Exhibit 10.2

 

RESTRICTED STOCK AWARD AGREEMENT

 

THIS RESTRICTED STOCK AWARD AGREEMENT (this “Agreement”), is entered into this
15th day of March, 2005, by and between Warner Music Group Corp., a Delaware
corporation (“Parent”), and Richard Blackstone (the “Executive”).  Capitalized
terms used herein and not otherwise defined shall have the respective meanings
set forth in the “Employment Agreement” (as defined herein).

 

R E C I T A L S:

 

WHEREAS, Warner Music Group Inc., a Delaware corporation (the “Company”), an
indirect majority owned subsidiary of Parent, or one of its direct or indirect
subsidiaries, and the Executive have entered into an employment agreement, dated
March 15, 2005 (such employment agreement, as it may be amended, superceded or
replaced from time to time, the “Employment Agreement”); and

 

WHEREAS, the Board of Directors of Parent (the “Board”) has determined to grant
to the Executive on the date hereof (the “Effective Date”) the restricted stock
provided for herein (the “Restricted Stock Award”), such grant to be subject to
the terms and conditions set forth herein.

 

NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth,
the parties hereto agree as follows:

 

1.             Purchase of Restricted Stock.  Subject to the terms and
conditions set forth in this Agreement, Parent hereby grants to the Executive,
and the Executive hereby accepts a grant from Parent, effective as of the
Effective Date (which is the date hereof), 209.8765432 shares of Class A Common
Stock of Parent, par value $.001 per share (the “Restricted Shares”).  The
Restricted Shares shall vest in accordance with Section 2 and Section 5 hereof.

 

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2.             Vesting.

 

(a)           Service-Based Restricted Stock.  Except as otherwise provided in
this Agreement, one-third of the Restricted Shares (the “Service-Based
Restricted Stock”), shall vest and become non-forfeitable in four equal
installments on the day prior to each of the first, second, third and fourth
anniversaries of the date on which the Executive commences full-time employment
with the Company (the “Employment Commencement Date”) provided that the
Executive remains employed with the Company on each such date, such that one
hundred percent (100%) of the Service-Based Restricted Stock shall be vested and
non-forfeitable on the day prior to the fourth anniversary of the Employment
Commencement Date; provided that any unvested Service-Based Restricted Stock
shall become vested and non-forfeitable upon a termination of the Executive’s
employment with the Company (A) due to his death, (B) by the Company due to his
Disability or without Cause or (C) by the Executive for Good Reason, in each
case on or after a “Change in Control” (as defined in Section 2(b)(iii)(6)) or,
in the case of a termination by the Company without Cause or a termination by
the Executive for Good Reason, in anticipation of a Change in Control (a
termination described in the foregoing proviso being referred to hereinafter as
a “CIC Termination”).

 

(b)           Performance-Based Restricted Stock.  Except as otherwise provided
in this Agreement, two-thirds of the Restricted Shares (the “Performance-Based
Restricted Stock”) shall contingently vest in equal installments on the day
prior to each of the first, second, third and fourth anniversary of the
Employment Commencement Date provided that the Executive remains employed with
the Company on each such date (the “Service Condition”), but shall not be
considered to be fully vested until and unless the condition described in
Section 2(b)(i) or 2(b)(ii), as applicable, has been satisfied (each such
condition, a “Performance Condition”).

 

(i)           With respect to one-half of the Performance-Based Restricted
Stock, the Performance Condition shall be the occurrence of a 2X Restricted
Stock Liquidity Event.

 

(ii)          With respect to the other one-half of the Performance-Based
Restricted Stock, the Performance Condition shall be the occurrence of a 3X
Restricted Stock Liquidity Event.

 

(iii)         For purposes of this Section 2(b), and also as and if used
elsewhere in this Agreement, the following terms shall have the following
meanings:

 

(1) “2X Investor Equity Value” shall mean (X) two times the Investment minus (Y)
the aggregate amount of cash and “Fair Market Value” (as defined below) of
readily marketable securities or other assets (determined at the time of
receipt) received by the Investors in respect of the Investor Equity prior to or
coincident with the time of determination.

