Exhibit 10.25


 





















 


EMPLOYMENT AGREEMENTS—DAVID JOHNSON


 





















 


Warner Music Group Inc.

75 Rockefeller Plaza

New York, New York 10019


 


 


February
14, 2003


 


 


David H. Johnson


Warner Music Group Inc.


75 Rockefeller Plaza


New York, NY 10019


 


 


Re: Employment


 


Dear Mr. Johnson,


 


Reference is made to the
Employment Agreement between you and Warner Music Group Inc. (the “Company”)
dated December 15, 1998 (the “Agreement”). This letter will confirm that you
and the Company have agreed that the Agreement shall be modified, as follows:


 


Notwithstanding any more
restrictive provisions in any applicable stock option plan or stock option
agreement, if your employment with the Company is terminated by the Company
without cause or if you shall terminate your employment with the Company due to
a material breach of the Agreement by the Company, then, except if you shall
otherwise qualify for retirement under the terms of the applicable stock option
agreement, (i) all stock options to purchase shares of AOL Time Warner Inc. (“AOLTW”)
Common Stock granted to you by AOLTW or the Company shall continue to vest, and
any vested stock options will remain exercisable (but not beyond the term of
such stock options), while you remain on the payroll of the Company, (ii) all
such stock options granted to you by AOLTW or the Company on or after January
10, 2000 (the “Term Options”) that would have vested on or before the end of
the term of the Agreement (or the comparable date under an employment agreement
that amends, replaces or supersedes the Agreement) shall vest and become
immediately exercisable at the time you go off the payroll of the Company,
(iii) all vested Term Options shall remain exercisable for a period of three
years after the date you leave the payroll of the Company (but not beyond the
term of such options), and (iv) the Company shall not be permitted to determine
that your employment was terminated for “unsatisfactory performance” within the
meaning of any stock option agreement between you and the Company. At the time
you leave the payroll of the Company, all stock options to purchase shares of
AOLTW Common Stock granted to you prior to January 10, 2000 shall be governed
by the terms of the applicable stock option agreements and stock option plans.


 





















 


Except as provided herein, all
other terms and conditions of your employment with the Company remain in full
force and effect. Please execute and return this letter at your earliest
convenience.


 


 


	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
  /s/ Helen Murphy

  	
   

  
	
   

  	
   

  
	
   

  	
  Helen Murphy

  
	
   

  	
  Executive Vice President and

  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  Acknowledged and agreed,

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ David Johnson

  	
   

  	
   

  
	
  Name:

  	
  David Johnson

  	
   

  
	
  Date: 

  	
  February 14, 2003

  	
   

  
					



 





















 


WARNER
MUSIC GROUP INC.


75
ROCKEFELLER PLAZA


New
York, New York 10019


 


 


May
13, 2003


 


David H. Johnson


Warner Music Group Inc.


75 Rockefeller Plaza


New York, NY 10019


 


Re: Employment Agreement


 


Dear David:


 


Reference is made to the
Employment Agreement between Warner Music Group Inc. (the “Company”) and you
dated December 15, 1998 (the “Agreement”).
Capitalized terms used but not defined in this letter shall have the meanings
given such terms in the Agreement. You and the Company desire to amend
the Agreement as follows:


 


1.                                       Paragraph 2 of the Agreement is amended to
extend the Terra through June 29, 2007 (“Term Date”), subject however, to
earlier termination as set forth in the Agreement.


 


2.                                       Paragraph 3.1 of the Agreement is amended to
provide that from the period January 1, 2003 through the Term Date, the Company
shall pay you a base salary of not less than $700,000 (“Base Salary”). The
Company may increase, but not decrease, your Base Salary during the period
January 1, 2003 through the Term Date. Base
Salary shall be paid in accordance with the Company’s customary payroll
practices.


