Exhibit
10.17


 





















 


PURCHASER ADMINISTRATIVE
SERVICES AGREEMENT


 


 


Between


 


 


TIME WARNER INC.


 


 


and


 


 


WMG ACQUISITION CORP.


 


 


Dated February 29, 2004


 





















 


TABLE OF CONTENTS


 


	
  ARTICLE I

  	
   

  
	
   

  	
   

  	
   

  
	
  Definitions

  	
   

  
	
  SECTION 1.01.

  	
  Definitions

  	
   

  
	
  SECTION 1.02.

  	
  Certain Terms

  	
   

  
	
  SECTION 1.03.

  	
  Usage Generally; Interpretation

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
   

  
	
   

  	
   

  	
   

  
	
  Services

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 2.01.

  	
  Agreement to Provide Services

  	
   

  
	
  SECTION 2.02.

  	
  Change Orders

  	
   

  
	
  SECTION 2.03.

  	
  No Management Authority

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
   

  
	
   

  	
   

  	
   

  
	
  Compensation

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 3.01.

  	
  Compensation for Services

  	
   

  
	
  SECTION 3.02.

  	
  Adjustments to Cost of Services

  	
   

  
	
  SECTION 3.03.

  	
  Payment Terms

  	
   

  
	
  SECTION 3.04.

  	
  Disclaimer of Warranty

  	
   

  
	
  SECTION 3.05.

  	
  Books and Records

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
   

  
	
   

  	
   

  	
   

  
	
  Term

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 4.01.

  	
  Commencement

  	
   

  
	
  SECTION 4.02.

  	
  Termination

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
   

  
	
   

  	
   

  	
   

  
	
  Indemnification; Limitation of Liability

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 5.01.

  	
  Indemnification by Seller

  	
   

  
	
  SECTION 5.02.

  	
  Limitation on Liability; Indemnification by
  Purchaser

  	
   

  



 





















 


	
  ARTICLE VI

  	
   

  
	
   

  	
   

  	
   

  
	
  Other Covenants

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 6.01.

  	
  Attorney-in-Fact

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
   

  
	
   

  	
   

  	
   

  
	
  Other
  Matters

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 7.01.

  	
  Title to Data

  	
   

  
	
  SECTION 7.02.

  	
  Notices

  	
   

  
	
  SECTION 7.03.

  	
  Amendments; No Waivers

  	
   

  
	
  SECTION 7.04.

  	
  Governing Law

  	
   

  
	
  SECTION 7.05.

  	
  Enforcement

  	
   

  
	
  SECTION 7.06.

  	
  Severability

  	
   

  
	
  SECTION 7.07.

  	
  Confidentiality

  	
   

  
	
  SECTION 7.08.

  	
  Counterparts

  	
   

  
	
  SECTION 7.09.

  	
  Independent Contractors

  	
   

  
	
  SECTION 7.10.

  	
  Assignment

  	
   

  
	
  SECTION 7.11.

  	
  WAIVER OF JURY TRIAL

  	
   

  
	
  SECTION 7.12.

  	
  Entire Agreement

  	
   

  
	
  SECTION 7.13.

  	
  Captions

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBITS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
  —

  	
  Services

  	
   

  
				



 





















 


PURCHASER ADMINISTRATIVE SERVICES AGREEMENT
(this “Purchaser Administrative Services Agreement”), dated February 29,
2004, between TIME WARNER INC. (“Seller”) and WMG ACQUISITION CORP. (“Purchaser”).


 


In consideration of the mutual covenants
contained in this Purchaser Administrative Services Agreement and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:


 


ARTICLE I


 


Definitions


 


SECTION 1.01.
Definitions. Capitalized terms used but not defined herein shall have
the respective meanings assigned to them in the Purchase. Agreement (as defined
herein).


 


SECTION 1.02.
Certain Terms.


 


“Purchase Agreement” means that
Purchase Agreement, dated as of November 24, 2003, between Seller and
Purchaser.


 


“Services” means the services
identified on Exhibit A.


 


“Service Categories” means the
categories of Service Items as identified on Exhibit A or otherwise agreed by
the parties.


 


“Service Items” means the individual
service items included within the various Service Categories identified on
Exhibit A or otherwise agreed by the parties.