 

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(2)          “3X Investor Equity Value” shall mean (X) three times the
Investment minus (Y) the aggregate amount of cash and Fair Market Value of
readily marketable securities or other assets (determined at the time of
receipt) received by the Investors in respect of the Investor Equity prior to or
coincident with the time of determination.

 

(3)          “2X Restricted Stock Liquidity Event” shall mean (A) the first sale
in an underwritten offering of Parent’s Class A Common Stock pursuant to a
registration statement on Securities and Exchange Commission (“SEC”) Form S-l or
otherwise under the Securities Act of 1933, as amended (the “Securities Act”)
(an “IPO”), at a per share price which implies an aggregate value of the
Investor Equity at the time of the IPO of at least the 2X Investor Equity Value,
(B) following an IPO, or any transaction other than an IPO which causes Parent’s
Class A Common Stock, or all or substantially all of the securities into which
such Class A Common Stock is converted or for which it is exchanged, to be
listed for trading on a national securities exchange or quoted on an automated
quotation system, the average closing price of Parent’s Class A Common Stock, or
such securities into which Class A Common Stock is converted or for which it is
exchanged, on the primary exchange on which, or system over which, it is traded
over any 20 consecutive trading days is such that the implied aggregate value of
the Investor Equity at the end of such 20 consecutive trading days, based on
such average price, is at least the 2X Investor Equity Value, determined as of
the first of such 20 consecutive trading days, or (C) a Bonus Liquidity Event
occurs which results in a combination of cash and readily marketable securities
being paid or provided to the Investors having an aggregate value (as determined
by the Board in good faith as of the time of receipt) of at least the 2X
Investor Equity Value.

 

(4)          “3X Restricted Stock Liquidity Event” has the same meaning as a 2X
Restricted Stock Liquidity Event, except that the term “2X Investor Equity
Value” each time it appears in Section 2(b)(iii)(3) above shall be replaced with
“3X Investor Equity Value.”

 

(5)          “Bonus Liquidity Event” shall mean a Change in Control, or other
event (e.g., a leveraged recapitalization in which the proceeds are paid out to
the Investors as dividends and/or redemptions), in which consideration is paid
to Investors in respect of the Investor Equity in the form of cash, readily
marketable securities or a combination of both.

 

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(6)          “Change in Control” shall mean a “Change of Control,” as defined in
the certificate of incorporation of Parent, as amended from time to time.

 

(7)          “Fair Market Value” shall mean the price at which the asset in
question would change hands in an arms’ length sale between a willing buyer and
a willing seller, with neither being under any compunction to buy or sell and
each with full knowledge of all relevant facts, as determined by the Board in
good faith; provided that, in determining Fair Market Value of the securities of
any member of the Parent Group, the Board shall take into account the free cash
flow, revenue and EBITDA and such other methodologies and characteristics as it
may determine to be relevant, and shall (A) adjust the Fair Market Value of the
securities to take into account the illiquidity of securities which are not
publicly traded and (B) make no adjustment on account of any control premium.
 Notwithstanding the above, the Fair Market Value of any freely tradable
security which is of a class listed for trading on an established securities
market or established trading system shall be the average of the high and low
trading prices of such class of securities, as reported on the primary market or
trading system on which such securities are listed on the date Fair Market Value
is determined.

 

(8)          “Investment” means $1.25 billion.

 

(9)          “Investor Equity” shall mean all equity securities of all members
of the Parent Group, including common and preferred stock and warrants, options
and other instruments convertible or exercisable into, or redeemable for, common
or preferred stock, either (A) purchased or otherwise received by the Investors
on or prior to March 1, 2004 or (B) received by the Investors following March 1,
2004, without cost to the Investors, in respect of the equity securities
described in the preceding clause (A).