 


3.                                       In addition to any other rights you may have
under the Agreement, and unless previously terminated pursuant to any other
provision of this Agreement, you have the right to terminate the Term (subject
to the notice and cure provisions of Paragraph 13 of the Agreement) if any of
the following events occur:


 


(a)                                  there is any material reduction of your
duties and responsibilities during the Term or any extension thereof. The sale,
transfer or other disposition of the manufacturing and/or the music publishing
operations of the Company shall not constitute a material
reduction in your duties or responsibilities. The sale or transfer or
other disposition (including by way of a joint
venture formation) of all or substantially all of the Company’s assets (or all
or substantially all of the recorded music business of AOL Time Warner) shall
not constitute a material reduction of your duties and responsibilities
provided that (i) the Company assigns its rights and obligations under the
Agreement to the entity acquiring all or substantially all of the assets of the
Company (or all or


 





















 


substantially all of the
assets of the recorded music business of AOL Time Warner) (the “successor
entity”) as provided in Paragraph 18(e) of the Agreement; (ii) you shall
continue to have substantially the same duties, responsibilities and authority with respect to Company’s
businesses that you had as of the date of this Amendment and that you may have
with respect to businesses added hereafter, and (iii) you shall report solely
and directly to the individual holding the office within the successor entity
that is substantially equivalent to the position within the Company to whom you
reported under the Agreement; or


 


(b)                                 any failure by the Company to obtain the
assumption and agreement to perform this Agreement by a successor entity as
contemplated by Paragraph 4 of this Amendment.


 


In the event of a termination under this
Paragraph, the Term of this Agreement shall terminate and your sole remedy
shall be that set forth in Paragraph 13 of the Agreement (Termination for
Material Breach by Company and Wrongful Termination by Company).


 


4. Paragraph 18(e) of the
Agreement is amended in its entirety
to read as follows:


 


The
provisions of this Agreement shall inure to the benefit of the parties hereto, their heirs, legal representatives, successors and permitted assigns.
This Agreement, and your rights and obligations hereunder, may not be assigned by you. The Company may assign its
rights, together with its obligations, hereunder in connection with any sale,
transfer or other disposition (including by way of a joint venture formation)
of all or a substantial portion of the stock or assets of Company, WCI, AOL
Time Warner or the recorded music business of AOL Time Warner. The Company
shall use reasonable efforts to cause any successor entity acquiring all or
substantially all of the business and/or assets of the Company (or all or substantially all of the recorded music
business of the Company), whether direct or indirect, by purchase, merger,
consolidation, acquisition of stock, formation of a joint venture, or
otherwise, expressly to assume and agree to perform this Agreement in the same
manner and to the same extent as the Company would be required to perform, and
to specifically agree to the following terms and conditions:


 


(a)     The successor entity shall pay you annual
compensation as follows: (i) Base Salary at a rate that is no less than the
rate you received from Company as of the effective date of the sale or transfer
(“Minimum Base Salary’) and (ii) either the Target Bonus or the average of the
bonus paid you for the two calendar years immediately preceding the effective
date of the sale or transfer, whichever is higher (“Minimum Bonus”). For
example, if the effective date of the sale or transfer was March 31, 2003, your
Minimum Base Salary would be $700,000 and


 


2





















 


your Minimum Bonus would be $925,000 (two-year average bonus rather than the Target Bonus of $750,000 at 100%).


 


(b)    Notwithstanding any other provision of the Agreement, in the event that the Term
of Employment is terminated for reasons other than Cause, Disability or Death
(as set forth in Paragraphs 11 and 12 of the Agreement), the successor entity
shall provide you a lump sum severance payment in a minimum amount equal to 2
years’ Base Pay and two years’ target bonus.


 


As amended, the Agreement
shall remain in full force and effect.


 


Please
indicate your agreement
with the terms of this letter by
signing and returning the enclosed
copy.


 


 


	
   

  	
  Warner Music Group Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Helen Murphy

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Confirmed and Agreed

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ David H. Johnson

  	
   

  	
   

  
					



 


3





















 


WARNER MUSIC GROUP INC.

75 ROCKEFELLER PLAZA

NEW YORK, NEW YORK 10019


 


 


December 15,
1998


 


 


PERSONAL
AND CONFIDENTIAL


 


Mr. David H. Johnson 

35 East 20th Street

New York, New York 10003


 


Dear David:


 


This letter,
when signed by you, shall constitute our agreement with respect to your
employment with us (“Company”).


 


1.                                       Position.
Executive Vice President and General Counsel of Company.


 


2.                                       Term.
The term of your employment with Company hereunder shall commence on January 1,
1999 (the “Commencement Date”) and shall end December 31, 2003 (the “Term”),
subject to earlier termination as herein below set forth.


