Exhibit 10.7


 





















 


COMPANY GUARANTY


 


 


Dated as of February 27, 2004


 


From


 


WMG ACQUISITION CORP.


 


as Guarantor


 


in favor of


 


THE SECURED PARTIES REFERRED TO IN

THE CREDIT AGREEMENT REFERRED TO HEREIN


 





















 


TABLE OF CONTENTS


 


	
  Section
  1. Guaranty

  	
   

  
	
  Section
  2. Guaranty
  Absolute

  	
   

  
	
  Section
  3. Waivers
  and Acknowledgments

  	
   

  
	
  Section
  4. Subrogation

  	
   

  
	
  Section
  5. Payments
  Free and Clear of Taxes, Etc

  	
   

  
	
  Section
  6. Amendments,
  Etc

  	
   

  
	
  Section
  7. Notices,
  Etc

  	
   

  
	
  Section
  8. No
  Waiver; Remedies

  	
   

  
	
  Section
  9. Right
  of Set-off

  	
   

  
	
  Section
  10. Continuing
  Guaranty; Assignments under the Credit Agreement

  	
   

  
	
  Section
  11. Execution
  in Counterparts

  	
   

  
	
  Section
  12. Governing Law; Jurisdiction; Waiver of Jury Trial, Etc

  	
   

  



 





















 


COMPANY GUARANTY


 


COMPANY
GUARANTY dated as of February 27, 2004 (the “Guaranty”) made
by WMG ACQUISITION CORP., a Delaware corporation (the “Guarantor”), in favor of the
Secured Parties (as defined in the Credit Agreement referred to below).


 


PRELIMINARY STATEMENT


 


The Guarantor
and certain of its Foreign Subsidiaries (the “Overseas
Borrowers” and, together with the Guarantor, the “Borrowers”) are parties to a
Credit Agreement dated as of February 27, 2004 (as amended, amended and
restated, supplemented or otherwise modified from time to time, the “Credit Agreement”; the capitalized terms
defined therein and not otherwise defined herein being used herein as therein
defined) with WMG Holdings Corp., certain Lenders party thereto, Bank of
America, N.A., as the L/C Issuer, the Swing Line Lender and the Administrative
Agent, and the other Agents named therein. The Guarantor will derive
substantial direct and indirect benefits from the transactions contemplated by
the Loan Documents and the Secured Hedge Agreements (together with all
instruments, agreements or other documents evidencing the Cash Management Obligations,
the “Finance Documents”). It
is a condition precedent to the making of Loans and the issuance of Letters of
Credit by the Lenders under the Credit Agreement and the entry by the Hedge
Banks into Secured Hedge Agreements from time to time that the Guarantor shall
have executed and delivered this Guaranty.


 


NOW,
THEREFORE, in consideration of the premises and in order to induce the Lenders
to make Loans and to issue Letters of Credit under the Credit Agreement and the
Hedge Banks to enter into Secured Hedge Agreements from time to time, the
Guarantor hereby agrees as follows:


 


Section 1.
Guaranty. (a) The Guarantor
hereby absolutely, unconditionally and irrevocably guarantees the punctual
payment, whether at scheduled maturity or by acceleration, demand or otherwise,
of all Obligations of each Loan Party and each other Restricted Subsidiary
which is an obligor with respect to the Cash Management Obligations (each, an “Obligor”) now or hereafter
existing (including, without limitation, any extensions, modifications,
substitutions, amendments or renewals of any or all of the foregoing
Obligations), whether direct or indirect, absolute or contingent, and whether
for principal, interest, premiums, fees, indemnities, contract causes of
action, costs, expenses or otherwise (such Obligations being the “Guaranteed Obligations”), and agrees to pay any and all expenses incurred by the Administrative
Agent or any other Secured Party in enforcing any rights under this Guaranty or
any other Loan Document (including reasonable fees, expenses and disbursements
of any law firm or other external counsel to the Administrative Agent). Without
limiting the


 





















 


generality of the foregoing,
the Guarantor’s liability shall extend to all amounts that constitute part of
the Guaranteed Obligations and would be owed by any Obligor to any Secured
Party under or in respect of the Finance Documents but for the fact that they
are unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving such Obligor.


 


(b)           The Guarantor hereby unconditionally
and irrevocably agrees that in the event any payment shall be required to be
made to any Secured Party under this Guaranty or the Parent Guaranty or the
Subsidiary Guaranty or any other guaranty, the Guarantor will contribute, to
the maximum extent permitted by law, such amounts to each other guarantor so as
to maximize the aggregate amount paid to the Secured Parties under or in
respect of the Finance Documents.


