Document:

Exhibit 10.1

 

WARNER/CHAPPELL MUSIC, INC.

10585 Santa Monica Boulevard

Los Angeles, CA 90025

 

March 15, 2005

 

Richard
Blackstone

C/o
Nicholas Gordon, Esq.

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

488
Madison Avenue

New
York, New York 10022

 

Dear
Richard:

 

You
acknowledge (a) that you are subject to an employment agreement (the “Current
Agreement”) with your current employer (the “Current Employer”), and (b) that
for the remainder of the term of the Current Agreement you intend to fully
perform your obligations under the Current Agreement.

 

Until
the Term Start Date (as defined below), you shall not be an employee or officer
of Warner/Chappell Music Inc. (“Company”) and you shall have no
responsibilities to Company, and shall not, and shall have no authority to,
bind Company in any manner or take any action on behalf of Company.

 

This
letter, when signed by you and countersigned by Company, shall, effective as of
the date on which this agreement (the “Agreement”) is executed in full,
constitute our agreement with respect to your future employment with us.

 

1.             Position: Chairman and Chief Executive Officer

 

2.             Term: (a) For purposes of this Agreement, “Term” shall mean the period
commencing on the date immediately following the date that is the earliest to
occur of (i) December 31, 2005 (which you have represented to us is the date as
of which the term of the Current Agreement expires), (ii) such earlier date, if
any, as the Current Agreement otherwise terminates in accordance with its
terms, or (iii) the date, if any, as of which you are released from your
employment under the Current Agreement pursuant to a reasonable written release
document, (such earliest date being the “Term Start Date”), and ending on the
fourth anniversary of the Term Start Date.  Each consecutive twelve-month period of the
Term is sometimes hereinafter referred to as a “Contract Year.”

 

 

(b)
Your employment with Company under this Agreement shall be deemed to commence
as of the Term Start Date.  None of the
obligations and restrictions imposed on you pursuant to this Agreement
(including, without limitation, any requirement of exclusivity and any
requirement that you comply with any conflict of interest policy of Company),
shall become effective until the Term Start Date.

 

3.             Compensation:

 

(a)
Salary: During the Term, Company shall pay you a salary at the rate of
$650,000 per annum.  Warner Music Group (“WMG”)
shall consider an upward adjustment to your salary effective as of the
commencement of the third Contract Year; provided, that, whether or not any
such adjustment is made shall remain in the sole discretion of WMG.

 

(b)
Annual Discretionary Bonus: With respect to each fiscal year of the
Term, WMG shall consider granting to you an annual bonus (or a pro rata portion
of such annual bonus for a portion of such fiscal year). The amount of each
annual bonus awarded to you shall be determined by WMG at its sole discretion,
based on the strength of your performance and on the performance of Company and
of WMG.  Your Target bonus for each full
fiscal year of the Term shall be $650,000 (or a pro rata portion of such amount
for a portion of a fiscal year); provided that the amount of each annual bonus
awarded to you may be higher or lower than the Target amount, and shall remain
in the sole discretion of WMG.  Notwithstanding the foregoing, you may, by
written notice to Company given no later than 10 business days following the
Term Start Date, elect either (i) that your pro rata annual bonus with respect
to fiscal year 2005 shall not be less than $650,000 multiplied  by
a fraction, the numerator of which is the number of days within the period from
the Term Start Date until the last day of the fiscal year 2005, and the
denominator of which is 365, or (ii) that your annual bonus with respect to fiscal
year 2006 shall not be less than $650,000. In the event that you fail to timely
give such notice, you shall be deemed to have elected (ii) above.

 

(c)
Special Payment: On or about January 31, 2006, Company shall pay to you
a special payment in an amount equal to $100,000 less the sum of (i) any
annual bonus amounts paid to you by your Current Employer, or which you
reasonably expect will be paid to you by your Current Employer, in respect of
your work for your Current Employer in calendar 2005 and (ii) any annual bonus
amounts paid to you by Company in respect of your work for Company in Company’s
fiscal year 2005.