 


3.                                       Compensation.


 


a.                                       Salary.
Company shall pay to you salary (“Base Salary”) at the rate of $600,000 per
annum commencing on the Commencement Date through December 31, 2000. Your Base
Salary will be increased to the rate of $650,000 for the years 2001 and 2002
and to $700,000 for the year 2003. Salary accruing to you during the


 





















 


Term shall be
payable in accordance with the regular payroll practices of Company for
employees at your level.


 


b.                                      Signing
Bonus. Promptly following the Commencement Date, you shall be entitled to
receive a one-time signing bonus in the amount of $500,000 less applicable
withholdings.


 


c.                                       Relocation
Expenses. You shall be reimbursed your actual reasonable moving expenses
relating to relocating your family and your personal effects to the Los Angeles
metropolitan area in accordance with Company policy for employees at your level
upon presentation of such evidence of such expenditures as Company shall
reasonably require.


 


d.                                      Guaranteed
and Discretionary Bonus. With respect to the period of your employment
commencing on the Commencement Date through December 31, 1999, you shall be
entitled to a bonus of not less than $750,000. With respect to each subsequent
calendar year of the Term, Company may grant to you, in recognition of services
rendered by you during such year, an annual bonus, the amount of which, if any,
shall be determined by Company in its discretion.


 


4.                                       Exclusivity.
During the Term and during any period you remain on the payroll of Company
pursuant to Paragraph 13b(iii) or otherwise, your employment with Company shall
be full-time and exclusive and you will not render any services for others, or
for your own account, in the field of entertainment or otherwise. You may
manage your passive investments and be involved in charitable interests so long
as they do not interfere with the performance of your duties hereunder and


 


2





















 


otherwise are
in compliance with Company’s conflict of interest and other policies of general
application.


 


5.                                       Stock
Options. As a separate and added inducement to your entering into this
Agreement, on November 23, 1998 Time Warner Inc. (“Time Warner”) granted you
options to purchase 60,000 shares of the Common Stock of Time Warner at an
exercise price of $104.78 per share, conditioned on your execution of this
Agreement. As a result of the pending two-for-one stock split for stockholders
of record on December 1, 1998, these options shall be adjusted to 120,000
options at an exercise price of $52.39 per share. In addition, during the Term
in the first quarter of each of 2000, 2001, 2002 and 2003 the Company shall use
its best efforts to cause Time Warner to grant you options to purchase an
additional 20,000 shares of Time Warner Common Stock. The number of shares
covered by such options shall be appropriately adjusted as contemplated in Time
Warner’s stock option plans generally in the event of any subsequent changes in
Time Warner’s stock capitalization after the pending stock split. Such options
shall be exercisable as set forth in stock option agreements in the standard
form for such agreements in effect as of the date of grant to be executed by
you and delivered to Time Warner promptly following each such grant.


 


6.                                       Reporting.
You shall serve as the senior legal officer of Company reporting to the
Chairman and Chief Executive Officer (or the Co-Chairmen and Co-Chief Executive
Officers, if applicable) and the President or other Chief Operating Officer, if
any, of Company and you shall perform such duties (consistent with your
position) as you shall reasonably be directed to perform by any such officer.


 


7.                                       Place
of Employment. Prior to June 30, 1999 you shall render services at Company’s
offices in the Los Angeles metropolitan area and in New York City,


 


3





















 


as required,
and you understand that it shall be necessary for you to spend substantial periods of time in
Company’s offices in the Los Angeles metropolitan area. On or prior to June 30,
1999 you shall relocate such that your services thereafter shall be rendered
primarily at the offices of Company in the Los Angeles metropolitan area. You
also agree to travel on temporary trips to such other place or places as may be
reasonably required from time to time to perform your duties hereunder.


 


8.                                       Travel
and Entertainment Expenses. Company shall pay or reimburse you for
reasonable expenses actually incurred or paid by you during the Term in the
performance of your services hereunder in accordance with Company’s policy for
employees at your level upon presentation of expense statements or vouchers or
such other supporting information as Company may customarily require.


 


9.                                       Benefits.
During the Term, you shall be entitled to all fringe benefits generally
accorded to employees of Company at your level from time to time, including,
but not limited to, pension, profit-sharing, medical health and accident, group
insurance and similar benefits, provided that you are eligible under the
general. provisions of any applicable plan or program and Company continues to
maintain such plan or program during the Term. In addition, during the Term you
shall be entitled to receive an automobile allowance of $24,000 per annum and a
financial advisory services allowance of $18,000 per annum, each payable in
accordance with the regular payroll practices of Company for employees at your
level.


