideration of the warehouse space and the distribution network and facility
shared by SONY to UNIVERSAL, the latter shall share the following costs with
SONY:
(a) Building Costs

UNIVERSAL shall share building costs with SONY in the amount of

(P85,585.50) per month. Such shared building costs is equal to 50% of
the area of the Premises warehouse area leased by SONY from FMF.

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(b) Variable Occupancy Costs

SONY and UNIVERSAL shall share variable occupancy costs equally,

consisting of power, water, drinking water, building fire insurance with
SONY in the amount of 50% of actual variable occupancy cost per month.

(c) Other Occupancy Costs

UNIVERSAL shall share the cost of one (1) parking space allocated for its
use in the amount of Php 2,000.00 per month.

(d) Picking, Packing and Distribution Fees

UNIVERSAL shall pay a fixed monthly fee of Php 124,950.00 per month
representing fees chargeable for services rendered covering picking,
packing and delivery costs of UNIVERSAL Product delivered in Metro
Manila outlets which are included in the Regular Routing Schedule. Fee is
fixed for one year and subject to annual review.

(e) Shipping Costs

UNIVERSAL shall pay directly to its preferred carrier the actual costs
charged by the latter for the provincial deliveries of UNIVERSAL Products.

6.2 Expenses

The following costs and expenses shall be borne by SONY:

(a) All freight expenses incurred by SONY in connection with the

transportation of UNIVERSAL Products from SONY’s warehouse to all

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 customers within Metro Manila, provided, however, that in the event
UNIVERSAL requires SONY to use a carrier other than that designated by
SONY, UNIVERSAL shall be responsible for any incremental freight costs.

6.3 Payment Method

(a) UNIVERSAL shall deliver to SONY, on or before the 7 th of each month, its
share in the Building Costs for the month and the fixed Picking, Packing
and Distribution fee.

(b) UNIVERSAL shall deliver to SONY, 15 days after receipt of Sony’s

Statement of Account for Variable Occupancy Costs; Other Occupancy
Costs; Delivery Costs and Shipping Costs, its share in such costs.

7. TITLE AND RISK

(a) At no time shall SONY acquire any title or interest in or to UNIVERSAL

Products. Full title and interest in UNIVERSAL Products shall remain with
UNIVERSAL. Accordingly, at all times UNIVERSAL shall be entitled to
possession and/or control of its Products and shall be entitled to
immediate access to the same at any time.

(b) Risk in the UNIVERSAL Products shall not pass to SONY otherwise than
in accordance with the terms of this Agreement.

The sole and exclusive remedy of SONY for any breach of this Agreement by
UNIVERSAL shall be an action at law for damages and SONY shall not seek any
other remedy, at law or in equity, such as withholding possession and/or control
of Product hereunder. Provided, that such court action for damages shall not be

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filed unless the parties refer the breach to a licensed government mediator for
mediation and such mediation proves unsuccessful.

All other disputes arising from the performance of the parties’ respective
obligations under this Agreement shall be referred to a licensed government
mediator for mediation before the same is brought to court.

8. LEGAL RELATIONSHIP

Nothing contained in this Agreement will be construed to constitute SONY and

UNIVERSAL as partners, joint venturers or having an employer–employee
relationship. SONY shall exercise exclusive control and responsibility as well
as exclusively answer for any liability which may arise in connection with all
persons employed, contracted or hired by it.

9. INSURANCE

UNIVERSAL shall bear the risk of and be responsible for insuring all its Products
while in storage at the warehouse at all times, including the period wherein the
Products are in SONY’s possession, as long as the goods are not in transit for
delivery/distribution within Metro Manila.

10. TAXES

(a) UNIVERSAL shall be solely responsible for the payment of taxes in

connection with the storage and distribution of its Products. If at any time
during the Term hereof, SONY is required by law to deduct any taxes from
UNIVERSAL’s share of the costs, SONY warrants that it shall make such

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 deductions and shall remit any such taxes for the account of UNIVERSAL
to the applicable local taxing authorities. SONY will furnish UNIVERSAL
with copies of all receipts and other documentation in connection with the
foregoing.