 

(d)
Payment of Compensation: Compensation accruing to you during the Term
shall be payable in accordance with the regular payroll practices of Company
for employees at your level.  You shall
not be entitled to additional compensation for

 

 

performing
any services for the “Non-publishing WMG Companies” (as defined below);
although the only such services that you may be required to perform for any
Non-publishing WMG Company are occasional services that are appropriate for
your position. “Non-publishing WMG Companies” shall mean WMG’s subsidiaries or
affiliates other than Warner/Chappell Music Inc. and its subsidiaries.

 

4.             Exclusivity:

 

(a)
Your employment with Company shall be full-time and exclusive.  During the Term you will not render any
services for others, or for your own account, in the field of entertainment or
otherwise.  Rendering services to your
Current Employer prior to the Term Start Date shall not constitute a violation
by you of the terms of this Paragraph 4, or of Company’s conflict of
interest policies.

 

(b)
You have advised Company that you intend to invest in certain companies in
Turkey (sometimes referred to as “Turkish Entities”) which may deal in aspects
of the music business, including recording and publishing.  Notwithstanding the provisions of clause (a)
above, but subject to clause (c) below, you shall not be precluded from owning
a minority equity interest in, and rendering occasional services to, any
Turkish Entities (your “Turkish Activities”), provided that (i) such Turkish
Activities do not interfere with the performance of your duties hereunder and
(ii) you periodically provide the General Counsel of WMG with written notice of
any significant new Turkish Activities or any material changes to your Turkish
Activities.

 

(c)
You understand that no WMG-owned or controlled company currently engages
actively in business in Turkey.  In the
event that a WMG-owned or controlled company commences any music-related
business in Turkey, then your Turkish Activities may constitute a conflict of
interest.  In the event that the Chief
Executive Officer of WMG, in consultation with the General Counsel of WMG,
concludes in good faith that any of your Turkish Activities constitutes a
conflict of interest, then the General Counsel of WMG shall, in consultation
with you, establish such procedures and/or direct such actions as are necessary
to address such conflict of interest in a manner that is satisfactory to the
Chief Executive Officer of WMG in his good faith determination.

 

5.             Reporting: You shall at all times work under the supervision and direction of
the Chief Executive Officer of WMG (currently Edgar Bronfman, Jr.), and you
shall perform such duties as you shall reasonably be directed to perform by
such officer.  All of Company’s employees
shall report to you, or in an ascending chain of authority ending with you;
provided, that, certain of Company’s executives located outside of the U.S.
currently report on a so-called “solid-line” basis to Company’s executives and
on a so-called “dotted-line” basis to executives of WMG’s

 

 

international
recorded music operations.  Company will
consider in good faith any proposal to modify that reporting structure that you
may make from time to time; provided that, whether or not any modification to
that reporting structure is effected shall remain in the sole discretion of the
Chief Executive Officer of WMG.

 

6.             Place of Employment: Manhattan.  You shall render services at the offices
established for Company at such location.  You also agree to travel on temporary trips to
such other place or places as may be required from time to time to perform your
duties hereunder, including likely frequent travel to the Los Angels area, in
which area Company will likely continue to maintain significant operations.

 

7.             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.  You shall be entitled to first class travel
and accommodations.

 

8.             Benefits: While you are employed hereunder, you shall be entitled to all fringe
benefits generally accorded to employees of WMG at your level from time to
time, including, but not limited to, 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.  You shall also be entitled to four (4) weeks
vacation (with pay) during each calendar year of the Term, which vacation shall
be taken at reasonable times and shall be governed by Company’s policies with
respect to vacations for executives.

 

9.             Disability/Death: If you shall become physically or mentally
incapacitated from performing your duties hereunder, and such incapacity shall
continue for a period of six (6) consecutive months or more or for shorter
periods aggregating six months or more in any twelve-month period, Company
shall have the right (before the termination of such incapacity), at its
option, to terminate your employment hereunder upon paying to you any accrued
but unpaid salary to the date of such termination.  In the event of your death, this Agreement
shall automatically terminate except that Company shall pay to your estate any
accrued but unpaid salary through the last day of the month of your death.