 


SECTION 1.03.
Usage Generally: Interpretation. References in this Purchaser
Administrative Services Agreement to any gender include references to all
genders. Any term defined in this Purchaser Administrative Services Agreement
in the singular form shall have the correlative meaning in the plural form, and
any term defined in this Purchaser Administrative Services Agreement in the
plural form shall have the correlative meaning in the singular form. References
in this Purchaser Administrative Services Agreement to a party or other Person
include their respective successors and permitted assigns. The words “include”,
“includes” and “including” when used in this Purchaser Administrative Services
Agreement shall be deemed to be followed by the phrase “without limitation”.
Unless the context otherwise requires, references in this Purchaser
Administrative Services Agreement to Articles, Sections and Exhibits shall be
deemed references to Articles and Sections of, and Exhibits to, this Purchaser
Administrative Services Agreement. Unless the context otherwise requires, the
words “hereof”, “hereby” and “herein” and words of similar meaning when used in
this Purchaser Administrative Services Agreement refer to this Purchaser Administrative


 


1





















 


Services Agreement in its entirety and not to any particular Article, Section or
provision of this Purchaser Administrative Services Agreement.


 


ARTICLE II


 


Services


 


SECTION 2.01.
Agreement to Provide Services. (a) Purchaser shall provide the Services
to Seller as provided herein. Seller shall provide input and assistance to
Purchaser in connection with the performance of the Services as reasonably
requested by Purchaser, and shall advise Purchaser as to the desired manner and
nature of the Services to be provided. Purchaser shall determine the Purchaser
personnel who shall perform the Services. Purchaser may, at its option, from
time to time delegate any of or all its obligations under this Purchaser
Administrative Services Agreement to any one or more of its Affiliates. In
addition, Purchaser may, as it deems necessary or desirable, engage the
services of other professionals and consultants in connection with the
performance of the Services; provided, that Seller consents in writing to such
engagement, which consent shall not be unreasonably withheld; and provided
further that Purchaser shall remain directly and fully liable to Seller for the
performance of its obligations hereunder notwithstanding the engagement of any
such professionals or consultants.


 


(b) Unless otherwise agreed by the
parties, the Services shall be performed by Purchaser in a reasonably prompt
and professional manner that is substantially the same manner in which
Purchaser currently provides similar services for its Affiliates.


 


(c) Notwithstanding anything herein to
the contrary, this Purchaser Administrative Services Agreement is not intended
to amend, replace or otherwise affect in any manner any existing contractual
relationships between Seller and its Subsidiaries, on the one hand, and
Purchaser and the Acquired Companies, on the other hand.


 


SECTION 2.02.
Change Orders. (a) Service Additions. Exhibit A may be amended at
any time by the mutual written agreement of the parties to add additional
Services.


 


(b) Service Deletions. Upon prior
written notice (a “Service Deletion Notice”) delivered to Purchaser not
less than the requisite number of days prior to termination as specified in
Exhibit A, Seller may:


 


(i)             terminate this
Purchaser Administrative Services Agreement with respect to any Service
Category; or


 


(ii)          terminate this Purchaser
Administrative Services Agreement with respect to any individual Service Item
included in the Services, so long as the other remaining Service Items in the
relevant Service Category can thereafter still be practicably provided by
Purchaser pursuant to this Purchaser Administrative


 


2





















 


Services Agreement. If Purchaser reasonably
determines that it cannot thereafter practicably provide the other Service
Items in the relevant Service Category, then Purchaser shall so notify Seller
within 30 days after Purchaser’s receipt of the relevant Service Deletion
Notice and such termination with respect to such Service Item shall not take
effect.


 


(c) Termination by Purchaser.
Except as otherwise provided in Exhibit A, upon not less than 180 days’ prior
written notice to Seller, Purchaser may terminate this Purchaser Administrative
Services Agreement with respect to any Service Category included in the
Services if Purchaser and its Affiliates cease to provide such Service Category
to Purchaser’s Subsidiaries, divisions and business units. Notwithstanding the
foregoing provision, Services under Financial and Accounting Advisory Services
and Information Technology Services as described on Exhibit A shall not be
terminated until the respective Default Termination Date.