 

(10)        “Investors” shall mean all of (i) Thomas H. Lee Equity Fund V, L.P.,
(ii) Thomas H. Lee Parallel Fund V, L.P., (iii) Thomas H. Lee Equity (Cayman)
Fund V, L.P., (iv) Putnam Investments Holdings, LLC, (v) Putnam Investments
Employees’ Securities Company I LLC, (vi) Putnam Investments Employees’
Securities Company II LLC, (vii) 1997 Thomas H. Lee Nominee Trust, (viii) Thomas
H. Lee Investors Limited Partnership, (ix) Bain Capital Partners Integral
Investors, LLC, (x) Bain Capital VII Coinvestment Fund, LLC, (xi) BCIP TCV, LLC,
(xii) Providence Equity Partners IV, L.P., (xiii) Providence Equity Operating
Partners IV, L.P..and (xiv) Lexa Partners LLC, or any

 

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affiliate of any of them, in each case which purchases Investor Equity on or
prior to the Effective Date.

 

(11)        “Parent Group” shall mean Parent, the Company and each direct or
indirect subsidiary of any of them.

 

Notwithstanding anything in this Agreement to the contrary, the Service
Condition applicable to each share of Performance-Based Restricted Stock shall
be deemed to have been attained upon a CIC Termination.

 

(c)          The term “Vested Restricted Shares.” as used herein, shall mean (i)
each share of Service-Based Restricted Stock on and following the time that the
vesting condition set forth in Section 2(a) hereof has been actually or deemed
satisfied as to such share, (ii) each share of Performance-Based Restricted
Stock on and following the time that both the Service Condition and the
Performance Condition have been actually or deemed satisfied as to such share
and (iii) each share of Performance-Based Restricted Stock not described in the
immediately preceding clause (ii) on an following the day prior to the seventh
anniversary of the Employment Commencement Date, so long as the Executive
remains employed by the Company on such day.  Restricted Shares which have not
become Vested Restricted Shares are hereinafter referred to as “Unvested
Restricted Shares.”

 

3.             Taxes.  The Executive shall pay to the Company or Parent promptly
upon request, and in any event at the time the Executive recognizes taxable
income in respect of the Restricted Stock Award, an amount equal to the taxes
the Company or Parent determines it is required to withhold under applicable tax
laws with respect to the Restricted Shares.  Such payment shall be made in the
form of cash.  The Executive may, but shall not be required to, make an election
pursuant to Section 83(b) of the Internal Revenue Code of 1986, as amended (the
“Code”) to realize taxable income in respect of the grant of the Restricted
Stock Award, in an amount equal to the Initial Value.

 

4.             Certificates.  Certificates evidencing the Restricted Shares
shall be issued by Parent and shall be registered in the Executive’s name on the
stock transfer books of Parent promptly after the date hereof, but shall remain
in the physical custody of Parent or its designee at all times prior to, in the
case of any particular Restricted Shares, the date such Restricted Shares become
Vested Restricted Shares.  As a condition to the receipt of this Restricted
Stock Award, the Executive shall deliver to Parent a stock power, duly endorsed
in blank, relating to the Restricted Shares.

 

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5.             Effect of Termination of Employment.

 

(a)           Upon the termination of the Executive’s employment with the
Company for any reason, the Restricted Shares shall be subject to forfeiture
back to Parent without consideration, or to the Call Option, in each case as
described in Section 5(b) below.  For purposes of this Agreement, such a
termination may be (i) by the Company for Cause or on account of the Executive’s
Disability, by the Executive without Good Reason or on account of the
Executive’s death (a “5(a)(i) Termination”) or (ii) by the Company without Cause
or by the Executive for Good Reason (a “5(a)(ii) Termination”).

 

(b)           Forfeiture; Call Option.

 

(i)            Other than as set forth in the second sentence of Section
5(b)(ix), upon the termination of the Executive’s employment with the Company
for any reason (or no reason), Unvested Restricted Shares shall be forfeited,
and Parent shall have the right and option (the “Call Option”), but not the
obligation, to purchase, or to cause any member of the Parent Group designated
by Parent (the “Call Assignee”) to purchase, from the Executive, on and after
the Initial Call Date any or all of the Vested Restricted Shares, in each case
as described below in this Section 5(b).  The purchase price (the “Call Price”)
of the Vested Restricted Shares subject to purchase under this provision (the
“Called Shares”) also is described below in this Section 5(b).  Notwithstanding
anything in this Agreement to the contrary, all of the Restricted Shares shall
be forfeited on January 6, 2006 if the Employment Commencement Date does not
occur on or prior to that date.

