Exhibit
10.13


 





















 


Execution
Version


 


 




 





 


STOCKHOLDERS AGREEMENT


 


 


among


 


 


WMG Parent Corp.


 


 


WMG Holdings Corp.


 


 


WMG Acquisition Corp.


 


and


 


 


Certain Stockholders of WMG Parent Corp. and
WMG Holdings Corp.


 


 


Dated as of February 29, 2004


 




 





 





















 


TABLE OF CONTENTS


 


 


	
  1.

  	
  EFFECTIVENESS;
  DEFINITIONS

  	
   

  
	
   

  	
  1.1.

  	
  Closing

  	
   

  
	
   

  	
  1.2.

  	
  Definitions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  VOTING AGREEMENT

  	
   

  
	
   

  	
  2.1.

  	
  Election of Directors

  	
   

  
	
   

  	
   

  	
  2.1.1.

  	
  Board
  Size

  	
   

  
	
   

  	
   

  	
  2.1.2.

  	
  Designation of
  Directors

  	
   

  
	
   

  	
   

  	
  2.1.3.

  	
  Sell-Down Provisions

  	
   

  
	
   

  	
   

  	
  2.1.4.

  	
  CEO
  Director

  	
   

  
	
   

  	
   

  	
  2.1.5.

  	
  Independent Directors

  	
   

  
	
   

  	
   

  	
  2.1.6.

  	
  Further Assurances

  	
   

  
	
   

  	
  2.2.

  	
  Removal and Replacement;
  Vacancies

  	
   

  
	
   

  	
  2.3.

  	
  Grant of Proxies

  	
   

  
	
   

  	
  2.4.

  	
  Certain Actions

  	
   

  
	
   

  	
  2.5.

  	
  Committees

  	
   

  
	
   

  	
  2.6.

  	
  Significant Transactions

  	
   

  
	
   

  	
  2.7.

  	
  Consent to Amendment

  	
   

  
	
   

  	
  2.8.

  	
  Midco’s and
  Purchaser’s Directors

  	
   

  
	
   

  	
  2.9.

  	
  The Company and Midco

  	
   

  
	
   

  	
  2.10.

  	
  Period

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  TRANSFER RESTRICTIONS

  	
   

  
	
   

  	
  3.1.

  	
  Transfers Allowed

  	
   

  
	
   

  	
   

  	
  3.1.1.

  	
  Permitted Transferees

  	
   

  
	
   

  	
   

  	
  3.1.2.

  	
  Distributions
  and Charitable Contributions

  	
   

  
	
   

  	
   

  	
  3.1.3.

  	
  Public Transfers

  	
   

  
	
   

  	
   

  	
  3.1.4.

  	
  Tag Along and Drag
  Along

  	
   

  
	
   

  	
   

  	
  3.1.5.

  	
  Other Private Transfers

  	
   

  
	
   

  	
  3.2.

  	
  Permitted Transferees

  	
   

  
	
   

  	
  3.3.

  	
  Restrictions on
  Public Transfers

  	
   

  
	
   

  	
  3.4.

  	
  Restrictions
  on Transfers to Strategic Investors

  	
   

  
	
   

  	
  3.5.

  	
  Impermissible Transfer

  	
   

  
	
   

  	
  3.6.

  	
  Notice of Transfer

  	
   

  
	
   

  	
  3.7.

  	
  Period

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  “TAG ALONG”
  AND “DRAG ALONG” RIGHTS AND RIGHT OF FIRST OFFER

  	
   

  
	
   

  	
  4.1.

  	
  Tag Along

  	
   

  
	
   

  	
   

  	
  4.1.1.

  	
  Notice

  	
   

  
	
   

  	
   

  	
  4.1.2.

  	
  Exercise

  	
   

  



 


i





















 


	
   

  	
   

  	
  4.1.3.

  	
  Exercise by
  Holders of Warrants

  	
   

  
	
   

  	
   

  	
  4.1.4.

  	
  Irrevocable Offer

  	
   

  
	
   

  	
   

  	
  4.1.5.

  	
  Reduction of Shares
  Sold

  	
   

  
	
   

  	
   

  	
  4.1.6.

  	
  Additional Compliance

  	
   

  
	
   

  	
  4.2.

  	
  Drag
  Along

  	
   

  
	
   

  	
   

  	
  4.2.1.

  	
  Exercise

  	
   

  
	
   

  	
  4.3.

  	
  Miscellaneous

  	
   

  
	
   

  	
   

  	
  4.3.1.

  	
  Certain Legal
  Requirements

  	
   

  
	
   

  	
   

  	
  4.3.2.

  	
  Further Assurances

  	
   

  
	
   

  	
   

  	
  4.3.3.

  	
  Sale
  Process

  	
   

  
	
   

  	
   

  	
  4.3.4.

  	
  Treatment of Options,
  Warrants and Convertible Securities

  	
   

  
	
   

  	
   

  	
  4.3.5.

  	
  Expenses

  	
   

  
	
   

  	
   

  	
  4.3.6.

  	
  Closing

  	
   

  
	
   

  	
  4.4.

  	
  Right of First Offer

  	
   

  
	
   

  	
   

  	
  4.4.1.

  	
  Notice

  	
   

  
	
   

  	
   

  	
  4.4.2.

  	
  Exercise

  	
   

  
	
   

  	
   

  	
  4.4.3.

  	
  Irrevocable Offer

  	
   

  
	
   

  	
   

  	
  4.4.4.

  	
  Acceptance of Offers

  	
   

  
	
   

  	
   

  	
  4.4.5.

  	
  Additional Compliance

  	
   

  
	
   

  	
   

  	
  4.4.6.

  	
  Determination
  of the Number of Subject Shares to be Sold

  	
   

  
	
   

  	
  4.5.

  	
  Period

  	
   

  
	
   

  	
  4.6.

  	
  Post-Termination Tag
  Along

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  RIGHT OF PARTICIPATION

  	
   

  
	
   

  	
  5.1.

  	
  Right of Participation

  	
   

  
	
   

  	
   

  	
  5.1.1.

  	
  Offer

  	
   

  
	
   

  	
   

  	
  5.1.2.

  	
  Exercise

  	
   

  
	
   

  	
   

  	
  5.1.3.

  	
  Other Securities

  	
   

  
	
   

  	
   

  	
  5.1.4.

  	
  Certain Legal
  Requirements

  	
   

  
	
   

  	
   

  	
  5.1.5.

  	
  Further Assurances

  	
   

  
	
   

  	
   

  	
  5.1.6.

  	
  Expenses

  	
   

  
	
   

  	
   

  	
  5.1.7.

  	
  Closing

  	
   

  
	
   

  	
  5.2.

  	
  Post-Issuance Notice

  	
   

  
	
   

  	
  5.3.

  	
  Excluded Transactions

  	
   

  
	
   

  	
  5.4.

  	
  Certain
  Provisions Applicable to Options, Warrants and Convertible Securities

  	
   

  
	
   

  	
  5.5.

  	
  Acquired Shares

  	
   

  
	
   

  	
  5.6.

  	
  Period

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  REGISTRATION RIGHTS

  	
   

  
	
   

  	
  6.1.

  	
  Demand
  Registration Rights for Investor Registrable Securities

  	
   

  
	
   

  	
   

  	
  6.1.1.

  	
  General

  	
   

  
	
   

  	
   

  	
  6.1.2.

  	
  Form

  	
   

  
	
   

  	
   

  	
  6.1.3.

  	
  Payment of Expenses

  	
   

  
	
   

  	
   

  	
  6.1.4.

  	
  Additional Procedures

  	
   

  
	
   

  	
   

  	
  6.1.5.

  	
  Suspension of
  Registration

  	
   

  



 


ii





















 


	
   

  	
  6.2.

  	
  Piggyback
  Registration Rights

  	
   

  
	
   

  	
   

  	
  6.2.1.

  	
  Piggyback Registration

  	
   

  
	
   

  	
   

  	
  6.2.2.

  	
  Payment of Expenses

  	
   

  
	
   

  	
   

  	
  6.2.3.

  	
  Additional Procedures

  	
   

  
	
   

  	
   

  	
  6.2.4.

  	
  Registration
  Statement Form

  	
   

  
	
   

  	
  6.3.

  	
  Certain Other Provisions

  	
   

  
	
   

  	
   

  	
  6.3.1.

  	
  Underwriter’s Cutback

  	
   

  
	
   

  	
   

  	
  6.3.2.

  	
  Registration Procedures

  	
   

  
	
   

  	
   

  	
  6.3.3.

  	
  Selection
  of Underwriters and Counsel

  	
   

  
	
   

  	
   

  	
  6.3.4.

  	
  Holder Lock-Up

  	
   

  
	
   

  	
   

  	
  6.3.5.

  	
  Company Lock-Up

  	
   

  
	
   

  	
   

  	
  6.3.6.

  	
  Other Agreements

  	
   

  
	
   

  	
  6.4.

  	
  Indemnification
  and Contribution

  	
   

  
	
   

  	
   

  	
  6.4.1.

  	
  Indemnities of the
  Company

  	
   

  
	
   

  	
   

  	
  6.4.2.

  	
  Indemnities to the
  Company

  	
   

  
	
   

  	
   

  	
  6.4.3.

  	
  Contribution

  	
   

  
	
   

  	
   

  	
  6.4.4.

  	
  Limitation
  on Liability of Holders of Registrable Securities

  	
   

  
	
   

  	
   

  	
  6.4.5.

  	
  Indemnification
  Procedures

  	
   

  
	
   

  	
  6.5.

  	
  Permitted Assignees

  	
   

  
	
   

  	
   

  	
  6.5.1.

  	
  Piggyback
  Registration Rights

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  COVENANTS

  	
   

  
	
   

  	
  7.1.

  	
  Information Rights

  	
   

  
	
   

  	
   

  	
  7.1.1.

  	
  Historical
  Financial Information

  	
   

  
	
   

  	
   

  	
  7.1.2.

  	
  Period

  	
   

  
	
   

  	
  7.2.

  	
  Confidentiality

  	
   

  
	
   

  	
  7.3.

  	
  Directors’ and
  Officers’ Insurance

  	
   

  
	
   

  	
  7.4.

  	
  Exercise of
  Rights Under Seller MMT Warrant Agreement

  	
   

  
	
   

  	
  7.5.

  	
  Seller Information
  Rights

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  REMEDIES

  	
   

  	
   

  
	
   

  	
  8.1.

  	
  Generally

  	
   

  
	
   

  	
  8.2.

  	
  Deposit

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  LEGENDS

  	
   

  	
   

  
	
   

  	
  9.1.

  	
  Restrictive Legend

  	
   

  
	
   

  	
  9.2.

  	
  1933 Act Legends

  	
   

  
	
   

  	
  9.3.

  	
  Stop Transfer
  Instruction

  	
   

  
	
   

  	
  9.4.

  	
  Termination of 1933
  Act Legend

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  AMENDMENT, TERMINATION, ETC

  	
   

  
	
   

  	
  10.1.

  	
  Oral Modifications

  	
   

  
	
   

  	
  10.2.

  	
  Written Modifications

  	
   

  
	
   

  	
  10.3.

  	
  Withdrawal from Agreement

  	
   

  
	
   

  	
  10.4.

  	
  Effect of Termination

  	
   

  



 


iii





















 


	
  11.

  	
  DEFINITIONS

  	
   

  
	
   

  	
  11.1.

  	
  Certain Matters of
  Construction

  	
   

  
	
   

  	
  11.2.

  	
  Definitions

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
  MISCELLANEOUS

  	
   

  
	
   

  	
  12.1.

  	
  Authority; Effect

  	
   

  
	
   

  	
  12.2.

  	
  Notices

  	
   

  
	
   

  	
  12.3.

  	
  Binding Effect, Etc

  	
   

  
	
   

  	
  12.4.

  	
  Descriptive Headings

  	
   

  
	
   

  	
  12.5.

  	
  Counterparts

  	
   

  
	
   

  	
  12.6.

  	
  Severability

  	
   

  
	
   

  	
  12.7.

  	
  No Recourse

  	
   

  
	
   

  	
  12.8.

  	
  Aggregation of Shares

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
  GOVERNING LAW

  	
   

  
	
   

  	
  13.1.

  	
  Governing Law

  	
   

  
	
   

  	
  13.2.

  	
  Consent to Jurisdiction

  	
   

  
	
   

  	
  13.3.

  	
  WAIVER OF JURY TRIAL

  	
   

  
	
   

  	
  13.4.

  	
  Exercise of
  Rights and Remedies

  	
   

  



 


iv





















 


STOCKHOLDERS
AGREEMENT


 


This Stockholders Agreement (the “Agreement”)
is made as of February 29, 2004 by and among:


 


(i)                                     WMG Parent Corp., a Delaware corporation (the
“Company”);


 


(ii)                                  WMG Holdings Corp., a Delaware corporation (“Midco”);


 


(iii)                               WMG Acquisition Corp., a Delaware corporation
(the “Purchaser”);


 


(iv)                              each Person executing this Agreement and
listed as an Investor on the signature pages hereto (collectively, the “Investors”);


 


(v)                                 each Person executing this Agreement and
listed as a Seller on the signature pages hereto (collectively, the “Sellers”);


 


(vi)                              each Person executing this Agreement and
listed as a Manager on the signature pages hereto (collectively, the “Managers”
and together with the Investors and the Sellers, the “Stockholders”);
and


 


(vii)                           such other Persons, if any, that from time to
time become party hereto as holders of Other Holder Shares (as defined below)
pursuant to Section 6.5 solely in the capacity of permitted assignees with
respect to certain registration rights hereunder (collectively, the “Other
Holders”).


 


RECITALS


 


1.                                       The Company has been formed for the purpose
of acquiring (the “Acquisition”), indirectly through one or more
subsidiaries, pursuant to a Purchase Agreement, dated as of November 24,
2003 (the “Acquisition Agreement”), between Time Warner Inc. and the
Purchaser, the Warner Recorded Music Business and the Warner Music Publishing
Business (as defined in the Acquisition Agreement).


 


2.                                       Upon the Closing (as defined below), the
Common Stock (as defined below) of the Company, the common stock and the
Preferred Stock (as defined below) of Midco and all Options, Warrants and
Convertible Securities (each as defined below) are held as set forth on Schedule 1
hereto.


 


3.                                       The parties believe that it is in the best
interests of the Company, Midco and the Stockholders to set forth their
agreements on certain matters.


 





















 


AGREEMENT


 


Therefore, the parties hereto hereby agree as
follows:


 


1.                                      EFFECTIVENESS; DEFINITIONS.


 


1.1.                              Closing.  This
Agreement shall become effective upon consummation of the closing under the
Acquisition Agreement (the “Closing”).


 


1.2.                              Definitions.  Certain terms are used in this
Agreement as specifically defined herein.  These definitions are set forth or referred to
in Section 11.2 hereof.


 


2.                                      VOTING AGREEMENT.


 


2.1.                              Election of Directors.


 


2.1.1.                     Board
Size.  Each
holder of Company Shares hereby agrees to cast all votes to which such holder
is entitled in respect of the Company Shares, whether at any annual or special
meeting, by written consent or otherwise, to fix the number of members of the
board of directors of the Company (the “Board”) at thirteen (subject to
reduction as set forth in Section 2.1.3).


 


2.1.2.                     Designation
of Directors.  Subject
to Section 2.1.3, there at all times shall be: (i) five THL Directors,
(ii) three Bain Directors, (iii) one Providence Director, (iv) one Lexa
Director, (iv) one director who at all times shall be the then current chief
executive officer of the Company (the “CEO Director”), who shall
initially be Edgar Bronfinan, Jr., with Mr. Bronfman also to serve as Chairman
of the Board during his tenure as the CEO Director, and (v) two additional
directors (the “Independent  Directors”). Each holder of Company
Shares hereby agrees to cast all votes to which such holder is entitled in
respect of the Company Shares, whether at any annual or special meeting, by
written consent or otherwise, so as to elect as the Company’s directors:


 


(i)                                     the number of THL Directors as determined
under Section 2.1.3, designated as follows: (A) first, one director
designated by Thomas H. Lee Equity Fund V, L.P., if it then holds any Company
Shares, (B) then, one director designated by Thomas H. Lee Parallel Fund V,
L.P., if it then holds any Company Shares, (C) then, one director designated by
THL WMG Equity Investors, L.P., if it then holds any Company Shares and (D) then,
such other directors designated by the Majority THL Investors as the remaining
THL Directors;


 


(ii)                                  the number of Bain Directors as determined
under Section 2.1.3, designated as follows: (A) first, one director
designated by Bain Capital VII Coinvestment Fund, L.P., if (1) it then holds
any Company Shares or (2) it is then the sole member of Bain Capital VII
Coinvestment Fund, LLC and the latter then holds any Company Shares, it being
understood and agreed that Bain Capital VII Coinvestment Fund, L.P. is intended
to be a third party beneficiary of this Section


 


2





















 


2.1.2(ii)(A) and the related provisions of Section 2.2
and shall be entitled to enforce such provisions of this Agreement as though it
were a party hereto, and (B) then, such other directors designated by the
Majority Bain Investors as the remaining Bain Directors;


 


(iii)                               the number of Providence Directors as
determined under Section 2.1.3, designated by Providence Equity Partners
IV, L.P., if it then holds any Company Shares, otherwise by the Majority
Providence Investors;


 


(iv)                              the number of Lexa Directors as determined
under Section 2.1.3, designated by Music Capital Partners, L.P., if it
then holds any Company Shares, otherwise by the Majority Lexa Investors;


 


(v)                                 one director as the CEO Director; and


 


(vi)                              two directors as the Independent Directors
designated unanimously by the members of the Board elected pursuant to clauses
(i) through (v) above.


 


2.1.3.                     Sell-Down
Provisions.


 


2.1.3.1.            The number of THL Directors, Bain Directors,
Providence Directors and Lexa Directors shall automatically be reduced
effective at and after such time as the applicable Investor Group ceases to
hold Shares representing both the requisite Total Investment and Voting Stock
Investment as set forth in the table below, subject to adjustment pursuant to Section 2.1.3.2:


 


	
   

  	
   

  	
  Total Investment

  	
   

  	
  Voting Stock Investment

  	
   

  	
  # of Directors

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  THL
  Directors

  	
   

  	
  at least
  $445,000,000

  	
   

  	
  at least
  $30,260,000

  	
   

  	
  5

  	
   

  
	
   

  	
   

  	
  at least $380,000,000

  	
   

  	
  at least
  $25,840,000

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
  at least
  $265,000,000

  	
   

  	
  at least
  $18,020,000

  	
   

  	
  3

  	
   

  
	
   

  	
   

  	
  at least
  $175,000,000

  	
   

  	
  at least
  $11,900,000

  	
   

  	
  2

  	
   

  
	
   

  	
   

  	
  at least
  $45,000,000

  	
   

  	
  at least
  $3,060,000

  	
   

  	
  1

  	
   

  
	
   

  	
   

  	
  less than
  $45,000,000

  	
   

  	
  less than
  $3,060,000

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bain
  Directors

  	
   

  	
  at least
  $265,000,000

  	
   

  	
  at least
  $18,020,000

  	
   

  	
  3

  	
   

  
	
   

  	
   

  	
  at least
  $175,000,000

  	
   

  	
  at least
  $11,900,000

  	
   

  	
  2

  	
   

  
	
   

  	
   

  	
  at least
  $45,000,000

  	
   

  	
  at least
  $3,060,000

  	
   

  	
  1

  	
   

  
	
   

  	
   

  	
  less than
  $45,000,000

  	
   

  	
  less than
  $3,060,000

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Providence
  Directors

  	
   

  	
  at least
  $45,000,000

  	
   

  	
  at least
  $3,060,000

  	
   

  	
  1

  	
   

  
	
   

  	
   

  	
  less than
  $45,000,000

  	
   

  	
  less than
  $3,060,000

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lexa
  Directors

  	
   

  	
  at least
  $45,000,000

  	
   

  	
  at least
  $3,060,000

  	
   

  	
  1

  	
   

  
	
   

  	
   

  	
  less than
  $45,000,000

  	
   

  	
  less than
  $3,060,000

  	
   

  	
  0

  	
   

  



 


3





















 


No increase after the Closing in the Total
Investment or Voting Stock Investment represented by the Shares held by any
Investor Group shall entitle such Investor Group to designate a greater number
of directors than that which such Investor Group was entitled to designate
immediately prior to such increase.  Upon
any reduction in the number of THL Directors, Bain Directors, Providence
Directors or Lexa Directors: (i) the applicable Investor Group promptly shall
cause one or more of its designated directors, as the case may be, to resign
and (ii) the number of members of the Board shall likewise be reduced.


 


2.1.3.2.                                                            The threshold amounts for Total Investment
and Voting Stock Investment in the table above shall automatically be
proportionately reduced effective immediately prior to any event that a
majority of the entire Board in good faith determines to be a Proportionate
Reduction Event; provided,  however, that no such adjustment shall
be made to the extent that the effect of such Proportionate Reduction Event, in
the good faith determination of a majority of the entire Board, is to offset
the effect of any increase (proportionate or otherwise) in the Total Investment
of the Shares held by each of the applicable Investor Groups occurring since
the later of: (i) the most recent Proportionate Reduction Event, if any, for
which an adjustment was made pursuant to this Section 2.1.3.2 and (ii) the
Closing; and provided,  further, that no adjustment pursuant to
this Section 2.1.3.2 shall entitle any Investor Group to designate a
greater number of directors than that which such Investor Group was entitled to
designate immediately prior to the event giving rise to such adjustment.


 


2.1.4.                     CEO
Director.  If
at any time a person serving as the CEO Director ceases to be the chief
executive officer of the Company, the Company and the holders of Company Shares
agree promptly to act in accordance with the provisions hereof to cause the
removal of such director and, at such time as a succeeding chief executive
officer of the Company is appointed in conformity with the provisions hereof,
the election of such person as the CEO Director.  The CEO Director may not be removed, with or
without cause, so long as such director continues to serve as the chief
executive officer of the Company.


 


2.1.5.                     Independent Directors.  An
Independent Director may be removed with, and only with, the consent of each
Investor Group then entitled to designate at least one director pursuant to Section 2.1.


 


2.1.6.                     Further Assurances.  The Company and each holder of
Company Shares hereby agrees to take, at any time and from time to time, all
actions necessary to accomplish the provisions of this Section 2.1.