 


(d) Return of Books and Records.
Upon the request of Seller after the termination of a Service with respect to
which Purchaser holds books, records or files, including current and archived
copies of computer files, (i) owned by Seller or its Affiliates and used by
Purchaser in connection with the provision of a Service to Seller or (ii)
created by Purchaser and in Purchaser’s possession as a function of and
relating to the provision of Services to Seller, such books and records shall
be returned to Seller. Seller shall be entitled to retain and use any such
materials. Purchaser shall return all of such books, records or files as soon
as reasonably practicable. Seller shall bear Purchaser costs and expenses
associated with the return of such documents. At its expense, Purchaser may
make a copy of such books, records or files for its legal files.


 


SECTION 2.03.
No Management Authority. Notwithstanding any other provision hereof,
Purchaser shall not be authorized by, and shall have no responsibility under,
this Purchaser Administrative Services Agreement to manage the affairs of the
Seller.


 


ARTICLE III


 


Compensation


 


SECTION 3.01.
Compensation for Services. As compensation for Services rendered
pursuant to this Purchaser Administrative Services Agreement, Seller shall pay
to Purchaser an amount equal to the Cost of Services as specified in Exhibit A
for each Service Category.


 


SECTION 3.02.
Adjustments to Cost of Services. (a) Adjustments Due to Service
Additions or Deletions. If at any time the parties mutually agree to add
any Service Categories or Service Items to the Services to be provided to Seller
hereunder, then concurrently with the addition of such Service Item or Service
Category, as the case may be, the parties shall work in good faith to agree
upon the then-current Cost of Services as appropriate to reflect such addition.
If at any time this Purchaser Administrative Services Agreement is terminated
with respect to any Service Item in


 


3





















 


accordance with Section 2.02, then not less than 30 days prior to
such termination, Purchaser and Seller shall work in good faith to mutually
agree upon an appropriate decrease, if any, to the then-current Cost of
Services.


 


(b) Adjustments Due to Variances in
Usage of Services. If, at any time, usage of any Service Category varies
materially from the projected patterns of usage employed by the parties to
determine the then-applicable Cost of Services with respect to such Service
Category, then either Seller or Purchaser, by written notice (a “Cost
Adjustment Request”) to the other, may trigger a review of the then-applicable
Cost of Services attributable to such Service Category. Within 45 days after
any Cost Adjustment Request, Purchaser and Seller shall agree upon an
appropriate adjustment, if any, to the Cost of Services applicable to such
Service Category so that such Cost of Services shall more appropriately reflect
the actual direct cost to Purchaser of providing Services within such Service
Category at then-current usage rates.


 


SECTION 3.03.
Payment Terms. (a) Purchaser shall bill Seller at the end of each month
for an amount equal to the sum of the Cost of Services for that month. Seller
shall pay such amount in full within 45 days after receipt of invoice. Each
invoice shall set forth in reasonable detail the calculation of the charges and
amounts upon which the sum of the Cost of Services is comprised, broken down by
the Cost of Services for each Service during the month to which such invoice
relates. Other remedies for non-payment notwithstanding, if any payment is not
received by Purchaser on or before the date such amount is due, then a late
payment interest charge, calculated at a 6% per annum rate, on the past amount
due shall become immediately due and payable in addition to the amount owed
under this Purchaser Administrative Services Agreement. If at any time this
Purchaser Administrative Services Agreement is terminated with respect to any
Service Item in accordance with Section 2.02, then not more than 30 days
after such termination, Purchaser shall return to Seller any amounts prepaid by
Seller to Purchaser in respect of the days in the month during which the
effectiveness of the termination occurred which fall after such termination.


 


(b) If Seller has any objection to the
amount of any invoice, it shall have the right to inspect Purchaser’s records
with respect thereto. Following such inspection, the parties shall endeavor in
good faith to resolve any disagreement with respect to charges and costs
hereunder. Thereafter, Seller will be entitled to a prompt refund of any
amounts paid in excess of the amounts required hereunder, and Purchaser shall
promptly pay any deficiency amounts (with interest at 6% per annum) found to be
due as a result of such inspection.


 


SECTION 3.04.
Disclaimer of Warranty. EXCEPT AS EXPRESSLY SET FORTH IN THIS PURCHASER
ADMINISTRATIVE SERVICES AGREEMENT, THE SERVICES TO BE PURCHASED UNDER THIS
PURCHASER ADMINISTRATIVE SERVICES AGREEMENT ARE FURNISHED WITHOUT WARRANTY OF
ANY KIND, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR
FITNESS FOR ANY PARTICULAR PURPOSE. PURCHASER DOES NOT MAKE ANY WARRANTY THAT
ANY SERVICE COMPLIES WITH ANY LAW, DOMESTIC OR FOREIGN.


