Exhibit
10.39


 


RESTRICTED
STOCK AWARD AGREEMENT


 


THIS RESTRICTED STOCK AWARD AGREEMENT (this “Agreement”), is entered into as of
this 21st day of December, 2004, by and between WMG Parent Corp., a Delaware
corporation (“Parent”), and Michael Fleisher (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 as of December 21, 2004 (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amended, superceded or replaced from time to time, the “Employment Agreement”);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 sell to the
Executive on the date hereof (the “Effective Date”) the restricted stock
provided for herein (the “Restricted Stock Award”), such sale 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 sells to the Executive,
and the Executive hereby purchases from Parent, effective as of the Effective
Date (which is the date hereof), 787.037037 shares of Class A Common Stock of
Parent (the “Restricted Shares”) for an aggregate purchase price of $927,916.67.
 The Board acknowledges to the Executive
that such purchase price is the fair market value of the Restricted Shares on
the Effective Date (the “Initial Value”), determined without regard to any
restrictions applicable thereto other than restrictions which by their terms do
not lapse.  The Restricted Shares shall
vest in accordance with Section 2 and Section 5 hereof.


 





















 


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 Effective 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 Effective 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
Effective 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, in the Executive’s sole discretion, an investment bank or
other valuation firm chosen by the Executive from among a list of no less than
five such banks and/or firms (all of which must be experienced in the valuation
of privately-held companies) provided to the Executive by the Company; provided
that, in determining Fair Market Value of the securities of any member of the
Parent Group, the chosen investment bank or valuation firm shall be instructed
to use a methodology which takes into account the free cash flow, revenue and
EBITDA and such other methodologies and characteristics as it may determine to
be relevant, and shall be instructed (A) to adjust the Fair Market Value of the
securities to take into account the illiquidity of securities which are not
publicly traded and (B) to 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” shall mean $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 the Effective
Date or (B) received by the Investors following the Effective Date, 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


 


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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 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 Effective 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.  As a condition to the
effectiveness of the Restricted Stock Award, the Executive shall make a timely
and valid 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 less the purchase price paid for the Restricted Shares.  Notwithstanding the above, because the Company
and the Executive acknowledge that the purchase price for the Restricted Shares
is equal to the Initial Value, so long as the Executive makes a timely and
valid Code Section 83(b) election in respect of the Restricted Shares the
Company and the Executive agree that no tax is due, and no withholding is
necessary, upon or on account of the Executive’s purchase of the Restricted
Shares.


 


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,


 


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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.


 


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 the Call Option 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)                                 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), 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 Restricted Shares.  The purchase price (the “Call Price”)
of the Restricted Shares subject to purchase under this provision (the “Called
Shares”) shall be as follows:


 


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


 


(2)                                  In the event of a 5(a)(ii) Termination, as to
each Called Share of Service-Based Restricted Stock and Performance-Based
Restricted Stock 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, 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, as to
each Called Share of Service-Based Restricted Stock and Performance-


 


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Based Restricted Stock which is an Unvested Restricted Share
immediately prior to the Initial Call Date of such share (other than such a
share which becomes a Vested Restricted Share upon termination of employment
solely because such termination is a CIC Termination), the lower of the Fair
Market Value of such share on the date of the applicable Call Notice or the
Initial Value of such share.


 


(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 (1) 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


 


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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.


 


(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 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


 


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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.


 


(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 WMG PARENT CORP. AND THE REGISTERED OWNER OF THIS
CERTIFICATE (OR HIS PREDECESSOR IN INTEREST) AND A STOCKHOLDERS’ AGREEMENT TO
WHICH WMG PARENT 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 WMG PARENT 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 WMG PARENT CORP.  HAS RECEIVED AN
OPINION OF COUNSEL, WHICH OPINION IS REASONABLY SATISFACTORY TO IT, TO THE
EFFECT THAT SUCH REGISTRATIONS ARE NOT REQUIRED.


 


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8.                                       Transferability.


 


(a)                                  The Restricted Shares may not, at any lime
prior to becoming Vested Restricted Shares, be assigned, alienated, pledged,
attached, sold or otherwise transferred or encumbered by the Executive and any
such purported assignment, alienation, pledge, attachment, sale, transfer or
encumbrance shall be void and unenforceable against the 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.


 


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(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.


 


(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 arc 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 Patent’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.


 


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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 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:


 


WMG Parent Corp.

75 Rockefeller Plaza

New York, New York  10019

Attention: General Counsel


 


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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.


 


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 time, 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 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


 


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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.                                 Interpretation.  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.  The term “Company” as used
herein with reference to the employment of the Executive or the termination
thereof shall refer to the Company and each member of the “Parent Group” (as
defined in Section 2(b)(11).


 


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.


 


	
   

  	
  WMG PARENT CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Dave Johnson

  
	
   

  	
  By:  Dave Johnson

  
	
   

  	
  Title:  EPP & General Counsel

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Michael Fleisher

  
	
   

  	
  Michael
  Fleisher

  



 


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