 


2.2.                              Removal and Replacement; Vacancies.  Members of the Board designated by a particular
Investor Group (or member thereof) may be removed by, and only by, such
Investor Group (or member thereof). The CEO Director and the Independent
Directors may be removed only in accordance with Section 2.1.4 or 2.1.5,
respectively.  If, prior to his or her
election to the Board, any designee for Investor Director or Independent
Director is unable or unwilling to serve


 


4





















 


as
a director, then the applicable designating Person or group, as set forth in Section 2.1.2,
shall be entitled to nominate a replacement.  If, following election to the Board, any
Investor Director or Independent Director resigns, is removed, or is unable to
serve for any reason prior to the expiration of his or her term as a director,
then, subject to Section 2.1.3, the applicable designating Person or
group, as set forth in Section 2.1.2, shall designate a replacement.  If any designating Person or group fails to
designate a person to fill any directorship, then such directorship shall be
vacant.


 


2.3.                              Grant
of Proxies.  Each
holder of Company Shares hereby grants an irrevocable proxy coupled with an
interest to vote, including in any action by written consent, such holder’s
Company Shares in accordance with such holder’s agreements contained in
Sections 2.1 and 2.2 to: (a) each Investor Group then entitled to designate any
Investor Directors solely in respect of the election or removal of such
Investor Group’s Investor Directors and (b) the Company otherwise.  Each of the foregoing proxies shall be valid
and remain in effect until the provisions of Sections 2.1 and 2.2 expire
pursuant to Section 2.10.


 


2.4.                              Certain
Actions.  The
Company, Midco and the holders of Shares agree that, in addition to any other
approval required by the certificate of incorporation of the Company or Midco
or by applicable law, the approval of a majority of the entire Board and the
approval of the Requisite Stockholder Majority shall be required to do any of
the following:


 


2.4.1.                     Approve the annual operating budget of the
Company and its subsidiaries, modify in any material respect any such budget or
take any action that is or would be reasonably likely to be in material
variance therefrom.


 


2.4.2.                     Effect a Change of Control transaction.


 


2.4.3.                     Incur any indebtedness, assume, guarantee,
endorse or otherwise as an accommodation become responsible for the obligations
of any other Person (provided that the Company or any of its subsidiaries may
provide cross-guarantees for any indebtedness that has been approved under this
Section 2.4.3), or make any loan, advance or capital contribution to any
Person (other than the Company or any of its subsidiaries), in each case
outstanding at any time, or enter into or effect any transaction or series of
related transactions involving the issuance by the Company or any of its
subsidiaries of any debt or equity securities, including rights to acquire any
debt or equity securities, in each case in an amount in excess of $100,000,000.


 


2.4.4.                     Enter into or effect any transaction or
series of related transactions, involving the sale, lease, exchange or other
disposal by the Company or any of its subsidiaries of any assets for
consideration having a fair market value (as reasonably determined by the
Board) in excess of $100,000,000, other than (i) transactions between and among
any of the Company and its direct or indirect wholly-owned subsidiaries and
(ii) sales of inventory in the ordinary course of business.


 


2.4.5. Enter into or effect
any transaction or series of related transactions, involving the purchase,
rent, license, exchange or other acquisition by the Company or


 


5





















 


any of its subsidiaries of any assets for
consideration having a fair market value (as reasonably determined by the
Board) in excess of $50,000,000, other than purchases, rentals, licenses,
exchanges or other acquisitions of equipment and supplies in the ordinary
course of business.


 


2.4.6.                     Enter into or effect any transaction or
series of related transactions, involving the merger or consolidation of the
Company or any of its subsidiaries with or into any Person, the assets that are
the subject of such merger or consolidation having a fair market value (as
reasonably determined by the Board) in excess of $50,000,000, other than a
merger or consolidation of a direct or indirect wholly-owned subsidiary of the
Company with or into the Company or another direct or indirect wholly-owned
subsidiary of the Company.


 


2.4.7.                     Register any equity securities under the
Securities Act in connection with, or consummate, an Initial Public Offering,
including an Initial Public Offering initiated pursuant to Section 6.1 or
register any equity securities under the Securities Act of any subsidiary of
the Company; provided,  however, that no such approval shall be
required for the inclusion of any Registrable Securities in any registration
statement relating to an Initial Public Offering pursuant to the exercise by
the holders thereof of piggyback registration rights under Section 6.2, if
applicable.


 


2.4.8.                     Hire or remove, with or without cause, the
chief executive officer of the Company or the chief executive officer of the
Purchaser from time to time.


 


Solely
for purposes of this Section 2.4, a majority of the entire Board shall
mean a majority of the number of members of the Board that are disinterested
directors with respect to such transaction as determined in accordance with the
Company’s by-laws.


 


2.5.                              Committees.
 The Company shall, and each holder of
Company Shares shall use its best efforts to, cause the Board to maintain the
following committees: (i) an Executive Committee, to be chaired by a THL
Director, if any, selected by the Majority THL Investors, and including a Bain
Director and a Providence Director, if any, selected by the applicable Investor
Group, and the CEO Director (ii) an Audit Committee, (iii) a Compensation
Committee and (iv) if the Board determines in its discretion, a Governance
Committee.  No committee shall have the
power to act for the Board where such action would otherwise require the vote
or consent of a majority of the entire Board under applicable law, pursuant to
the Company’s certificate of incorporation or by-laws or pursuant to this
Agreement.


 


2.6.                              Significant Transactions.  Subject to receipt of any approval that may be
required by Section 2.4, if a vote of holders of Shares is required under
any applicable law or stock exchange regulations in connection with a Change of
Control transaction being implemented pursuant to Section 4.2, each holder
of Shares agrees to cast all votes to which such holder is entitled in respect
of the Shares, whether at any annual or special meeting, by written consent or
otherwise, in such manner as the Requisite Stockholder Majority may instruct by
written notice to approve any sale, recapitalization, merger, consolidation,
reorganization or any other transaction or series of transactions involving the
Company or its subsidiaries (or all or any


 


6





















 


portion
of their respective assets) in connection with, or in furtherance of, the
exercise by the Requisite Stockholder Majority of their rights under Section 4.2.
Each holder of Shares hereby grants to each member of such Requisite
Stockholder Majority an irrevocable proxy coupled with an interest to vote,
including in any action by written consent, such holder’s Shares in accordance
with such holder’s agreements contained in this Section 2.6, which proxy
shall be valid and remain in effect until the provisions of this Section 2.6
expire pursuant to Section 2.10.


 


2.7.                              Consent to Amendment.  Each
holder of Company Shares agrees to cast all votes to which such holder is
entitled in respect of the Company Shares, whether at any annual or special
meeting, by written consent or otherwise, in such manner as the Requisite
Stockholder Majority may instruct by written notice to increase the number of
authorized shares of Stock to the extent necessary to permit the Company to
comply with the provisions of its certificate of incorporation with respect to
the conversion of shares of Class L Common Stock into shares of Class A Common
Stock.  Each holder of Shares hereby
grants to each member of such Requisite Stockholder Majority an irrevocable
proxy coupled with an interest to vote, including in any action by written
consent, such holder’s Shares in accordance with such holder’s agreements
contained in this Section 2.7, which proxy shall be valid and remain in
effect until the provisions of this Section 2.7 expire pursuant to Section 2.10.


 


2.8.                              Midco’s and Purchaser’s Directors.  The
Company will cause the board of directors of Midco and Purchaser to consist at
all times of the same members as the Board of the Company at such time.


 


2.9.                              The Company and Midco.  The
Company and Midco will not to give effect to any action by any holder of Shares
or any other Person which is in contravention of this Section 2.


 


2.10.                        Period.
 Each of the foregoing provisions of this
Section 2 shall expire on the earlier of (a) a Change of Control and (b)
with respect to any particular provision, the last date permitted by applicable
law (including the rules of the Commission and any exchange upon which equity
securities of the Company might be listed).


 


3.                                      TRANSFER RESTRICTIONS.


 


3.1.                              Transfers Allowed.  Until
the expiration of the provisions of this Section 3, no holder of Shares
shall Transfer any of such holder’s Shares to any other Person except as
follows:


 


3.1.1.                     Permitted Transferees.  Subject
to Section 3.4, but without regard to any other restrictions on transfer
contained elsewhere in this Agreement, any holder of Shares may Transfer any or
all of such Shares to such holder’s Permitted Transferees, so long as such
Permitted Transferee agrees to be bound by the terms of this Agreement in
accordance with Section 3.2 (if not already bound hereby).


 


3.1.2.                     Distributions
and Charitable Contributions.  At
or after the closing of the Initial Public Offering, any holder of Shares may
Transfer any or all of such Shares (a) in a pro rata Transfer to its partners,
members or stockholders or (b) to a Charitable


 


7





















 


Organization, without regard to any other
restrictions on transfer contained elsewhere in this Agreement (other than the
provisions of Section 6.3.4, if applicable). Any Shares so Transferred
shall conclusively be deemed thereafter not to be Shares under this Agreement
but may be deemed Other Holder Shares if and to the extent so provided in Section 6.5.


 


3.1.3.                     Public Transfers.  Any
holder of Shares may Transfer any or all of such Shares: (a) in a Public
Offering or (b) after the closing of the Initial Public Offering, pursuant to
Rule 144 or a block sale to a financial institution in the ordinary course of
its trading business, in each case in compliance with Section 3.3 and Section 3.4,
but without regard to any other restrictions on transfer contained elsewhere in
this Agreement (other than the provisions of Section 6.3.4, if
applicable). Shares Transferred pursuant to this Section 3.1.3 shall
conclusively be deemed thereafter not to be Shares under this Agreement.


 


3.1.4.                     Tag Along and Drag Along.  Any holder of Shares may Transfer any or all
of such Shares pursuant to Section 4.2, without regard to any other
restrictions on transfer contained elsewhere in this Agreement (other than the
provisions of Section 6.3.4, if applicable). A Participating Seller may
Transfer Shares pursuant to and in accordance with the provisions of Section 4.1
without regard to any other restrictions on transfer contained elsewhere in this
Agreement (other than the provisions of Section 6.3.4, if applicable).
Shares so Transferred shall conclusively be deemed thereafter not to be Shares
under this Agreement.


 


3.1.5.                     Other Private Transfers.  In addition to any Transfers made in
accordance with Sections 3.1.1, 3.1.2, 3.1.3 and 3.1.4, any holder of Shares
may Transfer any or all of such Shares subject to compliance with all of the
following conditions:


 


(i)                                     if such Transfer is during the Lock-Up Period
in respect of such Shares, with the consent of the Requisite Stockholder
Majority and in compliance with Section 4.4;


 


(ii)                                  in compliance with Section 4.1;


 


(iii)                               in compliance with Section 3.4; and


 


(iv)                              if applicable, in compliance with Section 6.3.4.


 


Any Shares so Transferred to a Person other than a
Stockholder or a Permitted Transferee shall conclusively be deemed thereafter
not to be Shares under this Agreement but may be deemed Other Holder Shares if
and to the extent so provided in Section 6.5.


 


3.2.                              Permitted Transferees.  Any Permitted Transferee
receiving Shares in a Transfer pursuant to Section 3.1.1 or 3.1.5 shall be
subject to the terms and conditions of, and be entitled to enforce, this
Agreement to the same extent, and in the same capacity, as the Stockholder that
Transfers the Shares to such Permitted Transferee as if such Permitted
Transferee were such


 


8





















 


Stockholder.
 Prior to the initial Transfer of any
Shares to any Permitted Transferee pursuant to Section 3.1.1 or 3.1.5, and
as a condition thereto, each holder of Shares effecting such Transfer shall (i)
cause such Permitted Transferee to deliver to the Company and each of the
Stockholders (other than the transferor) its written agreement, in form and
substance reasonably satisfactory to the Company, to be bound by the terms and
conditions of this Agreement to the extent described in the preceding sentence
and (ii) remain directly liable for the performance by the Permitted Transferee
of all obligations of such Permitted Transferee under this Agreement.  To the extent a Permitted Transferee is not an
individual, a trust or an estate, and the transferor or an Affiliate thereof
shall cease to control such Permitted Transferee, (i) such change of control
shall be deemed to be a Transfer of the Shares held by such Permitted
Transferee subject to the Transfer restrictions contained or referenced in this
Section 3 and (ii) to the extent such Permitted Transferee then holds
assets in addition to Shares, the determination of the purchase price deemed to
have been paid for the Shares held by such Permitted Transferee in such deemed
Transfer for purposes of the provisions of Sections 3 and 4 shall be made by
the Board in good faith; provided that, Music Capital Partners, L.P. ceasing to
control its Permitted Transferee ALP Music Capital Partners, L.P. following the
transfer referred to in the second sentence of the definition of Permitted
Transferee shall not be a deemed a Transfer of Shares pursuant to the
provisions of the foregoing sentence.


 


3.3.                              Restrictions on Public Transfers.  After
the Initial Public Offering, each Specified Holder promptly shall notify each
Related Stockholder (i) when it has commenced a measurement period for purposes
of the Rule 144 group volume limit in connection with a Sale that is subject to
such limit and (ii) what the volume limit for that measurement period,
determined as of its commencement, will be.  Each Related Stockholder shall be entitled to
effect Sales that are subject to the Rule 144 group volume limit pro rata
during the applicable measurement period based on its percentage ownership of
Shares held by all holders of Shares at the start of such measurement period.  In the event any Related Stockholder agrees to
forego its full pro rata share of the Rule 144 group volume limit by written
notice to the Specified Holder and all other Related Stockholders, the
remainder shall be re-allocated pro rata among Specified Holder and all other
Related Stockholders in like manner (except that the Shares held by such
forfeiting Related Holder at the start of such measurement period shall be
excluded from such calculation).  The
provisions of this Section 3.3 shall not apply to any Transfer of Shares
(i) in a Public Offering or (ii) not subject to volume limitation under Rule
144.  For purposes of this Section 3.3,
a “Specified Holder” means a holder of Shares whose sale of Shares
pursuant to Rule 144 would be subject to aggregation with another Stockholder
(such other Stockholder being a “Related Stockholder”).


 


3.4.                              Restrictions on Transfers to Strategic
Investors.  In
addition to any other provision of this Agreement, no holder of Shares shall
Transfer any Shares pursuant to Sections 3.1.1, 3.1.3 or 3.1.5 of this
Agreement to a Strategic Investor without the approval of a majority of the
entire Board and the approval of the Requisite Stockholder Majority.  If any Prospective Selling Stockholder
proposes to Transfer any Shares pursuant to Sections 3.1.1, 3.1.3 or 3.1.5 to
any Prospective Buyer, the Prospective Selling Stockholder shall furnish a
written notice (which notice may be the same notice as the Tag Along Notice, if
any, delivered pursuant to Section 4.1 or the Sale Notice, if any,
delivered pursuant to Section 4.4, in each case so long as such notice


 


9





















 


includes
all of the information required by the next sentence) to the Company and each
other holder of Shares at least ten business days prior to such proposed
Transfer.  Such notice shall set forth
the principal terms of the proposed Transfer, including (i) the number and
class of the Shares to be Transferred, (ii) the per share purchase price or the
formula by which such price is to be determined and (iii) the name and address
of the Prospective Buyer.  If the Prospective
Buyer (or an Affiliate thereof) has previously been determined by a majority of
the entire Board and the Requisite Stockholder Majority to be a Strategic
Investor, or is presumed to be a Strategic Investor pursuant to the definition
thereof, and such determination or presumption has not been reversed by written
notice to all holders of Shares, the Prospective Selling Stockholder shall not
Transfer any Shares to such Prospective Buyer without the written approval of a
majority of the entire Board and of the Requisite Stockholder Majority.  If the Prospective Buyer (or an Affiliate
thereof) has not previously been determined by a majority of the entire Board
and the Requisite Stockholder Majority to be a Strategic Investor, or is not
presumed to be a Strategic Investor pursuant to the definition thereof, the
Prospective Selling Stockholder may Transfer Shares to such Prospective Buyer
unless, within eight business days after the date of delivery of the notice
required by the second preceding sentence, the majority of the entire Board and
the Requisite Stockholder Majority deliver written notice to the Prospective
Selling Stockholder and all other Stockholders that such Prospective Buyer has
been designated a Strategic Investor.  If,
within such time period, a notice designating such Prospective Buyer a
Strategic Investor is delivered, than the Prospective Selling Stockholder shall
not Transfer any Shares to such Prospective Buyer.  In the event any proposed Transfer to a
Strategic Investor is approved in accordance with the foregoing, such approval
shall also apply to Transfers made to such Prospective Buyer by any Tag Along
Sellers.  Notwithstanding anything in
this Agreement to the contrary, the restrictions in this Section 3.4 shall
not apply, to any Transfers
(i) to the Company or any of its subsidiaries, (ii) to any Stockholder, (iii)
to any Affiliated Fund of any Stockholder, (iv) by any Seller to Time Warner
Inc. or any of its wholly owned subsidiaries, (v) pursuant to Rule 144 effected
as “brokers’ transactions” (as defined in Rule 144); or (vi) pursuant to an
underwritten Public Offering or, following the Initial Public Offering,
pursuant to Rule 144 directly to a “market maker” (as defined in Rule 144) or
pursuant to a block sale to a financial institution in the ordinary course of
its trading business, in each case of this clause (vi) in which, to the
knowledge of the Prospective Selling Stockholder (after reasonable due
inquiry), the underwriter(s), market maker(s) or block sale purchaser(s) do not
intend to resell such Shares to any Person that, after giving effect to such
resale, would own, directly or indirectly, more than five percent (5%) of then
outstanding shares of the applicable class of Shares.


 


3.5.                              Impermissible Transfer.  Any
attempted Transfer of Shares not permitted under the terms of this Section 3
shall be null and void, and neither the Company nor Midco shall in any way give
effect to any such impermissible Transfer.


 


3.6.                              Notice of Transfer.  To the extent any Stockholder or
Permitted Transferee shall Transfer any Shares, such Stockholder or Permitted
Transferee shall, within three business days following consummation of such
Transfer, deliver notice thereof to the Company and each other Stockholder.


 


3.7.                              Period.
 Each of the foregoing provisions of this
Section 3 shall expire upon a Change of Control.


 


10





















 


4.                                      “TAG ALONG” AND “DRAG ALONG” RIGHTS AND RIGHT OF FIRST OFFER.


 


4.1.                              Tag
Along.  Subject
to prior compliance with Section 4.4, if applicable, if any Prospective
Selling Stockholder proposes to Sell any Shares to any Prospective Buyer(s)
(including a First Offer Purchaser pursuant to Section 4.4) in a Transfer
pursuant to Section 3.1.5, other than a Transfer by a holder pursuant to
the exercise of such holder’s rights under this Section 4.1:


 


4.1.1.                     Notice.  The Prospective Selling Stockholder shall,
prior to any such proposed Transfer, furnish a written notice (the “Tag
Along Notice”) to each of the other holders of Shares (each, a “Tag
Along Holder”) and to each holder of Seller Warrants (who shall also be a “Tag
Along Holder” if and to the extent such holder exercises or conditionally
exercises such holder’s Seller Warrants on or prior to the Tag-Along Deadline).  The Tag Along Notice shall include:


 


(a)                                  the principal terms and conditions of the
proposed Sale, including (i) the number and class of the Shares to be purchased
from the Prospective Selling Stockholder, (ii) the fraction(s) expressed as a
percentage, determined by dividing the number of Shares of each class to be
purchased from the Prospective Selling Stockholder by the total number of
Shares of each such class held by the Prospective Selling Stockholder (the “Tag
Along Sale Percentage”), (iii) the per share purchase price or the formula
by which such price is to be determined and the payment terms, including a
description of any non-cash consideration sufficiently detailed to permit
valuation thereof, (iv) the name and address of each Prospective Buyer and (v)
the proposed Transfer date; and


 


(b)                                 an invitation to each Tag Along Holder to
make an offer to include in the proposed Sale to the applicable Prospective
Buyer(s) Shares of the same class(es) being sold by the Prospective Selling
Stockholder held by such Tag Along Holder (not in any event to exceed the Tag
Along Sale Percentage of the total number of Shares of the applicable class
held by such Tag Along Holder, assuming the exercise in full of all Seller
Warrants exercised or conditionally exercised prior to the Tag-Along Deadline),
on the same terms and conditions (subject to Section 4.3.4 in the case of
Options, Warrants and Convertible Securities), with respect to each Share Sold,
as the Prospective Selling Stockholder shall Sell each of its Shares.


 


4.1.2.       Exercise.  Within
five (ten if the proposed Transfer is not also the subject of a currently
effective Sale Notice under Section 4.4) business days after the date of
delivery of the Tag Along Notice (such date the “Tag-Along Deadline”),
each Tag Along Holder desiring to make an offer to include Shares in the
proposed Sale (each a “Participating Seller” and, together with the
Prospective Selling Stockholder, collectively, the “Tag Along Sellers”)
shall furnish a written notice (the “Tag Along  Offer”) to the
Prospective Selling Stockholder indicating the number of Shares which such
Participating Seller desires to have included in the proposed Sale (subject to
the


 


11





















 


limitation set forth in Section 4.1.1(b)).  Each Tag Along Holder who does not make a Tag
Along Offer in compliance with the above requirements, including the time
period, shall be deemed to have waived all of such holder’s rights with respect
to such Sale, and the Tag Along Sellers shall thereafter be free to Sell to the
Prospective Buyer, at a per share price no greater than the per share price set
forth in the Tag Along Notice and on other principal terms and conditions which
are not materially more favorable to the Tag Along Sellers than those set forth
in the Tag Along Notice, without any further obligation to such non-accepting
Tag Along Holder pursuant to this Section 4.1.


 


4.1.3.       Exercise by Holders of Warrants.  The
holders of Seller Warrants shall have the right to exercise the Seller Warrants
and participate as Tag Along Holders on the same terms and conditions as all
other Tag Along Holders and shall have the right to make the effectiveness of
such exercise conditional upon the consummation of the proposed sale to the
Prospective Buyer.