 

(1)  In the event of a 5(a)(i) Termination, (A) each Restricted Share which is
an Unvested Restricted Share immediately prior to such termination shall be
forfeited, and (B) the Call Price of each Called Share which is a Vested
Restricted Share immediately prior to such termination shall be the Fair Market
Value of such share on the date of the applicable “Call Notice” (as defined
below).

 

(2)  In the event of a 5(a)(ii) Termination, the Call Price of each Called Share
which is a Vested Restricted Share immediately prior to the Initial Call Date of
such share, or which becomes a Vested Restricted Share upon termination of
employment solely because such termination is a CIC Termination, shall be the
Fair Market Value of such share on the date of the applicable Call Notice.

 

(3)  In the event of a 5(a)(ii) Termination, each Restricted Share which is an
Unvested Restricted Share immediately prior to the Initial Call Date of such
share (other than

 

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such a share which becomes a Vested Restricted Share upon termination of
employment solely because such termination is a CIC Termination) shall be
forfeited on such Initial Call Date.

 

(ii)           The “Initial Call Date” shall mean (A) with respect to each share
of Performance-Based Restricted Stock as to which the Service Condition, but not
the Performance Condition, has been attained at the time of a 5(a)(ii)
Termination, the earlier of (I) the date the Performance Condition is first
attained with respect to such share and (II) the six-month anniversary of the
5(a)(ii) Termination, or (B) in all other cases, the date of termination of the
Executive’s employment with the Company.

 

(iii)          For purposes of Section 5(b)(i), (A) the termination of the
Executive’s employment at the end of the term of the Employment Agreement
following the failure of the Company to offer the Executive continued employment
at a base salary not less than that in effect at the end of such term shall be
deemed to be a 5(a)(ii) Termination and (B) the termination of the Executive’s
employment at the end of the term of the Employment Agreement following the
Company’s offering the Executive continued employment at a base salary not less
than that in effect at the end of such term shall be deemed to be a 5(a)(i)
Termination.

 

(iv)          Parent or the Call Assignee, as applicable, may exercise the Call
Option by delivering or mailing to the Executive (or to his estate, if
applicable), in accordance with Section 16 of this Agreement, written notice of
exercise (a “Call Notice”) at any time following the Initial Call Date.  The
Call Notice shall specify the date thereof, the number of Called Shares and the
Call Price.

 

(v)           Within ten (10) days after his receipt of the Call Notice, the
Executive (or his estate) shall tender to Parent or the Call Assignee, as
applicable, at its principal office the certificate or certificates representing
the Called Shares, duly endorsed in blank by the Executive (or his estate) or
with duly endorsed stock powers attached thereto, all in form suitable for the
transfer of such shares to Parent or the Call Assignee, as applicable.  Upon its
receipt of such shares, Parent or the Call Assignee, as applicable, shall pay to
the Executive the aggregate Call Price therefore, in cash.

 

(vi)          Parent or the Call Assignee, as applicable, will be entitled to
receive customary representations and warranties from the Executive regarding
the sale of the Called Shares pursuant to the exercise of the Call Option as may
reasonably requested by Parent or the Call Assignee, as applicable, including
but not limited to the representation that the Executive has good and marketable
title to the Called Shares to be transferred free and clear of all liens, claims
and other encumbrances.

 

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(vii)         If Parent or the Call Assignee, as applicable, delivers a Call
Notice, then from and after the time of delivery of the Call Notice the
Executive shall no longer have any rights as a holder of the Called Shares
subject thereto (other than the right to receive payment of the Call Price as
described above), and such Called Shares shall be deemed purchased in accordance
with the applicable provisions hereof and Parent or the Call Assignee, as
applicable, shall be deemed to be the owner and holder of such Called Shares.