 


Section 2.
Guaranty Absolute. The Guarantor guarantees that the Guaranteed
Obligations will be paid strictly in accordance with the terms of the Finance
Documents, regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of any
Secured Party with respect thereto. The Obligations of the Guarantor under or
in respect of this Guaranty are independent of the Guaranteed Obligations or
any other Obligations of any other Obligor under or in respect of the Finance
Documents, and a separate action or actions may be brought and prosecuted
against the Guarantor to enforce this Guaranty, irrespective of whether any
action is brought against any other Obligor or whether any other Obligor is
joined in any such action or actions. The liability of the Guarantor under this
Guaranty shall be irrevocable, absolute and unconditional irrespective of, and
the Guarantor hereby irrevocably waives any defenses it may now have or
hereafter acquire in any way relating to, any or all of the following:


 


(a)           any lack of validity or
enforceability of any Finance Document or any agreement or instrument relating
thereto;


 


(b)           any change in the time, manner or
place of payment of, or in any other term of, all or any of the Guaranteed
Obligations or any other Obligations of any other Obligor under or in respect
of the Finance Documents, or any other amendment or waiver of or any consent to
departure from any Finance Document, including, without limitation, any
increase in the Guaranteed Obligations resulting from the extension of
additional credit to any Obligor or any of its Subsidiaries or otherwise;


 


(c)           any taking, exchange, release or
non-perfection of any Collateral or any other collateral, or any taking,
release or amendment or waiver of, or consent to departure from, any other
guaranty, for all or any of the Guaranteed Obligations;


 


2





















 


(d)           any manner of application of
Collateral or any other collateral, or proceeds thereof, to all or any of the
Guaranteed Obligations, or any manner of sale or other disposition of any
Collateral or any other collateral for all or any of the Guaranteed Obligations
or any other Obligations of any Obligor under the Finance Documents or any
other assets of any Obligor or any of its Subsidiaries;


 


(e)           any change, restructuring or
termination of the corporate structure or existence of any Obligor or any of
its Subsidiaries;


 


(f)            any failure of any Secured Party to
disclose to any Obligor any information relating to the business, condition
(financial or otherwise), operations, performance, properties or prospects of
any other Obligor now or hereafter known to such Secured Party (the Guarantor
waiving any duty on the part of the Secured Parties to disclose such
information);


 


(g)           the failure of any other Person to
execute or deliver any other guaranty or agreement or the release or reduction
of liability of any other guarantor or surety with respect to the Guaranteed
Obligations; or


 


(h)           any other circumstance or any
existence of or reliance on any representation by any Secured Party that might
otherwise constitute a defense available to, or a discharge of, any Obligor or
any other guarantor or surety.


 


This Guaranty shall continue to
be effective or be reinstated, as the case may be, if at any time any payment
of any of the Guaranteed Obligations is rescinded or must otherwise be returned
by any Secured Party or any other Person upon the insolvency, bankruptcy or
reorganization of any other Obligor or otherwise, all as though such payment
had not been made.


 


Section 3.
Waivers and Acknowledgments. (a)
The Guarantor hereby unconditionally and irrevocably waives promptness,
diligence, notice of acceptance, presentment, demand for performance, notice of
nonperformance, default, acceleration, protest or dishonor and any other notice
with respect to any of the Guaranteed Obligations and this Guaranty and any
requirement that any Secured Party protect, secure, perfect or insure any Lien
or any property subject thereto or exhaust any right or take any action against
any Obligor or any other Person or any Collateral.


 


(b)           The Guarantor hereby unconditionally
and irrevocably waives any right to revoke this Guaranty and acknowledges that
this Guaranty is continuing in nature and applies to all Guaranteed
Obligations, whether existing now or in the future.


 


(c)           The Guarantor hereby unconditionally
and irrevocably waives (i) any defense arising by reason of any claim or
defense based upon an election of


 


3





















 


remedies by any Secured Party
that in any manner impairs, reduces, releases or otherwise adversely affects
the subrogation, reimbursement, exoneration, contribution or indemnification
rights of the Guarantor or other rights of the Guarantor to proceed against any
of the other Obligors, any other guarantor or any other Person or any
Collateral and (ii) any defense based on any right of set-off or counterclaim
against or in respect of the Obligations of the Guarantor hereunder.


