Document:

Exhibit
10.17

 

 

PURCHASER ADMINISTRATIVE
SERVICES AGREEMENT

 

 

Between

 

 

TIME WARNER INC.

 

 

and

 

 

WMG ACQUISITION CORP.

 

 

Dated February 29, 2004

 

 

TABLE OF CONTENTS

 

	
  ARTICLE I

  	
   

  
	
   

  	
   

  	
   

  
	
  Definitions

  	
   

  
	
  SECTION 1.01.

  	
  Definitions

  	
   

  
	
  SECTION 1.02.

  	
  Certain Terms

  	
   

  
	
  SECTION 1.03.

  	
  Usage Generally; Interpretation

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
   

  
	
   

  	
   

  	
   

  
	
  Services

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 2.01.

  	
  Agreement to Provide Services

  	
   

  
	
  SECTION 2.02.

  	
  Change Orders

  	
   

  
	
  SECTION 2.03.

  	
  No Management Authority

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
   

  
	
   

  	
   

  	
   

  
	
  Compensation

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 3.01.

  	
  Compensation for Services

  	
   

  
	
  SECTION 3.02.

  	
  Adjustments to Cost of Services

  	
   

  
	
  SECTION 3.03.

  	
  Payment Terms

  	
   

  
	
  SECTION 3.04.

  	
  Disclaimer of Warranty

  	
   

  
	
  SECTION 3.05.

  	
  Books and Records

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
   

  
	
   

  	
   

  	
   

  
	
  Term

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 4.01.

  	
  Commencement

  	
   

  
	
  SECTION 4.02.

  	
  Termination

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
   

  
	
   

  	
   

  	
   

  
	
  Indemnification; Limitation of Liability

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 5.01.

  	
  Indemnification by Seller

  	
   

  
	
  SECTION 5.02.

  	
  Limitation on Liability; Indemnification by
  Purchaser

  	
   

  

 

 

	
  ARTICLE VI

  	
   

  
	
   

  	
   

  	
   

  
	
  Other Covenants

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 6.01.

  	
  Attorney-in-Fact

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
   

  
	
   

  	
   

  	
   

  
	
  Other
  Matters

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 7.01.

  	
  Title to Data

  	
   

  
	
  SECTION 7.02.

  	
  Notices

  	
   

  
	
  SECTION 7.03.

  	
  Amendments; No Waivers

  	
   

  
	
  SECTION 7.04.

  	
  Governing Law

  	
   

  
	
  SECTION 7.05.

  	
  Enforcement

  	
   

  
	
  SECTION 7.06.

  	
  Severability

  	
   

  
	
  SECTION 7.07.

  	
  Confidentiality

  	
   

  
	
  SECTION 7.08.

  	
  Counterparts

  	
   

  
	
  SECTION 7.09.

  	
  Independent Contractors

  	
   

  
	
  SECTION 7.10.

  	
  Assignment

  	
   

  
	
  SECTION 7.11.

  	
  WAIVER OF JURY TRIAL

  	
   

  
	
  SECTION 7.12.

  	
  Entire Agreement

  	
   

  
	
  SECTION 7.13.

  	
  Captions

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBITS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
  —

  	
  Services

  	
   

  
				

 

 

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

 

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

 

ARTICLE I

 

Definitions

 

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

 

SECTION 1.02.
Certain Terms.

 

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

 

“Services” means the services
identified on Exhibit A.

 

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

 

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

 

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

 

1

 

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

 

ARTICLE II

 

Services

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

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

 

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

 

ARTICLE III

 

Compensation

 

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

 

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

 

3

 

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

 

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

 

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

 

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

 

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

 

4

 

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

 

ARTICLE IV

 

Term

 

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

 

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

 

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

 

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

 

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

 

ARTICLE V

 

Indemnification:
Limitation of Liability

 

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

 

5

 

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

 

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

 

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

 

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

 

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

 

ARTICLE VI

 

Other
Covenants

 

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

 

6

 

ARTICLE VII

 

Other Matters

 

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

 

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

 

if to Seller, to:

 

Time Warner Inc.