 


4





















 


SECTION 3.05.
Books and Records. Purchaser shall maintain complete and accurate books
of account as necessary to support its calculations of the Cost of Services and
shall make such books available to Seller, upon reasonable notice, during
normal business hours; provided, however, that to the extent
Purchaser’s books contain information relating to any other aspect of Purchaser’s
business, Seller and Purchaser shall negotiate a procedure to provide Seller
the necessary access while preserving the confidentiality of such other
records. In performing the Services, Purchaser shall be entitled to assume that
all books and records provided by Seller are true and accurate.


 


ARTICLE IV


 


Term


 


SECTION 4.01.
Commencement. This Purchaser Administrative Services Agreement is
effective as of the Closing Date and shall remain in effect with respect to a
particular Service until the Default Termination Date as specified in Exhibit A
unless and until terminated in accordance with Section 4.02.


 


SECTION 4.02. Termination. This
Purchaser Administrative Services Agreement may be terminated as follows:


 


(a) By Seller. With respect to
any Service Category, at any time upon prior written notice to Purchaser as
provided in Exhibit A.


 


(b) By Either Party. If either
party materially breaches any of its obligations under this Purchaser
Administrative Services Agreement, the non-breaching party may terminate this
Purchaser Administrative Services Agreement, including the provision of
Services pursuant hereto, effective at any time upon not less than 30 days
written notice of termination to the breaching party, provided said breaching party
does not cure such default within 30 days after receiving written notice
thereof from the non-breaching party.


 


In the event of any termination of this
Purchaser Administrative Services Agreement, each party shall remain liable for
all obligations of such party accrued hereunder prior to the date of such
termination, including all obligations of Seller to pay any amounts due to
Purchaser hereunder.


 


ARTICLE V


 


Indemnification:
Limitation of Liability


 


SECTION 5.01. Indemnification by
Seller. Seller shall indemnify and hold harmless Purchaser, its Affiliates,
partners, officers, employees, agents and permitted assigns (each, a “Purchaser
Party” and, together, the “Purchaser Parties”) from and against any
and all losses, liabilities, claims, litigation, damages, penalties, actions,
demands or expenses, including the reasonable fees and expenses of counsel
(collectively, “Losses”) incurred by Purchaser and arising out of, in
connection with or


 


5





















 


by reason of this Purchaser Administrative Services Agreement or any
Services provided by Purchaser hereunder, except to the extent such Losses
arise out of Purchaser’s material breach under this Purchaser Administrative
Services Agreement or Purchaser’s gross negligence or willful misconduct.


 


SECTION 5.02.
Limitation on Liability; Indemnification by Purchaser. (a) No Purchaser
Party shall be liable (whether such liability is direct or indirect, in
contract or tort or otherwise) to Seller or any of its Affiliates, partners,
officers, employees, agents, auditors or permitted assigns, for any Losses
arising out of, related to, or in connection with the Services or this
Purchaser Administrative Services Agreement, except to the extent that such
Losses arise out of Purchaser’s material breach under this Purchaser
Administrative Services Agreement or Purchaser’s gross negligence or willful
misconduct.


 


(b) Purchaser shall indemnify and hold
harmless Seller, its Affiliates, partners, officers, employees, agents and
permitted assigns (each, an “Seller Party”) from and against any and all
Losses incurred by such Seller Party and arising out of, in connection with or
by reason of this Purchaser Administrative Services Agreement or any Services
provided by Purchaser hereunder, which arise out of Purchaser’s material breach
of this Purchaser Administrative Services Agreement or Purchaser’s gross
negligence or willful misconduct.


 


(c) IN NO EVENT SHALL ANY PURCHASER
PARTY BE LIABLE WHETHER IN CONTRACT, IN TORT (INCLUDING NEGLIGENCE AND STRICT
LIABILITY) OR OTHERWISE TO ANY SELLER PARTY FOR ANY CONSEQUENTIAL DAMAGES
(INCLUDING LOSS OF PROFITS) AS A RESULT OF ANY BREACH, PERFORMANCE OR
NON-PERFORMANCE BY ANY PURCHASER PARTY OF THIS PURCHASER ADMINISTRATIVE
SERVICES AGREEMENT.