 


(d)           The Guarantor acknowledges that the
Administrative Agent may, in accordance with the Loan Documents, without notice
to or demand upon the Guarantor and without affecting the liability of the
Guarantor under this Guaranty, foreclose under any mortgage by nonjudicial sale,
and the Guarantor hereby waives any defense to the recovery by the
Administrative Agent and the other Secured Parties against the Guarantor of any
deficiency after such nonjudicial sale and any defense or benefits that may be
afforded by applicable law.


 


(e)           The Guarantor hereby unconditionally
and irrevocably waives any duty on the part of any Secured Party to disclose to
the Guarantor any matter, fact or thing relating to the business, condition
(financial or otherwise), operations, performance, properties or prospects of
any other Obligor or any of its Subsidiaries now or hereafter known by such
Secured Party.


 


(f)            The Guarantor acknowledges that it
will receive substantial direct and indirect benefits from the financing
arrangements contemplated by the Finance Documents and that the waivers set
forth in Section 2 and this Section 3 are knowingly made in contemplation of
such benefits.


 


Section 4.
Subrogation. The Guarantor hereby
unconditionally and irrevocably agrees not to exercise any rights that it may
now have or hereafter acquire against any other Obligor or any other insider
guarantor that arise from the existence, payment, performance or enforcement of
the Guarantor’s Obligations under or in respect of this Guaranty or any other
Finance Document, including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution or indemnification and any right to
participate in any claim or remedy of any Secured Party against any other
Obligor or any other insider guarantor or any Collateral, whether or not such
claim, remedy or right arises in equity or under contract, statute or common
law, including, without limitation, the right to take or receive from any other
Obligor or any other insider guarantor, directly or indirectly, in cash or other property or by
set-off or in any other manner, payment or security on account of such claim,
remedy or right, unless and until all of the Guaranteed Obligations and all
other amounts payable under this Guaranty shall have been paid in full in cash, all Letters of Credit shall
have expired or been terminated and the Commitments shall have expired or been
terminated. If any amount shall be paid to the Guarantor in violation of the
immediately preceding sentence at any time prior to the latest of (a) the
payment in full in cash of the
Guaranteed Obligations and all other amounts payable under


 


4





















 


this Guaranty,
(b) the Maturity Date and (c) the latest date of expiration or termination of
all Letters of Credit, such amount shall be received and held in trust for the
benefit of the Secured Parties, shall be segregated from other property and
funds of the Guarantor and shall forthwith be paid or delivered to the
Administrative Agent in the same form as so received (with any necessary
endorsement or assignment) to be credited and applied to the Guaranteed
Obligations and all other amounts payable under this Guaranty, whether matured
or unmatured, in accordance with the terms of the Finance Documents, or to be
held as Collateral for any Guaranteed Obligations or other amounts payable
under this Guaranty thereafter arising. If (i) all of the Guaranteed
Obligations and all other amounts payable under this Guaranty shall have been
paid in full in cash, (ii) the Maturity Date shall have occurred and (iii) all
Letters of Credit shall have expired or been terminated, the Secured Parties
will, at the Guarantor’s request and expense, execute and deliver to the
Guarantor appropriate documents, without recourse and without representation or
warranty, necessary to evidence the transfer by subrogation to the Guarantor of
an interest in the Guaranteed Obligations resulting from such payment made by
the Guarantor pursuant to this Guaranty.


 


Section 5.
Payments Free and Clear of Taxes, Etc. Any
and all payments by the Guarantor under this Guaranty or any other Loan
Document shall be made, in accordance with the terms of the Credit Agreement,
free and clear of and without deduction for any and all present or future
Taxes.


 


Section 6.
Amendments, Etc. No amendment or
waiver of any provision of this Guaranty and no consent to any departure by the
Guarantor therefrom shall in any event be effective unless the same shall be in
writing and signed by the Administrative Agent and the Guarantor (with the
consent of the requisite number of Lenders specified in the Credit Agreement),
and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.