 

(viii)        Any Vested Restricted Shares as to which the Call Option is not
exercised will remain subject to all terms and conditions of this Agreement,
including the continuation of Parent’s or the Call Assignee’s, as applicable,
right to exercise the Call Option.

 

(ix)           This Section 5(b) is in addition to, and not in lieu of, any
rights and obligations of the Executive and Parent in respect of the Restricted
Shares contained in the “Stockholders’ Agreement” (as defined below).
 Notwithstanding the above, this Section 5(b) shall be ineffective as to each
Vested Restricted Share on and following the later of (I) an IPO or any other
event which causes the Class A Common Stock, or other securities for which all
or substantially all of the Class A Common Stock may have been exchanged, to be
or become listed for trading on or over an established securities market or
established trading system and (II) the date on which such share becomes a
Vested Restricted Share.

 

6.             Rights as a Stockholder; Dividends.

 

(a)           The Executive shall be the record owner of the Restricted Shares
unless and until such shares are sold or otherwise disposed of, and as record
owner shall be entitled to all rights of a common stockholder of Parent,
including, without limitation, voting rights, if any, with respect to the
Restricted Shares; provided that (i) any cash or in-kind dividends paid with
respect to Restricted Shares which are not Vested Restricted Shares shall be
withheld by Parent and shall be paid to the Executive, without interest, only
when, and if, such Restricted Shares shall become Vested Restricted Shares
(provided, however, that in the event of a rights offering in which the
Restricted Shares are entitled to participate, the Executive shall be entitled
to subscribe for and purchase any securities made available in such rights
offering with respect to all Restricted Shares, whether or not such Restricted
Shares are Vested Restricted Shares), and (ii) the Restricted Shares shall be
subject to the limitations on transfer and encumbrance set forth in this
Agreement and the stockholders’ agreement executed and entered into by and
between Parent, the Investors and the other parties thereto prior to the
Effective Date (such stockholders’ agreement, as it may be amended, superceded
or replaced from time to time, the “Stockholders’ Agreement”).  A copy of the
Stockholders’ Agreement, as in effect on the date hereof, is annexed hereto as
Exhibit A.  As soon as practicable following the vesting of any Restricted
Shares, certificates for such Vested Restricted Shares shall be delivered to the
Executive or to the Executive’s legal representative along with the stock powers
relating thereto.

 

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(b)           At or promptly following an IPO or any other transaction which
makes Parent eligible to use SEC Form S-8, Parent shall register all of the
Restricted Shares (whether or not vested) on Form S-8 or an equivalent
registration statement (including, at Parent’s option, on the Form S-l filed in
connection with an IPO), and use reasonable commercial efforts to keep such
registration effective so long as the Executive continues to hold any of the
Restricted Shares.

 

7.             Restrictive Legend.  All certificates representing Restricted
Shares shall have affixed thereto a legend in substantially the following form,
in addition to any other legends that may be required under federal or state
securities laws, unless and to the extent determined inapplicable or unnecessary
by Parent:

 

THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS
ON TRANSFER AND AN OPTION TO PURCHASE SET FORTH IN A CERTAIN RESTRICTED STOCK
AWARD AGREEMENT BETWEEN WARNER MUSIC GROUP CORP. AND THE REGISTERED OWNER OF
THIS CERTIFICATE (OR HIS PREDECESSOR IN INTEREST) AND A STOCKHOLDERS’ AGREEMENT
TO WHICH WARNER MUSIC GROUP CORP. AND THE REGISTERED OWNER OF THIS CERTIFICATE
(OR HIS PREDECESSOR IN INTEREST) ARE PARTIES, WHICH AGREEMENTS ARE BINDING UPON
ANY AND ALL OWNERS OF ANY INTEREST IN SAID SHARES.  SAID AGREEMENTS ARE
AVAILABLE FOR INSPECTION WITHOUT CHARGE AT THE PRINCIPAL OFFICE OF WARNER MUSIC
GROUP CORP. AND COPIES THEREOF WILL BE FURNISHED WITHOUT CHARGE TO ANY OWNER OF
SAID SHARES UPON REQUEST.

