Exhibit 10.2


 


RESTRICTED STOCK AWARD AGREEMENT


 


THIS RESTRICTED STOCK AWARD AGREEMENT (this “Agreement”), is entered into
this 15th day of March, 2005, by and between Warner Music Group Corp., a
Delaware corporation (“Parent”), and Richard Blackstone (the “Executive”).
 Capitalized terms used herein and not
otherwise defined shall have the respective meanings set forth in the “Employment
Agreement” (as defined herein).


 


R E  C  I  T  A  L
S:


 


WHEREAS, Warner Music Group Inc., a Delaware corporation (the “Company”),
an indirect majority owned subsidiary of Parent, or one of its direct or
indirect subsidiaries, and the Executive have entered into an employment
agreement, dated March 15, 2005 (such employment agreement, as it may be
amended, superceded or replaced from time to time, the “Employment Agreement”);
and


 


WHEREAS, the Board of Directors of Parent (the “Board”) has determined to
grant to the Executive on the date hereof (the “Effective Date”) the
restricted stock provided for herein (the “Restricted Stock Award”),
such grant to be subject to the terms and conditions set forth herein.


 


NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth, the
parties hereto agree as follows:


 


1.             Purchase of Restricted Stock.  Subject to the terms and conditions set forth
in this Agreement, Parent hereby grants to the Executive, and the Executive
hereby accepts a grant from Parent, effective as of the Effective Date (which
is the date hereof), 209.8765432 shares of Class A Common Stock of Parent, par value
$.001 per share (the “Restricted Shares”).  The Restricted Shares shall vest in accordance
with Section 2 and Section 5 hereof.


 





















 


2.             Vesting.


 


(a)           Service-Based Restricted Stock.  Except
as otherwise provided in this Agreement, one-third of the Restricted Shares
(the “Service-Based Restricted Stock”), shall vest and become
non-forfeitable in four equal installments on the day prior to each of the
first, second, third and fourth anniversaries of the date on which the
Executive commences full-time employment with the Company (the “Employment
Commencement Date”) provided that the Executive remains employed with the
Company on each such date, such that one hundred percent (100%) of the Service-Based
Restricted Stock shall be vested and non-forfeitable on the day prior to the fourth
anniversary of the Employment Commencement Date; provided that any unvested Service-Based
Restricted Stock shall become vested and non-forfeitable upon a termination of
the Executive’s employment with the Company (A) due to his death, (B) by the
Company due to his Disability or without Cause or (C) by the Executive for Good
Reason, in each case on or after a “Change in Control” (as defined in Section
2(b)(iii)(6)) or, in the case of a termination by the Company without Cause or
a termination by the Executive for Good Reason, in anticipation of a Change in
Control (a termination described in the foregoing proviso being referred to
hereinafter as a “CIC Termination”).


 


(b)           Performance-Based Restricted Stock.  Except
as otherwise provided in this Agreement, two-thirds of the Restricted Shares
(the “Performance-Based Restricted Stock”) shall contingently vest in
equal installments on the day prior to each of the first, second, third and
fourth anniversary of the Employment Commencement Date provided that the
Executive remains employed with the Company on each such date (the “Service
Condition”), but shall not be considered to be fully vested until and
unless the condition described in Section 2(b)(i) or 2(b)(ii), as applicable,
has been satisfied (each such condition, a “Performance Condition”).


 


(i)           With respect to one-half of the Performance-Based Restricted Stock, the
Performance Condition shall be the occurrence of a 2X Restricted Stock
Liquidity Event.


 


(ii)          With respect to the other one-half of the Performance-Based Restricted Stock, the
Performance Condition shall be the occurrence of a 3X Restricted Stock
Liquidity Event.


 


(iii)         For purposes of this Section 2(b), and also as and if used elsewhere in
this Agreement, the following terms shall have the following meanings:


 


(1) “2X Investor Equity Value” shall mean (X) two times the
Investment minus (Y) the aggregate amount of cash and “Fair Market Value”
(as defined below) of readily marketable securities or other assets (determined
at the time of receipt) received by the Investors in respect of the Investor
Equity prior to or coincident with the time of determination.