 


Section 7.
Notices, Etc. All notices and
other communications provided for hereunder shall be in writing (including
telegraphic, telecopy or telex communication or facsimile transmission) and
mailed, telegraphed, telecopied, telexed, faxed or delivered to it, if to the
Guarantor, at its address specified in Section 10.02 of the Credit Agreement,
if to any Agent or any Lender, at its address specified in Section 10.02 of the
Credit Agreement, if to any Hedge Bank, at its address specified in the Secured
Hedge Agreement to which it is a party, or, as to any party, at such other
address as shall be designated by such party in a written notice to each other
party. All such notices and other communications shall be deemed to be given or
made at such time as shall be set forth in Section 10.02 of the Credit
Agreement. Delivery by telecopier of an executed counterpart of a signature
page to any amendment or waiver of any provision of this Guaranty shall be
effective as delivery of an original executed counterpart thereof.


 


5





















 


Section 8.
No Waiver; Remedies. No failure
on the part of any Secured Party to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.


 


Section 9.
Right of Set-off. Upon (a) the
occurrence and during the continuance of any Event of Default and (b) the
making of the request or the granting of the consent specified by Section 8.02
of the Credit Agreement to authorize the Administrative Agent to declare the
Notes due and payable pursuant to the provisions of said Section 8.02, the
Administrative Agent and, after obtaining the prior written consent of the
Administrative Agent, each other Agent and each Lender and each of their
respective Affiliates is hereby authorized at any time and from time to time,
to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Agent, such Lender or
such Affiliate to or for the credit or the account of the Guarantor against any
and all of the Obligations of the Guarantor now or hereafter existing under the
Loan Documents, irrespective of whether such Agent or such Lender shall have
made any demand under this Guaranty or any other Loan Document and although
such Obligations may be unmatured. Each Agent and each Lender agrees promptly
to notify the Guarantor after any such set-off and application; provided that the failure to give such
notice shall not affect the validity of such set-off and application. The
rights of each Agent and each Lender and their respective Affiliates under this
Section are in addition to other rights and remedies (including, without
limitation, other rights of set-off) that such Agent, such Lender and their respective
Affiliates may have.


 


Section 10.
Continuing Guaranty; Assignments under the
Credit Agreement. This Guaranty is a continuing guaranty and shall
(a) remain in full force and effect until the latest of (i) the payment in full
in cash of the Guaranteed Obligations (other than with respect to Secured Hedge
Agreements and Cash Management Obligations which are not yet due and payable)
and all other amounts payable under this Guaranty, (ii) the Maturity Date and
(iii) the latest date of expiration or termination of all Letters of Credit,
(b) be binding upon the Guarantor, its successors and assigns and (c) inure to
the benefit of and be enforceable by the Secured Parties and their successors,
transferees and assigns. Without limiting the generality of clause (c) of the
immediately preceding sentence, any Secured Party may assign or otherwise
transfer all or any portion of its rights and obligations under the Credit
Agreement (including, without limitation, all or any portion of its
Commitments, the Loans owing to it and the Note or Notes held by it) to any
other Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to such Secured Party herein or otherwise,
in each case as and to the extent provided in


 


6





















 


Section 10.07 of the Credit
Agreement. Except as expressly provided in the Credit Agreement, the Guarantor
shall not have the right to assign its rights hereunder or any interest herein
without the prior written consent of the Secured Parties.


 


Section 11.
Execution in Counterparts. This
Guaranty and each amendment, waiver and consent with respect hereto may be
executed in any number of counterparts and by different parties thereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Guaranty by telecopier shall be effective as delivery of an original executed
counterpart of this Guaranty.


 


Section 12.
Governing Law; Jurisdiction; Waiver of Jury
Trial, Etc. (a) This Guaranty shall be governed
by, and construed in accordance with, the laws of the State of New York.


 


(b)           ANY LEGAL ACTION OR PROCEEDING WITH
RESPECT TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE
COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK CITY OR OF THE UNITED
STATES FOR THE SOUTHERN DISTRICT OF SUCH STATE, AND BY EXECUTION AND DELIVERY
OF THIS GUARANTY, THE GUARANTOR CONSENTS, FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. THE GUARANTOR
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF
VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION
IN RESPECT OF ANY LOAN DOCUMENT OR OTHER DOCUMENT RELATED THERETO.


 


(c)           THE GUARANTOR HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, CLAIM, DEMAND OR CAUSE OF
ACTION (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.


 


7





















 


IN WITNESS
WHEREOF, the Guarantor has caused this Guaranty to be duly executed and
delivered by its officer thereunto duly authorized as of the date first above
written.


 


 


	
   

  	
  WMG
  ACQUISITION CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/   Paul
  Robinson

  	
   

  
	
   

  	
   

  	
  Title:    Vice
  President