 

10.           Termination by Company: Company may at any time during the Term, by
written notice, terminate your employment for “Cause” (as defined below), such
Cause to be specified in the notice of termination.  Only the following acts shall constitute “Cause”
hereunder: (i) any willful or intentional act or omission having the effect,
which effect is reasonably foreseeable, of injuring, to an extent that is
meaningful,

 

 

the
reputation, business, business relationships or employment relationships of
Company or its affiliates; (ii) conviction of, or plea of nolo contendere
to, a misdemeanor involving theft, fraud, forgery or the sale or possession of
illicit substances or a felony; (iii) breach of material covenants contained in
this Agreement; and (iv) repeated or continuous failure, neglect or refusal to
perform your material duties hereunder.  Notice
of termination given to you by Company shall specify the reason(s) for such
termination, and in the case where a cause for termination described in clause
(i), (iii) or (iv) above shall be susceptible of cure, and such notice of
termination is the first notice of termination given to you for such reason, if
you fail to cure such cause for termination within ten (10) business days after
the date of such notice, termination shall be effective upon the expiration of
such ten-day period, and if you cure such cause within such ten-day period, such
notice of termination shall be ineffective.  In all other cases, notice of termination
shall be effective on the date thereof.

 

11.           Termination by Employee.

 

(a)
For purposes of this Paragraph 11, Company shall be in breach of its
obligations to you hereunder if there shall have occurred any of the following
events (each such event being referred to as a “Good Reason”): (i) a material
reduction in your title shall have been put into effect; (ii) you shall have
been required to report to anyone other than as provided in Paragraph 5 hereof;
(iii) any monies required to be paid to you hereunder shall not be paid when
due; (iv) Company requires you to relocate your primary residence outside the
greater New York metropolitan area in order to perform your duties to Company
hereunder; or (v) Company assigns its rights and obligations under this
Agreement in contravention of the provisions of Paragraph 18(e) below.

 

(b)
You may exercise your right to terminate the Term of this Agreement for Good
Reason pursuant to this Paragraph 11 by notice given to Company in writing
specifying the Good Reason for termination within sixty (60) days after the
occurrence of any such event constituting Good Reason, otherwise your right to
terminate this Agreement by reason of the occurrence of such event shall expire
and shall be deemed to have permanently lapsed. Any such termination in
compliance with the provisions of this Paragraph 11 shall be effective thirty
(30) days after the date of your written notice of termination, except that if
Company shall cure such specified cause within such thirty-day period, you
shall not be entitled to terminate the term of this Agreement by reason of such
specified Good Reason and the notice of termination given by you shall be null
and void and of no effect whatsoever.

 

 

12.           Consequences of Breach by Company or
Non-renewal:

 

(a)
In the event of a “Special Termination” (as defined below) of your employment,
your sole remedy shall be that, upon your execution of a Release (as defined
below) Company shall pay to you the “Special Termination Payments” (as defined
below), and in the event of a “Qualifying Non-renewal” (as defined below), your
sole remedy shall be that, upon your execution of a Release, Company shall pay
to you the “Non-renewal Payments” (as defined below). Special Termination
Payments and Non-renewal Payments are sometimes herein referred to collectively
as the “Termination Payments.”

 

(b)
The “Basic Termination Payments” shall mean any accrued but unpaid salary,
accrued vacation pay in accordance with Company policy, any unreimbursed
expenses pursuant to Paragraph 7, plus any accrued but unpaid benefits in
accordance with Paragraph 8, in each case to the date on which your employment
terminates pursuant to an event described in subparagraph (d) or (f), below, as
applicable (the “Termination Date”).

 

(c)
A “Release” shall mean a release agreement in Company’s standard form attached
hereto as Exhibit A, which shall include, without limitation, a release by you
of Company from any and all claims which you may have relating to your
employment with Company and the termination of such employment.