 


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(2)          “3X Investor Equity Value” shall mean (X) three times the Investment
minus (Y) the aggregate amount of cash and Fair Market Value of readily
marketable securities or other assets (determined at the time of receipt)
received by the Investors in respect of the Investor Equity prior to or
coincident with the time of determination.


 


(3)          “2X Restricted Stock Liquidity Event” shall mean (A) the first
sale in an underwritten offering of Parent’s Class A Common Stock pursuant to a
registration statement on Securities and Exchange Commission (“SEC”)
Form S-l or otherwise under the Securities Act of 1933, as amended (the “Securities
Act”) (an “IPO”), at a per share price which implies an aggregate
value of the Investor Equity at the time of the IPO of at least the 2X Investor
Equity Value, (B) following an IPO, or any transaction other than an IPO which
causes Parent’s Class A Common Stock, or all or substantially all of the
securities into which such Class A Common Stock is converted or for which it is
exchanged, to be listed for trading on a national securities exchange or quoted
on an automated quotation system, the average closing price of Parent’s Class A
Common Stock, or such securities into which Class A Common Stock is converted
or for which it is exchanged, on the primary exchange on which, or system over
which, it is traded over any 20 consecutive trading days is such that the
implied aggregate value of the Investor Equity at the end of such 20
consecutive trading days, based on such average price, is at least the 2X
Investor Equity Value, determined as of the first of such 20 consecutive
trading days, or (C) a Bonus Liquidity Event occurs which results in a
combination of cash and readily marketable securities being paid or provided to
the Investors having an aggregate value (as determined by the Board in good
faith as of the time of receipt) of at least the 2X Investor Equity Value.


 


(4)          “3X Restricted Stock Liquidity Event” has the same meaning as a
2X Restricted Stock Liquidity Event, except that the term “2X Investor Equity
Value” each time it appears in Section 2(b)(iii)(3) above shall be replaced
with “3X Investor Equity Value.”


 


(5)          “Bonus Liquidity Event” shall mean a Change in Control, or other
event (e.g., a leveraged recapitalization in which the proceeds are paid
out to the Investors as dividends and/or redemptions), in which consideration
is paid to Investors in respect of the Investor Equity in the form of cash,
readily marketable securities or a combination of both.


 


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(6)          “Change in Control” shall mean a “Change of Control,” as defined
in the certificate of incorporation of Parent, as amended from time to time.


 


(7)          “Fair Market Value” shall mean the price at which the asset in
question would change hands in an arms’ length sale between a willing buyer and
a willing seller, with neither being under any compunction to buy or sell and
each with full knowledge of all relevant facts, as determined by the Board in good
faith; provided that, in determining Fair Market Value of the securities of any
member of the Parent Group, the Board shall take into account the free cash
flow, revenue and EBITDA and such other methodologies and characteristics as it
may determine to be relevant, and shall (A) adjust the Fair Market Value of the
securities to take into account the illiquidity of securities which are not
publicly traded and (B) make no adjustment on account of any control premium.  Notwithstanding the above, the Fair Market Value
of any freely tradable security which is of a class listed for trading on an
established securities market or established trading system shall be
the average of the high and low trading prices of such class of securities, as
reported on the primary market or trading system on which such securities are
listed on the date Fair Market Value is determined.


 


(8)          “Investment” means $1.25 billion.


 


(9)          “Investor Equity” shall mean all equity securities of all
members of the Parent Group, including common and preferred stock and warrants,
options and other instruments convertible or exercisable into, or redeemable
for, common or preferred stock, either (A) purchased or otherwise received by
the Investors on or prior to March 1, 2004 or (B) received by the Investors
following March 1, 2004, without cost to the Investors, in respect of the equity
securities described in the preceding clause (A).