 


10.                                 Life
Insurance. Company will obtain and maintain $1 million of term life
insurance on your life during the Term, provided that you cooperate with
Company in completing any application(s) to obtain such insurance and shall
submit to, and satisfactorily complete, any medical examinations required with


 


4





















 


respect
thereto. The provisions of this Paragraph 10 shall be in addition to any other
insurance provided by Company, Warner Communications Inc. (“WCI”) or Time
Warner on your life under any group policy.


 


11.                                 Disability
and Death.


 


a.                                       If
during the Term you shall become physically or mentally disabled, whether
totally or partially, so that you are substantially prevented from performing
your usual duties for a period of six consecutive months, or for shorter
periods aggregating six months in any twelve-month period, Company shall,
nevertheless, continue to pay you your full compensation through the last day
of the sixth consecutive month of disability or the date on which the shorter
periods of disability shall have equaled a total of six months in any
twelve-month period (such last day or date being referred to herein as the “Disability
Date”). If you have not resumed your usual duties on or prior to the Disability
Date, Company may terminate your employment hereunder and, in such event, shall
pay you the Base Salary to the last day of the month in which such termination
occurs plus a pro rata share of (i) your guaranteed bonus for the year 1999, if
such termination occurs in such year, and (ii) your automobile and financial
services allowances contemplated in Paragraph 9.


 


b.                                      Upon
your death, this Agreement and all benefits hereunder shall terminate except
that your estate (or a designated beneficiary thereof) shall be entitled to
receive the Base Salary to the last day of the month in which your death occurs
plus a pro rata share of (i) your guaranteed bonus for the year 1999, if such
termination


 


5





















 


occurs in such year, and (ii) your automobile and financial services
allowances contemplated in Paragraph 9.


 


c.                                       Any
termination pursuant to this Paragraph 11 shall not affect any vested rights
which you may have at the time of such termination pursuant to any insurance or
other benefit plans or arrangements of Company or any of its affiliated
companies or to the. benefit plans described in Paragraph 9, which
vested rights shall continue to be governed by the provisions of such plans.


 


12.                                 Termination
by Company for Cause. Company may at any time during the Term, by written
notice, terminate your employment and all of Company’s obligations hereunder
(other than its obligations set forth in this Paragraph 12) only for “cause”.
The following acts shall constitute “cause” hereunder: (i) any willful or
intentional act or omission having the effect of injuring the reputation,
business or business relationships of Company or its affiliates; (ii)
conviction of, or plea of nolo  contendere to, a misdemeanor
involving moral turpitude or a felony; (iii) breach of material covenants
contained in this Agreement; and (iv) repeated or continuous failure, neglect
or refusal to perform your duties hereunder. Such termination shall be effected
by notice thereof delivered by Company to you and shall be effective as of the
date of such notice; provided,  however,  that if (a) such
termination is by reason of events described in clause (iii) or (iv) of the
preceding sentence, (b) such notice is the first such notice of termination for
any reason delivered by Company to you hereunder, and (c) within 15 days
following the date of such notice, you shall cease your refusal and shall use
your best efforts to perform such obligations, termination shall not be
effective. In the event of termination by Company for cause in accordance with
the foregoing procedures, without prejudice to any other rights or remedies
that Company may have at law


 


6





















 


or equity,
Company shall have no further obligations to you other than (i) to pay your
salary accrued through the effective date of termination, (ii) to pay any
annual bonus in respect of any year prior to the year in which such termination
is effective which has been determined and not yet paid as of such termination
and (iii) with respect to any of your rights under Paragraphs 9 or 10 through
the effective date of termination (except as may be otherwise specifically
provided in any such plan or program) or pursuant to any insurance or other
benefit plans or arrangements of Company maintained for the benefit of its
executives.


 


13.                                 Termination
for Material Breach by Company and Wrongful Termination by  Company.


 


a.                                       You
shall have the right, exercisable by written notice to Company specifying the
facts, events or circumstances constituting any alleged breach of this
Agreement, to terminate the Term effective 15 days after the giving of such
notice, if, at the time of such notice. Company shall be in material breach of
its obligations hereunder, provided that, with the exception of clause(i)
below, the Term Shall not so terminate if within such 15-day period Company
shall have cured all such material breaches of its obligations hereunder. The
parties acknowledge and agree that a material breach by Company shall include,
but not be limited to, (i) Company’s failing to cause you to serve during the
Term in the capacities set forth in Paragraph l; and (ii) unless you otherwise
consent, Company’s requiring your primary services to be rendered in an area.
other than as contemplated in Paragraph 7.