(b) SONY and UNIVERSAL shall be responsible for the payment of value
added taxes on all costs such as building costs and other variable costs.
(Note: This item for verification yet).

(c) Except as provided in this Agreement, each party will be solely obligated
to pay all taxes, fees or other government charges required by law to be
paid in connection with their activities undertaken pursuant to this
Agreement.

11. TERMINATION

(a) SONY may, at its option terminate this Agreement immediately by giving
UNIVERSAL written notice of termination in the event that UNIVERSAL
fails to shoulder its share of the costs as provided under this Agreement
within thirty (30) days from written demand.

(b) Either party may terminate this Agreement immediately by notice in writing
to the other party if the other party:

(i) Commits any material breach of this Agreement, otherwise than as

a result of any contingency referred to in clause 14 below and has
not remedied the same (if capable of being remedied) within thirty
(30) days after receipt of notice in writing from the party specifying
the breach and calling for the same to be remedied or shall not
have commenced within such period with due diligence to remedy

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 the breach complained of in as short a time as is reasonably
practicable or having so commenced has not continued so to
remedy the same; or

(ii) Goes bankrupt, compounds or makes any arrangements with its

creditors or goes into liquidation (other than voluntary liquidation for
the sole purpose of amalgamation or reconstruction) or have a
receiver appointed of its assets.

(c) The termination of this Agreement shall be without prejudice to any rights
or obligations already accrued prior to such termination and shall not
destroy or diminish the binding force of any of the provisions of this
Agreement which are expressly or by implication to come into effect or to
continue to be effective on or after such termination. For the avoidance of
doubt, it is understood that SONY’s distribution of UNIVERSAL’s Products
in accordance with this Agreement shall cease upon the termination of the
same.

(d) In case of termination arising from material breach by either party, the
non-defaulting party may terminate the Agreement only upon issuance of
an arbitral award and confirming the breach.

(e) Either party may pre-terminate this Agreement by giving written notice of
pre-termination six (6) months prior to termination date.

12. WARRANTIES

(a) UNIVERSAL hereby represents and warrants to SONY that:

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(i) it has and will during the Term of this Agreement have all such
rights in the Products as are necessary to enable it to enter into and
perform its obligations under this Agreement;

(ii) the shipment of any UNIVERSAL Product hereunder will not

contravene any law, ordinance or administrative regulation.

(iii) artist and copyright royalties and any other similar charges of
whatsoever nature due to any third party in respect of any
UNIVERSAL Product distributed hereunder shall be the sole
responsibility of UNIVERSAL;

(iv) the distribution of the UNIVERSAL Product hereunder in

accordance with the terms of this Agreement will not involve SONY
in any form of liability to any third party unless caused by the
wrongful or negligent acts of SONY;

(v) it is under no disability, restriction or prohibition in respect of its

rights to enter into this Agreement and to perform its obligations
hereunder;

(vi) SONY shall have no liability to administer or pay copyright and/or

artists’ royalty or any other fees, royalties or monies of any kind,
including, without limiting the generality of the foregoing, any
monies payable to persons having or claiming an interest in the
Products arising from SONY’s distribution of the Product
hereunder.

(vii) UNIVERSAL shall indemnify SONY and keep it indemnified against

all actions, claims, demands, liabilities, costs, charges and
expenses of whatever nature, including reasonable legal fees which

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 may be brought against SONY or which SONY may suffer or incur
as a result of any breach by UNIVERSAL of this Agreement, or
arising from any third party claim relating to the warranties
described in clause 12 (a) regardless of whether or not the
existence of such claims were known by UNIVERSAL at any time.
In the event of any claim to which this indemnity applies, SONY
shall give UNIVERSAL prompt notice thereof in writing and
UNIVERSAL shall have the right, at its option, to participate in the
defense of such claim with SONY’s consent, which consent shall
not be unreasonably withheld or delayed.