 


(10)        “Investors” shall mean all of (i) Thomas H. Lee Equity Fund V,
L.P., (ii) Thomas H. Lee Parallel Fund V, L.P., (iii) Thomas H. Lee Equity
(Cayman) Fund V, L.P., (iv) Putnam Investments Holdings, LLC, (v) Putnam
Investments Employees’ Securities Company I LLC, (vi) Putnam Investments Employees’
Securities Company II LLC, (vii) 1997 Thomas H. Lee Nominee Trust, (viii)
Thomas H. Lee Investors Limited Partnership, (ix) Bain Capital Partners
Integral Investors, LLC, (x) Bain Capital VII Coinvestment Fund, LLC, (xi) BCIP
TCV, LLC, (xii) Providence Equity Partners IV, L.P., (xiii) Providence Equity Operating
Partners IV, L.P..and (xiv) Lexa Partners LLC, or any


 


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affiliate
of any of them, in each case which purchases Investor Equity on or prior to the
Effective Date.


 


(11)        “Parent Group” shall mean Parent, the Company and each direct or
indirect subsidiary of any of them.


 


Notwithstanding
anything in this Agreement to the contrary, the Service Condition applicable to
each share of Performance-Based Restricted Stock shall be deemed to have been
attained upon a CIC Termination.


 


(c)          The term “Vested Restricted Shares.”
as used herein, shall mean (i) each share of Service-Based Restricted Stock on
and following the time that the vesting condition set forth in Section 2(a)
hereof has been actually or deemed satisfied as to such share, (ii) each share
of Performance-Based Restricted Stock on and following the time that both the
Service Condition and the Performance Condition have been actually or deemed
satisfied as to such share and (iii) each share of Performance-Based Restricted
Stock not described in the immediately preceding clause (ii) on an following
the day prior to the seventh anniversary of the Employment Commencement Date,
so long as the Executive remains employed by the Company on such day.  Restricted Shares which have not become Vested
Restricted Shares are hereinafter referred to as “Unvested Restricted Shares.”


 


3.             Taxes.  The Executive shall pay to the
Company or Parent promptly upon request, and in any event at the time the
Executive recognizes taxable income in respect of the Restricted Stock Award,
an amount equal to the taxes the Company or Parent determines it is required to
withhold under applicable tax laws with respect to the Restricted Shares.  Such payment shall be made in the form of
cash.  The Executive may, but shall not
be required to, make an election pursuant to Section 83(b) of the Internal
Revenue Code of 1986, as amended (the “Code”) to realize taxable income
in respect of the grant of the Restricted Stock Award, in an amount equal to
the Initial Value.


 


4.             Certificates.  Certificates evidencing the Restricted Shares
shall be issued by Parent and shall be registered in the Executive’s name on
the stock transfer books of Parent promptly after the date hereof, but shall
remain in the physical custody of Parent or its designee at all times prior to,
in the case of any particular Restricted Shares, the date such Restricted
Shares become Vested Restricted Shares.  As
a condition to the receipt of this Restricted Stock Award, the Executive shall
deliver to Parent a stock power, duly endorsed in blank, relating to the
Restricted Shares.


 


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5.             Effect of Termination of Employment.


 


(a)           Upon the termination of the Executive’s
employment with the Company for any reason, the Restricted Shares shall be
subject to forfeiture back to Parent without consideration, or to the Call
Option, in each case as described in Section 5(b) below.  For purposes of this Agreement, such a
termination may be (i) by the Company for Cause or on account of the Executive’s
Disability, by the Executive without Good Reason or on account of the Executive’s
death (a “5(a)(i) Termination”) or (ii) by the Company without Cause or
by the Executive for Good Reason (a “5(a)(ii) Termination”).


 


(b)           Forfeiture; Call Option.