 


4.1.4.       Irrevocable Offer.  The
offer of each Participating Seller contained in such holder’s Tag Along Offer
shall be irrevocable, and, to the extent such offer is accepted, such
Participating Seller shall be bound and obligated to Sell in the proposed Sale
on the same terms and conditions, with respect to each Share Sold (subject to Section 4.3.4
in the case of Options, Warrants and Convertible Securities), as the
Prospective Selling Stockholder, up to such number of Shares as such
Participating Seller shall have specified in such holder’s Tag Along Offer; provided,
however, that if the principal terms of the proposed Sale change with
the result that the per share price shall be less than the per share price set
forth in the Tag Along Notice or the other principal terms and conditions shall
be materially less favorable to the Tag Along Sellers than those set forth in
the Tag Along Notice, each Participating Seller shall be permitted to withdraw
the offer contained in such holder’s Tag Along Offer by written notice to the
Prospective Selling Stockholder and upon such withdrawal shall be released from
such holder’s obligations thereunder.


 


4.1.5.       Reduction of
Shares Sold.  The Prospective Selling Stockholder shall
attempt to obtain the inclusion in the proposed Sale of the entire number of
Shares which each of the Tag Along Sellers requested to have included in the
Sale (as evidenced in the case of the Prospective Selling Stockholder by the
Tag Along Notice and in the case of each Participating Seller by such Participating
Seller’s Tag Along Offer).  In the event
the Prospective Selling Stockholder shall be unable to obtain the inclusion of
such entire number of Shares in the proposed Sale, the number of Shares to be
sold in the proposed Sale shall be allocated among the Tag Along Sellers in
proportion, as nearly as practicable, as follows:


 


(i)                                     there shall be first allocated to each Tag
Along Seller a number of Shares equal to the lesser of (A) the number of Shares
offered (or proposed, in the case of the Prospective Selling Stockholder) to be
included by such Tag Along Seller in the proposed Sale pursuant to this Section 4.1,
and (B) a number of Shares equal to such Tag Along Seller’s Pro Rata Portion;
and


 


12





















 


(ii)                                  the balance, if any, not allocated pursuant
to clause (i) above shall be allocated to the Prospective Selling Stockholder,
or in such other manner as the Prospective Selling Stockholder may otherwise
agree.


 


4.1.6.                     Additional
Compliance.  If
prior to consummation, the terms of the proposed Sale shall change with the
result that the per share price to be paid in such proposed Sale shall be
greater than the per share price set forth in the Tag Along Notice or the other
principal terms of such proposed Sale shall be materially more favorable to the
Tag Along Sellers than those set forth in the Tag Along Notice, the Tag Along
Notice shall be null and void, and it shall be necessary for a separate Tag
Along Notice to be furnished, and the terms and provisions of this Section 4.1
separately complied with, in order to consummate such proposed Sale pursuant to
this Section 4.1; provided, however, that in the case of
such a separate Tag Along Notice, the applicable period to which reference is
made in Sections 4.1.1 and 4.1.2 shall be three business days and two business
days, respectively.  In addition, if the
Prospective Selling Stockholders have not completed the proposed Sale by the
end of the 180th day after the date of delivery of: (i) if the
proposed Transfer is also the subject of a currently effective Sale Notice
under Section 4.4, such Sale Notice and (ii) otherwise, the Tag Along
Notice, each Participating Seller shall be released from such holder’s
obligations under such holder’s Tag Along Offer, the Tag Along Notice shall be
null and void, and it shall be necessary for a separate Tag Along Notice to be
furnished, and the terms and provisions of this Section 4.1 separately
complied with, in order to consummate such proposed Sale pursuant to this Section 4.1,
unless the failure to complete such proposed Sale resulted from any failure by
any Participating Seller to comply with the terms of this Section 4.


 


4.2.                              Drag
Along.  Each
holder of Shares hereby agrees, if requested by the Requisite Stockholder
Majority, to Sell the same percentage (the “Drag Along Sale Percentage”)
of each class of such Shares that is proposed to be sold by the Prospective
Selling Stockholders to a Prospective Buyer in a Change of Control transaction
that has received the requisite approval under Section 2.4, in the manner
and on the terms set forth in this Section 4.2; provided, however,
that no such Prospective Buyer shall be a member of a Principal Investor Group
forming part of the acting Requisite Stockholder Majority, any Affiliate of any
such member or any Person more than five percent (5%) of the economic interests
in or voting power of which are directly or indirectly beneficially owned by
any such member, unless such proposed Sale is approved by vote or written
consent of each of the Investor Groups, each voting separately.


 


4.2.1.                          Exercise.  The Prospective Selling Stockholders shall
furnish a written notice (the “Drag Along Notice”) to each other holder
of Shares at least ten business days prior to the consummation of the Change of
Control transaction.  The Drag Along
Notice shall set forth the principal terms and conditions of the proposed Sale,
including (i) the number and class of Shares to be acquired from the
Prospective Selling Stockholders, (ii) the Drag Along Sale Percentage for each
class, (iii) the per share consideration to be received in the proposed Sale
for each class, (iv) the name
and address of the Prospective Buyer and (v) if known, the proposed Transfer
date.  If the Prospective Selling
Stockholders consummate the proposed Sale to which reference is made in the
Drag Along Notice, each other holder of Shares (each a “Participating Seller”,
and, together


 


13





















 


with the Prospective Selling Stockholders,
collectively, the “Drag Along Sellers”) shall: (i) be bound and
obligated to Sell the Drag Along Sale Percentage of such holder’s Shares of
each class in the proposed Sale on the same terms and conditions, with respect
to each Share Sold (subject to Section 4.3.4 in the case of Options,
Warrants and Convertible Securities) as the Prospective Selling Stockholders
shall Sell each Share in the Sale (subject to Section 4.3.4 in the case of
Options, Warrants and Convertible Securities); and (ii) except as provided in Section 4.3.1,
shall receive the same form and amount of consideration per Share to be
received by the Prospective Selling Stockholders for the corresponding class of
Shares (on an as converted basis, if applicable).  Except as provided in Section 4.3.1, if
any holders of Shares of any class are given an option as to the form and
amount of consideration to be received, all holders of Shares of such class
will be given the same option.  Unless
otherwise agreed by the Drag Along Sellers, any non-cash consideration shall be
allocated among the Drag Along Sellers pro rata based upon the aggregate amount
of consideration to be received by such Drag Along Sellers.  If at the end of the 180th day
after the date of delivery of the Drag Along Notice the Prospective Selling
Stockholders have not completed the proposed Sale, the Drag Along Notice shall
be null and void, each Participating Seller shall be released from such holder’s
obligation under the Drag Along Notice and it shall be necessary for a separate
Drag Along Notice to be furnished and the terms and provisions of this Section 4.2
separately complied with, in order to consummate such proposed Sale pursuant to
this Section 4.2.


 


4.3.                              Miscellaneous.  The following provisions shall
be applied to any proposed Sale to which Sections 4.1, 4.2 or 4.4 applies:


 


4.3.1.                     Certain
Legal Requirements.  In
the event the consideration to be paid in exchange for Shares in a proposed
Sale pursuant to Section 4.1 or Section 4.2 includes any securities,
and the receipt thereof by a Participating Seller would require under
applicable law (a) the registration or qualification of such securities or of
any Person as a broker or dealer or agent with respect to such securities where
such registration or qualification is not otherwise required for the Sale by
the Prospective Selling Stockholder(s) or (b) the provision to any Tag Along
Seller or Drag Along Seller of any specified information regarding the Company
or any of its subsidiaries, such securities or the issuer thereof that is not
otherwise required to be provided for the Sale by the Prospective Selling
Stockholder(s), then such Participating Seller shall not have the right to Sell
Shares in such proposed Sale.  In such
event, the Prospective Selling Stockholder(s) shall (i) in the case of a Sale
pursuant to Section 4.1, have the right, but not the obligation, and (ii)
in the case of a Sale pursuant to Section 4.2, have the obligation to
cause to be paid to such Participating Seller in lieu thereof, against
surrender of the Shares (in accordance with Section 4.3.6 hereof) which
would have otherwise been Sold by such Participating Seller to the Prospective
Buyer in the proposed Sale, an amount in cash equal to the Fair Market Value of
such Shares as of the date such securities would have been issued in exchange
for such Shares.


 


4.3.2.                     Further Assurances.  Each
Participating Seller and First Offer Purchaser, whether in such holder’s
capacity as a Participating Seller, First Offer Purchaser,


 


14





















 


stockholder, officer or director of the Company
(subject to such officer’s or director’s fiduciary duty), or otherwise, shall
take or cause to be taken all such actions as may be necessary or reasonably
desirable in order expeditiously to consummate each Sale pursuant to Section 4.1,
Section 4.2 or Section 4.4 and any related transactions, including
executing, acknowledging and delivering consents, assignments, waivers and
other documents or instruments; furnishing information and copies of documents;
filing applications, reports, returns, filings and other documents or
instruments with governmental authorities; and otherwise cooperating with the
Prospective Selling Stockholder(s) and the Prospective Buyer; provided, however,
that Participating Sellers shall be obligated to become liable in respect of
any representations, warranties, covenants, indemnities or otherwise to the
Prospective Buyer solely to the extent provided in the immediately following
sentence.  Without limiting the
generality of the foregoing, each Participating Seller agrees to execute and
deliver such agreements as may be reasonably specified by the Prospective
Selling Stockholder(s) to which such Prospective Selling Stockholder(s) will
also be party, including agreements to (a) (i) make individual representations,
warranties, covenants and other agreements as to the unencumbered title to its
Shares and the power, authority and legal right to Transfer such Shares and the
absence of any Adverse Claim with respect to such Shares and (ii) be liable as
to such representations, warranties, covenants and other agreements, in each
case to the same extent (on a pro rata basis) as the Prospective Selling
Stockholder(s), and (b) in the case of a Sale pursuant to Sections 4.1 or 4.2,
be liable (whether by purchase price adjustment, indemnity payments or
otherwise) in respect of representations, warranties, covenants and agreements
in respect of the Company and its subsidiaries; provided, however,
that the aggregate amount of liability described in this clause (b) in
connection with any Sale of Shares shall not exceed the lesser of (i) such
Participating Seller’s pro rata portion of any such liability, to be determined
in accordance with such Participating Seller’s portion of the aggregate
proceeds to all Participating Sellers and Prospective Selling Stockholder(s) in
connection with such Sale or (ii) the proceeds to such Participating Seller in
connection with such Sale.


 


4.3.3.                     Sale
Process.  The
Requisite Stockholder Majority, in the case of a proposed Sale pursuant to Section 4.2,
or the Prospective Selling Stockholder, in the case of a proposed Sale pursuant
to Section 4.1 and 4.4, shall, in their sole discretion, decide whether or
not to pursue, consummate, postpone or abandon any proposed Sale and the terms
and conditions thereof.  No holder of
Shares nor any Affiliate of any such holder shall have any liability to any
other holder of Shares or the Company arising from, relating to or in
connection with the pursuit, consummation, postponement, abandonment or terms
and conditions of any proposed Sale except to the extent such holder shall have
failed to comply with the provisions of this Section 4.


 


4.3.4.                     Treatment of Options, Warrants and Convertible Securities.  Each Participating Seller
agrees that to the extent such Participating Seller desires to include Options,
Warrants or Convertible Securities in any Sale of Shares pursuant to Section 4,
such Participating Seller shall be deemed to have exercised, converted or
exchanged such Options, Warrants or Convertible Securities immediately prior to
the closing of such Sale


 


15





















 


to the extent necessary to Sell Stock to the
Prospective Buyer, except to the extent permitted under the terms of any such
Option, Warrant or Convertible Security and agreed by the Prospective Buyer.  If any Participating Seller shall Sell
Options, Warrants or Convertible Securities in any Sale pursuant to Section 4,
such Participating Seller shall receive in exchange for such Options, Warrants
or Convertible Securities consideration in the amount (if greater than zero)
equal to the purchase price received by the Prospective Selling Stockholder(s)
in such Sale for the number of shares of each class of Stock that would be
issued upon exercise, conversion or exchange of such Options, Warrants or
Convertible Securities less the exercise price, if any, of such Options,
Warrants or Convertible Securities (to the extent exercisable, convertible or
exchangeable at the time of such Sale), subject to reduction for any tax or
other amounts required to be withheld under applicable law.


 


4.3.5.                     Expenses.  All reasonable costs and expenses incurred by
the Prospective Selling Stockholder(s) or the Company in connection with any
proposed Sale pursuant to Section 4.2 (whether or not consummated), and
all reasonable costs and expenses incurred by the Prospective Selling
Stockholder(s) or the Company in order to comply with the requirements of this Section 4
in connection with any proposed Sale pursuant to Section 4.1 or Section 4.4
(whether or not consummated), including all attorneys fees and charges, all
accounting fees and charges and all finders, brokerage or investment banking
fees, charges or commissions, shall be paid by the Company.  The reasonable fees and expenses of a single
legal counsel representing any or all of the Participating Sellers in
connection with any proposed Sale pursuant to this Section 4 (whether or
not consummated) shall be paid by the Company. 
Any other costs and expenses incurred by or on behalf of any or all of
the Participating Sellers in connection with any proposed Sale pursuant to this
Section 4 (whether or not consummated) shall be borne by such
Participating Seller(s).


 


4.3.6.                     Closing.  The closing of a Sale to which Section 4.1,
4.2 or 4.4 applies shall take place (i) on the proposed Transfer date, if any,
specified in the Tag Along Notice, Drag Along Notice or Sale Notice, as
applicable (provided that consummation of any Transfer may be extended
beyond such date to the extent necessary to obtain any applicable governmental
approval or other required approval or to satisfy other conditions), (ii) if no
proposed Transfer date was required to be specified in the Drag Along Notice,
at such time as the Prospective Selling Stockholders shall specify by notice to
each Participating Seller and (iii) at such place as the Prospective Selling
Stockholders) shall specify by notice to each Participating Seller, and in any
event subject to Section 2.4 in the case of a Sale to which Section 4.2
applies.  At the closing of such Sale,
each Participating Seller shall deliver the certificates evidencing the Shares
to be Sold by such Participating Seller, duly endorsed, or with stock (or
equivalent) powers duly endorsed, for transfer with signature guaranteed, free
and clear of any liens or encumbrances, with any stock (or equivalent) transfer
tax stamps affixed, against delivery of the applicable consideration.


 


4.4.                              Right of First Offer.  If
any Prospective Selling Stockholder proposes to Sell any Shares in a Transfer
(including to another Stockholder or the Company or any of its subsidiaries)


 


16





















 


described
in Section 3.1.5, other than a Transfer by a holder pursuant to the
exercise of such holder’s rights under Section 4.1:


 


4.4.1.                     Notice.  The Prospective Selling Stockholder shall
furnish a written notice of such proposed Sale (a “Sale Notice”) to each
other holder of Acquisition Shares (each, a “First Offer Holder”) prior
to any such proposed Transfer.  The Sale
Notice shall include:


 


(a)                                  (i) the number and class(es) of Shares
proposed to be sold by the Prospective Selling Stockholder (the “Subject
Shares”), (ii) the per share purchase price or the formula by which such
price is to be determined and (iii) the proposed Transfer date; and


 


(b)                                 an invitation to each First Offer Holder to
make an offer to purchase (subject to Section 4.4.6 below) any number of
the Subject Shares at such price.


 


4.4.2.                     Exercise.


 


4.4.2.1.                                                            Within twenty business days after the date of
delivery of the Sale Notice (the “First Offer Deadline”), each First
Offer Holder may make an offer to purchase any number of the Subject Shares at
the price set forth in the Sale Notice by furnishing a written notice (the “First
Offer Notice”) of such offer specifying a number of Subject Shares offered
to be purchased from the Prospective Selling Stockholder (each such Person
delivering such notice, a “First  Offer Purchaser”).


 


4.4.2.2.                                                            Each Person not furnishing a First Offer
Notice that complies with the above requirements, including the applicable time
periods, shall be deemed to have waived all of such Person’s rights to purchase
such Shares under this Section 4.4.2 and the Prospective Selling
Stockholder shall thereafter be free to Sell the Subject Shares to the First
Offer Purchasers and/or any Prospective Buyer, at a per share purchase price no
less than the price set forth in the Sale Notice, without any further
obligation to such Person pursuant to this Section 4.4.


 


4.4.3.                     Irrevocable Offer.  The
offer of each First Offer Purchaser contained in a First Offer Notice shall be
irrevocable, and, subject to Section 4.4.6 below, to the extent such offer
is accepted, such First Offer Purchaser shall be bound and obligated to
purchase the number of Subject Shares set forth in such First Offer Purchaser’s
First Offer Notice.


 


4.4.4.                     Acceptance of Offers.  Within
five business days after the First Offer Deadline, the Prospective Selling
Stockholder shall inform each First Offer Purchaser, by written notice (the “Acceptance
Notice”), of whether or not the Prospective Selling Stockholder will accept
all (but not less than all) offers of the First Offer Purchasers. In


 


17





















 


the event the Prospective Selling Stockholder fails
to furnish the Acceptance Notice within the specified time period, the
Prospective Selling Stockholder shall be deemed to have decided not to Sell the
Subject Shares to the First Offer Purchasers. 
If the Prospective Selling Stockholder decides not to Sell the Subject
Shares to the First Offer Purchasers, each First Offer Purchaser shall be
released from such holder’s obligations under such holder’s irrevocable offer.  Acceptance of such offers by the Prospective
Selling Stockholder is without prejudice to the Prospective Selling Stockholder’s
discretion under Section 4.3.3 to determine whether or not to consummate
any Sale.


 


4.4.5.                     Additional Compliance.  If
at the end of the 180th day after the date of delivery of the Sale
Notice, the Prospective Selling Stockholder and First Offer Purchasers or
Prospective Buyer (if not a First Offer Purchaser), if any, have not completed
the Sale of the Subject Shares (other than due to the failure of any First
Offer Purchaser to perform its obligations under this Section 4.4), each
First Offer Purchaser shall be released from such holder’s obligations under
such holder’s irrevocable offer, the Sale Notice shall be null and void, and it
shall be necessary for a separate Sale Notice to be furnished, and the terms
and provisions of this Section 4.4 separately complied with, in order to
consummate a Transfer of such Subject Shares; provided, however,
that in the case of such a separate Sale Notice in which the class(es) of
Subject Shares and the per share price are unchanged and the number of Subject
Shares is substantially the same, the applicable period to which reference is
made in Section 4.4.1 and 4.4.2.1 shall be three business days and two
business days, respectively.


 


4.4.6.                     Determination
of the Number of Subject Shares to be Sold.


 


4.4.6.1.                                                            In the event that the number of Shares
offered to be purchased by the First Offer Purchasers is less than the number
of Subject Shares, the Prospective Selling Stockholder may accept the offers of
the First Offer Purchasers and, at the option of the Prospective Selling
Stockholder, sell any remaining Subject Shares which the First Offer Purchasers
did not elect to purchase to one or more Prospective Buyers at a price per
share that is no less than the price set forth in the Sale Notice.  Such sales, if any, to Prospective Buyer(s)
other than the First Offer Purchasers may be consummated together with the sale
to the First Offer Purchasers or otherwise.


 


4.4.6.2.                                                            In the event that a single Prospective Buyer
or group of Prospective Buyers is unwilling to purchase less than all of the
Subject Shares and the number of Shares offered to be purchased by the First
Offer Purchasers is less than the number of Subject Shares, the Prospective
Selling Stockholder may Sell all (but not less than all) of the Subject Shares
to such Prospective Buyer or group of Prospective Buyers at a price per share
that is no less than the price set forth in the Sale Notice rather than Sell
the Subject Shares to the First Offer Purchasers.


 


4.4.6.3.                                                            In the event that the Prospective Selling
Stockholder has accepted the offers of the First Offer Purchasers and the
aggregate number of Subject Shares offered to be purchased by (and to be sold
to) the First Offer


 


18





















 


Purchasers is equal to or exceeds the aggregate
number of Subject Shares, the Subject Shares shall be sold to the First Offer
Purchasers as follows:


 


(i)                                     there shall be first allocated to each First
Offer Purchaser a number of Shares of each applicable class equal to the lesser
of (A) the number of Shares of such class offered to be purchased by such First
Offer Purchaser pursuant such holder’s First Offer Notice, and (B) a number of
Shares of such class equal to such First Offer Purchaser’s Pro Rata Portion;
and


 


(ii)                                  the balance, if any, not allocated pursuant
to clause (i) above shall be allocated to those First Offer Purchasers which
offered to purchase a number of Shares of the applicable class in excess of
such Person’s Pro Rata Portion pro rata to each such First Offer Purchaser
based upon the amount of such excess, or in such other manner as the First
Offer Purchasers may otherwise agree.


 


In the event any holders of
Shares exercise such holders’ rights under Section 4.1 to sell Shares in
connection with a Sale to First Offer Purchasers pursuant to this Section 4.4,
such Shares (as the case may be, reduced in accordance with Section 4.1.5)
shall be deemed to be Subject Shares for purposes of this Section 4.4 and
shall be allocated among the First Offer Purchasers in accordance with this Section 4.4.6.


 


4.5.                              Period.  The provisions of Section 4.4 shall
expire as to any Share on the earlier of (a) a Change of Control or (b) the
expiration of the Lock-Up Period in respect of such Share.  Each of the other provisions of this Section 4
above shall expire on a Change of Control.


 


4.6.                              Post-Termination Tag Along.  In connection with a Change of Control in
which any Investor Group immediately prior to such Change of Control continues
to hold Shares or receives securities of another Person or Persons in
consideration thereof, which Shares or securities are of a class that is not
publicly traded, if any such Investor Group or member thereof receives “tag
along” rights in respect of its Shares or such securities in connection with
such Change of Control (whether such “tag along” rights are in respect of
another Investor Group or any other holder of Shares or such securities), each
other holder of Acquisition Shares shall receive pari passu “tag along” rights
on a pro rata basis.


 


5.                                      RIGHT OF PARTICIPATION.  Subject to Section 5.3, the Company shall not, and shall not
permit any direct or indirect subsidiary of the Company (the Company and each
such subsidiary, an “Issuer”) to, issue or sell any shares of any of its
capital stock or any securities convertible into or exchangeable for any shares
of its capital stock, issue or grant any options or warrants for the purchase
of, or enter into any agreements providing for the issuance (contingent or
otherwise) of, any of its capital stock or any stock or securities convertible
into or exchangeable for any shares of its capital stock, in each case, to any
Person (each an “Issuance” of “Subject Securities”), except in
compliance with the provisions of Section 5.1 or Section 5.2.