 

(d)
A “Special Termination” shall have occurred in the event that Company
terminates your employment hereunder other than pursuant to Paragraphs 9 or 10
hereof.

 

(e)
“Special Termination Payments” shall mean (i) the Basic Termination Payments;
plus (ii) the greater of (A) the “Severance Amount” (as defined below) and (B)
the sum of:

 

(I) a pro rata annual bonus with respect to the year
in which your employment terminates, which bonus shall be in an amount equal to
$650,000 multiplied  by a fraction, the numerator of which is the
number of days within the period from the first day of the fiscal year in which
the termination of your employment occurs until the date of such termination,
and the denominator of which is 365; and

 

(II) a severance payment in the amount of
$2,000,000, if such termination occurs in the first Contract Year, or
$1,500,000, if such termination occurs in the second Contract Year, or
$1,000,000, if such termination

 

 

occurs
in the third Contract Year, or $650,000, if such termination occurs in the
fourth Contract Year.

 

(f)
A “Qualifying Non-renewal” shall have occurred in the event that, on the date
that is 90 days prior to the expiration of the Term: (i) Company has failed to
offer you continued employment with Company or one of its affiliates; or (ii)
Company has offered you continued employment with Company or one of its
affiliates for a term of less than three years or at a salary lower, or on
other terms materially less favorable to you (excluding with respect to the
granting of any equity), than your salary and other terms of employment
(excluding with respect to the granting of any equity) as in effect on the last
day of the Term, and you elect to decline such offer and terminate your
employment with Company at the end of the Term.

 

(g)
The “Non-renewal Payments” shall mean (i) the greater of (A) the amount of
severance pay (the “Severance Amount”) that would have been payable to you
under Company policy as in effect on the Termination Date had you not been
subject to an employment agreement with Company, or (B) $650,000, plus; (ii)
the Basic Termination Payments.

 

(h)
Any Termination Payments payable to you under Paragraph 12(e) or (g) above
shall be made by Company in accordance with its regular payroll practices by
means of payments to you in equal periodic installments (which shall be not
less frequent than monthly) during the one-year period following the
termination of your employment (the “Payment Period”). During the Payment
Period, Company shall continue to provide you with coverage under Company’s
medical plans in accordance with the terms of such plans, and you shall be
entitled to no other benefits during such period.

 

(i)
In the event you elect not to execute and deliver a Release in connection with
a Special Termination or a Qualifying Non-renewal, Company shall only be
obligated to pay to you the Basic Termination Payments.  Following the delivery of an executed Release
pursuant to this Paragraph 12, you shall have no duty to seek substitute
employment, and Company shall have no right of offset against any amounts paid
to you under this Paragraph 12 with respect to any compensation or fees
thereafter received by you from any employment thereafter obtained or
consultancy arrangement thereafter entered into by you.

 

13.           Confidential Matters: You shall keep secret all confidential
matters of Company and its affiliates (for purposes of this Paragraph 13 only, “Company”),
and shall not disclose them to anyone outside of Company, either during or
after your employment with Company, except (i) with Company’s written consent;
(ii) as required by law or judicial process; or (iii) to your professional
advisors to the extent reasonable and necessary.  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.

 

14.           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.

 

15.           Indemnity: To the extent that you perform your duties for Company in good faith
and in a manner you reasonably believe to be in or not opposed to the best
interests of Company and not in contravention of the instructions of any senior
officer of Company, Company agrees to indemnify you against expenses (including
but not limited to final judgments and amounts paid in settlement to which
Company has consented in writing, which consent shall not be unreasonably
withheld) in connection with litigation against you arising out of the
performance of your duties hereunder; provided, that, you shall have provided
Company with prompt notice of the commencement of any such litigation.  Company will provide defense counsel selected
by Company.  You agree to cooperate in
connection with any such litigation.