 


(i)            Other than as set forth in the second
sentence of Section 5(b)(ix), upon the termination of the Executive’s
employment with the Company for any reason (or no reason), Unvested Restricted
Shares shall be forfeited, and Parent shall have the right and option (the “Call
Option”), but not the obligation, to purchase, or to cause any member of
the Parent Group designated by Parent (the “Call Assignee”) to purchase,
from the Executive, on and after the Initial Call Date any or all of the Vested
Restricted Shares, in each case as described below in this Section 5(b).  The purchase price (the “Call Price”)
of the Vested Restricted Shares subject to purchase under this provision (the “Called
Shares”) also is described below in this Section 5(b).  Notwithstanding anything in this Agreement to
the contrary, all of the Restricted Shares shall be forfeited on January 6,
2006 if the Employment Commencement Date does not occur on or prior to that
date.


 


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


 


(2)  In the event of a 5(a)(ii)
Termination, the Call Price of each Called Share which is a Vested Restricted
Share immediately prior to the Initial Call Date of such share, or which becomes
a Vested Restricted Share upon termination of employment solely because such
termination is a CIC Termination, shall be the Fair Market Value of such share
on the date of the applicable Call Notice.


 


(3)  In the event of a 5(a)(ii)
Termination, each Restricted Share which is an Unvested Restricted Share immediately
prior to the Initial Call Date of such share (other than


 


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such
a share which becomes a Vested Restricted Share upon termination of employment
solely because such termination is a CIC Termination) shall be forfeited on
such Initial Call Date.


 


(ii)           The “Initial Call Date” shall mean (A) with respect to each
share of Performance-Based Restricted Stock as to which the Service Condition,
but not the Performance Condition, has been attained at the time of a 5(a)(ii)
Termination, the earlier of (I) the date the Performance Condition is first
attained with respect to such share and (II) the six-month anniversary of the
5(a)(ii) Termination, or (B) in all other cases, the date of termination of the
Executive’s employment with the Company.


 


(iii)          For purposes of Section 5(b)(i), (A) the termination of the Executive’s
employment at the end of the term of the Employment Agreement following the
failure of the Company to offer the Executive continued employment at a base
salary not less than that in effect at the end of such term shall be deemed to
be a 5(a)(ii) Termination and (B) the termination of the Executive’s
employment at the end of the term of the Employment Agreement following the
Company’s offering the Executive continued employment at a base salary not less
than that in effect at the end of such term shall be deemed to be a 5(a)(i)
Termination.


 


(iv)          Parent or the Call Assignee, as applicable, may exercise the Call
Option by delivering or mailing to the Executive (or to his estate, if
applicable), in accordance with Section 16 of this Agreement, written notice of
exercise (a “Call Notice”) at any time following the Initial Call Date.  The Call Notice shall specify the date
thereof, the number of Called Shares and the Call Price.


 


(v)           Within ten (10) days after his receipt of the Call Notice, the
Executive (or his estate) shall tender to Parent or the Call Assignee, as
applicable, at its principal office the certificate or certificates
representing the Called Shares, duly endorsed in blank by the Executive (or his
estate) or with duly endorsed stock powers attached thereto, all in form
suitable for the transfer of such shares to Parent or the Call Assignee, as
applicable.  Upon its receipt of such
shares, Parent or the Call Assignee, as applicable, shall pay to the Executive
the aggregate Call Price therefore, in cash.


 


(vi)          Parent or the Call Assignee, as applicable, will be entitled to receive
customary representations and warranties from the Executive regarding the sale
of the Called Shares pursuant to the exercise of the Call Option as may
reasonably requested by Parent or the Call Assignee, as applicable, including
but not limited to the representation that the Executive has good and
marketable title to the Called Shares to be transferred free and clear of all
liens, claims and other encumbrances.


 


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(vii)         If Parent or the Call Assignee, as applicable, delivers a Call Notice,
then from and after the time of delivery of the Call Notice the Executive shall
no longer have any rights as a holder of the Called Shares subject thereto
(other than the right to receive payment of the Call Price as described above),
and such Called Shares shall be deemed purchased in accordance with the
applicable provisions hereof and Parent or the Call Assignee, as applicable,
shall be deemed to be the owner and holder of such Called Shares.