75 Rockefeller Plaza

New York, NY 10019

Fax: (212) 258-3172

Attn: General Counsel

 

with copies to:

 

Cravath, Swaine & Moore LLP

825 Eighth Avenue

New York, New York 10019

Fax: (212) 474-3700

Attn: Richard Hall, Esq.

 

if to Purchaser, to:

 

WMG Acquisition Corp.

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

75 State Street

Boston, Massachusetts 02109

Fax: (617) 227-3514

Attn: Scott Sperling

 

with copies to:

 

Simpson Thacher & Bartlett LLP

425 Lexington Avenue

New York, New York 10017

Fax: (212) 455-2502

Attn: John Finley, Esq.

 

Brian Stadler, Esq.

 

7

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

8

 

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

 

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

 

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

 

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

 

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

 

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

 

9

 

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

 

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

 

10

 

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

 

	
   

  	
  TIME WARNER INC.,

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  WMG ACQUISITION CORP.,

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Scott Sperling

  	
   

  
	
   

  	
   

  	
  Name: Scott Sperling

  
	
   

  	
   

  	
  Title:   President

  

 

 

EXHIBIT A

 

Services

 

	
  Service Category:

  	
   

  	
  Financial and Accounting Advisory Services

  
	
   

  	
   

  	
   

  
	
  Default Termination:

  	
   

  	
  December 31, 2004

  
	
   

  	
   

  	
   

  
	
  Termination Notice by Seller:

  	
   

  	
  30 days.

  
	
   

  	
   

  	
   

  
	
  Service Items:

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Cost of Services:

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  

 

 

	
  Service Category:

  	
   

  	
  Information Technology Services

  
	
   

  	
   

  	
   

  
	
  Default Termination:

  	
   

  	
  December 31, 2004

  
	
   

  	
   

  	
   

  
	
  Termination Notice by Seller:

  	
   

  	
  90 days.

  
	
   

  	
   

  	
   

  
	
  Service Items:

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Cost of Services:

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  

 

2

 

	
  Service Category:

  	
   

  	
  Real Estate Services

  
	
   

  	
   

  	
   

  
	
  Default Termination:

  	
   

  	
  June 30, 2004

  
	
   

  	
   

  	
   

  
	
  Termination Notice by Seller:

  	
   

  	
  60 days.

  
	
   

  	
   

  	
   

  
	
  Service Items:

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Cost of Services:

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  

 

3

 

	
  Service Category:

  	
   

  	
  Distribution Services

  
	
   

  	
   

  	
   

  
	
  Default Termination:

  	
   

  	
  December 31, 2004

  
	
   

  	
   

  	
   

  
	
  Termination Notice by Seller:

  	
   

  	
  120 days.

  
	
   

  	
   

  	
   

  
	
  Service Items:

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Cost of Services:

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  

 

4Exhibit 10.18

 

 

EXECUTION COPY

 

MANAGEMENT AGREEMENT

 

This Management Agreement (this “Agreement”) is entered into as
of February 29, 2004, by and between WMG Parent Corp., a Delaware company (“Parent”),
WMG Holdings Corp., a Delaware company and a wholly owned subsidiary of Parent
(“Holdings”) and WMG Acquisition Corp., a Delaware company and a wholly
owned subsidiary of Holdings (the “Company”), THL Managers V, L.L.C., a
Delaware limited liability company (“THL”), Bain Capital Partners, LLC,
a Delaware limited liability company (“Bain”), Providence Equity
Partners IV Inc., a Delaware company (“Providence”) and Music Partners
Management, LLC, a Delaware limited liability company (“Music” and,
together with THL, Bain and Providence, the “Managers”).