 


b.                                      In
the event of a termination by you pursuant to this Paragraph 13, or in the
event of a termination of this Agreement or the term of employment by Company
without cause or in the event Company does not enter into a renewal employment
agreement with you at the end of the original Term of this Agreement, you shall


 


7





















 


be entitled to
elect by delivery of written notice to Company within 30 days after written
notice of such termination is given pursuant to Paragraph 13(a) or the
expiration of the original Term without execution of a renewal employment
agreement, as the case may be, either (x) to cease being an employee of Company
and receive a lump sum payment as provided in Paragraph 13(b)(ii) or (y) to
remain an employee of Company as provided in Paragraph 13(b)(iii). After you
make such election, the following provisions shall apply:


 


(i)                                     Regardless
of the election you make, (x) following the effective date of such termination,
you shall have no further obligations or liabilities to Company whatsoever
(except for your obligations under Paragraphs 14, 15 and 16, which shall
survive such termination in accordance with their terms) and (y) you shall be
entitled to receive any earned and unpaid Base Salary and your automobile and
financial services allowances contemplated in Paragraph 9 accrued through the
effective date of such termination, plus, your guaranteed bonus for the year
1999, if not previously paid to you.


 


(ii)                                  If
you make the election provided in clause (x) of Paragraph 13(b), within 30 days
following such election, Company shall pay to you as damages in a lump sum an
amount (discounted as provided in the following sentence) equal to your Base
Salary otherwise payable pursuant to Paragraph 3 and your automobile and
financial services allowances contemplated in Paragraph 9 for the period ending
the later of (a) the end of the original Term or (b) two years following the
effective date of such termination. Any payments required to be made to you
pursuant to this Paragraph 13(b)(ii) in excess of the amount equal to the first
two years of Base Salary otherwise payable following the effective date of such
termination (which shall be paid in a lump sum without discounting) shall be
discounted to present value from the times at which such amounts would have
been paid


 


8





















 


absent such
termination at an annual discount rate for the relevant periods equal to 120%
of the “applicable Federal rate” (within the meaning of Section 1274(d) of the
Internal Revenue Code of 1986 (the “Code”) in effect on the date of such
termination, compounded semi-annually, the use of which rate is hereby elected
by Company and you pursuant to Treas. Reg. § 1.280G-l Q/A 32 (provided that, in
the event such election is not permitted under Section 280G and the regulations
thereunder, such other rate determined as of such other date as is applicable
for determining present value under Section 280G of the Code shall be used).


 


(iii)                               If
you make the election provided in clause (y) of Paragraph 13(b), the term of
employment shall continue and you shall remain an employee of Company for the period
ending the later of (a) the end of the original Term or (b) two years following
the effective date of such termination, and during such period you shall be
entitled to receive, whether or not you become disabled during such period but
subject to Paragraph 11(b), your. Base Salary otherwise payable
pursuant to Paragraph 3 and your automobile and financial services allowances
contemplated in Paragraph 9. Except as provided in the following sentence, if
you accept full-time employment with any other entity during such period or
notify Company in writing of your intention to terminate your status as an
employee during such period, then the term of employment shall cease and you
shall cease to be an employee of Company effective upon the commencement of such
employment or the effective date of such termination as specified by you in
such notice, whichever is applicable (the “Termination Date”), and, within 30
days following such Termination Date, Company shall pay to you as damages in a
lump sum an amount determined in accordance with Paragraph 13(b)(ii) (treating
the Termination Date as the effective date of such termination for purposes
thereof). Notwithstanding the preceding


 


9





















 


sentence, if
you accept employment with any not-for-profit entity, then you shall be
entitled to remain an employee of Company and receive the payments as provided
in the first sentence of this Paragraph 13(b)(iii); and if you accept full-time
employment with any affiliate of Company, then the payments provided for in
this Paragraph 13(b)(iii) and the term of employment shall cease and you shall
not be entitled to any such lump sum payment. For purposes of this Agreement,
the term “affiliate” shall mean any entity that, directly or indirectly,
controls, is controlled by, or is under common control with, the Company.