 


19





















 


5.1.                              Right of Participation.


 


5.1.1.                     Offer.  Not fewer than ten business days prior to the
consummation of an Issuance, a notice (the “Participation Notice”) shall
be furnished by the Issuer to each holder of Acquisition Shares (the “Participation
Offerees”).  The Participation Notice
shall include:


 


(a)                                  the principal terms and conditions of the
proposed Issuance, including (i) the amount and kind of Subject Securities to
be included in the Issuance, (ii) the number of Equivalent Shares represented
by such Subject Securities (if applicable), (iii) the percentage of the total
number of Equivalent Shares of the Company outstanding as of immediately prior
to giving effect to such Issuance which the number of Equivalent Shares of the
Company held by such Participation Offeree constitutes (the “Participation
Portion”), (iv) the maximum and minimum price (including if applicable, the
maximum and minimum Price Per Equivalent Share) per unit of the Subject
Securities, including a description of any non-cash consideration sufficiently
detailed to permit valuation thereof, (v) the proposed manner of disposition,
(vi) the name and address of the Person to whom the Subject Securities will be
issued (the “Prospective Subscriber”) and (vii) if known, the proposed
Issuance date; and


 


(b)                                      an offer by the Issuer to issue, at the
option of each Participation Offeree, to such Participation Offeree such
portion of the Subject Securities to be included in the Issuance as may be
requested by such Participation Offeree (not to exceed the Participation
Portion of the total amount of Subject Securities to be included in the
Issuance), on the same economic terms and conditions, with respect to each unit
of Subject Securities issued to the Participation Offerees, as each of the
Prospective Subscribers shall be issued units of Subject Securities.


 


5.1.2.                     Exercise.


 


5.1.2.1.                                                            General.  Each Participation Offeree desiring to accept
the offer contained in the Participation Notice shall accept such offer by
furnishing a written notice of such acceptance to the Issuer within eight
business days after the date of delivery of the Participation Notice specifying
the amount of Subject Securities (not in any event to exceed the Participation
Portion of the total amount of Subject Securities to be included in the
Issuance) which such Participation Offeree desires to be issued (each a “Participating
Buyer”).  Each Participation Offeree
who does not accept such offer in compliance with the above requirements,
including the applicable time periods, shall be deemed to have waived all of
such holder’s rights with respect to such Issuance, and the Issuer shall
thereafter be free to issue Subject Securities in such Issuance to the
Prospective Subscriber and any Participating Buyers, at a price no less than
the minimum price set forth in the Participation Notice and on other principal
terms not substantially more favorable to the Prospective Subscriber than those
set forth in the Participation Notice, without any further obligation to such
non-accepting


 


20





















 


Participation Offerees pursuant to Section 5.  If, prior to consummation, the terms of such
proposed Issuance shall change with the result that the price shall be less
than the minimum price set forth in the Participation Notice or the other
principal terms shall be substantially more favorable to the Prospective
Subscriber than those set forth in the Participation Notice, it shall be
necessary for a separate Participation Notice to be furnished, and the terms
and provisions of this Section 5.1 separately complied with, in order to
consummate such Issuance pursuant to this Section 5.1; provided, however,
that in such case of a separate Participation Notice, the applicable period to
which reference is made in Section 5.1.1 and in the first sentence of Section 5.1.2.1
shall be three business days and two business days respectively.


 


5.1.2.2.                                                            Irrevocable Acceptance.  The
acceptance of each Participating Buyer shall be irrevocable except as
hereinafter provided, and each such Participating Buyer shall be bound and
obligated to acquire in the Issuance on the same terms and conditions, with
respect to each unit of Subject Securities issued, as the Prospective Subscriber,
such amount of Subject Securities as such Participating Buyer shall have
specified in such Participating Buyer’s written commitment.


 


5.1.2.3.                                                            Time Limitation.  If
at the end of the 180th day after the date of the effectiveness of
the Participation Notice the Issuer has not completed the Issuance, each
Participating Buyer shall be released from such holder’s obligations under the
written commitment, the Participation Notice shall be null and void, and it
shall be necessary for a separate Participation Notice to be furnished, and the
terms and provisions of this Section 5.1 separately complied with, in
order to consummate such Issuance pursuant to this Section 5.1; provided,
however, that in such case of a separate Participation Notice, the
applicable period to which reference is made in Section 5.1.1 and in the
first sentence of Section 5.1.2.1 shall be three business days and two
business days, respectively.


 


5.1.3.                     Other Securities.  The
Issuer may condition the participation of the Participation Offerees in an
Issuance upon the purchase by such Participation Offerees of any securities
(including debt securities) other than Subject Securities (“Other  Securities”)
in the event that the participation of the Prospective Subscriber in such
Issuance is so conditioned.  In such
case, each Participating Buyer shall acquire in the Issuance, together with the
Subject Securities to be acquired by it, Other Securities in the same
proportion to the Subject Securities to be acquired by it as the proportion of
Other Securities to Subject Securities being acquired by the Prospective
Subscriber in the Issuance, on the same terms and conditions, as to each unit
of Subject Securities and Other Securities issued to the Participating Buyers,
as the Prospective Subscriber shall be issued units of Subject Securities and
Other Securities.


 


5.1.4.                     Certain
Legal Requirements.  In
the event that the participation in the Issuance by a holder of Shares as a
Participating Buyer would require under applicable


 


21





















 


law
(i) the registration or qualification of such securities or of any Person as a
broker or dealer or agent with respect to such securities where such
registration or qualification is not otherwise required for the Issuance or
(ii) the provision to any participant in the Sale of any specified information
regarding the Company or any of its subsidiaries or the securities that is not
otherwise required to be provided for the Issuance, such holder of Shares shall
not have the right to participate in the Issuance.  Without limiting the generality of the
foregoing, it is understood and agreed that neither the Company nor the Issuer
shall be under any obligation to effect a registration of such securities under
the Securities Act or similar state statutes.


 


5.1.5.                     Further Assurances.  Each
Participation Offeree and each Stockholder to whom the Shares held by such
Participation Offeree were originally issued, shall, whether in such holder’s
capacity as a Participating Buyer, Stockholder, officer or director of the
Company, or otherwise, take or cause to be taken all such reasonable actions as
may be necessary or reasonably desirable in order expeditiously to consummate
each Issuance pursuant to this Section 5.1 and any related transactions,
including executing, acknowledging and delivering consents, assignments,
waivers and other documents or instruments; filing applications, reports,
returns, filings and other documents or instruments with governmental
authorities; and otherwise cooperating with the Issuer and the Prospective
Subscriber.  Without limiting the
generality of the foregoing, each such Participating Buyer and Stockholder
agrees to execute and deliver such subscription and other agreements specified
by the Issuer to which the Prospective Subscriber will be party.


 


5.1.6.                     Expenses.  All costs and expenses incurred by the Issuer
in connection with any proposed Issuance of Subject Securities (whether or not
consummated), including all attorney’s fees and charges, all accounting fees
and charges and all finders, brokerage or investment banking fees, charges or
commissions, shall be paid by the Company or the Issuer.  The reasonable fees and charges of a single
legal counsel representing any or all of the holders of Shares in connection
with such proposed Issuance of Subject Securities (whether or not consummated)
shall be paid by the Company or the Issuer. 
Any other costs and expenses incurred by or on behalf of any holder of
Shares in connection with such proposed Issuance of Subject Securities (whether
or not consummated) shall be borne by such holder.


 


5.1.7.                     Closing.  The closing of an Issuance pursuant to Section 5.1
shall take place on (i) the proposed date of Issuance, if any, set forth in the
Participation Notice (provided that consummation of any Transfer may be
extended beyond such date to the extent necessary to obtain any applicable
governmental approval or other required approval or to satisfy other
conditions), (ii) if no proposed Transfer date was required to be specified in
the Participation Notice, at such time as the Issuer shall specify by notice to
each Participating Buyer and (iii) at such place as the Issuer shall specify by
notice to each Participating Buyer.  At
the closing of any Issuance under this Section 5.1.7, each Participating
Buyer shall be delivered the notes, certificates or other instruments
evidencing the Subject Securities (and, if applicable, Other Securities) to be
issued to such Participating Buyer, registered in the name of such
Participating Buyer or such


 


22





















 


holder’s designated nominee, free and clear of any
liens or encumbrances, with any transfer tax stamps affixed, against delivery
by such Participating Buyer of the applicable consideration.


 


5.2.                              Post-Issuance Notice.  Notwithstanding
the requirements of Section 5.1, the Issuer may proceed with any Issuance
prior to having complied with the provisions of Section 5.1; provided
that the Issuer shall:


 


(a)                                  provide to each holder of Shares who would
have been a Participation Offeree in connection with such Issuance (i) with
prompt notice of such Issuance and (ii) the Participation Notice described in Section 5.1.1
in which the actual price per unit of Subject Securities (and, if applicable,
actual Price Per Equivalent Share) shall be set forth;


 


(b)                                 offer to issue to such holder of Shares such
number of securities of the type issued in the Issuance as may be requested by
such holder (not to exceed the Participation Portion that such holder would have
been entitled to pursuant to Section 5.1 multiplied by the number of
Subject Securities included in the Issuance) on the same economic terms and
conditions with respect to such securities as the subscribers in the Issuance
received; and


 


(c)                                  keep such offer open for a period of ten
business days, during which period, each such holder may accept such offer by
sending a written acceptance to the Issuer committing to purchase an amount of
such securities (not in any event to exceed the Participation Portion that such
holder would have been entitled to pursuant to Section 5.1 multiplied by
the number of Subject Securities included in such issuance).


 


5.3.                              Excluded Transactions.


 


5.3.1.  The provisions of this Section 5 shall
not apply to Issuances by the Company as follows:


 


(a)                                  Any Issuance of Common Stock upon the
exercise or conversion of any Common Stock, Options, Warrants or Convertible
Securities outstanding on the date hereof or Issued after the date hereof in
compliance with the provisions of this Section 5;


 


(b)                                 Any Issuance of shares of Common Stock,
Options, Warrants or Convertible Securities to officers, employees, directors
or consultants of the Company or its subsidiaries in connection with such
Person’s employment arrangements with the Company or its subsidiaries;


 


(c)                                  Any Issuance of shares of Common Stock,
Options, Warrants or Convertible Securities in connection with any business
combination or acquisition transaction involving the Company or any of its
subsidiaries;


 


23





















 


(d)                                 Any Issuance of shares of Common Stock,
Options, Warrants or Convertible Securities in connection with any joint
venture or strategic partnership approved by the Board;


 


(e)                                  Any Issuance of shares of Common Stock,
Options, Warrants or Convertible Securities in connection with the incurrence
or guarantee of indebtedness by the Company or any of its subsidiaries; or


 


(f)                                    Any Issuance of Common Stock pursuant to the
Initial Public Offering.


 


5.3.2.                     The provisions of this Section 5 also shall not apply to:


 


(a)                                  The Issuance of Shares to the Investors and
Seller Warrants to the Sellers in connection with the Closing;


 


(b)                                 Any Issuance of shares of Stock pursuant to
the Seller Warrants; or


 


(c)                                  Any Issuance of shares of Stock in connection
with any stock split, stock dividend or recapitalization.


 


5.4.                              Certain Provisions Applicable to Options, Warrants and Convertible Securities.  In
the event that the Issuance of Subject Securities shall result in any increase
in the number of shares of Stock issuable upon exercise, conversion or exchange
of any Options, Warrants or Convertible Securities, the number of shares (or
Equivalent Shares, if applicable) of Subject Securities (and Other Securities,
if applicable) which the holders, of such Options, Warrants or Convertible
Securities, as the case may be, shall be entitled to purchase pursuant to Section 5.1,
if any, shall be reduced, share for share, by the amount of any such increase.


 


5.5.                              Acquired
Shares.  Any
Subject Securities constituting Stock acquired by any holder of Shares pursuant
to this Section 5 shall be deemed for all purposes hereof to be Shares
hereunder.


 


5.6.                              Period.  Each of the foregoing provisions of this Section 5
shall expire on the earlier of (a) a Change of Control or (b) the closing of
the Initial Public Offering.


 


6.                                      REGISTRATION RIGHTS.  The Company will perform and comply, and cause each of its subsidiaries
to perform and comply, with such of the following provisions as are applicable
to it.  Each Holder will perform and
comply with such of the following provisions as are applicable to such Holder.


 


6.1.                              Demand Registration Rights for Investor Registrable Securities.


 


6.1.1.                     General.  One or more members of an Investor Group or
the Seller (the “Initiating Investors”), by notice to the Company
specifying the intended method or methods of disposition, may request that the
Company effect the registration under the Securities Act for a Public Offering
of all or a specified part of the Registrable Securities


 


24





















 


held
by such Initiating Investors; provided, however, that the value
of Registrable Securities that the Initiating Investors propose to sell in such
Public Offering is at least twenty million dollars ($20,000,000); and provided,
further, that the Initial Public Offering may not be initiated pursuant
to this Section 6.1 without the approval of a majority of the entire Board
and the approval of the Requisite Stockholder Majority.  The Company will then use its best efforts to
(i) effect the registration under the Securities Act (including by means of a
shelf registration pursuant to Rule 415 under the Securities Act if so
requested and if the Company is then eligible to use such registration) of the
Registrable Securities which the Company has been requested to register by such
Initiating Investors together with all other Registrable Securities which the
Company has been requested to register pursuant to Section 6.2 by other
Holders, all to the extent requisite to permit the disposition (in accordance
with the intended methods thereof as aforesaid and as otherwise specified by
the Principal Participating Holders) of the Registrable Securities which the
Company has been so requested to register, and (ii) if requested by the Principal
Participating Holders, obtain acceleration of the effective date of the
registration statement relating to such registration; provided, however,
that the Company shall not be obligated to take any action to effect any such
registration pursuant to this Section 6.1.1:


 


(a)                                       during the effectiveness of any Principal
Lock-Up Agreement entered into in connection with any registration statement
pertaining to an underwritten public offering of securities of the Company for
its own account (other than a Rule 145 Transaction, or a registration relating
solely to employee benefit plans);


 


(b)                                      upon the request of any member of an Investor
Group on any form other than Form S-3 (or any successor form) if the Company
has previously effected a number of registrations of Registrable Securities
under this Section 6.1.1 upon the request of the members of such Investor
Group on any form other than Form S-3 (or any successor form) equaling or
exceeding five (5), two (2), one (1) and one (1) with respect to the THL Investors,
the Bain Investors, the Providence Investors and the Lexa Investors,
respectively; provided, however, that any registration of
Registrable Securities (i) which does not become and remain effective for at
least 270 days in accordance with the provisions of this Section 6 or (ii)
pursuant to which the Initiating Investors and all other holders of Registrable
Securities joining therein are not able to include at least 90% of the
Registrable Securities which they desired to include, shall not be included in
the calculation of the numbers of registrations contemplated by this clause
(b); or


 


(c)                                       upon the request of the Seller on any form
other than Form S-3 (or any successor form).


 


6.1.2.                     Form.  Except as otherwise provided above, each
registration requested pursuant to Section 6.1.1 shall be effected by the
filing of a registration statement on Form S-1 (or any other form which
includes substantially the same information as would be required to be included
in a registration statement on such form as currently


 


25





















 


constituted),
unless the use of a different form has been agreed to in writing by the
Principal Participating Holders; provided that if any registration
requested pursuant to this Section 6.1 is proposed to be effected on Form
S-3 (or any successor or similar short-form registration statement) and is in
connection with an underwritten offering, and if the managing underwriter shall
advise the Company in writing that, in its opinion, it is of material importance
to the success of such proposed offering to include in such registration
statement information not required to be included pursuant to such form, then
the Company will supplement such registration statement as reasonably requested
by such managing underwriter.


 


6.1.3.                     Payment of Expenses.  The
Company shall pay all Registration Expenses in connection with registrations of
Registrable Securities pursuant to this Section 6.1, including all
reasonable expenses (other than fees and disbursements of counsel that do not
constitute Registration Expenses) that any Holder incurs in connection with
each registration of Registrable Securities requested pursuant to this Section 6.1.


 


6.1.4.                     Additional
Procedures.  In
the case of a registration pursuant to Section 6.1 hereof, whenever the
Principal Participating Holders shall request that such registration shall be
effected pursuant to an underwritten offering, the Company shall include such
information in the written notices to Holders referred to in Section 6.2.  In such event, the right of any Holder to
have securities owned by such Holder included in such registration pursuant to Section 6.1
shall be conditioned upon such Holder’s participation in such underwriting and
the inclusion of such Holder’s Registrable Securities in the underwriting
(unless otherwise mutually agreed upon by the Principal Participating Holders
and such Holder).  If requested by the
Principal Participating Holders, the Company together with the Holders
proposing to distribute their securities through the underwriting will enter
into an underwriting agreement with the underwriters for such offering
containing such representations and warranties by the Company and such Holders
and such other terms and provisions as are customarily contained in
underwriting agreements with respect to secondary distributions, including
customary indemnity and contribution provisions (subject, in each case, to the
limitations on such liabilities set forth in this Agreement).


 


6.1.5.                     Suspension
of Registration.  If
the filing, initial effectiveness or continued use of a registration statement,
including a shelf registration statement pursuant to Rule 415 under the
Securities Act, in respect of a registration pursuant to this Section 6.1
at any time would require the Company to make a public disclosure of material
non-public information, which disclosure in the good faith judgment of the
Board (after consultation with external legal counsel) (i) would be required to
be made in any registration statement so that such registration statement would
not be materially misleading, (ii) would not be required to be made at such
time but for the filing, effectiveness or continued use of such registration
statement and (iii) would have a material adverse effect on the Company or its
business or on the Company’s ability to effect a material proposed acquisition,
disposition, financing, reorganization, recapitalization or similar
transaction, then the Company may, upon giving prompt written notice of such
action to the Holders participating in such registration, delay the filing or
initial effectiveness of, or suspend


 


26





















 


use
of, such registration statement; provided, that the Company shall not be
permitted to do so (i) more than two times during any 12 month period, (ii) for
a period exceeding 30 days on any one occasion or (iii) for a period exceeding
60 days in any 12 month period.  In the
event the Company exercises its rights under the preceding sentence, such
Holders agree to suspend, promptly upon their receipt of the notice referred to
above, their use of any prospectus relating to such registration in connection
with any sale or offer to sell Registrable Securities.  The Company shall promptly notify such
Holders of the expiration of any period during which it exercised its rights
under this Section 6.1.5.  The
Company agrees that, in the event it exercises its rights under this Section 6.1.5,
it shall, within 30 days following such Holders’ receipt of the notice of
suspension, update the suspended registration statement as may be necessary to
permit the Holders to resume use thereof in connection with the offer and sale
of their Registrable Securities in accordance with applicable law.


 


6.2.                         Piggyback
Registration Rights.


 


6.2.1.                     Piggyback
Registration.


 


6.2.1.1.                                                            General.
 Each time the Company proposes to
register any shares of Common Stock under the Securities Act on a form which
would permit registration of Registrable Securities for sale to the public, for
its own account and/or for the account of any other Person (pursuant to Section 6.1
or otherwise) for sale in a Public Offering, the Company will give notice to
all Holders of its intention to do so.  Any
Holder may, by written response delivered to the Company within 20 days after
the date of delivery of such notice, request that all or a specified part of
such Holder’s Registrable Securities be included in such registration.  The Company thereupon will use its reasonable
efforts to cause to be included in such registration under the Securities Act
all Registrable Securities which the Company has been so requested to register
by such Holders, to the extent required to permit the disposition (in
accordance with the methods to be used by the Company or other Holders in such Public
Offering) of the Registrable Securities to be so registered; provided
that (i) if, at any time after giving written notice of its intention to
register any securities, the Company shall determine for any reason not to
proceed with the proposed registration of the securities to be sold by it, the
Company may, at its election, give written notice of such determination to each
Holder and, thereupon, shall be relieved of its obligation to register any
Registrable Securities in connection with such registration (but not from its
obligation to pay the Registration Expenses in connection therewith), and (ii)
if such registration involves an underwritten offering, all Holders requesting
to be included in the Company’s registration must sell their Registrable Securities
to the underwriters selected by the Company on the same terms and conditions as
apply to the Company, with such differences as may be customary or appropriate
in combined primary and secondary offerings. 
No registration of Registrable Securities effected under this Section 6.2
shall relieve the Company of any of its obligations to effect registrations of
Registrable Securities pursuant to Section 6.1 hereof.


 


27





















 


6.2.1.2.                                                            Excluded Transactions.  The
Company shall not be obligated to effect any registration of Registrable
Securities under this Section 6.2 incidental to the registration of any of
its securities in connection with:


 


(a)                                  Any Public Offering relating to employee
benefit plans or dividend reinvestment plans;


 


(b)                                 Any Public Offering relating to the
acquisition or merger after the date hereof by the Company or any of its
subsidiaries of or with any other businesses; or


 


(c)                                  The Initial Public Offering, unless such
offering shall have been initiated pursuant to Section 6.1.1.


 


6.2.2.                     Payment of Expenses.  The
Company will pay all Registration Expenses in connection with registrations of
Registrable Securities pursuant to this Section 6.2


 


6.2.3.                     Additional
Procedures.  Holders
participating in any Public Offering pursuant to this Section 6.2 shall
take all such actions and execute all such documents and instruments that are
reasonably requested by the Company to effect the sale of their Registrable
Securities in such Public Offering, including being parties to the underwriting
agreement entered into by the Company and any other selling shareholders in
connection therewith and being liable in respect of the representations and
warranties and the other agreements (including customary selling stockholder
representations, warranties, indemnifications and “lock-up” agreements) for the
benefit of the underwriters contained therein; provided, however,
that (a) with respect to individual representations, warranties, indemnities
and agreements of sellers of Registrable Securities in such Public Offering,
the aggregate amount of such liability shall not exceed such holder’s net
proceeds from such offering and (b) to the extent selling stockholders give
further representations, warranties and indemnities, then with respect to all
other representations, warranties and indemnities of sellers of shares in such
Public Offering, the aggregate amount of such liability shall not exceed the
lesser of (i) such holder’s pro rata portion of any such liability, in accordance
with such holder’s portion of the total number of Registrable Securities
included in the offering, and (ii) such holder’s net proceeds from such
offering.


 


6.2.4.                     Registration
Statement Form.  The
Company shall select the registration statement form for any registration
pursuant to this Section 6.2 (other than a registration that is also
pursuant to Section 6.1); provided that if any registration
requested pursuant to this Section 6.2 is proposed to be effected on Form
S-3 (or any successor form) and is in connection with an underwritten offering,
and if the managing underwriter shall advise the Company in writing that, in
its opinion, it is of material importance to the success of such proposed
offering to include in such registration statement information not required to
be included pursuant to such form, then the Company will supplement such
registration statement as reasonably requested by such managing underwriter.