 


(d) The provisions of this Article V
shall survive indefinitely, notwithstanding any termination of all or any
portion of this Purchaser Administrative Services Agreement.


 


ARTICLE VI


 


Other
Covenants


 


SECTION 6.01.
Attorney-in-Fact. On a case-by-case basis, Seller shall execute
documents necessary to appoint Purchaser as its attorney-in-fact for the sole
purpose of executing any and all documents and instruments reasonably required
to be executed in connection with the performance by Purchaser of any Service
under this Purchaser Administrative Services Agreement.


 


6





















 


ARTICLE VII


 


Other Matters


 


SECTION 7.01.
Title to Data. Seller acknowledges that it will acquire no right, title
or interest (including any license rights or rights of use) in any firmware or
software, and the licenses therefor that are owned by Purchaser or its
Affiliates, by reason of their provision of the Services provided hereunder.
Purchaser agrees that all records, data, files, input materials and other
information received or computed that relate to Seller or its Affiliates are
the property of Seller or its Affiliates, respectively.


 


SECTION 7.02.
Notices. All notices, requests and other communications to any party
hereunder shall be in writing (including facsimile transmission) and shall be
given,


 


if to Seller, to:


 


Time Warner Inc.


75 Rockefeller Plaza


New York, NY 10019


Fax: (212) 258-3172


Attn: General Counsel


 


with copies to:


 


Cravath, Swaine & Moore LLP


825 Eighth Avenue


New York, New York 10019


Fax: (212) 474-3700


Attn: Richard Hall, Esq.


 


if to Purchaser, to:


 


WMG Acquisition Corp.


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


75 State Street


Boston, Massachusetts 02109


Fax: (617) 227-3514


Attn: Scott Sperling


 


with copies to:


 


Simpson Thacher & Bartlett LLP


425 Lexington Avenue


New York, New York 10017


Fax: (212) 455-2502


Attn: John Finley, Esq.


 


Brian Stadler, Esq.


 


7





















 


or such other address or facsimile number as such party may hereafter
specify for the purpose by notice to the other parties hereto. All such
notices, requests and other communications shall be deemed received on the date
of receipt by the recipient thereof if received prior to 5 p.m. in the place of
receipt and such day is a business day, in the place of receipt. Otherwise, any
such notice, request or communication shall be deemed not to have been received
until the next succeeding business day in the place of receipt.


 


SECTION 7.03.
Amendments: No Waivers. (a) Any provision of this Purchaser
Administrative Services Agreement may be amended or waived if, but only if,
such amendment or waiver is in writing and is signed, in the case of an
amendment, by each party to this Purchaser Administrative Services Agreement
or, in the case of a waiver, by each party against whom the waiver is to be
effective.


 


(b) No failure or delay by any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.


 


SECTION 7.04.
Governing Law. This Purchaser Administrative Services Agreement shall be
governed by, and construed in accordance with, the laws of the State of New
York, regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws thereof; provided, however, that the laws of
the respective jurisdictions of incorporation of each of the parties hereto
shall govern the relative rights, obligations, powers, duties and other
internal affairs of such party and its board of directors.


 


SECTION 7.05.
Enforcement. (a) Each party hereby consents to the exclusive
jurisdiction of the United States Federal courts located in the State of New
York with respect to disputes arising out of this Purchaser Administrative
Services Agreement.


 


(b) Other than as specified in Article V,
there are not any intended third-party beneficiaries of any provision of this
Purchaser Administrative Services Agreement.


 


SECTION 7.06.
Severability. If any term, provision, covenant, restriction or other
condition of this Purchaser Administrative Services Agreement is held by a
court of competent jurisdiction or other authority to be invalid, illegal or
incapable of being enforced by any rule or law, or public policy, all other
terms, provisions, covenants, restrictions and conditions of this Purchaser
Administrative Services Agreement shall nevertheless remain in full force and
effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to either
party. Upon such a determination, the parties shall negotiate in good faith to
modify this Purchaser Administrative Services Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner
to the end that transactions contemplated hereby are consummated to the extent
possible.