 


(viii)        Any Vested Restricted Shares as to which the Call Option is not
exercised will remain subject to all terms and conditions of this Agreement,
including the continuation of Parent’s or the Call Assignee’s, as applicable,
right to exercise the Call Option.


 


(ix)           This Section 5(b) is in addition to, and not in lieu of, any rights and
obligations of the Executive and Parent in respect of the Restricted Shares
contained in the “Stockholders’ Agreement” (as defined below).  Notwithstanding the above, this Section 5(b)
shall be ineffective as to each Vested Restricted Share on and following the
later of (I) an IPO or any other event which causes the Class A Common Stock,
or other securities for which all or substantially all of the Class A Common
Stock may have been exchanged, to be or become listed for trading on or over an
established securities market or established trading system and (II) the date
on which such share becomes a Vested Restricted Share.


 


6.             Rights as a Stockholder; Dividends.


 


(a)           The Executive shall be the record owner of
the Restricted Shares unless and until such shares are sold or otherwise disposed
of, and as record owner shall be entitled to all rights of a common stockholder
of Parent, including, without limitation, voting rights, if any, with respect
to the Restricted Shares; provided that (i) any cash or in-kind
dividends paid with respect to Restricted Shares which are not Vested
Restricted Shares shall be withheld by Parent and shall be paid to the
Executive, without interest, only when, and if, such Restricted Shares shall
become Vested Restricted Shares (provided, however, that in the event of a
rights offering in which the Restricted Shares are entitled to participate, the
Executive shall be entitled to subscribe for and purchase any securities made
available in such rights offering with respect to all Restricted Shares,
whether or not such Restricted Shares are Vested Restricted Shares), and (ii)
the Restricted Shares shall be subject to the limitations on transfer and
encumbrance set forth in this Agreement and the stockholders’ agreement
executed and entered into by and between Parent, the Investors and the other
parties thereto prior to the Effective Date (such stockholders’ agreement, as
it may be amended, superceded or replaced from time to time, the “Stockholders’
Agreement”).  A copy of the
Stockholders’ Agreement, as in effect on the date hereof, is annexed hereto as
Exhibit A.  As soon as practicable
following the vesting of any Restricted Shares, certificates for such Vested
Restricted Shares shall be delivered to the Executive or to the Executive’s
legal representative along with the stock powers relating thereto.


 


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(b)           At or promptly following an IPO or any other
transaction which makes Parent eligible to use SEC Form S-8, Parent shall
register all of the Restricted Shares (whether or not vested) on Form S-8 or an
equivalent registration statement (including, at Parent’s option, on the Form
S-l filed in connection with an IPO), and use reasonable commercial efforts to
keep such registration effective so long as the Executive continues to hold any
of the Restricted Shares.


 


7.             Restrictive Legend.  All
certificates representing Restricted Shares shall have affixed thereto a legend
in substantially the following form, in addition to any other legends that may
be required under federal or state securities laws, unless and to the extent
determined inapplicable or unnecessary by Parent:


 


THE
SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON
TRANSFER AND AN OPTION TO PURCHASE SET FORTH IN A CERTAIN RESTRICTED STOCK
AWARD AGREEMENT BETWEEN WARNER MUSIC GROUP CORP. AND THE REGISTERED OWNER OF
THIS CERTIFICATE (OR HIS PREDECESSOR IN INTEREST) AND A STOCKHOLDERS’ AGREEMENT
TO WHICH WARNER MUSIC GROUP CORP. AND THE REGISTERED OWNER OF THIS CERTIFICATE
(OR HIS PREDECESSOR IN INTEREST) ARE PARTIES, WHICH AGREEMENTS ARE BINDING UPON
ANY AND ALL OWNERS OF ANY INTEREST IN SAID SHARES.  SAID AGREEMENTS ARE AVAILABLE FOR INSPECTION
WITHOUT CHARGE AT THE PRINCIPAL OFFICE OF WARNER MUSIC GROUP CORP. AND COPIES
THEREOF WILL BE FURNISHED WITHOUT CHARGE TO ANY OWNER OF SAID SHARES UPON
REQUEST.