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.
 THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO
DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD, MORTGAGED, PLEDGED, HYPOTHECATED OR
OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED AND ANY APPLICABLE STATE
SECURITIES LAWS, UNLESS WARNER MUSIC GROUP CORP. HAS RECEIVED AN OPINION OF
COUNSEL, WHICH OPINION IS REASONABLY SATISFACTORY TO IT, TO THE EFFECT THAT SUCH
REGISTRATIONS ARE NOT REQUIRED.

 

8.           Transferability.

 

(a)           The Restricted Shares may not, at any time prior to becoming
Vested Restricted Shares, be assigned, alienated, pledged, attached, sold or
otherwise transferred or encumbered by the Executive and any such purported

 

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assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall
be void and unenforceable against Parent; provided that the designation of a
beneficiary shall not constitute an assignment, alienation, pledge, attachment,
sale, transfer or encumbrance; and provided further that the foregoing
restriction shall not apply to a sale of Restricted Shares in compliance with
the obligations, if any, of the holder thereof to sell such shares pursuant to
the “drag along” provisions of the Stockholders’ Agreement.

 

(b)           Prior to an IPO, neither the Executive nor any transferee of the
Executive (including any beneficiary, executor or administrator) shall assign,
alienate, pledge, attach, sell or otherwise transfer or encumber the Restricted
Shares upon or subsequent to their vesting, except in accordance with the
applicable provisions of this Agreement and the Stockholders’ Agreement;
provided, that, subject to the provisions of the Stockholders’ Agreement, Vested
Restricted Shares may be transferred (i) by will or the laws of descent, or (ii)
with the Board’s approval (which may be granted or withheld at its sole
discretion), by the Executive without consideration to (A) any person who is a
“family member” of the Executive, as such term is used in the instructions to
SEC Form S-8 (collectively, the “Immediate Family Members”); (B) a trust solely
for the benefit of the Executive and/or Immediate Family Members; or (C) any
other transferee as may be approved by the Board in its sole discretion
(collectively, the “Permitted Transferees”); provided, that, the Executive gives
the Board advance written notice describing the terms and conditions of the
proposed transfer and the Board notifies the Executive in writing that such a
transfer is in compliance with the terms of this Agreement; provided, further,
that, the restrictions upon any Vested Restricted Shares transferred in
accordance with this Section 8(b) shall apply to the Permitted Transferee, such
transfer shall be subject to the acceptance by the Permitted Transferee of the
terms and conditions hereof and of the Stockholders’ Agreement, and any
reference in this Agreement or the Stockholders’ Agreement to the Executive
shall be deemed to refer to the Permitted Transferee, except that (a) prior to
an IPO, Permitted Transferees shall not be entitled to transfer any Vested
Restricted Shares other than by will or the laws of descent and distribution or,
with the Board’s approval (which may be granted or withheld at its sole
discretion), to a trust solely for the benefit of the Permitted Transferee, and
(b) the consequences of the termination of the Executive’s employment with the
Company under the terms of this Agreement shall continue to be applied with
respect to the Permitted Transferee to the extent specified in this Agreement.

 

9.           Securities Laws.  The Executive represents, warrants and covenants
as follows:

 

(a)           The Executive is acquiring the Restricted Shares for his own
account and not with a view to, or for sale in connection with, any distribution
of the Restricted Shares in violation of the Securities Act or any rule or
regulation under the Securities Act or in violation of any applicable state
securities law.

 

(b)           The Executive has had such opportunity as he has deemed adequate
to obtain from representatives of Parent such information as is necessary to
permit him to evaluate the merits and risks of his investment in the Parent.

 

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(c)           The Executive has sufficient experience in business, financial and
investment matters to be able to evaluate the risks involved in acquiring of the
Restricted Shares and to make an informed investment decision with respect to
such investment.