 

16.           Non-Solicitation: For a period of one year after the date on
which your employment with Company ends for any reason, you shall not, without
the prior written consent of Company, directly or indirectly, as an employee,
agent, consultant, partner, joint venturer, owner, officer, director, or member
of any other person, firm, partnership, corporation or other entity, or in any
other capacity, (a) call upon, solicit, negotiate with, offer or enter into a
recording or other contract with any recording artist (including a duo or a
group) or songwriter who at the time is, either directly or through a
furnishing entity, under contract to Company or an affiliate of Company or a
label distributed to Company or an affiliate of Company, and (b) discuss or
negotiate employment with or offer employment to any individual employed by
Company or an affiliate of Company.

 

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 courier, or mailed
first-class, postage prepaid, by registered or certified mail, return receipt
requested, as follows:

 

 

	
  TO
  YOU:

  	
  TO
  COMPANY:

  
	
   

  	
   

  
	
  Richard
  Blackstone 

  	
  Warner
  Music Group Inc.

  
	
  C/o
  Nicholas Gordon, Esq. 

  	
  75
  Rockefeller Plaza

  
	
  Franklin,
  Weinrib, Rudell & 

  	
  New
  York, New York 10019

  
	
  Vassallo,
  P.C.

  	
  Attn:
  General Counsel

  
	
  488
  Madison Avenue

  	
   

  
	
  New
  York, New York 10022 

  	
   

  
	
   

  	
   

  
	
  With
  a copy to:

  	
   

  
	
   

  	
   

  
	
  Nicholas
  Gordon, Esq.

  	
   

  
	
  Franklin,
  Weinrib, Rudell &

  	
   

  
	
  Vassallo,
  P.C.

  	
   

  
	
  488
  Madison Avenue

  	
   

  
	
  New
  York, New York 10022

  	
   

  

 

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.

 

(b)
You acknowledge that while you are employed hereunder you will comply with Company’s
conflict of interest policy and other corporate policies, as in effect from
time to time, of which you are made aware.  All payments made to you hereunder shall be
subject to applicable withholding and social security taxes and other ordinary
and customary payroll deductions.

 

(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 13
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 such event, 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 shall be bound by or liable for
any alleged representation, promise or inducement not herein set forth.

 

If,
notwithstanding the provisions of the foregoing paragraph, any provision of
this Agreement or the application hereof is held to be wholly invalid, such
invalidity shall not affect any other provisions or application of this
Agreement that can be given effect without the invalid provisions or
application, and to this end the provisions of this Agreement are hereby
declared to be severable.

 

(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
or Warner Music Group Inc.

 

(f)
Nothing contained in this Agreement shall be construed to impose any obligation
on Company to renew this Agreement.  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.  Neither the
continuation of employment nor any other conduct shall be deemed to imply a
continuing obligation upon the expiration of this Agreement.  The failure of either party at any time 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 executed in and to be wholly
performed within such State.

 

 

If
the foregoing correctly sets forth our understanding, please sign below and
return this agreement to Company.

 

 

	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WARNER/CHAPPELL
  MUSIC, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Edgar Bronfman, Jr.

  	
   

  
	
   

  	
   

  
	
  Accepted
  and Agreed:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/
  Richard Blackstone

  	
   

  	
   

  
	
  Richard
  Blackstone

  	
   

  
	
  SS
  #:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
						

 

 

EXHIBIT A

 

SEPARATION AGREEMENT AND RELEASE

 

SEPARATION
AGREEMENT (“Agreement”) made and entered into on     ,
200   between (name) (“you”)
and (company) (“Company”).

 

In
consideration of the mutual covenants, conditions and obligations contained in
this Agreement, you and Company agree as follows:

 

1.             Your employment with Company shall end
effective (date). As of that date, you shall
have no further responsibilities as an employee of Company and as of such date
the employment agreement (the “Employment Agreement”) between you and Company
dated (date), [as amended], shall be
terminated with no liability of either party to the other thereunder
whatsoever, except as specifically set out in this Agreement.