 


c.                                       The
termination of this Agreement or the Term pursuant to Paragraph 13 shall not
affect the obligations of Company under the last sentence of Paragraph 9 or
under Paragraph 10. In addition, if following a termination by you pursuant to
Paragraph 13 or a termination of this Agreement by Company without cause or at
the end of the original Term of this Agreement, you make the election provided
in clause (y) of Paragraph 13(b), then during the period you remain on the
payroll of Company after such termination (i) you shall continue to be eligible
to receive the other benefits required to be provided under Paragraphs 9 and 10
to the extent such benefits are maintained in effect by Company for its senior
executives and (ii) you shall continue to be an employee of Company for
purposes of any stock option agreements, including the obligation to use
Company’s best efforts to cause Time Warner to grant stock options pursuant to
Paragraph 5. In the event you leave the payroll of Company or such best efforts
are not successful such that any such options are not granted (whether or not
you leave the payroll of Company, unless your termination is for cause pursuant
to Paragraph 12), Company shall be obligated to pay you the fair value of such
options, less applicable withholdings, the amount of which shall be determined
in good faith using the Black Scholes valuation model. Upon the later of the
time your term of employment with Company terminates and the time you leave the
payroll of


 


10





















 


Company
pursuant to the provisions of Paragraph 13(b), your rights to benefits and
payments under any benefit plans or any insurance or other death benefit plans
or arrangements of Company or under any stock, restricted stock, stock
appreciation right, bonus unit, management incentive or other plan of Company shall be determined,
subject to the other terms and provisions of this Agreement, in accordance with
the terms and provisions of such plans and any agreements under which such
stock options, restricted stock or other awards were granted. Notwithstanding
the foregoing or any more restrictive provisions of any such plan or agreement,
upon a termination of this Agreement or the Term pursuant to Paragraph 13 or a
termination of this Agreement by Company without cause all stock options
granted to you by Company shall become immediately exercisable and shall remain
exercisable (but not beyond the term thereof) during the remainder of the Term.


 


d.                                      In
partial consideration for Company’s obligation to make the payments described
in Paragraph 13, you shall execute and deliver to Company a release in
substantially the form attached hereto as Annex A. Company shall deliver such
release to you and to your counsel specified in Paragraph 17 hereof within 10
days after the written notice of termination is delivered pursuant to Paragraph
13(b) and you shall execute and deliver such release to Company within 21 days
after receipt thereof. If you shall fail to execute and deliver such release to
Company within such 21 day period, or if you shall revoke your consent to such
release as provided therein, your term of employment shall terminate as
provided in Paragraph 13(b), but you shall receive, in lieu of the payments
provided for in Paragraph 13, a lump sum cash payment in an amount determined
in accordance with the personnel policies of Company relating to notice and
severance then generally applicable to employees with a length of service and
compensation level comparable to yours.


 


14.                                 Mitigation.
In the event of the termination of this Agreement by you as a result of


 


11





















 


a material
breach by Company of any of its obligations hereunder, or in the event of the
termination of this Agreement or the term of employment by Company in breach of
this Agreement or at the end of the original Term of this Agreement, you shall
not be required to seek other employment in order to mitigate your damages
hereunder; provided, however, that, notwithstanding the foregoing, (i) if there
are any damages hereunder by reason of the events of termination described
above which are “contingent on a change” (within the meaning of Section
280G(b)(2)(A)(i) of the Code), you shall be required to mitigate such damages
hereunder, including any such damages theretofore paid, but not in excess of
the extent, if any, necessary to prevent Company from losing any tax deductions
to which it otherwise would be entitled in connection with such damages if they
were not so “contingent on a change,” and (ii) in addition to any obligation
under the preceding clause (i), and without duplication of any amounts required
to be paid to Company thereunder, if any such termination occurs and you,
whether or not required to mitigate your damages under clause (i) above,
thereafter obtain any compensation from any employment or consulting
arrangements other than with a not-for-profit entity, such compensation,
whether paid to you or deferred for your benefit, shall reduce, pro  tanto,
any amount which Company would otherwise be required to pay you as a result of
such termination and, to the extent amounts have theretofore been paid to you
as a result of such termination, such compensation shall be paid over to
Company as received. Notwithstanding anything to the contrary in this Paragraph
14, you shall not be required to mitigate your damages hereunder with respect
to the first two years of Base Salary otherwise payable after such termination
which shall be paid to you without discount or offset.


