Complete translation of the contract (English)

Finally I'm done with translating rest of the contract. (That took a while...)

Click Here for the original contract in Korean

I didn't write the Korean-English version because it might have looked too busy, and the post count showed that most people just read the English version anyways.

The original Korean contract has the footnotes repeated on the last page, and I just deleted them. Footnotes are marked by "1), 2), 3), 4), 5)", and the footnotes were moved right below the marks and colored to distinguish it from current contract. The footnotes denotes sections of the contract that was amended and the colored sections shows the original contract and previous amendments. Article 9 & 10 (distribution of profits) may confuse some readers. The colored parts are from the original contract, and the tables right below them are the current one. I'll clarify it when I go over the contract.

I've made some changes to the words and rearranged some sentence structures to improve readability, but the contents were not changed in any way.


Examples of changes:
Original contract uses '갑' & '을' ('A' and 'B') to refer to the respondent and the applicant respectively, and those are substituted with 'Artist' and 'Company.
Some English words have different meanings in Korea, and they are changed accordingly

So here it is.

Coming next: Detailed explanation of the contract

                                                                                                                                                                                         

Appendix

Exclusive Contract

Article 1 (Purpose of the Contract)
 
To effectively perform domestic and overseas entertainment activities of the applicant (hereinafter called the “Artist”), the domestic and foreign entertainment activities and promotions, appearances, making deals, and all legal actions will be handled by the respondent (hereinafter called the “Company”) or the management designated by the Company. The Artist cannot sign personal contracts or make promises, and will concentrate only on their activities and acting.

 Article 2 (Duration of the Contract)

① The Contract begins on the date the contract is signed by the Artist, and will be terminated 13 years after the Artist releases the first album. 1)

1) The original contract had a 10-year duration, and it was extended to 13 years in the first contract amendment.

② In the event the Artist is unable to fulfill its obligations due to the Artist's personal reasons, the duration of the contract is automatically is extended for the same length of time.

Article 3 (Transfer of rights)

① The Company retains the rights to the Artist's TV appearances, domestic and foreign activities.

② The Artist must perform activities decided upon by the company diligently during the contract period, and cannot perform activities on its own. If this is violated, the clauses on Article 11 clauses ①, ②, and ③ will be in effect.

③ The Company retains all the rights to the Artist’s entertainment activities and appearances.

④ The ownership of the albums and recorded songs (including unreleased songs) belongs to the company.

After the duration of the contract is over, the profit will be distributed according to the distribution rates agreed in this contract.

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⑤ The Artist transfers the rights to copy, distribute, broadcast, concerts, karaoke, compilation, remake and other rights of the lyrics, compositions and arrangements created under the contract to the Company.

⑥ The songs recorded and created during the contract period can be used by the Company in any form(LP, MC, CD, CD-FMV, CD-I, CD-V, CD-G, LD, VIDEO, Compilation Albums, Best of Albums, advertisements, movies, photos, VIDEO recordings, MP3, miscellaneous music files, all media with audio are transferred to be rearranged and reused in any form).

⑦ The Artist needs to get the Company's consent before allowing a 3rd party to use the lyrics, compositions, and arrangements created by the Artist.

⑧ The Artist's manager is assigned by the company, and all the schedules will be managed by him/her and the Artist needs to work diligently.

⑨ The company can use the lyrics, songs, and arrangements created by the Artist on other albums produced by the Company other than the Artist's own album.

⑩ The company can transfer all or parts of the contract to another company 2), except when the Artist disagrees to it in advance.

2) The exception was added in the 4th contract amendment


Article 4 (Delegation of the Agreements)

On the following domestic and foreign matters, the Company:
manages and makes decisions

can delegate all the rights that pertains to this contract
can transfer management rights to another company.

1. 1. TV appearances and scheduling agreements (including the internet)

2. 2. Contracts for concerts and events (Domestic and foreign)

3. 3. Contracts for movies and commercials

4. 4. Artist's photos and name usage (publicity, trademark, copyright etc.)

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5. 5. Contracts for lyrics, compositions, and arrangements

6. 6. Handling and managing rights of the legal issues

7. 7. All entertainment activities at home and abroad

-The Company owns the copyright and all the work created by the Company during the contract period.