 

2.             (a)           Subject to your compliance with the terms of
this Agreement, Company shall during the period from the date hereof to
           (the “Payment
Period”) pay you salary at a rate of
$          per annum (less
required withholding) and an automobile allowance at the rate of
$            per month
(less required withholding). All payments to you hereunder shall be payable in
accordance with the regular payroll practices of the Company.  You shall have no duty to mitigate Company’s
damages by seeking other employment, and Company shall have no right to reduce
the amounts payable to you under this Agreement in the event that you obtain
other earnings.

 

(b)           Company shall continue to provide you and
your dependent family members (to the extent such individuals are eligible for
such coverage under the terms of the applicable programs) with coverage under
Company’s medical and dental plans until the earlier of (i) the end of the
Payment Period or (ii) the date as of which you become eligible for another
medical insurance plan.

 

(c)           For so long as you are on a payroll of Company,
you shall continue to participate in Company’s life insurance and 401(k) plans
as if you were a full time employee of Company, subject to the terms and
conditions of each such plan.

 

(d)           The Company shall pay you any accrued and
unused vacation time through
          , 200   (to
the extent not paid prior to the date hereof).

 

3.             In accordance with the terms and conditions
of the Consolidated Omnibus Budget Reconciliation Act (“COBRA”), you shall have
the right, at your expense, to elect to continue medical insurance coverage
under the group insurance plan maintained by Company for a period of

 

 

eighteen
months beginning on (date). Further
information regarding COBRA’s coverage, including enrollment forms and premium
quotations, will be sent to you separately.

 

4.             (a) In consideration of, and exchange for,
the payment and other benefits to be received by you under this Agreement, you
hereby waive, release and forever discharge Company and its successors, their
directors, officers, agents, representatives and employees, and the parents,
subsidiaries and affiliates, and the directors, officers, agents and employees
thereof (the “Company Group”) from all claims, causes of action, lawsuits and
demands, attorney’s fees, expenses or other compensation (“Claims”) which in
any way relate to or arise out of the Employment Agreement or your employment
with Company or the termination of your employment, which you may now or
hereafter have under any common law, federal, state or local law, regulation or
order, including without limitation, (i) any Claim under Title VII of the Civil
Rights Act of 1964, as amended, the Age Discrimination in Employment Act, as
amended, as well as all liability for any acts that may have violated your
rights under any contract or local fair employment practices law, any employee
relations statute, executive law or ordinance, any unemployment or workers
compensation law or any other duty or obligation of any kind or nature; (ii)
all Claims relating to or arising out of any alleged tortious act, including
but not limited to, wrongful termination, intentional infliction of emotional
distress and defamation; (iii) all Claims which may be alleged against or
imputed to Company by you or by anyone acting on your behalf; and (iv) all
Claims for wages, (including, but not limited to, all Claims in connection with
any long-term incentive compensation plan of Company), monetary and equitable
relief, employment or reemployment with Company in any position.

 

(b)
The Company Group, in exchange for the consideration embodied in this
Agreement, waives, releases, and forever discharges you from all Claims which
the Company Group may now or hereafter have against you under any common law,
federal, state or local law, regulation or order, arising out of your employment
with Company.

 

5.             Neither you nor Company shall file or cause
to be filed any action, suit, claim, charge or proceeding with any federal,
state or local court or agency relating to any Claims within the scope of
paragraph 4.

 

6.             You and Company each acknowledge that nothing
in this Agreement constitutes (or shall be deemed) an admission of liability or
wrongdoing by either you or the Company.

 

7.             (a) You shall not at any time exploit, use,
sell, publish, disclose, or communicate to any person, corporation or entity,
either directly or indirectly, any trade secrets or confidential information
regarding the Company Group, including, without limitation, the terms of any
agreements between Company or any of its affiliates and any third party (except
that you may disclose the financial terms of this Agreement to tax authorities,
and to your attorneys and accountants). You shall not during the one-year
period following the date hereof, without the prior approval of Company,
discuss any “Company Topic” (as defined below) with any press or media
representative, nor shall you provide any information regarding any Company
Topic to any

 

 

press
or media representative. “Company Topic” shall mean any matter relating to
Company or its affiliates, including any of their respective employees or
artists.  Notwithstanding the foregoing,
you shall not be precluded from informing any party that you were employed by
Company, the dates of your employment, the positions with Company that you
held, and the names of officers of Company and its affiliates with whom you
worked.