 

(d)          The Executive can afford the complete loss of the value of the
Restricted Shares and is able to bear the economic risk of holding such shares
for an indefinite period.

 

(e)           The Executive understands that (i) the Restricted Shares have not
been registered under the Securities Act and are “restricted securities” within
the meaning of Rule 144 under the Securities Act; (ii) the Restricted Shares
cannot be sold, transferred or otherwise disposed of unless they are
subsequently registered under the Securities Act or an exemption from
registration is then available; (iii) in any event, the exemption from
registration under Rule 144 will not be available for at least one (1) year and
even then will not be available unless a public market then exists for such
shares, adequate information concerning Parent is then available to the public,
and other terms and conditions of Rule 144 are complied with and (iv) there is
now no registration statement on file with the SEC with respect to the
Restricted Shares and, except as set forth in Section 6(b) hereof or in the
Stockholders’ Agreement, there is no commitment on the part of Parent to make
any such filing.

 

(f)           In addition, upon any Restricted Shares becoming Vested Restricted
Shares, the Executive will make or enter into such other written
representations, the warranties and agreements as the Board may reasonably
determine are legally required in order to comply with applicable securities
laws.

 

10.         Adjustments for Stock Splits. Stock Dividends, etc.

 

(a)           If from time to time during the term of this Agreement there is
any stock split-up, stock dividend, stock distribution or other reclassification
of Parent’s Class A Common Stock, any and all new, substituted or additional
securities to which the Executive is entitled by reason of his ownership of the
Restricted Shares shall be immediately subject to the terms of this Agreement.

 

(b)           If the Parent’s Class A Common Stock is converted into or
exchanged for, or stockholders of Parent receive by reason of any distribution
in total or partial liquidation, securities of another corporation, or other
property (including cash), pursuant to any merger of Parent or acquisition of
its assets, then the rights of Parent under this Agreement shall inure to the
benefit of Parent’s successor and this Agreement shall apply to the securities
or other property received upon such conversion, exchange or distribution in the
same manner and to the same extent as the Restricted Shares.

 

11.         Confidentiality of the Agreement.  The Executive agrees to keep
confidential the terms of this Agreement.  This provision does not prohibit the
Executive from providing this information on a confidential and privileged basis
to the Executive’s

 

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attorneys or accountants for purposes of obtaining legal or tax advice or as
otherwise required by law, regulation or stock exchange rule.

 

12.          Severability.  The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, and each other provision of the Agreement shall be
severable and enforceable to the extent permitted by law.

 

13.          Waiver.  Any right of Parent contained in the Agreement may be
waived in writing by the Board.  No waiver of any right hereunder by any party
shall operate as a waiver of any other right, or as a waiver of the same right
with respect to any subsequent occasion for its exercise, or as a waiver of any
right to damages.  No waiver by any party of any breach of this Agreement shall
be held to constitute a waiver of any other breach or a waiver of the
continuation of the same breach.

 

14.          No Rights to Employment.  Nothing contained in this Agreement shall
be construed as giving the Executive any right to be retained, in any position,
as an employee, consultant or director of the Company or its affiliates or shall
interfere with or restrict in any way the right of the Company or its
affiliates, which are hereby expressly reserved, to remove, terminate or
discharge the Executive at any time for any reason whatsoever.

 

15.        Entire Agreement.  This Agreement contains the entire agreement and
understanding of the parties hereto with respect to the subject matter contained
herein and supersedes all prior communications, representations and negotiations
in respect thereto.  No change, modification or waiver of any provision of this
Agreement shall be valid unless the same be in writing and signed by the parties
hereto.

 

16.        Notices.  Any notice, consent, request or other communication made or
given in accordance with this Agreement shall be in writing and shall be deemed
to have been duly given when actually received or, if mailed, three days after
mailing by registered or certified mail, return receipt requested, or one
business day after mailing by a nationally recognized express mail delivery
service with instructions for next-day delivery, to those persons listed below
at their following respective addresses or at such other address or person’s
attention as each may specify by notice to the others:

 

To Parent:

 

Warner Music Group Corp.