 


8





















 


SECTION 7.07.
Confidentiality. Except as otherwise required under applicable law, each
party agrees that it and its respective Affiliates will maintain as
confidential, and not use, any and all information provided by either party to
the other or otherwise obtained by such party in connection with or as a result
of this Purchaser Administrative Services Agreement. Nothing contained in this Section shall
limit or affect in any way obligations of the parties to maintain the
confidentiality of information pursuant to the Purchase Agreement.
Notwithstanding anything herein to the contrary, each party to this Purchaser
Administrative Services Agreement (and any employee, representative or other
agent of such party) may disclose to any and all persons, without limitation of
any kind, the U.S. federal income tax treatment and the U.S. federal income tax
structure of the transactions contemplated by this Purchaser Administrative
Services Agreement and all materials of any kind (including opinions or other
tax analyses) that are provided to it relating to such tax treatment and tax
structure. However, no such party shall disclose any information relating to
such tax treatment or tax structure to the extent nondisclosure is reasonably
necessary in order to comply with applicable securities laws.


 


SECTION 7.08.
Counterparts. This Purchaser Administrative Services Agreement may be
executed in one or more counterparts, all of which shall be considered one and
the same agreement and shall become effective when one or more counterparts
have been signed by each of the parties and delivered to the other parties.


 


SECTION 7.09.
Independent Contractors. No agency, partnership or joint venture is established
by this Purchaser Administrative Services Agreement. Neither party shall enter
into, incur liabilities or hold itself out to third parties as having the
authority to enter into and incur any contractual obligations, expenses, or
liabilities on behalf of the other party.


 


SECTION 7.10.
Assignment. Other than as provided in Section 2.01, neither this
Purchaser Administrative Services Agreement nor any of the rights, interests or
obligations hereunder shall be assigned, in whole or in part, by operation of
law or otherwise by either party without the prior written consent of the other
party. Notwithstanding the foregoing, Seller may assign all or a portion of its
rights hereunder to one or more of its Subsidiaries, provided that no such
assignment shall relieve Seller of any obligations hereunder. Any purported
assignment without such consent shall be void. Subject to the preceding
sentences, this Purchaser Administrative Services Agreement shall be binding
upon, inure to the benefit of, and be enforceable by, the parties and their
respective successors and assigns.


 


SECTION 7.11.
WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT
OF OR RELATED TO THIS PURCHASER ADMINISTRATIVE SERVICES AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.


 


SECTION 7.12.
Entire Agreement. This Purchaser Administrative Services Agreement and
the Purchase Agreement constitute the entire agreement between the parties with
respect to the subject matter of this Purchaser Administrative Services


 


9





















 


Agreement and supersede all prior agreements and understandings, both
oral and written, between the parties with respect to the subject matter of
this Purchaser Administrative Services Agreement.


 


SECTION 7.13.
Captions. The captions herein are included for convenience of reference
only and shall be ignored as in the construction or interpretation hereof.


 


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IN WITNESS WHEREOF, the parties have caused
this Purchaser Administrative Services Agreement to be duly executed as of the
day and year first written above.


 


	
   

  	
  TIME WARNER INC.,

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  WMG ACQUISITION CORP.,

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Scott Sperling

  	
   

  
	
   

  	
   

  	
  Name: Scott Sperling

  
	
   

  	
   

  	
  Title:   President

  



 





















 


EXHIBIT A


 


Services


 


	
  Service Category:

  	
   

  	
  Financial and Accounting Advisory Services

  
	
   

  	
   

  	
   

  
	
  Default Termination:

  	
   

  	
  December 31, 2004

  
	
   

  	
   

  	
   

  
	
  Termination Notice by Seller:

  	
   

  	
  30 days.

  
	
   

  	
   

  	
   

  
	
  Service Items:

  	
   

  	
  Financial and accounting advisory services,
  including any assistance necessary to Seller in preparing financial
  statements as required under Section 5.15 of the Cinram Purchase
  Agreement in connection with the sale of Seller’s manufacturing and distribution
  business to Cinram International Inc.

  
	
   

  	
   

  	
   

  
	
  Cost of Services:

  	
   

  	
  For internal financial and accounting
  advisory work, costs of services represent an allocation of compensation
  (including benefits) to Purchaser employees performing such work and other out-of-pocket
  costs directly attributable to the provision of such work, based on actual
  time spent on Purchaser-related projects.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  For outside financial and accounting
  advisory work, costs of services represent amounts billed.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  If the Acquired Companies’ normal practice
  prior to Closing was to value costs of Financial and Accounting Advisory
  Services in order to make intra-company allocations for those services for
  purposes of the Acquired Companies’ financial statements, then cost
  calculations will be conducted in accordance with that past practice to the
  extent reasonably possible.