Article 5 (Company's responsibilities)

① Give best effort on the management of the Artist's popularity

② The Company will notify the Artist's schedule of events promptly


Article 6 (Artist's responsibilities)

① The Artist cannot disclose the details of the contract and the Company's internal affairs to an outside agent.

② The Artist needs to make appearances on concerts, TV, and various events requested and scheduled by the Company or the manager.

③ In the event the broadcasting or concerts is disrupted because of the Artist's personal reasons, the Company or the manager needs to be notified in advance, and if the problem arises without any valid reason, the Artist needs to take the responsibility.

④ The Company assigns the Artist's manager who administers and manages all the events, and the Artist need to work diligently.

⑤ 6 months prior to the expiration of the contract, the Artist must release a new album (recorded) requested by the Company, and must participate in the promotional activities for 6 months or more.

⑥ The Artist must release two or more full albums every year when requested by the Company, and participate in the recording and activities related to it and work diligently. (The company decides the production period and the Artist follows accordingly.)

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Article 7 (The Artist's rights)

The Artist can refuse the Company's request if the request is not part of the Artist's responsibility.


Article 8 (Promotion and production cost)

① Promotion is participated in mutual cooperation if possible.

② If the Company determines the promotional activities need to be halted during the promotion period, it can stop the activities, and the Artist will comply with the Company's decision.

③ For the Company's and Artist's album production, the Company is fully responsible for everything including the production cost, and will take the resulting gains or losses.


Article 9 (Distribution of profits - Albums) 3)

3) The original contract (Items amended are noted separately) was as follows. The distribution of the profit (categories, methods and rates) was modified in the 2nd and 5th amendments, and the modifications from the final(5th) amendment were retroactively applied starting from July 7,2008.

「Article 9 (the distribution of profits - Album)

① When the Artist releases an album as a singer, the Artist is paid 50million KRW when 500,000 copies not including returns are sold at the time the next album is released.

If over a million copies are sold, 100million KRW is paid(for singles, 25 million KRW for 500K, 50million KRW for over 1 million copies).

But if the Artist is a part of a team (group), then the above amount is divided equally according to the number of members.

The Company can increase the payment amount within 100% of above amount 5 years after the album is released. (In the 1st contract modification it was changed to: "With both sides' mutual consent, the amount can be increased within 4 times above amount after 10 years after the album is released.") 

② Clause ① only applies to the Artist's full album, and the profit generated from secondary compilations (Live album, best of album, omnibus album, miscellaneous compilation) belongs to the Company.

When the Artist's songs are released again by the Company as a compilation album, the profit goes to the Company. If songs not released previously are included in the compilation album, the Artist will get paid by multiplying the payment calculated according to the clause ① by the ratio of the song {profit from ① (100%) x number of new songs/total number of songs = Artist's profit}
 

③ The Artist is paid 10% of the net profit from online and wired/wireless internet (including MP3 and other digital audio files) and for the albums produced for foreign market. (If the Artist is a group, distribution is identical to clause ①)
 

④ The Artist always needs to make an appearance on the Internet programs produced by SM at the Company's request. Internet programs are considered a promotional activity for the Artist, and no appearance fees are paid. (→changed in the 4th contract amendment “The Artist must appear on the Internet program produced by SM at the company's request as long as there a valid reason not to, and the Company will pay the appearance fees except for the appearances for the promotion of the Artist's album etc.).
 

⑤ SM produced media productions have priority of appearance. The appearance fee of the SM produced shows are set to be comparable to the average fees of the air or cable broadcasting shows, and 50% is paid to the Artist.」

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Category		Distribution of Profits (Entertainer) For groups, divide the profits equally per number of members
Domestic Album & Packaged products (including Licensed Albums sold overseas) This distributions only applies to regular Album & DVD Secondary compilations (Live music, Best of albums, Omnibus Album, other compilations) are not included	50001 to 100K	2% of Sales
	100K to 200K	3% of Sales
	Over 200K	5% of Sales
Digital Wired/Wireless Downloads (Album, Songs) For free downloads Online, only when there's income from advertisement		10% of Net Profit
On Line and wired/wireless Internet, Mp3, Digital files etc		10% of Net Profit
Overseas Revenue (Revenues in Japan produced via SM Japan)	Performance Loyalty (Albums made overseas)	70% of Net Profit
	Loyalty (Limited to the songs, lyrics, written by the Artists)	70% of Net Profit
	Master Loyalty *The whole amount of Master Loyalty is considered to be SM's revenue	Not Applicable