 


28





















 


6.3.                              Certain Other Provisions.


 


6.3.1.                     Underwriter’s
Cutback.  In
connection with any registration of shares, the underwriter may determine that
marketing factors (including an adverse effect on the per share offering price)
require a limitation of the number of shares to be underwritten.  Notwithstanding any contrary provision of
this Section 6 and subject to the terms of this Section 6.3.1, the
underwriter may limit the number of shares which would otherwise be included in
such registration by excluding any or all Registrable Securities from such
registration (it being understood that, if the registration in question
involves a registration for sale of securities for the Company’s own account,
then the number of shares which the Company seeks to have registered in such
registration shall not be subject to exclusion, in whole or in part, under this
Section 6.3.1).  Upon receipt of
notice from the underwriter of the need to reduce the number of shares to be
included in the registration, the Company shall advise all holders of the
Company’s securities that would otherwise be registered and underwritten
pursuant hereto, and the number of shares of such securities, including
Registrable Securities, that may be included in the registration shall be
allocated in the following manner, unless the underwriter shall determine that
marketing factors require a different allocation: shares, other than
Registrable Securities, requested to be included in such registration by other
shareholders shall be excluded unless the Company, with the consent of the parties
required to approve any amendment or waiver of this Agreement pursuant to Section 10.2,
has granted registration rights which are to be treated on an equal basis with
Registrable Securities for the purpose of the exercise of the underwriter
cutback (such shares afforded such equal treatment being “Parity Shares”);
and, if a limitation on the number of shares is still required, the number of
Registrable Securities, Parity Shares and other shares of Common Stock that may
be included in such registration shall be allocated among the holders thereof
in proportion, as nearly as practicable, as follows:


 


(i)                                     there shall be first allocated to each such
holder requesting that its Registrable Securities or Parity Shares be
registered in such registration a number of such shares to be included in such
registration equal to the lesser of (A) the number of such shares requested to
be registered by such holder, and (B) a number of such shares equal to such
holder’s Pro Rata Portion;


 


(ii)                                  the balance, if any, not allocated pursuant
to clause (i) above shall be allocated to those holders requesting that their
Registrable Securities or Parity Shares be registered in such registration
which requested to register a number of such shares in excess of such holder’s
Pro Rata Portion pro rata to each such holder based upon the number of
Registrable Securities and Parity Shares held by such holder, or in such other
manner as the holders requesting that their Registrable Securities or Parity
Shares be registered in such registration may otherwise agree; and


 


(iii)                               the balance, if any, not allocated pursuant
to clause (ii) above shall be allocated to shares, other than Registrable
Securities and Parity Shares, requested to be included in such registration by
other stockholders.


 


29





















 


For purposes of any underwriter cutback, all
Registrable Securities held by any Holder shall also include any Registrable
Securities held by the partners, retired partners, shareholders or Affiliates
of such Holder, or the estates and family members of any such Holder or such
partners and retired partners, any trusts for the benefit of any of the
foregoing Persons and, at the election of such Holder or such partners, retired
partners, trusts or Affiliates, any Charitable Organization to which any of the
foregoing shall have contributed Common Stock prior to the execution of the
underwriting agreement in connection with such underwritten offering, and such
Holder and other Persons shall be deemed to be a single selling Holder, and any
pro rata reduction with respect to such selling Holder shall be based upon the
aggregate amount of Common Stock owned by all entities and individuals included
in such selling Holder, as defined in this sentence.  No securities excluded from the underwriting
by reason of the underwriter’s marketing limitation shall be included in such
registration.  Upon delivery of a written
request that Registrable Securities be included in the underwriting pursuant to
Section 6.1.1 or 6.2.1.1, the Holder thereof may not thereafter elect to
withdraw therefrom without the written consent of the Principal Participating
Holders; provided that, if the managing underwriter of any underwritten
offering shall advise the Holders participating in a registration pursuant to Section 6.1
that the Registrable Securities covered by the registration statement cannot be
sold in such offering within a price range acceptable to the Principal
Participating Investors, then the Principal Participating Investors shall have
the right to notify the Company that they have determined that the registration
statement be abandoned or withdrawn, in which event the Company shall abandon
or withdraw such registration statement.


 


6.3.2.                     Registration
Procedures.  If
and in each case when the Company is required to effect a registration of any
Registrable Securities as provided in this Section 6, the Company shall
promptly:


 


(i)                                     prepare and, in any event within sixty days
(forty-five days in the case of a Form S-3 registration) after the end of the
period under Section 6.2.1.1 within which a piggyback request for
registration may be given to the Company, file with the Commission a
registration statement with respect to such Registrable Securities and use its
best efforts to cause such registration statement to become effective within
ninety days of the initial filing;


 


(ii)                                  prepare and file with the Commission such
amendments and supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such registration
statement effective for a period not in excess of 270 days (or such shorter
period which will terminate when all Registrable Securities covered by such
registration statement have been sold) and to comply with the provisions of the
Securities Act and the Exchange Act with respect to the disposition of all
securities covered by such registration statement during such period in
accordance with the intended methods of disposition by the seller or sellers
thereof set forth in such registration statement; provided that before
filing a registration statement or prospectus, or any


 


30





















 


amendments or supplements thereto in accordance with
Sections 6.1 or 6.2, the Company will furnish to counsel selected pursuant to Section 6.3.3
hereof copies of all documents proposed to be filed, which documents will be
subject to the review of such counsel;


 


(iii)                               furnish to each seller of such Registrable
Securities such number of copies of such registration statement and of each
amendment and supplement thereto (in each case including all exhibits filed
therewith), such number of copies of the prospectus included in such
registration statement (including each preliminary prospectus and summary
prospectus), in conformity with the requirements of the Securities Act, and
such other documents as such seller may reasonably request in order to
facilitate the disposition of the Registrable Securities by such seller;


 


(iv)                              use its best efforts to register or qualify
such Registrable Securities covered by such registration in such jurisdictions
as each seller shall reasonably request, and do any and all other acts and
things which may be reasonably necessary or advisable to enable such seller to
consummate the disposition in such jurisdictions of the Registrable Securities
owned by such seller, except that the Company shall not for any such purpose be
required to qualify generally to do business as a foreign corporation in any
jurisdiction where, but for the requirements of this clause (iv), it would not
be obligated to be so qualified or to consent to general service of process in
any such jurisdiction;


 


(v)                                 notify each seller of any such Registrable
Securities covered by such registration statement, at any time when a
prospectus relating thereto is required to be delivered under the Securities
Act, of the Company’s becoming aware that the prospectus included in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in the light of the
circumstances then existing, and at the request of any such seller, prepare and
furnish to such seller a reasonable number of copies of an amended or
supplemental prospectus as may be necessary so that, as thereafter delivered to
the purchasers of such Registrable Securities, such prospectus shall not
include an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing;


 


(vi)                              otherwise use its best efforts to comply with
all applicable rules and regulations of the Commission, and make available to
its security holders, as soon as reasonably practicable (but not more than 18
months) after the effective date of the registration statement, an earnings
statement which shall satisfy the provisions of Section 11(a) of the
Securities Act;


 


(vii)                           (i) if such Registrable Securities are Common
Stock (including Common Stock issuable upon conversion, exchange or exercise of
another


 


31





















 


security), use its best efforts to list such
Registrable Securities on any securities exchange or authorize for quotation on
each other market (including, if applicable, the National Association of
Securities Dealers, Inc. (the “NASD”) Automated Quotation System) on
which the Common Stock is then listed or authorized for quotation if such
Registrable Securities are not already so listed or authorized for quotation;
and (ii) use its best efforts to provide a transfer agent and registrar for
such Registrable Securities covered by such registration statement not later than
the effective date of such registration statement;


 


(viii)                        enter into such customary agreements
(including an underwriting agreement in customary form), which may include
indemnification provisions in favor of underwriters and other Persons in
addition to the provisions of Section 6.4 hereof, and take such other
actions as the Principal Participating Holders or the underwriters, if any,
reasonably requested in order to expedite or facilitate the disposition of such
Registrable Securities;


 


(ix)                                obtain a “cold comfort” letter or letters
from the Company’s independent public accountants in customary form and
covering matters of the type customarily covered by “cold comfort” letters as
the Principal Participating Holders shall reasonably request;


 


(x)                                   make available for inspection by any seller
of such Registrable Securities covered by such registration statement, by any
managing underwriter or underwriters participating in any disposition to be
effected pursuant to such registration statement and by any attorney,
accountant or other agent retained by any such seller or any such managing
underwriter(s), all pertinent financial and other records, pertinent corporate
documents and properties of the Company, and cause all of the Company’s
officers, directors and employees to supply all information reasonably
requested by any such seller, underwriter, attorney, accountant or agent in
connection with such registration statement (subject to each party referred to
in this clause (x) entering into customary confidentiality agreements in a form
reasonably acceptable to the Company);


 


(xi)                                notify counsel (selected pursuant to Section 6.3.3
hereof) for the Holders of Registrable Securities included in such registration
statement and the managing underwriter or agent, immediately, and confirm the
notice in writing (a) when the registration statement, or any post-effective
amendment to the registration statement, shall have become effective, or any
supplement to the prospectus or any amendment to the prospectus shall have been
filed, (b) of the receipt of any comments from the Commission, (c) of any
request of the Commission to amend the registration statement or amend or
supplement the prospectus or for additional information, and (d) of the
issuance by the Commission of any stop order suspending the effectiveness of
the registration statement or of any order preventing or suspending the use of
any preliminary prospectus, or of the suspension of the qualification of the
registration statement


 


32





















 


for offering or sale in any jurisdiction, or of the
institution or threatening of any proceedings for any of such purposes;


 


(xii)                             make every commercially reasonable effort to
prevent the issuance of any stop order suspending the effectiveness of the
registration statement or of any order preventing or suspending the use of any
preliminary prospectus and, if any such order is issued, to obtain the
withdrawal of any such order as soon as practicable;


 


(xiii)                          if requested by the managing underwriter or
agent or any Holder of Registrable Securities covered by the registration
statement, incorporate in a prospectus supplement or post-effective amendment
such information as the managing underwriter or agent or such Holder reasonably
requests to be included therein, including, with respect to the number of
Registrable Securities being sold by such Holder to such underwriter or agent,
the purchase price being paid therefor by such underwriter or agent and with
respect to any other terms of the underwritten offering of the Registrable
Securities to be sold in such offering; and make all required filings of such
prospectus supplement or post-effective amendment as soon as practicable after
being notified of the matters incorporated in such prospectus supplement or
post-effective amendment;


 


(xiv)                         cooperate with the Holders of Registrable
Securities covered by the registration statement and the managing underwriter
or agent, if any, to facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legends) representing securities to
be sold under the registration statement, and enable such securities to be in
such denominations and registered in such names as the managing underwriter or
agent, if any, or such Holders may request;


 


(xv)                            obtain for delivery to the Holders of
Registrable Securities being registered and to the underwriter or agent an
opinion or opinions from counsel for the Company in customary form and in form,
substance and scope reasonably satisfactory to such Holders, underwriters or
agents and their counsel;


 


(xvi)                         cooperate with each seller of Registrable
Securities and each underwriter or agent participating in the disposition of
such Registrable Securities and their respective counsel in connection with any
filings required to be made with the NASD; and


 


(xvii)                      use its commercially reasonable best efforts
to make available the executive officers of the Company to participate with the
Holders of Registrable Securities and any underwriters in any “road shows” that
may be reasonably requested by the Holders in connection with distribution of
the Registrable Securities.


 


33










 










6.3.3.                     Selection of Underwriters and Counsel.  The
underwriters and legal counsel to be retained by the Company in connection with
any Public Offering shall be selected by the Board; provided that, in
the case of an offering following a request therefor under Section 6.1.1, such
underwriters and counsel shall be reasonably acceptable to the Principal
Participating Holders.  In connection
with any registration of Registrable Securities pursuant to Sections 6.1 and
6.2 hereof, the Principal Participating Holders may select one counsel to
represent all Holders of Registrable Securities covered by such registration; provided,
however, that in the event that the counsel selected as provided above
is also acting as counsel to the Company in connection with such registration,
the remaining Holders shall be entitled to select one additional counsel to
represent, at such Holders’ expense, all such remaining Holders.


 


6.3.4.                       Holder
Lock-Up.  In connection with each underwritten Public
Offering each Holder agrees to become bound by and to execute and deliver such
lock-up agreement with the underwriter(s) of such Public Offering restricting
such Holder’s right to (a) Transfer, directly or indirectly, any shares of
Common Stock or any securities convertible into or exercisable or exchangeable
for such Common Stock or (b) enter into any swap or other arrangement that
transfers to another any of the economic consequences of ownership of Common
Stock, as is entered into by the Principal Participating Holders with the
underwriter(s) of such Public Offering (the “Principal  Lock-Up
Agreement”); provided, however, that no Holder shall be
required to enter into a lock-up agreement covering a period of greater than 90
days (180 days in the case of the Initial Public Offering) following the
effectiveness of the related registration statement.  Notwithstanding the foregoing, such lock-up agreement shall not
apply to (i) transactions relating to shares of Common Stock or other
securities acquired in open market transactions after the completion of the
Initial Public Offering, (ii) Transfers to Permitted Transferees of such Holder
in accordance with the terms of this Agreement, (iii) conversions of shares of
Stock into other classes of Stock without change of holder and (iv) during the period
preceding the execution of the underwriting agreement, Transfers to a
Charitable Organization in accordance with the terms of this Agreement.


 


6.3.5.                     
Company Lock-Up.  If any registration pursuant to Section 6.1
of this Agreement shall be in connection with an underwritten public offering,
the Company agrees not to effect any public sale or distribution of any Common
Stock of the Company (or securities convertible into or exchangeable or
exercisable for Common Stock) (in each case, other than as part of such
underwritten public offering and other than pursuant to a registration on Form
S-4 or S-8) for its own account, within 90 days (or such shorter period as the
managing underwriters may require) after, the effective date of such
registration (except as part of such registration).


 


6.3.6.                     
Other Agreements.  The Company covenants and agrees that, so
long as any Person holds any Registrable Securities in respect of which any
registration rights provided for in Section 6.1 of this Agreement remain in effect,
the Company will not, directly or indirectly, grant to any Person or agree to
or otherwise become obligated in respect of (i) rights of registration in the
nature or substantially in the nature of those set forth in Section 6.1 of this
Agreement that would have priority over the Registrable


 


34






















 


Securities
with respect to the inclusion of such securities in any registration or (ii)
demand registration rights exercisable prior to such time as the Investors can
first exercise their rights under Section 6.1.


 


6.4.                              Indemnification and Contribution.


 


6.4.1.                     Indemnities of the Company.  In the event of any registration of any
Registrable Securities or other debt or equity securities of the Company or any
of its subsidiaries under the Securities Act pursuant to this Section 6 or
otherwise, and in connection with any registration statement or any other
disclosure document produced by or on behalf of the Company or any of its
subsidiaries including reports required and other documents filed under the
Exchange Act, and other documents pursuant to which any debt or equity
securities of the Company or any of its subsidiaries are sold (whether or not
for the account of the Company or its subsidiaries), the Company will, and
hereby does, and will cause each of its subsidiaries, jointly and severally, to
indemnify and hold harmless each holder of Registrable Securities, any Person
who is or might be deemed to be a controlling Person of the Company or any of
its subsidiaries within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, their respective direct and indirect partners,
advisory board members, directors, officers, trustees, members and
shareholders, and each other Person, if any, who controls any such holder or
any such controlling Person within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act (each such Person being referred to
herein as a “Covered Person”), against any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof), joint or several,
to which such Covered Person may be or become subject under the Securities Act,
the Exchange Act, any other securities or other law of any jurisdiction, the
common law or otherwise, insofar as such losses, claims, damages or liabilities
(or actions or proceedings in respect thereof) arise out of or are based upon
(i) any untrue statement or alleged untrue statement of any material fact
contained or incorporated by reference in any registration statement under the
Securities Act, any preliminary prospectus or final prospectus included
therein, or any related summary prospectus, or any amendment or supplement
thereto, or any document incorporated by reference therein, or any other such disclosure
document (including reports and other documents filed under the Exchange Act
and any document incorporated by reference therein) or other document or
report, (ii) any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading or (iii) any violation or alleged violation by the Company or any of
its subsidiaries of any federal, state, foreign or common law rule or
regulation applicable to the Company or any of its subsidiaries and relating to
action or inaction in connection with any such registration, disclosure
document or other document or report, and will reimburse such Covered Person
for any legal or any other expenses incurred by it in connection with investigating
or defending any such loss, claim, damage, liability, action or proceeding; provided,
however, that neither the Company nor any of its subsidiaries shall be
liable to any Covered Person in any such case to the extent that any such loss,
claim, damage, liability, action or proceeding arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged omission
made in such


 


35






















 


registration
statement, any such preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement, incorporated document or other such
disclosure document or other document or report, in reliance upon and in
conformity with written information furnished to the Company or to any of its
subsidiaries through an instrument duly executed by such Covered Person
specifically stating that it is for use in the preparation thereof.  The indemnities of the Company and of its
subsidiaries contained in this Section 6.4.1 shall remain in full force and
effect regardless of any investigation made by or on behalf of such Covered
Person and shall survive any transfer of securities or any termination of this
Agreement.


 


6.4.2.                     Indemnities to the Company.  Subject to Section 6.4.4, the Company and
any of its subsidiaries may require, as a condition to including any securities
in any registration statement filed pursuant to this Section 6, that the
Company and any of its subsidiaries shall have received an undertaking
satisfactory to it from the prospective seller of such securities, severally
and not jointly, to indemnify and hold harmless the Company and any of its
subsidiaries, each director of the Company or any of its subsidiaries, each
officer of the Company or any of its subsidiaries who shall sign such
registration statement and each other Person (other than such seller), if any,
who controls the Company and any of its subsidiaries within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act and each
other prospective seller of such securities with respect to any statement in or
omission from such registration statement, any preliminary prospectus, final
prospectus or summary prospectus included therein, or any amendment or
supplement thereto, or any other disclosure document (including reports and
other documents filed under the Exchange Act or any document incorporated
therein) or other document or report, if such statement or omission was made in
reliance upon and in conformity with written information furnished to the
Company or any of its subsidiaries through an instrument executed by such
seller specifically stating that it is for use in the preparation of such
registration statement, preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement, incorporated document or other document or
report.  Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of
the Company, any of its subsidiaries or any such director, officer or
controlling Person and shall survive any transfer of securities or any
termination of this Agreement.


 


6.4.3.                     Contribution.  If the indemnification
provided for in Sections 6.4.1 or 6.4.2 hereof is unavailable to a party that
would have been entitled to indemnification pursuant to the foregoing
provisions of this Section 6.4 (an “Indemnitee”) in respect of any
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) referred to therein, then each party that would have been an
indemnifying party thereunder shall, subject to Section 6.4.4 and in lieu of
indemnifying such Indemnitee, contribute to the amount paid or payable by such
Indemnitee as a result of such losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) in such proportion as is appropriate
to reflect the relative fault of such indemnifying party on the one hand and
such Indemnitee on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities (or actions or


 


36






















 


proceedings
in respect thereof). The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by such indemnifying party or such Indemnitee
and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.  The parties agree that it would not be just
or equitable if contribution pursuant to this Section 6.4.3 were determined by
pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the preceding
sentence.  The amount paid or payable by
a contributing party as a result of the losses, claims, damages or liabilities
(or actions or proceedings in respect thereof) referred to above in this
Section 6.4.3 shall include any legal or other expenses reasonably incurred by
such Indemnitee in connection with investigating or defending any such action
or claim.  No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any Person who was not guilty of
such fraudulent misrepresentation.


 


6.4.4.                     Limitation on Liability of Holders of Registrable Securities.  The
liability of each holder of Registrable Securities in respect of any
indemnification or contribution obligation of such holder arising under this
Section 6.4 shall not in any event exceed an amount equal to the net proceeds
to such holder (after deduction of all underwriters’ discounts and commissions)
from the disposition of the Registrable Securities disposed of by such holder
pursuant to such registration.


 


6.4.5.                     Indemnification Procedures.  Promptly after receipt by an Indemnitee of
written notice of the commencement of any action or proceeding with respect to
which a claim for indemnification may be made pursuant to this Section 6.4,
such Indemnitee will, if a claim in respect thereof is to be made against an
indemnifying party, give written notice to the latter of the commencement of
such action or proceeding; provided that the failure of the Indemnitee
to give notice as provided herein shall not relieve the indemnifying party of
its obligations under this Section 6.4, except to the extent that the
indemnifying party is materially prejudiced by such failure to give notice.  In case any such action or proceeding is
brought against an Indemnitee, the indemnifying party will be entitled to
participate in and to assume the defense thereof (at its expense), jointly with
any other indemnifying party similarly notified to the extent that it may wish,
with counsel reasonably satisfactory to such Indemnitee, and after notice from
the indemnifying party to such Indemnitee of its election so to assume the
defense thereof, the indemnifying party will not be liable to such Indemnitee
for any legal or other expenses subsequently incurred by the latter in
connection with the defense thereof other than reasonable costs of
investigation and shall have no liability for any settlement made by the
Indemnitee without the consent of the indemnifying party, such consent not to
be unreasonably withheld. 
Notwithstanding the foregoing, if in such Indemnitee’s reasonable
judgment a conflict of interest between such Indemnitee and the indemnifying
parties may exist in respect of such action or proceeding or the indemnifying
party does not assume the defense of any such action or proceeding within a
reasonable time after notice of commencement, the Indemnitee shall have the
right to assume or continue its


 


37






















 


own
defense and the indemnifying party shall be liable for any reasonable expenses
therefor, but in no event will bear the expenses for more than one firm of
counsel for all Indemnitees in each jurisdiction who shall be approved by the
Principal Participating Holders in the registration in respect of which such
indemnification is sought.  No
indemnifying party will settle any action or proceeding or consent to the entry
of any judgment without the prior written consent of the Indemnitee, unless
such settlement or judgment (i) includes as an unconditional term thereof the
giving by the claimant or plaintiff of a release to such Indemnitee from all
liability in respect of such action or proceeding and (ii) does not involve the
imposition of equitable remedies or the imposition of any obligations on such
Indemnitee and does not otherwise adversely affect such Indemnitee, other than
as a result of the imposition of financial obligations for which such
Indemnitee will be indemnified hereunder.