  



 





















 


	
  Service Category:

  	
   

  	
  Information Technology Services

  
	
   

  	
   

  	
   

  
	
  Default Termination:

  	
   

  	
  December 31, 2004

  
	
   

  	
   

  	
   

  
	
  Termination Notice by Seller:

  	
   

  	
  90 days.

  
	
   

  	
   

  	
   

  
	
  Service Items:

  	
   

  	
  Provide Information Technology services
  consistent with the manner in which the Acquired Companies have provided such
  services to Seller and its Subsidiaries in the past. Such services include
  the following: (i) Oracle software and accounts receivable services
  historically provided to Warner Home Video; (ii) wide area network access for
  shared offices (include offices shared by Warner-Elektra-Atlantic Corp. and
  Warner Home Video); (iii) order-to-cash accounting systems provided to Warner
  Home Video offices in European territories; and (iv) the EDI, NEWS, ARCOLE,
  DAISY, NIDS, STREGA and related systems currently provided to Warner Bros.
  Entertainment Inc. and its subsidiaries by Warner-Elektra-Atlantic Corp.

  
	
   

  	
   

  	
   

  
	
  Cost of Services:

  	
   

  	
  Direct costs from providing the Information
  Technology services, including (i) staff costs (including benefits provided
  to the staff) and (ii) operational costs associated with the provision of the
  services. These costs will be passed through to Seller at Purchaser’s cost or
  paid directly by Seller.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  If the Acquired Companies’ normal practice
  prior to Closing was to value costs of Information Technology Services in
  order to make intra-company allocations for those services for purposes of
  Acquired Companies’ financial statements, then cost calculations will be
  conducted in accordance with that past practice to the extent reasonably
  possible.

  



 


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  Service Category:

  	
   

  	
  Real Estate Services

  
	
   

  	
   

  	
   

  
	
  Default Termination:

  	
   

  	
  June 30, 2004

  
	
   

  	
   

  	
   

  
	
  Termination Notice by Seller:

  	
   

  	
  60 days.

  
	
   

  	
   

  	
   

  
	
  Service Items:

  	
   

  	
  Purchaser will either (a) continue to
  provide to Seller (or its Subsidiaries) the office space and facilities
  support currently provided by the Acquired Companies to Seller (or its
  Subsidiaries), including co-location facilities for computers, switches or
  other equipment or (b) provide to Seller (or its Subsidiaries) a comparable
  amount of such office space and facilities support.

  
	
   

  	
   

  	
   

  
	
  Cost of Services:

  	
   

  	
  Realty costs will be based on square
  footage used, plus usage costs for items such as electricity, and will be
  passed through to Seller at Purchaser’s actual cost.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  If the Acquired Companies’ normal practice
  prior to Closing was to value costs of Real Estate Services in order to make
  intra-company allocations for those services for purposes of Acquired
  Companies’ financial statements, then cost calculations will be conducted in
  accordance with that past practice to the extent reasonably possible.

  



 


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  Service Category:

  	
   

  	
  Distribution Services

  
	
   

  	
   

  	
   

  
	
  Default Termination:

  	
   

  	
  December 31, 2004

  
	
   

  	
   

  	
   

  
	
  Termination Notice by Seller:

  	
   

  	
  120 days.

  
	
   

  	
   

  	
   

  
	
  Service Items:

  	
   

  	
  Physical distribution and “pick, pack and
  ship” services provided in countries outside of the United States, to the
  extent that such services are provided by the Acquired Companies to Seller
  (and its Subsidiaries) prior to Closing, and consistent with past practice.

  
	
   

  	
   

  	
   

  
	
  Cost of Services:

  	
   

  	
  Costs of Distribution Services will be
  negotiated by Seller and Purchaser in good faith consistent with the past
  billing arrangements for such services.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  If the Acquired Companies’ normal practice
  prior to Closing was to value costs of Distribution Services in order to make
  intra-company allocations for those services for purposes of Acquired
  Companies’ financial statements, then cost calculations will be conducted in
  accordance with that past practice to the extent reasonably possible.

  



 


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