 


THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.  THESE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD,
MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED AND ANY APPLICABLE STATE SECURITIES LAWS, UNLESS WARNER MUSIC GROUP
CORP. HAS RECEIVED AN OPINION OF COUNSEL, WHICH OPINION IS REASONABLY
SATISFACTORY TO IT, TO THE EFFECT THAT SUCH REGISTRATIONS ARE NOT REQUIRED.


 


8.           Transferability.


 


(a)           The Restricted Shares may not, at any time
prior to becoming Vested Restricted Shares, be assigned, alienated, pledged,
attached, sold or otherwise transferred or encumbered by the Executive and any
such purported


 


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assignment,
alienation, pledge, attachment, sale, transfer or encumbrance shall be void and
unenforceable against Parent; provided that the designation of a beneficiary
shall not constitute an assignment, alienation, pledge, attachment, sale,
transfer or encumbrance; and provided further that the foregoing restriction
shall not apply to a sale of Restricted Shares in compliance with the
obligations, if any, of the holder thereof to sell such shares pursuant to the “drag
along” provisions of the Stockholders’ Agreement.


 


(b)           Prior to an IPO, neither the Executive nor
any transferee of the Executive (including any beneficiary, executor or
administrator) shall assign, alienate, pledge, attach, sell or otherwise
transfer or encumber the Restricted Shares upon or subsequent to their vesting,
except in accordance with the applicable provisions of this Agreement and the
Stockholders’ Agreement; provided, that, subject to the
provisions of the Stockholders’ Agreement, Vested Restricted Shares may be
transferred (i) by will or the laws of descent, or (ii) with the Board’s
approval (which may be granted or withheld at its sole discretion), by the
Executive without consideration to (A) any person who is a “family member” of
the Executive, as such term is used in the instructions to SEC Form S-8
(collectively, the “Immediate Family Members”); (B) a trust solely for
the benefit of the Executive and/or Immediate Family Members; or (C) any other
transferee as may be approved by the Board in its sole discretion
(collectively, the “Permitted Transferees”); provided, that,
the Executive gives the Board advance written notice describing the terms and
conditions of the proposed transfer and the Board notifies the Executive in
writing that such a transfer is in compliance with the terms of this Agreement;
provided, further, that, the restrictions upon any Vested
Restricted Shares transferred in accordance with this Section 8(b) shall apply
to the Permitted Transferee, such transfer shall be subject to the acceptance
by the Permitted Transferee of the terms and conditions hereof and of the
Stockholders’ Agreement, and any reference in this Agreement or the
Stockholders’ Agreement to the Executive shall be deemed to refer to the
Permitted Transferee, except that (a) prior to an IPO, Permitted Transferees
shall not be entitled to transfer any Vested Restricted Shares other than by
will or the laws of descent and distribution or, with the Board’s approval
(which may be granted or withheld at its sole discretion), to a trust solely
for the benefit of the Permitted Transferee, and (b) the consequences of the
termination of the Executive’s employment with the Company under the terms of
this Agreement shall continue to be applied with respect to the Permitted
Transferee to the extent specified in this Agreement.


 


9.           Securities Laws.  The
Executive represents, warrants and covenants as follows:


 


(a)           The Executive is acquiring the Restricted
Shares for his own account and not with a view to, or for sale in connection
with, any distribution of the Restricted Shares in violation of the Securities
Act or any rule or regulation under the Securities Act or in violation of any
applicable state securities law.


 


(b)           The Executive has had such opportunity as he
has deemed adequate to obtain
from representatives of Parent such information as is necessary to permit him
to evaluate the merits and risks of his investment in the Parent.


 


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(c)           The Executive has sufficient experience in
business, financial and investment matters to be able to evaluate the risks
involved in acquiring of the Restricted Shares and to make an informed
investment decision with respect to such investment.