 


6.5.                              Permitted Assignees.


 


6.5.1.                     Piggyback Registration Rights.  The rights of a holder of Registrable
Securities to cause the Company to register its Registrable Securities pursuant
to Section 6.2 may be assigned (but only with all related obligations as set
forth below) in a Transfer effected in accordance with the terms of this
Agreement to: (a) an Affiliate of such holder, (b) a Charitable Organization or
(c) any other transferee that in the case of this clause (c) acquires shares of
Registrable Securities either (i) for consideration of at least $10,000,000 or
(ii) having a then fair market value (determined in good faith by the Board) of
at least $10,000,000 (the transferees in clauses (a) through (c) each a “Permitted
Piggyback Assignee”). Without prejudice to any other or similar conditions
imposed hereunder with respect to any such Transfer, no assignment permitted
under the terms of this Section 6.5.1 shall be effective unless the Permitted
Piggyback Assignee, if not a Stockholder, has delivered to the Company a
written acknowledgment and agreement in form and substance reasonably
satisfactory to the Company that such Registrable Securities in respect of
which such assignment is made shall be deemed Other Holder Shares and shall be
subject to all of the provisions of this Agreement relating to Other Holder
Shares and that such Permitted Piggyback Assignee shall be bound by, and shall
be an Other Holder party to, this Agreement and the holder of Other Holder
Shares hereunder.  A transferee to whom
rights are transferred pursuant to this Section 6.5.1 may not again transfer
such rights to any Person, other than as provided in this Section 6.5.1.


 


7.                                      COVENANTS.


 


7.1.                              Information Rights.


 


7.1.1.                     Historical Financial Information.  The
Company will furnish each holder of Shares or Seller Warrants representing a
Total Investment of at least twenty five million dollars ($25,000,000), the
following:


 


7.1.1.1.                                                            As soon as available, and in any event within
120 days after the end of each fiscal year of the Company, the consolidated
balance sheet of the


 


38






















 


Company
and its subsidiaries as at the end of each such fiscal year and the
consolidated statements of income, cash flows and changes in stockholders’
equity for such year of the Company and its subsidiaries, setting forth in each
case in comparative form the figures for the next preceding fiscal year,
accompanied by the report of independent certified public accountants of
recognized national standing, to the effect that, except as set forth therein,
such consolidated financial statements have been prepared in accordance with
generally accepted accounting principles applied on a basis consistent with
prior years and fairly present in all material respects the financial condition
of the Company and its subsidiaries at the dates thereof and the results of
their operations and changes in their cash flows and stockholders’ equity for
the periods covered thereby.


 


7.1.1.2.                                                                 As soon as available, and in any event within
60 days after the end of each fiscal quarter of the Company, the consolidated
balance sheet of the Company and its subsidiaries as at the end of such quarter
and the consolidated statements of income, cash flows and changes in
stockholders’ equity for such quarter and the portion of the fiscal year then
ended of the Company and its subsidiaries, setting forth in each case the
figures for the corresponding periods of the previous fiscal year in
comparative form, all in reasonable detail.


 


7.1.2.                          Period.  Each of the foregoing provisions of this
Section 7.1 shall expire on the earlier of (a) a Change of Control or (b) the
closing of the Initial Public Offering.


 


7.2.                              Confidentiality.  Each holder of Shares or Seller
Warrants agrees that it will keep confidential and will not disclose, divulge
or use for any purpose, other than to monitor its investment in the Company and
its subsidiaries, any confidential information obtained from the Company
pursuant to the terms of this Agreement, unless such confidential information
(i) is known or becomes known to the public in general (other than as a result
of a breach of this Section 7.2 by such holder or its Affiliates), (ii) is or
has been independently developed or conceived by such holder without use of the
Company’s confidential information or (iii) is or has been made known or
disclosed to such holder by a third party (other than an Affiliate of such
holder) without a breach of any obligation of confidentiality such third party
may have to the Company that is known to such holder; provided, however,
that a holder may disclose confidential information (a) to its attorneys,
accountants, consultants, and other professionals to the extent necessary to
obtain their services in connection with monitoring its investment in the
Company, (b) to any prospective purchaser of any Shares from such holder as
long as such prospective purchaser agrees to be bound by the provisions of this
Section 7.2, (c) to any Affiliate, partner or member of such holder in the
ordinary course of business, (d) if the holder is the Seller and is advised by
outside counsel of recognized national standing that it is required to disclose
such information to fulfill its public filing requirements, or (e) as may
otherwise be required by law, provided that such holder takes reasonable steps
to minimize the extent of any such required disclosure; and provided, further,
however, that the acts and omissions of any Person to whom such holder
may disclose confidential information pursuant to clauses (a) through (c) of
the preceding proviso shall be attributable to such holder for purposes of
determining such holder’s compliance with this Section 7.2. Each of the parties
hereto


 


39






















 


acknowledge
that the holders of Shares may review the business plans and related proprietary
information of many enterprises, including enterprises which may have products
or services which compete directly or indirectly with those of the
Company.  Nothing in this Section 7.2
shall preclude or in any way restrict the holders of Shares or Seller Warrants
or their Affiliates from investing or participating in any particular
enterprise, or trading in the securities thereof, whether or not such
enterprise has products or services that compete with those of the Company.


 


7.3.                              Directors’ and Officers’ Insurance.  The
Company shall purchase, within a reasonable period following the Closing, and
maintain for such periods as the Board shall in good faith determine, at its
expense, insurance in an amount determined in good faith by the Board to be appropriate,
on behalf of any person who after the Closing is or was a director or officer
of the Company, or is or was serving at the request of the Company as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, including any direct or indirect subsidiary
of the Company, against any expense, liability or loss asserted against such
Person and incurred by such Person in any such capacity, or arising out of such
Person’s status as such, subject to customary exclusions.  The provisions of this Section 7.3 shall
survive any termination of this Agreement.


 


7.4.                              Exercise of Rights Under Seller MMT Warrant Agreement.  If
a majority of the entire Board and the Requisite Stockholder Majority elect to
exercise the rights of the Purchaser Entities (as defined in the Seller MMT
Warrant Agreement) under Section 23 of the Seller MMT Warrant Agreement to
defease the Seller MMT Warrants, then


 


7.4.1.                     the aggregate consideration to be paid in the
sale transaction referred to in Section 23 of the Seller MMT Warrant Agreement
shall be allocated as if the Seller MMT Warrants had been exercised in full
immediately prior to the closing of such sale transaction and the amount of
consideration to be allocated in respect of the Seller MMT Warrants will be
deposited in an escrow account established in accordance with Section 23 of the
Seller MMT Warrant Agreement;


 


7.4.2.                     if the holders of the Seller MMT Warrants
subsequently exercise the MMT Warrants, (i) such holders will pay the exercise
price to the escrow agent to be added to the escrow account, (ii) the escrow
agent will distribute to such holders the amounts of cash and securities to
which they are entitled under the MMT Warrants, and (iii) the escrow agent will
distribute the balance of the cash and securities (or the proceeds thereof, if
the Required Stockholder Majority, directs that such securities shall be sold
prior to such distribution) held in the escrow account in accordance with the
allocation of the aggregate consideration (other than the escrowed
consideration) paid in the sale transaction (which allocation (A) shall be made
in good faith by the Board, whose determination shall be conclusive and binding
and (B) shall provide that any options or restricted stock which shall not have
become vested or unrestricted at or prior to the closing of such sale
transaction shall not receive any portion of such distribution); and


 


7.4.3.                     if the Seller MMT Warrants subsequently
expire unexercised, the escrow agent will distribute all of the cash and
securities (or the proceeds thereof, if the Required


 


40






















 


Stockholder
Majority, directs that such securities shall be, sold prior to such
distribution) held in the escrow account in accordance with the allocation
described in clause (iii) of Section 7.4.2.


 


7.5.                              Seller Information Rights.  In connection with any contemplated exercise
of the Seller Warrants, at any Seller’s request, the Company will make
available to the Sellers the Company’s annual budget for the then current
fiscal year to the extent available, any available financial projections and
the opportunity to have one meeting to discuss such budget and projections with
the Company’s officers at a mutually agreeable time; provided, however
that (i) the Sellers will have the opportunity to exercise their rights under
this Section 7.5 in connection with a potential Major Music Transaction (as
defined in the MMT Warrant Agreement) and (ii) otherwise no earlier than 6
months following the completion of the Seller’s prior exercise of rights under
this Section 7.5.


 


8.                                      REMEDIES.


 


8.1.                              Generally.  The parties shall have all remedies
available at law, in equity or otherwise in the event of any breach or
violation of this Agreement or any default hereunder.  The parties acknowledge and agree that in the event of any breach
of this Agreement, in addition to any other remedies which may be available,
each of the parties hereto shall be entitled to specific performance of the
obligations of the other parties hereto and, in addition, to such other
equitable remedies (including preliminary or temporary relief) as may be
appropriate in the circumstances.


 


8.2.                              Deposit.  Without limiting the generality of Section
8.1, if any holder of Shares fails to deliver to the purchaser thereof the
certificate or certificates evidencing Shares to be Sold pursuant to Section 4,
such purchaser may, at its option, in addition to all other remedies it may
have, deposit the purchase price for such Shares with any national bank or
trust company having combined capital, surplus and undivided profits in excess
of One Hundred Million Dollars ($100,000,000) (the “Escrow Agent”) and
the Company or Midco, as the case may be, shall cancel on its books the
certificate or certificates representing such Shares and thereupon all of such
holder’s rights in and to such Shares shall terminate.  Thereafter, upon delivery to such purchaser
by such holder of the certificate or certificates evidencing such Shares (duly
endorsed, or with stock powers duly endorsed, for transfer, with signature
guaranteed, free and clear of any liens or encumbrances, and with any transfer
tax stamps affixed), such purchaser shall instruct the Escrow Agent to deliver
the purchase price (without any interest from the date of the closing to the
date of such delivery, any such interest to accrue to such purchaser) to such
holder.


 


9.                                      LEGENDS.


 


9.1.                              Restrictive Legend. 
Each certificate representing Shares shall have the following legend
endorsed conspicuously thereupon:


 


“THE VOTING OF THE SHARES OF STOCK REPRESENTED BY THIS
CERTIFICATE, AND THE SALE, ENCUMBRANCE OR OTHER DISPOSITION THEREOF, ARE
SUBJECT TO THE PROVISIONS OF A STOCKHOLDERS


 


41






















 


AGREEMENT TO WHICH THE ISSUER AND CERTAIN OF ITS
STOCKHOLDERS ARE PARTY, A COPY OF WHICH MAY BE INSPECTED AT THE PRINCIPAL
OFFICE OF THE ISSUER OR OBTAINED FROM THE ISSUER WITHOUT CHARGE.”


 


Any
Person who acquires Shares which are not subject to all or part of the terms of
this Agreement shall have the right to have such legend (or the applicable
portion thereof) removed from certificates representing such Shares.


 


9.2.                              1933
Act Legends. 
Each certificate representing Shares shall have the following legend
endorsed conspicuously thereupon:


 


“THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE
ISSUED IN A PRIVATE PLACEMENT, WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “ACT”), AND MAY NOT BE SOLD, ASSIGNED, PLEDGED OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION UNDER THE ACT
COVERING THE TRANSFER OR AN OPINION OF COUNSEL, SATISFACTORY TO THE ISSUER,
THAT REGISTRATION UNDER THE ACT IS NOT REQUIRED.”


 


9.3.                              Stop Transfer Instruction.  The Company or Midco will instruct any
transfer agent not to register the Transfer of any Shares until the conditions
specified in the foregoing legends and this Agreement are satisfied.


 


9.4.                              Termination of 1933 Act Legend.  The requirement imposed by Section 9.2
hereof shall cease and terminate as to any particular Shares (a) when, in the
opinion of counsel reasonably acceptable to the Company, such legend is no
longer required in order to assure compliance by the Company and Midco with the
Securities Act or (b) when such Shares have been effectively registered under
the Securities Act or transferred pursuant to Rule 144. Wherever (x) such
requirement shall cease and terminate as to any Shares or (y) such Shares shall
be transferable under paragraph (k) of Rule 144, the holder thereof shall be
entitled to receive from the Company or Midco, as the case may be, without
expense, new certificates not bearing the legend set forth in Section 9.2
hereof.


 


10.                               AMENDMENT, TERMINATION, ETC.


 


10.1.                        Oral Modifications. 
This Agreement may not be orally amended, modified, extended or
terminated, nor shall any oral waiver of any of its terms be effective.


 


10.2.                        Written Modifications. 
This Agreement may be amended, modified, extended or terminated, and the
provisions hereof may be waived, only by an agreement in writing signed by the
Company, Midco and holders of a Majority in Interest of the Shares; provided,
however, that:


 


(a)                                  the consent of each of the Investor Groups
shall be required for any amendment, modification, extension, termination or
waiver (an “Amendment”) of


 


42






















 


the
provisions of Section 2, Section 12.8 or this clause (a) of Section 10.2; provided,
however, that such consent shall not be required for any Amendment of
the provisions of Section 2 adopted with the consent of a majority of the
entire Board and the Requisite Stockholder Majority (i) in connection with the
consummation of, or at any time following, an Initial Public Offering that has
been approved in accordance with Section 2.4, other than an Amendment of the
provisions of Section 2.1.2 (excluding Amendments to the extent relating to the
Independent Directors), Section 2.1.3, Section 2.1.4 or Section 2.10, or any
related provisions of Section 2.2, Section 2.3 or Section 2.8, or (ii) in
connection with any transaction described in Section 2.4.5 or 2.4.6 that has
been approved in accordance with Section 2.4, to the extent such Amendment does
no more than increase the number of directors of the Company and/or extend
Board designation rights to any Person related to such transaction other than a
member of an Investor Group or its Affiliates;


 


(b)                                 the consent of each of the Investor Groups
shall be required for any Amendment of the provisions of Section 4.1, Section
4.6, any related provisions of Section 3.1.5 or Section 4.3 or this clause (b)
of Section 10.2;


 


(c)                                  the consent of, as applicable, at least (i)
three Investor Groups (if a total of four are then parties to this Agreement),
(ii) two Investor Groups (if a total of three are then parties to this
Agreement) and (iii) all Investor Groups (if a total of less than three are
then parties to this Agreement), shall be required for any Amendment to the
provisions of Section 5 or this clause (c) of Section 10.2;


 


(d)                                 the consent of any Investor Group shall be
required for any Amendment that discriminates against such Investor Group as
such under this Agreement;


 


(e)                                  the consent of the Requisite Stockholder
Majority shall be required for any Amendment that discriminates against the
Principal Investor Groups as such under this Agreement;


 


(f)                                    the consent of the holders of a Majority in
Interest of the Seller Warrants shall be required for any Amendment that
discriminates against the holders of Warrants or Seller Warrants, as such, or
the holders of Shares receivable upon exercise thereof, as such, under this
Agreement;


 


(g)                                 the consent of the holders of a Majority in
Interest of the Management Shares shall be required for any Amendment that
discriminates against the holders of Management Shares as such under this
Agreement;


 


(h)                                 the consent of the holders of a Majority in
Interest of the Other Holder Shares shall be required for any Amendment that
discriminates against the holders of Other Holder Shares as such under this
Agreement; and


 


43






















 


(i)                                     the consent of any party shall be required
for any Amendment that discriminates against such party.


 


Each
such Amendment shall be binding upon each party hereto and each holder of
Shares, Other Holder Shares or Seller Warrants subject hereto.  In addition, each party hereto and each
holder of Shares, Other Holder Shares or Seller Warrants subject hereto may
waive any right hereunder by an instrument in writing signed by such party or
holder.  To the extent the Amendment of
any Section of this Agreement would require a specific consent pursuant this
Section 10.2, any Amendment to the definitions used in such Section shall also
require the specified consent.


 


10.3.                        Withdrawal from Agreement.  At any time following the Initial Public
Offering, any holder of Shares or Other Holder Shares (other than a holder of
Management Shares) that, together with its Affiliates, holds less than five
percent (5%) of the then outstanding shares of Common Stock may elect (on
behalf of itself and its Affiliates (collectively, the “Withdrawing  Holders”)),
by written notice to the other parties hereto, to withdraw from this Agreement
and thereby terminate this Agreement as to the Withdrawing Holders.  From the date of delivery of such withdrawal
notice, the Withdrawing Holders shall cease to be parties to this Agreement and
shall no longer be subject to the obligations of this Agreement or have rights
under this Agreement, and the Shares or Other Holder Shares held by the
Withdrawing Holders shall conclusively be deemed thereafter not to be Shares or
Other Holder Shares, as the case may be, under this Agreement; provided,
however, that such Withdrawing Holders, if they constitute an Investor
Group, shall comply with such Investor Group’s obligations under Section 2.1.3
to cause the resignation of any Investor Directors designated by such Investor
Group; provided, further, that the Withdrawing Holders shall
nonetheless be obligated under Section 6.3.4 with respect to any Pending
Underwritten Offering to the same extent that they would have been obligated if
they had not withdrawn; and provided, further, that the rights
and obligations of such Withdrawing Holders under Section 6.4 shall survive
such withdrawal.


 


10.4. Effect of
Termination.  No termination under this Agreement shall
relieve any Person of liability for breach prior to termination.


 


11.                               DEFINITIONS.  For purposes of this Agreement:


 


11.1.                        Certain Matters of Construction.  In addition to the definitions referred to
or set forth below in this Section 11:


 


(i)                                          The words “hereof”, “herein”, “hereunder” and
words of similar import shall refer to this Agreement as a whole and not to any
particular Section or provision of this Agreement, and reference to a
particular Section of this Agreement shall include all subsections thereof;


 


(ii)                                       The word “including” shall mean including,
without limitation;


 


(iii)                                    Definitions shall be equally applicable to
both nouns and verbs and the singular and plural forms of the terms defined;
and


 


44






















 


(iv)                              The masculine, feminine and neuter genders
shall each include the other.


 


11.2.                        Definitions.  The following terms shall
have the following meanings:


 


“Acceptance
Notice” shall have the meaning set forth in Section 4.4.4.


 


“Acquisition”
shall have the meaning set forth in the Recitals.


 


“Acquisition
Agreement” shall have the meaning set forth in the Recitals.


 


“Acquisition
Shares” shall mean: (a) for purposes of Sections 4.4.1, 4.6, and 5.1 all
shares of Stock held by (i) the members of any Investor Group, (ii) the Sellers
or (iii) their respective Permitted Transferees; and (b) for all other
purposes, all Shares held by (i) the members of any Investor Group, (ii) the
Sellers or (iii) their respective Permitted Transferees.


 


“Adverse
Claim” shall have the meaning set forth in Section 8-102 of the applicable
Uniform Commercial Code.


 


“Affiliate”
shall mean, with respect to any specified Person, (a) any other Person which
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such specified Person (for the
purposes of this definition, “control” (including, with correlative meanings,
the terms “controlling,” “controlled by” and “under common control with”), as used
with respect to any Person, means the possession, directly or indirectly, of
the power to direct or cause the direction of the management or policies of
such Person, whether through the ownership of voting securities, by agreement
or otherwise); provided, however, that neither the Company nor
any of its subsidiaries shall be deemed an Affiliate of any of the Stockholders
(and vice versa), (b) if such
specified Person is an investment fund, any other investment fund the primary
investment advisor to which is the primary investment advisor to such specified
Person and (c) if such specified Person is a natural Person, any Family Member
of such natural Person.  Music Capital
Partners, L.P and ALP Music Partners, L.P. shall be deemed to be Affiliates of
each other for purposes of Section 12.8.


 


“Affiliated
Fund” shall mean, with respect to any specified Person, an investment fund
that is an Affiliate of such Person.


 


“Agreement”
shall have the meaning set forth in the Preamble.


 


“Amendment”
shall have the meaning set forth in Section 10.2.


 


“Bain
Director” shall mean a member of the Board of Directors designated by one
or more Bain Investors.


 


45






















 


“Bain
Investors” shall mean, as of any date, Bain Capital Integral Investors,
LLC, Bain Capital VII Coinvestment Fund, LLC and BCIP TCV, LLC, and their
respective Permitted Transferees, in each case only if such Person is then a
Stockholder and holds any Shares.


 


“Board”
shall have the meaning set forth in Section 2.1.1.


 


“business
day” shall mean any day that is not a Saturday, a Sunday or other day on
which banks are required or authorized by law to be closed in the City of New
York.


 


“CEO
Director” shall have the meaning set forth in Section 2.1.1.


 


“Change
of Control” shall mean the occurrence of (a) any consolidation or merger of
the Company with or into any other corporation or other Person, or any other
corporate reorganization or transaction (including the acquisition of capital
stock of the Company), whether or not the Company is a party thereto, in which
the stockholders of the Company immediately prior to such consolidation,
merger, reorganization or transaction, own capital stock either (i)
representing directly, or indirectly through one or more entities, less than
50% of the economic interests in or voting power of the Company or other
surviving entity immediately after such consolidation, merger, reorganization
or transaction or (ii) that does not directly, or indirectly through one or
more entities, have the power to elect a majority of the entire board of
directors of the Company or other surviving entity immediately after such
consolidation, merger, reorganization or transaction, (b) any transaction or
series of related transactions, whether or not the Company is a party thereto,
after giving effect to which in excess of fifty percent (50%) of the Company’s
voting power is owned by any Person and its “affiliates” or “associates” (as
such terms are defined in the rules adopted by the Commission under the Exchange
Act), excluding (except with respect to a transaction or series of related
transactions in connection with which the “drag along right” under Section 4.2
is being exercised) the Investor Groups; or (c) a sale, lease or other
disposition of all or substantially all of the assets of the Company; provided
that (x) any consolidation or merger effected exclusively to change the
domicile of the Corporation or to form a holding company in which the
stockholders of the Company immediately prior to such consolidation or merger
own capital stock representing economic interests and voting power with respect
to such redomiciled entity or holding company in substantially the same
proportions as their ownership of capital stock of the Company shall be
excluded from clauses (a) and (b) above and (y) any Initial Public Offering or
any bona fide primary or secondary public offering following the occurrence of
an Initial Public Offering shall be excluded from clause (b) above.


 


“Charitable
Organization” shall mean a charitable organization as described by Section
501(c)(3) of the Internal Revenue Code of 1986, as in effect from time to time.