(a) SONY hereby represents and warrants to UNIVERSAL that:

(i) it is under no disability, restriction nor prohibition in respect of its

rights to enter into this Agreement and to perform its obligations
hereunder.

(ii) it has all the required licenses consents, approvals and capacity to
perform its obligations under this Agreement.

(iii) the distribution of any UNIVERSAL Product hereunder will not

contravene any contract, law, ordinance or administrative
regulation.

(iv)I it will perform the services hereunder in accordance with all

applicable laws, rules and regulations, including best business
practices.

(v) it will maintain UNIVERSAL in the peaceful and adequate

enjoyment of the Premises for the Term of this Agreement and shall
ensure that throughout said period utilities payments due to all

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 public or private entities shall be promptly and completely settled
whenever due.

(vi) it will allow UNIVERSAL or its designated representative to have

access to the Premises. UNIVERSAL or its designated
representative shall have the right to require SONY to take such
action as UNIVERSAL may reasonably require to ensure that the
UNIVERSAL Products are safely and securely stored.

(vii) it will provide appropriate facilities and measures to protect

UNIVERSAL’s Products from damage caused by humidity, heat,
liquids, pilferage, vandalism, insects and pests.

(viii) it shall indemnify UNIVERSAL against all actions, claims,

demands, liabilities, costs, charges and expenses of whatever
nature, including reasonable legal fees which may be brought
against it or which it may suffer or incur as a result of any breach by
SONY of the Agreement. In the event of any claim being made to
which this indemnity applies, UNIVERSAL shall give SONY prompt
notice thereof in writing and SONY shall have the right to
participate in the defense of such claim at SONY’s sole expense.
UNIVERSAL shall not settle any claim without SONY’s consent,
which consent shall not be unreasonably withheld or delayed.

13. ASSIGNMENT

Neither party may assign this Agreement or any portion thereof without thewritten
consent of the other party.

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14. FORCE MAJEURE

Notwithstanding anything contained herein to the contrary, neither party will be

liable to the other for any non-performance or delay or interruption in the
performance of this Agreement because of any fortuitous event or force majeure
including without limitation, wars, insurrections, strikes, delays of transportation
agencies, acts of God, labor disputes, fires, governmental actions or
proceedings, injunctions or any other reasons beyond the control of one or both
of the parties or of their agents or personnel. Upon the occurrence of any
fortuitous event or force majeure; UNIVERSAL will have the right to suspend this
Agreement or extend the Term thereof for the same period as the delay
occasioned by such fortuitous event or force majeure, provided however that if
any fortuitous event or force majeure continues for one (1) month, either party
will have the right to terminate this Agreement by giving the other party written
notice to that effect and provided, further, that no occurrence of any fortuitous
event or force majeure hereunder will relieve either party of any obligation to
make any payments due the other party under this Agreement.

15. NOTICES

Unless otherwise herein specified, any notice or request required or permitted to

be given or made under this Agreement to either Party shall be in writing to the
addresses, e-mail addresses, telex and facsimile numbers specified below or to
such other address, e-mail addresses, telex, and facsimile numbers as may be
notified in writing by one party to the other party from time to time:

To UNIVERSAL:
UNIVERSAL Music Philippines
28 Manga Rd., Brgy. Kaunlaran, Aurora Blvd., Cubao, Quezon City
Attn – Delfin Sabido, Managing Director

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 To SONY:
Sony Music Entertainment Philippines, Inc.
GDC 1A Bldg., 750 Shaw Blvd., Mandaluyong City
Attention – Wallace D. Chamsay, Managing Director

Any such notice, or request shall be sent by prepaid registered post or delivered
personally or sent by e-mail, telegram, telex or facsimile addressed to the
recipient and shall be conclusively deemed to be received:

15.1 in the case of delivery in person, at the time of delivery;

15.2 in the case of prepaid registered post, five (5) days after date of posting;

15.3 in the case of e-mail, upon deliberate or latent acknowledgement of

receipt of the e-mail notice or in the absence thereof, upon lapse of five (5) days
from the date of transmittal of the said e-mail without a failure of delivery report
received from the sender’s system; or
in the case of telegram, telex or facsimile, on a Business Day immediately
following the date of the telegram, telex or facsimile transmission, as the case
may be, to be authenticated by the receipt by the sender of a transmission
controlled report appearing on its fact to emanate from the sender’s machine
showing the answer-back code of the recipient, the relevant number of pages,
the correct facsimile number of the recipient and the result of the transmission
being described as “O.K.” or any equivalent description indicating that the
communication has been properly transmitted.

16.. ENTIRE AGREEMENT

This Agreement is complete and embodies the entire agreement of the parties,
superseding all prior written or oral agreements, statements representations,

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warranties, agreement or covenants, express or implied, of any kind or character
whatsoever have been made by either party to the other except as expressly set
forth in this Agreement. This Agreement cannot be amended, modified or
changed in any manner except by a written instrument duly executed by both
parties.

17. GOVERNING LAW

This Agreement will be interpreted, enforced and governed in accordance with

the laws of the Republic of the Philippines. All disputes arising in connection with
this Agreement shall exclusively be filed in the proper courts of Pasig City.

18. MISCELLANEOUS PROVISIONS

(a) No waiver of any breach or default of this Agreement by either party shall
be deemed a continuing waiver of any other breach or default.

(b) The clause headings used in this Agreement indicate only the subject of
the provisions immediately following it and shall not be construed to
unduly limit or enhance the legal effect of such provisions.

(c) In connection with anti-piracy activity and other actions related to

UNIVERSAL’s intellectual property, SONY agrees to execute such
additional documents at UNIVERSAL’s cost and expense as may be
necessary or desirable for UNIVERSAL to enforce its rights hereunder
including without limitation any affidavits or other documents which
evidence UNIVERSAL’s rights over its Products or which evidence
UNIVERSAL’s or SONY’s rights and obligations under this Agreement, in

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 connection with any legal action involving the Product and/or any
provisions of this Agreement.

19. CONFIDENTIALITY

(a) Neither party may, under any circumstance, give access to or disclose
any confidential information gathered as a result of the performance of
their respective obligations under this Agreement.

(b) Notwithstanding clause 19(a), SONY may disclose UNIVERSAL’s

confidential information to its employees, contractors and agents only
insofar as necessary to the performance of its obligations hereunder.
Provided, that such access is a necessary incident of SONY performing its
obligations under this Agreement.

(c) This clause 19 survives termination and expiry of this Agreement. The
prohibition on either party to disclose or give access to any confidential
information survives the termination or expiration of this Agreement and
shall continue to be force for a period of (pls. specify) year(s) thereafter.

IN WITNESS WHEREOF the parties hereto have executed this Agreement as of

the day and year first above written.

UNIVERSAL MUSIC PHILIPPINES

By: DELFIN SABIDO

Title: MANAGING DIRECTOR
CTC Details: ____________________________________

SONY MUSIC PHILIPPINES

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By: WALLACE S. CHAMSAY
Title: MANAGING DIRECTOR
CTC Details: ___________________________________

Witnesses: ______________________ _________________________

ACKNOWLEDGEMENT

I HEREBY CERTIFY that this Agreement consisting of 21 pages including

the page on which this acknowledgement is written, is the free and voluntary act
and deed of the executing parties, their duly authorized representatives and their
instrumental witnesses, all pages signed by them and sealed with my notarial
seal this _______ day of ________________, 2003 at _________________.

Doc. No. _____;

Page No. _____;
Book No. _____;
Series of 2003.

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