 


15.                                 Confidential
Matters. Except as may be required by law, you shall keep secret all
confidential matters of Company and its affiliates (for purposes of this
Paragraph.


 


12





















 


15 only, “Company”),
and shall not disclose them to anyone outside of Company, either during or
after your employment with Company, except with Company’s written consent. You
shall deliver promptly to Company upon termination of your employment, or at
any time Company may request, all confidential memoranda, notes, records,
reports and other documents (and all copies thereof) relating to the business
of Company which you may then possess or have under your control. Notwithstanding
anything to the contrary in this Paragraph 15, you shall be entitled to
disclose the terms of this Agreement and any other arrangements concerning your
employment hereunder to members of your immediate family and your attorneys and
financial advisors.


 


16.                                 Results
and Proceeds of Employment. You acknowledge that Company shall own all
rights of every kind and character throughout the world in perpetuity in and to
any material and/or ideas written, suggested or in any way created by you
hereunder and all other results and proceeds of your services hereunder,
including, but not limited to, all copyrightable material created by you within
the scope of your employment. You agree to execute and deliver to Company such
assignments or other instruments as Company may require from time to time to
evidence Company’s ownership of the results and proceeds of your services.


 


17.                                 Notices.
All notices, requests, consents and other communications required or permitted
to be given hereunder shall be in writing and shall be deemed to have been duly
given if delivered personally or sent by prepaid telegram, courier, or mailed
first-class, postage prepaid, by registered or certified mail, return receipt
requested, as follows:


 


TO YOU:


Mr. David H.
Johnson


35 East 20th
Street


New York, New
York 10003


 


13





















 


WITH A COPY
TO:


Nicholas
Gordon, Esq.


Franklin,
Weinrib, Rudell & Vassallo, P.C.


488 Madison
Avenue


New York, New
York 10022


 


TO COMPANY:


Warner Music Group Inc.


4000 Warner Boulevard - Bldg 2


Burbank, CA 91522


Attn: Chief Executive Officer


 


WITH A COPY TO:


Time Warner Inc.


75 Rockefeller Plaza


New York, NY 10019


Attn: General Counsel


 


Either you or
Company may change the address to which notices are to be sent by giving
written notice of such change of address to the other in the manner herein
provided for giving notice.


 


18.                                 Miscellaneous.


 


a.                                       You
represent and warrant to Company that you are free to enter into this Agreement
and, as of the commencement of the Term hereof, are not subject to any
conflicting obligation or any disability which will prevent you from or
interfere with your executing and performing your obligations hereunder or
could be the basis of any valid claim against Company. Prior to entering into
this Agreement you have obtained release from Sony Music Entertainment Inc. (“Sony”)
of any claims relating to this Agreement, a true, correct and complete copy of
which has been delivered to Company.


 


14





















 


b.                                      You
acknowledge that during the Term you will comply with Company’s conflict of
interest policy and other corporate policies (including without limitation, the
policies contained in Time Warner’s Compliance Program Manual, a copy
of which has been
furnished to you), as in effect from time to time, of which you are made aware.
You have accurately completed the attached Conflict of Interest Questionnaire
as of the date hereof.


 


c.                                       You
acknowledge that services to be rendered by you under this Agreement are of a
special, unique and intellectual character which gives them peculiar value, and
that a breach or threatened breach of any provision of this Agreement
(particularly, but not limited to, the provisions of Paragraphs 4 and 15
hereof), will cause Company immediate irreparable injury and damage which
cannot be reasonably or adequately compensated in damages in an action at law.
Accordingly, without limiting any right or remedy which Company may have in the
premises, you specifically agree that Company shall be entitled to injunctive
relief to enforce and protect its rights under this Agreement. The provisions
of this Paragraph 18(c) shall not be construed as a waiver by Company of any
rights which Company may have to damages or any other remedy.


 


d.                                      This
Agreement sets forth the entire agreement and understanding of the parties
hereto, and supersedes and terminates any and all prior agreements,
arrangements and understandings. No representation, promise or inducement has
been made by either party that is not embodied in this Agreement, and neither
party


 


15





















 


shall be bound
by or liable for any alleged representation, promise or inducement not herein
set forth.