 


“Class
A Stock” shall mean the Class A Common Stock, par value $.001 per share, of
the Company.


 


“Class
L Stock” shall mean the Class L Common Stock, par value $.001 per share, of
the Company.


 


“Closing”
shall have the meaning set forth in Section 1.1.


 


46






















 


“Commission”
shall mean the Securities and Exchange Commission.


 


“Common
Stock” shall mean the common stock of the Company, including the Class A
Stock and the Class L Stock.


 


“Company”
shall have the meaning set forth in the Preamble.


 


“Company
Shares” shall mean Shares in respect of capital stock of the Company.


 


“Convertible
Securities” shall mean any evidence of indebtedness, shares of stock (other
than Stock) or other securities (other than Options and Warrants) which are
directly or indirectly convertible into or exchangeable or exercisable for
shares of Stock.


 


“Covered
Person” shall have the meaning set forth in Section 6.4.1.


 


“Drag
Along Notice” shall have the meaning set forth in Section 4.2.1.


 


“Drag
Along Sale Percentage” shall have the meaning set forth in Section 4.2.


 


“Drag
Along Sellers” shall have the meaning set forth in Section 4.2.1.


 


“Equivalent
Shares” shall mean, at any date of determination, (a) as to any outstanding
shares of Stock, such number of shares of Stock and (b) as to any outstanding
Options, Warrants or Convertible Securities which constitute Shares, the maximum
number of shares of Stock for which or into which such Options, Warrants or
Convertible Securities may at the time be exercised, converted or exchanged (or
which will become exercisable, convertible or exchangeable on or prior to, or
by reason of, the transaction or circumstance in connection with which the
number of Equivalent Shares is to be determined).


 


“Escrow
Agent” shall have the meaning set forth in Section 8.2.


 


“Exchange
Act” shall mean the Securities Exchange Act of 1934, as in effect from time
to time.


 


“Fair
Market Value” shall mean, as of any date, as to any Share, the Board’s good
faith determination of the fair value of such Share as of the applicable
reference date.


 


“Family
Member” shall mean, with respect to any natural Person, (i) any lineal
descendant or ancestor or sibling (by birth or adoption) of such natural
Person, (ii) any spouse or former spouse of any of the foregoing, (iii) any
legal representative or estate of any of the foregoing, (iv) any trust
maintained for the benefit of the foregoing and (v) any corporation, private
charitable foundation or other organization controlled by the foregoing.


 


“First
Offer Deadline” shall have the meaning set forth in Section 4.4.2.1.


 


“First
Offer Holder” shall have the meaning set forth in Section 4.4.1.


 


47






















 


“First
Offer Notice” shall have the meaning set forth in Section 4.4.2.1.


 


“First
Offer Purchaser” shall have the meaning set forth in Section 4.4.2.1.


 


“Holders”
shall mean the holders of Registrable Securities under this Agreement.


 


“Indemnitee”
shall have the meaning set forth in Section 6.4.3.


 


“Independent
Directors” shall have the meaning set forth in Section 2.1.1.


 


“Initial
Public Offering” shall mean the initial Public Offering registered on Form
S-1 (or any successor form under the Securities Act).


 


“Initiating
Investors” shall have the meaning set forth in Section 6.1.1.


 


“Investor
Directors” shall mean the THL Directors, the Bain Directors, the Providence
Directors and the Lexa Directors.


 


“Investor
Group” shall mean any one of (a) the THL Investors, collectively, (b) the
Bain Investors, collectively, (c) the Providence Investors, collectively and
(d) the Lexa Investors, collectively. 
Where this Agreement provides for the vote, consent or approval of any
Investor Group, such vote, consent or approval shall be determined by the
Majority THL Investors, the Majority Bain Investors, the Majority Providence
Investors or the Majority Lexa Investors, as the case may be, except as otherwise
specifically set forth herein.


 


“Investors”
shall have the meaning set forth in the Preamble.


 


“Issuance”
shall have the meaning set forth in Section 5.


 


“Issuer”
shall have the meaning set forth in Section 5.


 


“Lexa
Director” shall mean a member of the Board of Directors designated in
accordance with Section 2.1.2(iv).


 


“Lexa
Investors” shall mean, as of any date, Music Capital Partners, L.P and,
from and after a Lexa Triggering Event, ALP Music Partners, L.P. and their
respective Permitted Transferees, in each case only if such Person is then a
Stockholder and holds any Shares.


 


“Lexa
Triggering Event” shall mean the earlier to occur of Edgar Bronfman, Jr.
(a) ceasing to serve as the chief executive officer of the Company and the
senior executive officer of the Company’s Recorded Music Business and Music
Publishing Business (as such terms are defined in the Acquisition Agreement) or
(b) ceasing to control (as such term is used in the definition of “Affiliate”)
the general partner of Music Capital Partners, L.P.


 


“Lock-Up
Period” shall mean the period commencing from the effective date hereof and
continuing through (i) in respect of any Acquisition Shares, the earlier to
occur of (a) the seven


 


48






















 


year
anniversary of the date of the Closing and (b) the closing of the Initial
Public Offering and (ii) otherwise, the closing of the Initial Public Offering.


 


“Majority
Bain Investors” shall mean, as of any date, the holders of a Majority in
Interest of the Shares held by the Bain Investors.


 


“Majority
in Interest” shall mean, (a) with respect to a set of Shares and/or Other
Holder Shares of a single class, a majority of such Shares and/or Other Holder
Shares, (b) with respect to a set of Shares and/or Other Holder Shares of more
than one class, a majority in aggregate Purchase Price Value of such Shares
and/or Other Holder Shares and (c) with respect to the Seller Warrants, a
majority of the Seller MMT Warrants and a majority of the Seller Three-Year
Warrants.


 


“Majority
Lexa Investors” shall mean, as of any date, the holders of a Majority in
Interest of the Shares held by the Lexa Investors.


 


“Majority
Providence Investors” shall mean, as of any date, the holders of a Majority
in Interest of the Shares held by the Providence Investors.


 


“Majority
THL Investors” shall mean, as of any date, the holders of a Majority in
Interest of the Shares held by the THL Investors.


 


“Management
Shares” shall mean (a) all shares of Stock held by a Manager, whenever
issued, including all shares of Stock issued upon the exercise, conversion or
exchange of any Options, Warrants or Convertible Securities and (b) all
Options, Warrants and Convertible Securities held by a Manager, treating such
Options, Warrants and Convertible Securities as a number of Management Shares
equal to the maximum number of shares of Stock for which or into which such
Options, Warrants or Convertible Securities may at the time be exercised,
converted or exchanged (or which will become exercisable, convertible or
exchangeable on or prior to, or by reason of, the transaction or circumstance
in connection with which the number of Management Shares is to be determined); provided,
however, in connection with a Transfer to a Manager of any Shares that
are not then Management Shares, such Shares shall not become Management Shares
as a result of such Transfer if such Manager is then a Permitted Transferee of
the holder of such Shares.  Any
Management Shares that are Transferred by the holder thereof to such holder’s
Permitted Transferees shall remain Management Shares in the hands of such
Permitted Transferee.  For the avoidance
of doubt, any Shares held by any Lexa Investor (other than Shares Transferred
to such Lexa Investor under the circumstances described in the preceding
sentence) shall not be deemed Management Shares.


 


“Managers”
shall have the meaning set forth in the Preamble and shall include any current
employee of the Company or any of its subsidiaries and any Permitted Transferee
of any current employee of the Company or any of its subsidiaries that, at any
time, holds Shares or Other Shares.


 


“Midco”
shall have the meaning set forth in the Preamble.


 


49






















 


“NASD”
shall have the meaning set forth in Section 6.3.2(vii).


 


“Options”
shall mean any options to subscribe for, purchase or otherwise directly acquire
Stock, other than any such option held by the Company or Midco or any right to
purchase shares pursuant to this Agreement.


 


“Other
Holder Shares” shall mean (a) all shares of Stock held by an Other Holder,
whenever issued, including all shares of Stock issued upon the exercise,
conversion or exchange of any Options, Warrants or Convertible Securities and
(b) all Options, Warrants and Convertible Securities held by an Other Holder,
treating such Options, Warrants and Convertible Securities as a number of Other
Holder Shares equal to the maximum number of shares of Stock for which or into
which such Options, Warrants or Convertible Securities may at the time be exercised,
converted or exchanged (or which will become exercisable, convertible or
exchangeable on or prior to, or by reason of, the transaction or circumstance
in connection with which the number of Other Holder Shares is to be
determined).


 


“Other
Holders” shall have the meaning set forth in the Preamble.


 


“Other
Securities” shall have the meaning set forth in Section 5.1.3.


 


“Parity
Shares” shall have the meaning set forth in Section 6.3.1.


 


“Participating
Buyer” shall have the meaning set forth in Section 5.1.2.1.


 


“Participating
Seller” shall have the meaning set forth in Section 4.1.2 and 4.2.1.


 


“Participation
Notice” shall have the meaning set forth in Section 5.1.1.


 


“Participation
Offerees” shall have the meaning set forth in Section 5.1.1.


 


“Participation
Portion” shall have the meaning set forth in Section 5.1.1.


 


“Pending
Underwritten Offering” means, with respect to any Withdrawing Holder
withdrawing from this Agreement pursuant to Section 10.3, any underwritten
Public Offering for which a registration statement relating thereto is or has
been filed with the Commission either prior to, or not later than the sixtieth
day after, the effectiveness of such Withdrawing Holder’s withdrawal from this
Agreement.


 


“Permitted
Piggyback Assignee” shall have the meaning set forth in Section 6.5.1.


 


“Permitted
Transferee” shall mean, in respect of any Stockholder or Permitted
Transferee, any Affiliate of such Stockholder or Permitted Transferee to the
extent such Person agrees to be bound by the terms of this Agreement in
accordance with Section 3.2. In addition, upon the occurrence of a Lexa
Triggering Event and until the earlier to occur of: (i) the completion of a
period of sixty (60) days thereafter and (ii) the completion of the Transfer
described in the following, ALP Music Partners, L.P. shall be deemed a
Permitted Transferee of Music Capital Partners, L.P. for purposes of a single
Transfer by Music Capital Partners, L.P. to


 


50






















 


ALP
Music Partners, L.P., as one of its limited partners, of a number of Shares
equal to such limited partner’s proportionate interest in all of the Shares
then held by Music Capital Partners, L.P., to the extent such limited partner
agrees to be bound by the terms of this Agreement in accordance with Section
3.2. In addition, any Stockholder shall be a Permitted Transferee of the
Permitted Transferees of itself; provided, however, that the
foregoing shall not apply as between Music Capital Partners, L.P. and ALP Music
Partners, L.P.


 


“Person”
shall mean any individual, partnership, corporation, company, association,
trust, joint venture, limited liability company, unincorporated organization,
entity or division, or any government, governmental department or agency or
political subdivision thereof.


 


“Price
Per Equivalent Share” shall mean the Board’s good faith determination of
the price per Equivalent Share of any Convertible Securities or Options which
are the subject of an Issuance pursuant to Section 5 hereof.


 


“Preferred
Stock” shall mean the 10% Cumulative Preferred Stock, par value $.001 per
share, of Midco.


 


“Principal
Investor Group” shall mean any one of (a) the THL Investors, collectively,
(b) the Bain Investors, collectively and (c) the Providence Investors,
collectively; provided, however, that any such Investor Group
shall cease to be a Principal Investor Group at such time after the Closing,
and at all times thereafter, as (i) such Investor Group ceases to hold Shares
representing a Total Investment of at least $45,000,000 (subject to adjustment
as provided below) or (ii) such Investor Group ceases to hold Shares
representing a Voting Stock Investment of at least $3,060,000 (subject to
adjustment as provided below). The threshold amounts for Total Investment and
Voting Stock Investment set forth above shall automatically be proportionately
reduced effective immediately prior to any Proportionate Reduction Event if and
only if, and in the same manner as, any adjustment is made pursuant to Section
2.1.3.2 with respect to such Proportionate Reduction Event; provided
that no adjustment pursuant to the foregoing shall cause any former Principal
Investor Group to again become a Principal Investor Group.


 


“Principal
Lock-Up Agreement” shall have the meaning set forth in Section 6.3.4.


 


“Principal
Participating Holders” shall mean, with respect to any Public Offering, (i)
the two holders (determined in accordance with Section 6.3.1) including the
greatest number of Registrable Securities in such Public Offering, (ii) if
there are more than two such holders including the greatest number of
Registrable Securities in such Public Offering, all of such holders and (iii)
if there is only one such holder including any Registrable Securities in such
Public Offering, such holder.  Where
this Agreement provides for the vote, consent or approval of the Principal
Participating Holders, such vote, consent or approval shall be required of each
such holder as identified in the preceding sentence.


 


“Pro
Rata Portion” shall mean:


 


51






















 


(i)                                     for purposes of Section 4.1.5, with respect
to each Tag Along Seller, a number of Shares equal to the aggregate number of
Shares that the Prospective Buyer is willing to purchase in the proposed Sale,
multiplied by a fraction, the numerator of which is the aggregate number of
Shares held by such Tag Along Seller and the denominator of which is the
aggregate number of Shares held by all Tag Along Sellers, assuming the exercise
of any Seller Warrant that is exercised or conditionally exercised prior to the
Tag-Along Deadline;


 


(ii)                                  for purposes of Section 4.4.6, with respect
to each First Offer Purchaser, a number of Shares equal to the aggregate number
of Subject Shares of the applicable class multiplied by a fraction, the
numerator of which is the aggregate number of Shares of the applicable class
held by such First Offer Purchaser and the denominator of which is the
aggregate number of Shares of the applicable class held by all First Offer
Purchasers; and


 


(iii)                               for purposes of Section 6.3, with respect to
each holder of Registrable Securities or Parity Shares requesting that such
shares be registered in such registration statement, a number of such shares
equal to the aggregate number of shares of Common Stock to be registered in such
registration (excluding any shares to be registered for the account of the
Company) multiplied by a fraction, the numerator of which is the aggregate
number of Registrable Securities and Parity Shares held by such holder, and the
denominator of which is the aggregate number of Registrable Securities and
Parity Shares held by all holders requesting that their Registrable Securities
or Parity Shares be registered in such registration.


 


“Proportionate
Reduction Event” shall mean, at any time that immediately prior thereto
there are at least two Investor Groups each of which is then entitled to
designate at least one director pursuant to Section 2.1, the consummation of
any transaction or series of related transactions (including any dividend,
distribution, redemption, stock repurchase or comparable transaction), whether
or not the Company or Midco is a party thereto, that effects a reduction in the
Total Investment of the Shares held by each such Investor Group that, in the
good faith determination of a majority of the entire Board, is substantially
proportionate with respect to each such Investor Group.


 


“Prospective
Buyer” shall mean any Person proposing to purchase shares from a
Prospective Selling Stockholder.


 


“Prospective
Selling Stockholder” shall mean:


 


(i)                                     for purposes of Section 3.4, any Stockholder
that proposes to Transfer any Shares to any Prospective Buyer;


 


(ii)                                  for purposes of Section 4.1, any Stockholder
that proposes to Transfer any Shares to any Prospective Buyer, including a
First Offer Purchaser pursuant to Section 4.4;


 


52






















 


(iii)                               for purposes of Section 4.2, any Stockholder
forming part of the acting Requisite Stockholder Majority that has elected to
exercise the drag along right provided by such Section; and


 


(iv)                              for purposes of Section 4.4, any Stockholder
that proposes to Transfer any Shares in a transaction that is subject to such
Section.


 


“Prospective
Subscriber” shall have the meaning set forth in Section 5.1.1.


 


“Providence
Director” shall mean a member of the Board of Directors designated by one
or more Providence Investors.


 


“Providence
Investors” shall mean, as of any date, Providence Equity Partners IV, L.P.
and Providence Equity Operating Partners IV, L.P., and their respective Permitted
Transferees, in each case only if such Person is then a Stockholder and holds
any Shares.


 


“Public
Offering” shall mean a public offering and sale of Common Stock for cash
pursuant to an effective registration statement under the Securities Act.


 


“Purchase
Price Value” shall mean: (a) $1,000, in the case of a share of Class A
Stock, (b) $81,000, in the case of a share of Class L Stock and (c) $10,000, in
the case of a share of Preferred Stock, in each case appropriately adjusted for
any stock split, stock dividend, combination, recapitalization or the like
involving such class.


 


“Purchaser”
shall have the meaning set forth in the Preamble.


 


“Registrable
Securities” shall mean (a) all shares of Class A Stock, (b) all shares of
Class A Stock issuable upon conversion of shares of Class L Stock, (c) all
shares of Class A Stock issuable upon exercise, conversion or exchange of any
Option, Warrant or Convertible Security and (d) all shares of Class A Stock
directly or indirectly issued or issuable with respect to the securities
referred to in clauses (a), (b) or (c) above by way of stock dividend or stock
split or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization, in each case constituting Shares or Other
Holder Shares.  As to any particular
Registrable Securities, such shares shall cease to be Registrable Securities
when (i) such securities shall have ceased to be Shares or Other Holder Shares
hereunder, (ii) a registration statement with respect to the sale of such
securities shall have become effective under the Securities Act and such
securities shall have been disposed of in accordance with such registration
statement, (iii) such securities shall have been Transferred pursuant to Rule
144 or Rule 145, (iv) disposition of such securities may be made under Rule 144
or 145 and the holder of such securities holds no more than one percent of the
shares of the applicable class outstanding as shown by the most recent report
or statement published by the Company, (v) subject to the provisions of Section
8.2 hereof, such securities shall have been otherwise transferred, new
certificates for them not bearing a legend restricting further transfer shall
have been delivered by the Company and subsequent disposition of them shall not
require registration of them under the Securities Act and such securities may
be distributed without volume limitation or other restrictions on transfer
under Rule 144 or Rule 145 (including without


 


53






















 


application
of paragraphs (c), (e) (f) and (h) of Rule 144), (vi) such securities shall
have ceased to be outstanding or (vii) the holder thereof shall have withdrawn
from this Agreement pursuant to Section 10.3.


 


“Registration
Expenses” means any and all expenses incident to performance of or
compliance with Section 6 of this Agreement (other than underwriting discounts
and commissions paid to underwriters and transfer taxes, if any), including (a)
all Commission and securities exchange or NASD registration and filing fees,
(b) all fees and expenses of complying with securities or blue sky laws
(including reasonable fees and disbursements of counsel for the underwriters in
connection with blue sky qualifications of the Registrable Securities), (c) all
printing, messenger and delivery expenses, (d) all fees and expenses incurred
in connection with the listing of the Registrable Securities on any securities
exchange or NASD pursuant to Section 6.3.2(vii) and all rating agency fees, (e)
the fees and disbursements of counsel for the Company and of its independent
public accountants, including the expenses of any special audits and/or “cold
comfort” letters required by or incident to such performance and compliance,
(f) the reasonable fees and disbursements of one counsel for the Holders
selected pursuant to the terms of Section 6, (g) any fees and disbursements
customarily paid by the issuers of securities, and (h) expenses incurred in
connection with any road show (including the reasonable out-of-pocket expenses
of the Holders).


 


“Regulation
D” shall mean Regulation D under the Securities Act.


 


“Requisite
Stockholder Majority” shall mean at any time the approval of (a) (i) any
Principal Investor Group then holding Shares representing a Total Investment
that is no less than that of any other Principal Investor Group and (ii) any
other Principal Investor Group, if any and (b) if there are no Principal
Investor Groups, the holders of a majority of the outstanding Class A Stock
constituting Shares.


 


“Rule
144” shall mean Rule 144 under the Securities Act (or any successor Rule).


 


“Rule
145” shall mean Rule 145 under the Securities Act (or any successor Rule).


 


“Rule
145 Transaction” shall mean a registration on Form S-4 (or any successor
Form) pursuant to Rule 145.


 


“Sale”
shall mean a Transfer for value and the terms “Sell” and “Sold” shall have
correlative meanings.


 


“Sale
Notice” shall have the meaning set forth in Section 4.4.1.


 


“Securities
Act” shall mean the Securities Act of 1933, as in effect from time to time.


 


“Seller
MMT Warrant Agreement” shall mean the Agreement (MMT Warrants) of even date
herewith by and among the Company, Midco and the Sellers.


 


“Seller
MMT Warrants” shall mean the warrants issued pursuant to the Seller MMT
Warrant Agreement.


 


54






















 


“Seller
Three-Year Warrants” shall mean the warrants issued pursuant to the Warrant
Agreement (Three-Year Warrants) of even date herewith by and among the Company,
Midco and the Sellers.


 


“Seller
Warrants” shall mean the Seller MMT Warrants and the Seller Three-Year
Warrants.


 


“Sellers”
shall have the meaning set forth in the Preamble.


 


“Shares”
shall mean (a) all shares of Stock held by a Stockholder, whenever issued,
including all shares of Stock issued upon the exercise, conversion or exchange
of any Options, Warrants (including the Seller Warrants) or Convertible
Securities and (b) all Options, Warrants (excluding the Seller Warrants) and
Convertible Securities held by a Stockholder (treating such Options, Warrants
and Convertible Securities as a number of Shares equal to the number of
Equivalent Shares represented by such Options, Warrants and Convertible
Securities for all purposes of this Agreement except as otherwise specifically
set forth herein). Shares shall include Management Shares for all purposes of
this Agreement except with respect to Sections 5 and 7.


 


“Stock”
shall mean the Common Stock and the Preferred Stock.


 


“Stockholders”
shall have the meaning set forth in the Preamble.


 


“Strategic
Investor” shall mean, with respect to any proposed Transfer, any (a) Person
that is determined by (i) a majority of the entire Board and (ii) the Requisite
Stockholder Majority to be a competitor of the Company or any of its
subsidiaries or a potential strategic investor in the Company or any of its
subsidiaries and (b) any Affiliate of any such Person.  For purposes hereof, without limiting the
foregoing, any Person with substantial operations in the Recorded Music
Business (as defined in the Acquisition Agreement) or the Music Publishing
Business (as defined in the Acquisition Agreement) shall be presumed to be a
Strategic Investor unless (i) a majority of the entire Board and (ii) the
Requisite Stockholder Majority otherwise determine.


 


“Subject
Securities” shall have the meaning set forth in Section 5.


 


“Subject
Shares” shall have the meaning set forth in Section 4.4.


 


“Tag
Along Deadline” shall have the meaning set forth in Section 4.1.2.


 


“Tag
Along Holder” shall have the meaning set forth in Section 4.1.1.