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 Article 10. (Distribution of Profits - TV, Events, Commercials, Copyright etc)⁴⁾

 4) The original contract(Items amended are noted separately) was as follows, and in the 2nd and 5th amendment, the distribution of profit was divided into more specific categories, and the rates were adjusted. The changes made in the 5th amendment was retroactively applied starting July 7, 2008.


「Article 10 (Distribution of profits - TV, Events, Commercials, Copyright, etc.)
 

① 40% of appearance fees from regular appearances need to be paid to the Company.
 

② Appearance fees as a guest or as a singer are used by the Company as the cost of promotion.
 

③ The Company gets 50% of the Net profit which is calculated by deducting operating costs from all the revenue generated by entertainment activities (except Article 9, clause ①, ② above).

If the Artist is a group(team), the Company gets 40% of the net profit, and each member's profit is as follows:

Duo - 30%, Trio - 20%, Quartet - 15%, Quintet - 12%, Sextet - 10%

(Examples of operating cost): Defined as all the expenses incurred by the personnel aiding the Artist and the manager. Specifically, all the expenses for the Artist's entertainment activities

- Transportation, lodging, meals, make-up and the salaries of the coordinator, dancers and stage staff
 

- Salaries of manager and road manager (The manager's salary is 800,000 KRW per month, and the road manager (when needed) is paid 600,000KRW per month, and their salaries are increased by 10% annually)
 

 - Living expenses (utilities, meals, housekeepers and miscellaneous fees) and training cost for the activities

 ④ The profit is distributed between the Artist and Company within 6 months of generating the profit.」

Category		Distribution of Profits (Entertainer) For groups, divide the profits equally per number of members
Overseas Revenue	CF(Commercials), Events, & Miscellaneous Activities	70% of Net Profit
	Up front payment and/or down payments from various contracts	10% of actual amount received by SM
Commercials (Guarantees, Appearances Fees included), TV, Radio, Cable, Satellite, Magazines, Concerts, Events etc.)	Regular appearances	65% of Net Profit
	Promotional/temporary guest appearances	Used for cost of promotion
Revenues from Internet Business (Mobile & any revenues from Internet)		10% of Net Profit
Photo Books using actual pictures of the Singers(Digital/Online income is considered Internet Business Revenue) - Photo Books are limited only to the products planned and produced for sales of the actual photos.		60% of Net Profit
Character products & Licensed products utilizing Photos (except for the picture books mentioned above), Brand, Brand Name, Intellectual properties - Accessories, Clothes, Shoes, Stationary, Toys etc.		10% of Net Profit

Article 11 (Breach of contract and Compensation for damages)

① When the Artist violates the terms of this contract, the Artist need to pay for any damages, and when the Artist's action or the situation caused by the Artist impacts his/her entertainment activities, the Artist takes the full responsibility. The Company can stop the Artist's activities when it is determined the activities would be difficult to continue, and the Artist need to pay for the damages to the Company. (Paid compensation does not terminate the contract.)

② The Artist need to pay 3 times the total investment (promotional fees and other expenses paid or used in any form), and reimburse twice the amount of the potential lost profits for the remainder of the contract period. 5)

5) The original contract was as follows: "The Artist need to pay 3 times the total investment, and reimburse 3 times the potential lost profits for the remainder of the contract period, and 1 billion KRW", and it was modified during the 3rd contract amendment.

③ A mutual agreement must be reached between the Artist and the Company to terminate the contract, and the Artist must carry out clause ②.

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Article 12 (Disputes and Miscellaneous responsibilities )  

In the event of a dispute caused by different interpretation of the contract or by clauses not specified in the contract, the dispute needs to be settled according to the relevant laws or regulations, and it needs to be resolved by a mutual agreement and trust between the Artist and Company.