Mills Music Trust MMTRS

Mills Music Trust was created by a Declaration of Trust dated December 3 1964 for the purpose of acquiring from Mills Music Inc the right to receive a deferred contingent purchase price obligation payable to Mills Music Inc. The obligation to pay the contingent portion arose as a result of the sale by Mills Music Inc of its music and lyric copyright catalogue to a newly formed company pursuant to an asset purchase agreement dated December 5 1964. Pursuant to the asset purchase agreement payment of the contingent portion to the trust continues until the end of the year in which the last copyright in the catalogue expires and cannot be renewed. The contingent portion amounts are currently payable by EMI Mills Music Inc the owner of the copyrighted materials contained in the catalogue. The trust has been advised that Sony/ATV Music Publishing LLC is the administrator and manager of EMI and the catalogue. HSBC Bank USA NA is the corporate trustee of the trust and Lee Eastman is the individual trustee of the trust. The declaration of trust provides that these are the trust's sole responsibilities and that the trust is prohibited from engaging in any business activities. Proceeds from contingent portion payments the trust receives quarterly payments of the contingent portion from EMI and distributes the amounts it receives to the registered owners of trust certificates representing interests in the trust after payment of or withholdings in connection with expenses and liabilities of the trust. The trust does not own the catalogue or any copyrights or other intellectual property rights and is not responsible for collecting royalties in connection with the catalogue.

The trust generates revenue by receiving quarterly contingent portion payments from EMI based on the royalty income that the catalogue generates. The amount of each payment is determined by a formula set forth in the asset purchase agreement between the original seller and the buyer of the catalogue. EMI as the current owner and administrator of the catalogue is obligated under the asset purchase agreement to use its best efforts to collect all domestic and foreign royalties associated with the catalogue and to remit a portion of that royalty income to the trust as its contingent portion payment. Upon receipt of the funds the trust first pays or withholds any expenses and liabilities associated with the administration of the trust. The remaining balance is then distributed to the unit holders who hold trust certificates representing beneficial interests in the trust. The trust accounts for its cash receipts and disbursements on a cash basis and does not prepare a balance sheet or a statement of cash flows. The trust does not engage in any active exploitation of the catalogue nor does it undertake any marketing or licensing activities related to the musical works.

Mills Music Trust operates as a passive royalty trust within the broader music publishing industry. It does not own or control the underlying copyrights and it does not participate in the exploitation or administration of the catalogue. Its sole function is to receive the contractual payments from EMI and to pass those proceeds on to the investors who hold trust certificates. In contrast to active music publishers that acquire catalogues and seek to maximize revenue through licensing synchronization and performance rights the trust has no operational role in generating or enhancing the value of the musical works. The trust's competitive position is therefore defined entirely by the specific contractual right to receive a share of the royalty stream from the catalogue and by the enduring commercial appeal of the songs contained therein. There are few comparable investment vehicles that offer a direct pass through of royalty income from a historic music catalogue however the trust's structure is unique because it was created through a specific asset purchase agreement and a declaration of trust that limits its activities to receipt and distribution. The value of the trust is closely tied to the cash flow produced by the catalogue which depends on the continued use of the songs in recordings performances broadcasts and other media. As a result the trust's financial performance mirrors the royalty stream rather than reflecting any managerial skill or strategic decision making.

The trust receives its quarterly payments from EMI which is the current owner and administrator of the catalogue and which also acts as the counterparty responsible for collecting royalties and remitting the contingent portion. The trust distributes the net amounts it receives after expenses to the registered owners of trust certificates who are referred to as unit holders. These unit holders consist of individuals and institutions that hold beneficial interests in the trust and who rely on the trust for periodic distributions of cash. The filing does not disclose the specific names of the unit holders therefore the customer base is described as the broader group of investors who hold the trust's securities. The payer EMI is a single entity that provides the royalty stream to the trust under the terms of the asset purchase agreement.