 


“Tag
Along Notice” shall have the meaning set forth in Section 4.1.1.


 


“Tag
Along Offer” shall have the meaning set forth in Section 4.1.2.


 


“Tag
Along Sale Percentage” shall have the meaning set forth in Section 4.1.1.


 


55






















 


“Tag
Along Sellers” shall have the meaning set forth in Section 4.1.2.


 


“THL
Director shall mean a member of the Board of Directors designated by one or
more THL Investors.


 


“THL
Investors” shall mean, as of any date, Thomas H. Lee Equity Fund V, L.P.,
Thomas H. Lee Parallel Fund V, L.P., Thomas H. Lee Equity (Cayman) Fund V,
L.P., Putnam Investments Holdings, LLC, Putnam Investments Employees’
Securities Company I LLC, Putnam Investments Employees Securities Company II
LLC, 1997 Thomas H. Lee Nominee Trust, Thomas H. Lee Investors Limited
Partnership and THL WMG Equity Investors, L.P., and their respective Permitted
Transferees, in each case only if such Person is then a Stockholder and holds
any Shares.


 


“Total
Investment” shall mean at any time, (a) with respect to a set of Shares,
the aggregate Purchase Price Value of such Shares, (b) with respect to a set of
Seller MMT Warrants only or Seller Three-Year Warrants only, the aggregate
Purchase Price Value of the maximum number of shares of Stock issuable upon
exercise thereof (without regard to whether any such outstanding Seller MMT
Warrants are then exercisable) and (c) with respect to a set of Seller MMT
Warrants and Seller Three-Year Warrants, the greater of (i) the aggregate Purchase
Price Value of the maximum number of shares of Stock issuable upon exercise of
such Seller MMT Warrants (without regard to whether any such outstanding Seller
MMT Warrants are then exercisable) and (ii) the aggregate Purchase Price Value
of the maximum number of shares of Stock issuable upon exercise of such Seller
Three-Year Warrants.


 


“Transfer”
shall mean any sale, pledge, assignment, encumbrance or other transfer or
disposition of any Shares or Other Holder Shares to any other Person, whether
directly, indirectly, voluntarily, involuntarily, by operation of law, pursuant
to judicial process or otherwise.


 


“Voting
Stock Investment” shall mean, with respect to a set of Shares at any time,
the aggregate Purchase Price Value of such Shares that are outstanding shares
of Class A Stock.


 


“Warrants”
shall mean any warrants to subscribe for, purchase or otherwise directly
acquire Stock.


 


“Withdrawing
Holders” shall have the meaning set forth in Section 10.3.


 


12.                               MISCELLANEOUS.


 


12.1.                        Authority; Effect.  Each
party hereto represents and warrants to and agrees with each other party that
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized on behalf of such
party and do not violate any agreement or other instrument applicable to such
party or by which its assets are bound. 
This Agreement does not, and shall not be construed to, give rise to the
creation of a partnership among any of the parties hereto, or to constitute any
of such parties members of a


 


56






















 


joint
venture or other association.  The
Company and Midco shall be jointly and severally liable for all obligations of
each such party pursuant to this Agreement.


 


12.2.                        Notices.  Any notices and other communications
required or permitted in this Agreement shall be effective if in writing and
(a) delivered personally, (b) sent by facsimile, or (c) sent by overnight
courier, in each case, addressed as follows:


 


If
to the Company, the Purchaser or Midco, to it:


 


In
care of Thomas H. Lee Partners, L.P.


75
State Street


Boston,
Massachusetts 02109


Facsimile:
(617) 227-3514


Attention:
Scott Sperling


 


with copies to:


 


Simpson
Thacher & Bartlett LLP


425
Lexington Avenue


New
York, New York 10017


Facsimile:
(212) 455-2502


Attention:
John Finley, Esq.


Brian
Stadler, Esq.


 


and


 


Ropes
& Gray LLP


One
International Place


Boston,
Massachusetts 02210


Facsimile:
(617) 951-7050


Attention:
Alfred Rose, Esq.


 


If
to a Stockholder or an Other Holder, to it at the address set forth in the
records of the Company.


 


Notice
to the holder of record of any shares of capital stock shall be deemed to be
notice to the holder of such shares for all purposes hereof.


 


Unless
otherwise specified herein, such notices or other communications shall be
deemed effective (a) on the date received, if personally delivered, (b) on the
date received if delivered by facsimile on a business day, or if not delivered
on a business day, on the first business day thereafter and (b) two business
days after being sent by overnight courier. 
Each of the parties hereto shall be entitled to specify a different
address by giving notice as aforesaid to each of the other parties hereto.


 


12.3.                        Binding
Effect, Etc. 
Except for restrictions on the Transfer of Shares or Seller Warrants set
forth in other agreements, plans or other documents, this Agreement constitutes
the


 


57






















 


entire
agreement of the parties with respect to its subject matter, supersedes all
prior or contemporaneous oral or written agreements or discussions with respect
to such subject matter, and shall be binding upon and inure to the benefit of
the parties hereto and their respective heirs, representatives, successors and
permitted assigns.  Except as otherwise
expressly provided herein, no Holder party hereto may assign any of its
respective rights or delegate any of its respective obligations under this
Agreement without the prior written consent of the other parties hereto, and
any attempted assignment or delegation in violation of the foregoing shall be
null and void.


 


12.4.                        Descriptive Headings.  The
descriptive headings of this Agreement are for convenience of reference only,
are not to be considered a part hereof and shall not be construed to define or
limit any of the terms or provisions hereof.


 


12.5.                        Counterparts.  This Agreement may be
executed in multiple counterparts, each of which shall be deemed an original,
but all of which taken together shall constitute one instrument.


 


12.6.                        Severability.  In the event that any
provision hereof would, under applicable law, be invalid or unenforceable in
any respect, such provision shall be construed by modifying or limiting it so
as to be valid and enforceable to the maximum extent compatible with, and
possible under, applicable law.  The
provisions hereof are severable, and in the event any provision hereof should
be held invalid or unenforceable in any respect, it shall not invalidate,
render unenforceable or otherwise affect any
other provision hereof.


 


12.7.                        No
Recourse. 
Notwithstanding anything that may be expressed or implied in this
Agreement, the Company and each Stockholder covenant, agree and acknowledge
that no recourse under this Agreement or any documents or instruments delivered
in connection with this Agreement shall be had against any current or future
director, officer, employee, general or limited partner or member of any
Stockholder or of any Affiliate or assignee thereof, as such, whether by the
enforcement of any assessment or by any legal or equitable proceeding, or by
virtue of any statute, regulation or other applicable law, it being expressly
agreed and acknowledged that no personal liability whatsoever shall attach to,
be imposed on or otherwise be incurred by any current or future officer, agent
or employee of any Stockholder or any current or future member of any
Stockholder or any current or future director, officer, employee, partner or
member of any Stockholder or of any Affiliate or assignee thereof, as such, for
any obligation of any Stockholder under this Agreement or any documents or
instruments delivered in connection with this Agreement for any claim based on,
in respect of or by reason of such obligations or their creation.


 


12.8.                        Aggregation of Shares.  All
Shares held by a Stockholder and its Affiliates shall be aggregated together
for purposes of determining the availability of any rights under Sections 3.3,
4, 5, 6 and 7. Within any Investor Group, the Stockholders may allocate the
ability to exercise any rights under this Agreement in any manner that such
Investor Group (by a Majority in Interest of the Shares held by such Investor
Group) sees fit.


 


58






















 


13.                               GOVERNING LAW.


 


13.1.  Governing Law. 
This Agreement and all claims arising out of or based upon this
Agreement or relating to the subject matter hereof 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 laws provision or
rule that would cause the application of the domestic substantive laws of any
other jurisdiction.


 


13.2.  Consent to Jurisdiction. 
Each party to this Agreement, by its execution hereof, (a) hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in the State of Delaware for the purpose of any action, claim,
cause of action or suit (in contract, tort or otherwise), inquiry, proceeding
or investigation arising out of or based upon this Agreement or relating to the
subject matter hereof, (b) hereby waives to the extent not prohibited by
applicable law, and agrees not to assert, and agrees not to allow any of its
subsidiaries to assert, by way of motion, as a defense or otherwise, in any
such action, any claim that it is not subject personally to the jurisdiction of
the above-named courts, that its property is exempt or immune from attachment
or execution, that any such proceeding brought in one of the above-named courts
is improper, or that this Agreement or the subject matter hereof or thereof may
not be enforced in or by such court and (c) hereby agrees not to commence or
maintain any action, claim, cause of action or suit (in contract, tort or
otherwise), inquiry, proceeding or investigation arising out of or based upon
this Agreement or relating to the subject matter hereof or thereof other than
before one of the above-named courts nor to make any motion or take any other
action seeking or intending to cause the transfer or removal of any such
action, claim, cause of action or suit (in contract, tort or otherwise),
inquiry, proceeding or investigation to any court other than one of the
above-named courts whether on the grounds of inconvenient forum or otherwise.  Notwithstanding the foregoing, to the extent
that any party hereto is or becomes a party in any litigation in connection
with which it may assert indemnification rights set forth in this agreement,
the court in which such litigation is being heard shall be deemed to be
included in clause (a) above. 
Notwithstanding the foregoing, any party to this Agreement may commence
and maintain an action to enforce a judgment of any of the above-named courts
in any court of competent jurisdiction. 
Each party hereto hereby consents to service of process in any such
proceeding in any manner permitted by Delaware law, and agrees that service of
process by registered or certified mail, return receipt requested, at its
address specified pursuant to Section 12.2 hereof is reasonably calculated to
give actual notice.


 


13.3.  WAIVER OF JURY TRIAL.  TO
THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH CANNOT BE WAIVED, EACH PARTY
HERETO HEREBY WAIVES AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS
PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN
RESPECT OF ANY ISSUE OR ACTION, CLAIM, CAUSE OF ACTION OR SUIT (IN CONTRACT,
TORT OR OTHERWISE), INQUIRY, PROCEEDING OR INVESTIGATION ARISING OUT OF OR
BASED UPON THIS AGREEMENT OR THE SUBJECT MATTER HEREOF OR IN ANY WAY CONNECTED
WITH OR RELATED OR INCIDENTAL TO THE TRANSACTIONS CONTEMPLATED HEREBY, IN EACH
CASE WHETHER NOW EXISTING OR HEREAFTER ARISING.  EACH PARTY HERETO ACKNOWLEDGES THAT IT HAS BEEN INFORMED BY THE
OTHER PARTIES HERETO THAT THIS


 


59






















 


SECTION
13.3 CONSTITUTES A MATERIAL INDUCEMENT UPON WHICH THEY ARE RELYING AND WILL
RELY IN ENTERING INTO THIS AGREEMENT. 
ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
SECTION 13.3 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF EACH SUCH
PARTY TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.


 


13.4.  Exercise of Rights and Remedies.  No
delay of or omission in the exercise of any right, power or remedy accruing to
any party as a result of any breach or default by any other party under this
Agreement shall impair any such right, power or remedy, nor shall it be
construed as a waiver of or acquiescence in any such breach or default, or of
any similar breach or default occurring later; nor shall any such delay,
omission nor waiver of any single breach or default be deemed a waiver of any
other breach or default occurring before or after that waiver.


 


[Signature pages follow]


 


60






















 


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


 


	
  THE COMPANY:

  	
  WMG PARENT CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Scott
  Sperling

  
	
   

  	
  Name:

  	
  Scott
  Sperling

  
	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  MIDCO:

  	
  WMG HOLDINGS CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Scott
  Sperling

  
	
   

  	
  Name:

  	
  Scott
  Sperling

  
	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  PURCHASER:

  	
  WMG ACQUISITION CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Scott
  Sperling

  
	
   

  	
  Name:

  	
  Scott
  Sperling

  
	
   

  	
  Title:

  	
  President

  
				



 






















 


	
  THE INVESTORS:

  	
  THOMAS H. LEE EQUITY FUND V, L.P.

  
	
   

  	
  By:

  	
  THL
  Equity Advisors V, LLC, its general partner

  
	
   

  	
  By:

  	
  Thomas
  H. Lee Partners, L.P., its sole member

  
	
   

  	
  By:

  	
  Thomas
  H. Lee Advisors, LLC, its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  *

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Principal
  Managing Director

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  THOMAS H. LEE PARALLEL FUND V, L.P.

  
	
   

  	
  By:

  	
  THL Equity Advisors V,
  LLC, its general partner

  
	
   

  	
  By:

  	
  Thomas H. Lee Partners,
  L.P., its sole member

  
	
   

  	
  By:

  	
  Thomas H. Lee Advisors,
  LLC, its general partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  *

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Principal
  Managing Director

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  THOMAS H. LEE EQUITY (CAYMAN) FUND V, L.P. 

  
	
   

  	
  By:

  	
  THL
  Equity Advisors V, LLC, its general partner

  
	
   

  	
  By:

  	
  Thomas
  H. Lee Partners, L.P., its sole member

  
	
   

  	
  By:

  	
  Thomas
  H. Lee Advisors, LLC, its general partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  *

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Principal
  Managing Director

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  THL WMG EQUITY INVESTORS, L.P.

  
	
   

  	
  By:

  	
  THL Equity Advisors V,
  LLC, its general partner

  
	
   

  	
  By:

  	
  Thomas H. Lee Partners,
  L.P., its sole member

  
	
   

  	
  By:

  	
  Thomas
  H. Lee Advisors, LLC, its general partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  *

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Principal
  Managing Director

  	
   

  
					



 












*  The signature appearing immediately below
shall serve as a signature at each place indicated with an “*” on this page
above:


 


	
   

  	
  /s/
  Thomas H. Lee

  	
   

  
	
   

  	
  Name:  Thomas H. Lee

  



 






















 


	
   

  	
  1997 THOMAS H. LEE NOMINEE TRUST

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  U.S. Bank,
  N.A., not personally, but solely as Trustee under the 1997 Thomas H. Lee
  Nominee Trust

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gerald
  R. Wheeler

  	
   

  
	
   

  	
  Name:

  	
  Gerald R.
  Wheeler

  	
   

  
	
   

  	
  Title:

  	
  Vice
  President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  THOMAS H. LEE INVESTORS LIMITED

  PARTNERSHIP

  
	
   

  	
  By:

  	
  THL
  Investment Management Corp., its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas
  H. Lee

  	
   

  
	
   

  	
  Name:

  	
  Thomas H.
  Lee

  	
   

  
	
   

  	
  Title:

  	
  Chief
  Executive Officer

  	
   

  
					



 






















 


	
   

  	
  PUTNAM INVESTMENTS HOLDINGS, LLC

  
	
   

  	
  By:

  	
  Putnam
  Investments, LLC, its managing member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  *

  	
   

  
	
   

  	
  Name:

  	
  William H.
  Woolverton

  	
   

  
	
   

  	
  Title:

  	
  Managing
  Director

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PUTNAM INVESTMENTS EMPLOYEES’

  SECURITIES COMPANY I LLC

  
	
   

  	
  By:

  	
  Putnam
  Investments Holdings, LLC, its managing member

  
	
   

  	
  By:

  	
  Putnam
  Investments, LLC, its managing member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  *

  	
   

  
	
   

  	
  Name:

  	
  William H.
  Woolverton

  	
   

  
	
   

  	
  Title:

  	
  Managing
  Director

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PUTNAM INVESTMENTS EMPLOYEES’

  SECURITIES COMPANY II LLC

  
	
   

  	
  By:

  	
  Putnam
  Investments Holdings, LLC, its managing member

  
	
   

  	
  By:

  	
  Putnam
  Investments, LLC, its managing member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  *

  	
   

  
	
   

  	
  Name:

  	
  William H.
  Woolverton

  	
   

  
	
   

  	
  Title:

  	
  Managing
  Director

  	
   

  
					



 












* The signature appearing  immediately below shall serve as a signatureat each place indicated  with
an “*” on this page above:


 


	
   

  	
   

  	
  /s/ William H. Woolverton

  	
   

  
	
   

  	
   

  	
  Name: 
  William H. Woolverton

  



 






















 


	
   

  	
  BAIN CAPITAL INTEGRAL INVESTORS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  *

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Managing
  Director

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BAIN CAPITAL VII COINVESTMENT FUND, LLC

  
	
   

  	
  By:

  	
  Bain Capital
  VII Coinvestment Fund, L.P., it sole member

  
	
   

  	
  By:

  	
  Bain Capital
  Partners VII, L.P., its general partner

  
	
   

  	
  By:

  	
  Bain Capital
  Investors, LLC, its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  *

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Managing
  Director

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BCIP TCV, LLC

  
	
   

  	
  By:

  	
  Bain Capital
  Investors, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  *

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Managing
  Director

  	
   

  
					



 












* The signature appearing
immediately below shall serve as a signature at each place indicated with an
“*” on this page above:


 


 


	
   

  	
  /s/
  Ian Loring

  	
   

  
	
   

  	
  Name:  Ian Loring

  



 






















 


	
   

  	
  PROVIDENCE EQUITY PARTNERS IV, L.P.

  
	
   

  	
  By:

  	
  Providence
  Equity  Partners GP IV L.P.,
its general partner

  
	
   

  	
  By:

  	
  Providence
  Equity Partners IV LLC,

  its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  *

  	
   

  
	
   

  	
   

  	
  Name:  

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PROVIDENCE EQUITY OPERATING PARTNERS

  IV, L.P.

  
	
   

  	
  By:

  	
  Providence
  Equity Partners GP IV L.P.,

  its general partner

  
	
   

  	
  By:

  	
  Providence
  Equity Partners IV LLC,

  its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  *

  	
   

  
	
   

  	
   

  	
  Name:  

  
	
   

  	
   

  	
  Title:

  



 












*  The signature appearing  immediately below shall serve as a signature at  each place indicated  with an “*” on  this page above:


 


	
   

  	
  /s/
  Mark J. Masiello

  	
   

  
	
   

  	
  Name:  Mark J. Masiello

  



 






















 


	
   

  	
  MUSIC CAPITAL PARTNERS, L.P.

  
	
   

  	
  By:

  	
  Music Partners Capital Limited,

  its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Edgar M. Bronfman, Jr.

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Edgar M. Bronfman, Jr.

  
	
   

  	
   

  	
  Title:

  	
  President

  
					



 






















 


	
   

  	
  /s/ Edgar Bronfman, Jr.

  	
   

  
	
   

  	
  Edgar Bronfman, Jr.

  



 






















 


	
  THE MANAGERS:

  	
  /s/ Lyor Cohen

  	
   

  
	
   

  	
  Lyor Cohen

  



 






















 


	
   

  	
  HISTORIC TW INC.,

  
	
   

  	
   

  
	
   

  	
   

  	
  by

  	
  /s/ Robert Marcus

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Robert Marcus

  
	
   

  	
   

  	
   

  	
  Title: Senior Vice
  President

  



 






















Schedule 1


Holdings of Shares


 


	
  Holder

  	
   

  	
  WMG Parent

  Corp.

  Class A Common

  Stock

  	
   

  	
  WMG Parent

  Corp.

  Class L Common

  Stock

  	
   

  	
  WMG
  Holdings

  Corp. Preferred

  Stock

  	
   

  
	
  Thomas H. Lee Equity Fund V, L.P.

  	
   

  	
  27,503.70221

  	
   

  	
  3,055.96691

  	
   

  	
  12,942.91869

  	
   

  
	
  Thomas H. Lee Parallel Fund V, L.P.

  	
   

  	
  7,136.10822

  	
   

  	
  792.90091

  	
   

  	
  3,358.16858

  	
   

  
	
  Thomas H. Lee Equity (Cayman) Fund V, L.P.

  	
   

  	
  378.96291

  	
   

  	
  42.10699

  	
   

  	
  178.33549

  	
   

  
	
  Putnam Investments Holdings, LLC

  	
   

  	
  214.94276

  	
   

  	
  23.88253

  	
   

  	
  101.14954

  	
   

  
	
  Putnam Investments Employees’ Securities
  Company I LLC

  	
   

  	
  184.74662

  	
   

  	
  20.52740

  	
   

  	
  86.93958

  	
   

  
	
  Putnam Investments Employees’ Securities
  Company II LLC

  	
   

  	
  164.95229

  	
   

  	
  18.32803

  	
   

  	
  77.62461

  	
   

  
	
  1997 Thomas H. Lee Nominee Trust

  	
   

  	
  66.24873

  	
   

  	
  7.36097

  	
   

  	
  31.17587

  	
   

  
	
  Thomas H. Lee Investors Limited Partnership

  	
   

  	
  50.33625

  	
   

  	
  5.59292

  	
   

  	
  23.68765

  	
   

  
	
  THL WMG Equity Investors, L.P.

  	
   

  	
  8,840.00000

  	
   

  	
  982.22222

  	
   

  	
  4,160.00000

  	
   

  
	
  Bain Capital Integral Investors, LLC

  	
   

  	
  13,476.67700

  	
   

  	
  1,486.84568

  	
   

  	
  6,290.31260

  	
   

  
	
  BCIP TCV, LLC

  	
   

  	
  70.62300

  	
   

  	
  18.40988

  	
   

  	
  84.88740

  	
   

  
	
  Bain Capital VII Coinvestment Fund, LLC

  	
   

  	
  5,492.70000

  	
   

  	
  610.30000

  	
   

  	
  2,584.80000

  	
   

  
	
  Providence Equity Partners IV L.P.

  	
   

  	
  10,167.20700

  	
   

  	
  1,129.68967

  	
   

  	
  4,784.56800

  	
   

  
	
  Providence Equity Operating Partners IV
  L.P.

  	
   

  	
  32.79300

  	
   

  	
  3.64367

  	
   

  	
  15.43200

  	
   

  
	
  Music Capital Partners, L.P.

  	
   

  	
  11,220.00000

  	
   

  	
  1,246.66667

  	
   

  	
  5,280.00000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Warrants

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Historic TW Inc. - MMT Warrant

  	
   

  	
  21,117.35331

  	
   

  	
  2,346.37259

  	
   

  	
  9937.57803

  	
   

  
	
  Historic TW Inc. - Three-Year Warrant

  	
   

  	
  15,000,000

  	
   

  	
  1,666.6667

  	
   

  	
  7,058.82353

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Restricted Stock

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Edgar Bronfman, Jr.

  	
   

  	
  2883.9136

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  Lyor Cohen

  	
   

  	
  2098.9543

  	
   

  	
  0

  	
   

  	
  0