Exhibit 10.6


 





















 


PARENT GUARANTY


 


Dated
as of February 27, 2004


 


From


 


WMG
HOLDINGS 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

  	
   

  



 





















 


PARENT GUARANTY


 


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


 


PRELIMINARY
STATEMENT


 


WMG Acquisition Corp., a
Delaware corporation and a wholly owned subsidiary of the Guarantor (the “Company”), and certain
Foreign Subsidiaries of the Company (the “Overseas
Borrowers” and, together with the Company, 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 the Guarantor, 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 other 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 other 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 Subsidiary Guaranty or the Company
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 the Company or any other Obligor or whether the
Company or 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;


 


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(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 the Company or 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 the Company, 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 the Company,
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
the Company, 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


 


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and
all other amounts payable under 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, addressed to it in care
of the Company at the Company’s 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


 


5





















 


amendment
or waiver of any provision of this Guaranty shall be effective as delivery of
an original executed counterpart thereof.


 


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 permitted 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


 


6





















 


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 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.


 


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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 HOLDINGS CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Paul Robinson

  	
   

  
	
   

  	
   

  	
  Title:    Vice
  President