Exhibit 10.3

 

 

TERMINATION AGREEMENT

 

This Termination Agreement (this “Agreement”) is entered into as of the 10th day
of May, 2005 by and between Warner Music Group Corp., a Delaware corporation
formerly known as WMG Parent Corp. (“Parent”), WMG Holdings Corp., a Delaware
corporation and a wholly owned subsidiary of Parent,(“Holdings”), WMG
Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of
Holdings (the “Company”), THL Managers V, L.L.C., a Delaware limited liability
company (“THL”), Bain Capital Partners, LLC, a Delaware limited liability
company (“Bain”), Providence Equity Partners IV Inc., a Delaware corporation
(“Providence”) and Music Partners Management, LLC, a Delaware limited liability
company (“Music” and, together with THL, Bain and Providence, the “Managers”).

 

WHEREAS, Parent, Holdings, the Company and the Managers are party to a
Management Agreement dated February 29, 2004 (the “Management Agreement”);

 

WHEREAS, Parent, Holdings, the Company and the Managers desire to discontinue
the provision of services by the Managers to Parent, Holdings and the Company
and the payment of fees to the Managers for such services, each as described in
the Management Agreement;

 

NOW THEREFORE, in consideration of the mutual covenants contained herein, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto, intending to be legally bound,
hereby agree as follows:

 

1.                                       Definitions.  Capitalized terms used
but not defined in this Agreement shall have the definitions set forth in the
Management Agreement.

 

2.                                       Termination.  Parent, Holdings, the
Company and the Managers hereby agree that:

 

(a)                                  effective upon the date hereof, the
Management Agreement is hereby terminated; provided, however, that the
provisions of Sections 4, 5 and 7 through 12 of the Management Agreement shall
survive such termination and remain in full force and effect, including without
limitation in the case of Sections 4 and 5 with respect to services, if any,
provided by a Manager or any of its affiliates to the Company, Holdings, Parent
or any of their affiliates after the termination of the Management Agreement;
provided further, however, that such termination is subject to reversal as set
forth below;

 

(b)                                 in consideration of services rendered under,
and the termination of, the Management Agreement, Parent, Holdings and the
Company, jointly and

 

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severally, shall pay the Managers, by wire transfer of immediately available
federal funds to the accounts specified by the Managers, the sum (the
“Termination Fee”) of seventy-three million two hundred forty-seven thousand
four hundred thirty-eight dollars ($73,247,438) on or prior to the date that is
ninety (90) days after the date hereof (the “Payment Deadline Date”), such
Termination Fee to be allocated among the Managers in the manner set forth in
Section 2(b) of the Management Agreement based on holdings of Investor Shares as
of the date hereof, such right of the Managers to payment of the Termination Fee
being non-transferable and non-assignable; and

 

(c)                                  if the Termination Fee has not been fully
paid on or prior to the Payment Deadline Date (the period from the date hereof
through the Payment Deadline Date being the “Termination Period”), then: (i) the
Management Agreement shall again be in full force and effect and shall be deemed
to have been in full force and effect at all times from and after the date
hereof as if never terminated (provided that none of the Managers shall be
deemed in breach of the Management Agreement on account of non-performance of
any services during the Termination Period; and provided that none of Parent,
Holdings or the Company shall be deemed in breach of the Management Agreement on
account of non-payment of any Periodic Fees that would have been due and payable
during the Termination Period, so long as any such Periodic Fees are paid
promptly, and in any event within five (5) business days, after the end of the
Termination Period); (ii) the obligation to pay the Termination Fee hereunder
shall be defeased and none of Parent, Holdings or the Company shall be deemed in
breach of this Agreement on account of non-payment of the Termination Fee; and
(iii) to the extent that any payments in respect of the Termination Fee were
made during the Termination Period, such payments will be offset against any
Periodic Fees payable to the Managers.

 

3.                                       Governing Law.  This Agreement and all
matters arising under or related to this Agreement shall be governed by and
construed in accordance with the domestic substantive laws of the State of
Delaware without giving effect to any choice or conflict of law provision or
rule that would cause the application of the domestic substantive laws of any
other jurisdiction.

 

4.                                       Amendments and Waivers.  No amendment
or waiver of any term, provision or condition of this Agreement shall be
effective as against any party, unless in writing and executed by such party.

 

5.                                       Miscellaneous.  Except as expressly
provided herein, the rights and obligations of the parties to the Agreement and,
to the extent surviving termination, the Management Agreement, shall be binding
upon and shall inure to the benefit of their respective successors and assigns. 
This Agreement may be executed in any

 

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number of counterparts and by each of the parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which together shall constitute one and the same agreement.

 

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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed
on its behalf as of the date first above written by its officer or
representative thereunto duly authorized.

 

PARENT:

WARNER MUSIC GROUP CORP.

 

 

 

 

 

By:

/s/ PAUL ROBINSON

 

 

Name: Paul Robinson

 

Title: SVP & Deputy General Counsel

 

HOLDINGS:

WMG HOLDINGS CORP.

 

 

 

 

 

By:

/s/ PAUL ROBINSON

 

 

Name: Paul Robinson

 

Title: SVP & Deputy General Counsel

 

THE COMPANY:

WMG ACQUISITION CORP.

 

 

 

 

 

By:

/s/ PAUL ROBINSON

 

 

Name: Paul Robinson

 

Title: SVP & Deputy General Counsel

 

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THL:

THL MANAGERS V, L.L.C.

 

By:

 Thomas H. Lee Partners L.P.,

 

 

 

 its Managing Member

 

 

By:

 Thomas H. Lee Advisors L.L.C.

 

 

 

 General Partner

 

 

 

 

 

 

 

 

 

 

By:

/s/ THOMAS H. LEE

 

 

Name: Thomas H. Lee

 

Title:

 

BAIN:

BAIN CAPITAL PARTNERS, LLC

 

By:

 Bain Capital LLC, its sole member

 

 

 

 

 

 

 

 

 

By:

/s/ MARK NUNNELLY

 

 

Name: Mark Nunnelly

 

Title:

 

PROVIDENCE:

PROVIDENCE EQUITY PARTNERS IV INC.

 

 

 

 

 

 

 

 

 

By:

/s/ JONATHAN M. NELSON

 

 

Name: Jonathan M. Nelson

 

Title:

 

MUSIC:

MUSIC PARTNERS MANAGEMENT, LLC

 

 

 

 

 

 

 

 

 

By:

/s/ GARY FUHRMAN

 

 

Name: Gary Fuhrman

 

Title:

 

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