75 Rockefeller Plaza

New York, New York 10019

Attention: General Counsel

 

with a copy to:

 

Paul, Weiss, Rifkind, Wharton & Garrison LLP

1285 Avenue of the Americas

New York, New York 10019

 

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Attention: Michael J. Segal, Esq.

 

To the Executive:

 

The most recent address for the Executive in the records of Parent or the
Company.  The Executive hereby agrees to promptly provide Parent and the Company
with written notice of any change in the Executive’s address for so long as this
Agreement remains in effect.

 

with a copy to:

 

Nick Gordon, Esq.

Franklin, Weinrib, Rudell, & Vassallo, P.C.

488 Madison Avenue

New York, New York 10022

 

17.           Beneficiary.  The Executive may file with the Board a written
designation of a beneficiary on such form as may be prescribed by the Board and
may, from time to lime, amend or revoke such designation.  If no designated
beneficiary survives the Executive, the executor or administrator of the
Executive’s estate shall be deemed to be the Executive’s beneficiary.  The
Executive’s beneficiary shall succeed to the rights and obligations of the
Executive hereunder upon the Executive’s death, except as maybe otherwise
described herein.

 

18.           Successors.  The terms of this Agreement shall be binding upon and
inure to the benefit of Parent, its successors and assigns, and of the Executive
and the beneficiaries, executors, administrators, heirs and successors of the
Executive.

 

19.           Modifications.  No change, modification or waiver of any provision
of this Agreement shall be valid unless the same be in writing and signed by the
parties hereto.

 

20.           Restricted Stock Award Subject to the Stockholders’ Agreement.  By
entering into this Agreement the Executive agrees and acknowledges that the
Executive has received and read the Stockholders’ Agreement.  The Stockholders’
Agreement as it may be amended from time to time is hereby incorporated herein
by reference.  In the event of a conflict between any term or provision
contained herein and any terms or provisions of the Stockholders’ Agreement, the
applicable terms and provisions of the Stockholders’ Agreement will govern and
prevail except with respect to Section 5(b) hereof.  Notwithstanding the above,
Section 4.1 of the Stockholders’ Agreement (“Tag-Along”) shall not apply to
Unvested Restricted Shares.

 

21.           GOVERNING LAW; CONSENT TO JURISDICTION.  THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE
APPLICABLE TO AGREEMENTS MADE AND TO BE WHOLLY PERFORMED WITHIN THAT STATE.  ANY
ACTION TO ENFORCE THIS AGREEMENT MUST BE BROUGHT

 

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IN A COURT SITUATED IN, AND THE PARTIES HEREBY CONSENT TO THE JURISDICTION OF,
COURTS SITUATED IN NEW YORK COUNTY, NEW YORK.  EACH PARTY HEREBY WAIVES THE
RIGHTS TO CLAIM THAT ANY SUCH COURT IS AN INCONVENIENT FORUM FOR THE RESOLUTION
OF ANY SUCH ACTION.

 

22.           JURY TRIAL WAIVER.  THE PARTIES EXPRESSLY AND KNOWINGLY WAIVE ANY
RIGHT TO A JURY TRIAL IN THE EVENT ANY ACTION ARISING UNDER OR IN CONNECTION
WITH THIS AGREEMENT IS LITIGATED OR HEARD IN ANY COURT.

 

23.           Headings.  The headings of the Sections hereof are provided for
convenience only and are not to serve as a basis for interpretation or
construction, and shall not constitute a part, of this Agreement.

 

24.           Signature in Counterparts.  This Agreement may be signed in
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.  The parties hereto
confirm that any facsimile copy of another party’s executed counterpart of this
Agreement (or its signature page thereof) will be deemed to be an executed
original thereof.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first set forth above.

 

 

WARNER MUSIC GROUP CORP.

 

 

 

 

 

/s/ Edgar Bronfman, Jr.

 

 

By:

 

Title:

 

 

 

/s/ Richard Blackstone

 

 

RICHARD BLACKSTONE

 

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