 


(d)          The Executive can afford the complete loss of
the value of the Restricted Shares and is able to bear the economic risk of
holding such shares for an indefinite period.


 


(e)           The Executive understands that (i) the
Restricted Shares have not been registered under the Securities Act and are “restricted
securities” within the meaning of Rule 144 under the Securities Act; (ii) the
Restricted Shares cannot be sold, transferred or otherwise disposed of unless
they are subsequently registered under the Securities Act or an exemption from
registration is then available; (iii) in any event, the exemption from
registration under Rule 144 will not be available for at least one (1) year and
even then will not be available unless a public market then exists for such
shares, adequate information concerning Parent is then available to the public,
and other terms and conditions of Rule 144 are complied with and (iv) there is
now no registration statement on file with the SEC with respect to the
Restricted Shares and, except as set forth in Section 6(b) hereof or in the
Stockholders’ Agreement, there is no commitment on the part of Parent to make
any such filing.


 


(f)           In addition, upon any Restricted Shares
becoming Vested Restricted Shares, the Executive will make or enter into such
other written representations, the warranties and agreements as the Board may
reasonably determine are legally required in order to comply with applicable
securities laws.


 


10.         Adjustments for Stock Splits. Stock Dividends, etc.


 


(a)           If from time to time during the term of this
Agreement there is any stock split-up, stock dividend, stock distribution or
other reclassification of Parent’s Class A Common Stock, any and all new,
substituted or additional securities to which the Executive is entitled by
reason of his ownership of the Restricted Shares shall be immediately subject
to the terms of this Agreement.


 


(b)           If the Parent’s Class A Common Stock is
converted into or exchanged for, or stockholders of Parent receive by reason of
any distribution in total or partial liquidation, securities of another corporation, or other property (including cash), pursuant to any
merger of Parent or acquisition of its assets, then the rights of Parent under
this Agreement shall inure to the benefit of Parent’s successor and this
Agreement shall apply to the securities or other property received upon such conversion,
exchange or distribution in the same manner and to the same extent as the
Restricted Shares.


 


11.         Confidentiality of the Agreement.  The
Executive agrees to keep confidential the terms of this Agreement.  This provision does not prohibit the Executive
from providing this information on a confidential and privileged basis to the
Executive’s


 


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attorneys or accountants for
purposes of obtaining legal or tax advice or as otherwise required by law, regulation
or stock exchange rule.


 


12.          Severability.  The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
and each other provision of the Agreement shall be severable and enforceable to
the extent permitted by law.


 


13.          Waiver.  Any right of Parent contained
in the Agreement may be waived in writing by the Board.  No waiver of any right hereunder by any party
shall operate as a waiver of any other right, or as a waiver of the same right
with respect to any subsequent occasion for its exercise, or as a waiver of any
right to damages.  No waiver by any party
of any breach of this Agreement shall be held to constitute a waiver of any other
breach or a waiver of the continuation of the same breach.


 


14.          No Rights to Employment. 
Nothing contained in this Agreement shall be construed as giving the
Executive any right to be retained, in any position, as an employee, consultant
or director of the Company or its affiliates or shall interfere with or restrict
in any way the right of the Company or its affiliates, which are hereby
expressly reserved, to remove, terminate or discharge the Executive at any time
for any reason whatsoever.


 


15.        Entire Agreement.  This
Agreement contains the entire agreement and understanding of the parties hereto
with respect to the subject matter contained herein and supersedes all prior
communications, representations and negotiations in respect thereto.  No change, modification or waiver of any
provision of this Agreement shall be valid unless the same be in writing and
signed by the parties hereto.


 


16.        Notices.  Any notice, consent, request
or other communication made or given in accordance with this Agreement shall be
in writing and shall be deemed to have been duly given when actually received
or, if mailed, three days after mailing by registered or certified mail, return
receipt requested, or one business day after mailing by a nationally recognized
express mail delivery service with instructions for next-day delivery, to those
persons listed below at their following respective addresses or at such other
address or person’s attention as each may specify by notice to the others:


 


To Parent:


 


Warner
Music Group Corp.