 

(b)
Company shall not at any time, use, sell, publish, disclose, or communicate to
any person, corporation or entity, either directly or indirectly, any
confidential information regarding you (except that Company may disclose the
financial terms of this Agreement to tax authorities, attorneys or
accountants).

 

(c)
You agree to promptly return to Company all property of Company in your
possession, including, but not limited to keys, identification cards, files,
records, credit cards, electronic equipment and books and manuals issued to you
by Company.

 

8.             For a period of one year after the date
hereof, you shall not, without the prior written consent of Company, directly
or indirectly, as an employee, agent, consultant, partner, joint venturer,
owner, officer, director, or member of any other person, firm, partnership,
corporation or other entity, or in any other capacity, (a) call upon, solicit,
negotiate with, offer or enter into a recording or other contract with any
recording artist (including a duo or a group) or songwriter who at the time is,
either directly or through a furnishing entity, under contract to Company or an
affiliate of Company or a label distributed by Company or an affiliate of
Company, or (b) discuss or negotiate employment with or offer employment to any
individual employed by Company or an affiliate of Company.

 

9.             You acknowledge that you have read this
Agreement and that you have executed and delivered this Agreement freely and
voluntarily, with full knowledge of all material facts.

 

[IF
EMPLOYEE IS AGE 40 OR OVER]  [10.  (a) You acknowledge that you have been
advised to seek independent advice and counsel in connection with this
Agreement and have retained (attorney name)
of the firm of (firm name) for such purpose, and
that you have been afforded the time and opportunity necessary to seek such
advice and counsel to the full extent you may have desired; and that you have
been afforded at least 21 days in which to consider this Agreement.  You understand your obligations and rights
under this Agreement and with such knowledge have entered into and executed
this Agreement freely and voluntarily.

 

(b)
You understand that you may revoke this Agreement within seven days of its
execution, by notifying Company in writing of your desire to revoke the
Agreement, whereupon this Agreement shall be rendered null and void.  The provisions of this Agreement including any
payment due to you shall not be binding upon Company until eight days after the
execution of this Agreement by you.]

 

 

11.           It is Company’s and your intention that this
Agreement shall be effective as a full and final accord and satisfaction and
release of each and every matter hereinabove referred to.  You and Company acknowledge that you and
Company are familiar with Section 1542 of the Civil Code of the State of
California which provides as follows:

 

“A
GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF

KNOWN
BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR”

 

You
and Company waive and relinquish any right and benefit which you and Company
have or may have under Section 1542 to the full extent that you and Company may
lawfully waive all such rights and benefits pertaining to the subject matter
hereof.

 

12.           This Agreement constitutes the final and
complete Agreement between you and Company with respect to the subject matter
hereof.  This Agreement supersedes any and
all prior agreements between you and Company, including, but not limited to,
the Employment Agreement.  No
modification or waiver of the terms of this Agreement shall be valid unless in
writing and signed by Company and you.

 

13.           This Agreement shall be governed by and
construed according to the laws of the State of (state)
as applicable to agreements executed in and to be wholly performed within such
State.

 

IN
WITNESS WHEREOF, the undersigned have acknowledged and executed this Agreement
as of the date first set forth above.

 

	
   

  	
   

  	
   

  
	
   

  	
  (name)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [COMPANY
  NAME]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: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.

 

2

 

(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.

 

3

 

(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

 

4

 

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.

 

5

 

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

 

6

 

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.

 

7

 

(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.

 

8

 

(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

 

9

 

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.

 

10

 

(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

 

11

 

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

  

 

14

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