 


e.                                       The
provisions of this Agreement shall inure to the benefit of the parties hereto,
their heirs, legal representatives, successors and permitted assigns. This
Agreement, and your rights and obligations hereunder, may not be assigned by
you. Company may assign its rights, together with its obligations, hereunder in
connection with any sale, transfer or other disposition of all or a substantial
portion of the stock or assets of Company, WCI, Time Warner or the recorded
music business of Time Warner.


 


f.                                         This
Agreement may be amended, modified, superseded, canceled, renewed or extended,
and the terms or covenants hereof may be waived, only by a written instrument
executed by both of the parties hereto, or in the case of a waiver, by the
party waiving compliance. The failure of either party at anytime or times to
require performance of any provision hereof shall in no manner affect the right
at a later time to enforce the same. No waiver by either party of the breach of
any term or covenant contained in this Agreement, whether by conduct or
otherwise, in any one or more instances shall be deemed to be, or construed as,
a further or continuing waiver of any such breach, or a waiver of the breach of
any other term or covenant contained in this Agreement.


 


g.                                      This
Agreement shall be governed by and construed according to the laws of the State
of New York as applicable to agreements to be wholly performed therein. Any
dispute or controversy arising


 


16





















 


with respect
to this Agreement shall, at the election of either Company or you, be submitted
to JAMS/ENDISPUTE for resolution in arbitration in accordance with the rules
and procedures of JAMS/ENDISPUTE. Either party shall make such election by
delivering written notice thereof to the other party at any time (but not later
than 45 days after such party receives notice of the commencement of any
administrative or regulatory proceeding or the filing of any lawsuit relating
to any such dispute or controversy) and thereupon any such dispute or
controversy shall be resolved only in accordance with the provisions of this
Paragraph 18(g). Any such proceedings shall take place in New York City before
a single arbitrator (rather than a panel of arbitrators), pursuant to any
streamlined or expedited (rather than a comprehensive) arbitration process, before
a nonjudicial (rather than a judicial) arbitrator, and in accordance with an
arbitration process which, in the judgment of such arbitrator, shall have the
effect of reasonably limiting or reducing the cost of such arbitration. The
resolution of any such dispute or controversy by the arbitrator appointed in
accordance with the procedures of JAMS/ENDISPUTE shall be final and binding.
Judgment upon the award rendered by such arbitrator may be entered in any court
having jurisdiction thereof, and the parties consent to the jurisdiction of the
New York courts for this purpose. The prevailing party shall be entitled to
recover the costs of arbitration (including reasonable attorneys’ fees and the
fees of experts) from the losing party. If at the time any dispute or
controversy arises with respect to this Agreement, JAMS/ENDISPUTE is not in
business or is no longer providing arbitration services, then the


 


17





















 


American Arbitration Association shall be
substituted for JAMS/ENDISPUTE for the purposes of the foregoing provisions in
this Paragraph 18(g). If you shall be the prevailing party in such arbitration,
Company shall promptly pay, upon your demand, all. legal fees, court
costs and other costs and expenses incurred by you in any legal
action seeking to enforce the award in any court.


 


h.                                      You
shall be entitled throughout the period of employment under this Agreement in
your capacity as an officer or director of Company or any of its subsidiaries
or an officer or member of the board of representatives or other governing body
of any partnership or joint venture in which Company has an equity interest
(and after the termination of the period of employment hereunder, to the extent
relating to your service as such officer, director or member) to the benefit of
the indemnification provisions contained on the date hereof in the Certificate
of Incorporation and By-Laws of Company (not including any amendments or
additions after the date of execution hereof that limit or narrow, but
including any that add to or broaden, the protection afforded to you by those
provisions), to the extent not prohibited by applicable law at the time of the
assertion of any liability against you, and provided that no such indemnity
will apply to any claim arising out of the release understanding between you
and Sony referred to in Paragraph 18(a).


 


18





















 


If the
foregoing correctly sets forth our understanding, please sign and return the
duplicate copy of the letter enclosed herewith.


 


 


	
   

  	
  Very truly
  yours,

  
	
   

  	
   

  
	
   

  	
  WARNER MUSIC
  GROUP INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  [ILLEGIBLE]

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Accepted and
  Agreed:

  	
   

  
	
   

  	
   

  
	
  /s/ David H.
  Johnson

  	
   

  	
   

  
	
  David H.
  Johnson

  	
   

  
					



 


19