75
Rockefeller Plaza


New
York, New York 10019


Attention:
General Counsel


 


with a copy to:


 


Paul,
Weiss, Rifkind, Wharton & Garrison LLP


1285
Avenue of the Americas


New
York, New York 10019


 


12





















 


Attention:
Michael J. Segal, Esq.


 


To
the Executive:


 


The
most recent address for the Executive in the records of Parent or the Company.  The Executive hereby agrees to promptly
provide Parent and the Company with written notice of any change in the
Executive’s address for so long as this Agreement remains in effect.


 


with
a copy to:


 


Nick
Gordon, Esq.


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


488
Madison Avenue


New
York, New York 10022


 


17.           Beneficiary.  The Executive may file with
the Board a written designation of a beneficiary on such form as may be
prescribed by the Board and may, from time to lime, amend or revoke such
designation.  If no designated
beneficiary survives the Executive, the executor or administrator of the
Executive’s estate shall be deemed to be the Executive’s beneficiary.  The Executive’s beneficiary shall succeed to the
rights and obligations of the Executive hereunder upon the Executive’s death,
except as maybe otherwise described herein.


 


18.           Successors.  The terms of this Agreement
shall be binding upon and inure to the benefit of Parent, its successors and
assigns, and of the Executive and the beneficiaries, executors, administrators,
heirs and successors of the Executive.


 


19.           Modifications.  No
change, modification or waiver of any provision of this Agreement shall be
valid unless the same be in writing and signed by the parties hereto.


 


20.           Restricted Stock Award Subject to the
Stockholders’ Agreement.  By entering into this Agreement the Executive
agrees and acknowledges that the Executive has received and read the
Stockholders’ Agreement.  The
Stockholders’ Agreement as it may be amended from time to time is hereby
incorporated herein by reference.  In the
event of a conflict between any term or provision contained herein and any
terms or provisions of the Stockholders’ Agreement, the applicable terms and
provisions of the Stockholders’ Agreement will govern and prevail except with
respect to Section 5(b) hereof.  Notwithstanding
the above, Section 4.1 of the Stockholders’ Agreement (“Tag-Along”) shall not apply
to Unvested Restricted Shares.


 


21.           GOVERNING LAW; CONSENT TO JURISDICTION.  THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF DELAWARE APPLICABLE TO AGREEMENTS MADE AND TO BE WHOLLY PERFORMED
WITHIN THAT STATE.  ANY ACTION TO ENFORCE
THIS AGREEMENT MUST BE BROUGHT


 


13





















 


IN A COURT SITUATED IN, AND
THE PARTIES HEREBY CONSENT TO THE JURISDICTION OF, COURTS SITUATED IN NEW YORK
COUNTY, NEW YORK.  EACH PARTY HEREBY
WAIVES THE RIGHTS TO CLAIM THAT ANY SUCH COURT IS AN INCONVENIENT FORUM FOR THE
RESOLUTION OF ANY SUCH ACTION.


 


22.           JURY TRIAL WAIVER.  THE
PARTIES EXPRESSLY AND KNOWINGLY WAIVE ANY RIGHT TO A JURY TRIAL IN THE EVENT
ANY ACTION ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT IS LITIGATED OR
HEARD IN ANY COURT.


 


23.           Headings.  The headings of the Sections
hereof are provided for convenience only and are not to serve as a basis for
interpretation or construction, and shall not constitute a part, of this Agreement.


 


24.           Signature in Counterparts.  This
Agreement may be signed in counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument.  The parties hereto confirm
that any facsimile copy of another party’s executed counterpart of this
Agreement (or its signature page thereof) will be deemed to be an executed
original thereof.


 


IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first
set forth above.


 


	
   

  	
  WARNER MUSIC GROUP CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Edgar Bronfman, Jr.

  	
   

  
	
   

  	
  By:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  /s/ Richard Blackstone

  	
   

  
	
   

  	
  RICHARD BLACKSTONE

  



 


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