 

RECITALS

 

WHEREAS, Parent, Holdings and the Company have been formed for the
purposes of acquiring (the “Acquisition”), pursuant to a Purchase
Agreement, dated as of November 24, 2003, as amended (the “Purchase
Agreement”), between Time Warner Inc (“Seller”) and the Company, the
Warner Recorded Music Business and the Warner Music Publishing Business (as
defined in the Purchase Agreement);

 

WHEREAS, the Managers are advising Holdings and the Company in
connection with the structuring and negotiation of senior secured debt
financing (the “Senior Financing”) being provided for the Acquisition
pursuant to a Senior Credit Facilities Commitment Letter, dated November 23,
2003, by Bank of America, Deutsche Bank Trust Company Americas, Banc of America
Securities LLC and Deutsche Bank Securities Inc as the lead arrangers and
underwriters;

 

WHEREAS, the Managers are advising Holdings and the Company in
connection with the Company’s structuring and negotiation of bridge financing
(the “Bridge Financing”) being provided for the Acquisition pursuant to
a Bridge Facility Commitment Letter, dated November 23, 2003, by Deutsche Bank
AG Cayman Islands Branch and Banc of America Bridge LLC;

 

WHEREAS, certain funds affiliated with the Managers are providing
equity financing (the “Equity Investments”) in connection with the
Acquisition; and

 

WHEREAS, the Company, Holdings and Parent want to retain the Managers
to provide certain management and advisory services to the Company, Holdings
and Parent, and the Managers are willing to provide such services on the terms
set forth below.

 

AGREEMENT

 

NOW THEREFORE, in consideration of the mutual covenants contained
herein, the parties hereto, intending to be legally bound, hereby agree as
follows:

 

1.             Services.
Each of the Managers hereby agrees that, during the term of this Agreement (the
“Term”), it will provide the following consulting and management
advisory services to the Company, Holdings and Parent as requested from time to
time by the Boards of Directors of the Company, Holdings and Parent:

 

1

 

(a)           advice
in connection with the negotiation and consummation of agreements, contracts,
documents and instruments necessary to provide the Company with financing on
terms and conditions satisfactory to the Company, Holdings and Parent;

 

(b)           financial,
managerial and operational advice in connection with the Company’s day-to-day
operations, including, without limitation, advice with respect to the
development and implementation of strategies for improving the operating,
marketing and financial performance of the Company; and

 

(c)           such
other services (which may include financial and strategic planning and
analysis, consulting services, human resources and executive recruitment
services and other services) as such Manager, the Company, Holdings and Parent
may from time to time agree in writing.

 

Each of the Managers shall devote such time and efforts to the
performance of services contemplated hereby as such Manager deems reasonably
necessary or appropriate; provided, however,
that no minimum number of hours is required to be devoted by THL, Bain,
Providence or Music on a weekly, monthly, annual or other basis. The Company,
Holdings and Parent acknowledge that each of the Manager’s services are not
exclusive to the Company, to Holdings and to Parent and that each Manager will
render similar services to other persons and entities. In providing services to
the Company, Holdings and Parent, each Manager will act as an independent
contractor and it is expressly understood and agreed that this Agreement is not
intended to create, and does not create, any partnership, agency, joint venture
or similar relationship and that no party has the right or ability to contract
for or on behalf of any other party or to effect any transaction for the
account of any other party.

 

2.             Payment of Fees.

 

(a)           Parent
will pay (or will cause Holdings or the Company to pay) to the Managers (or
such affiliates as they may respectively designate) an aggregate transaction
fee (the “Transaction Fee”) in the amount of $75,000,000 in connection
with services related to the Acquisition, such fee being payable at the closing
of the Acquisition. The Transaction Fee shall be divided among the Managers as
follows:

 

 

	
  THL

  	
   

  	
  $

  	
  39,300,000

  	
   

  
	
  Bain

  	
   

  	
  $

  	
  16,800,000

  	
   

  
	
  Music

  	
   

  	
  $

  	
  9,900,000

  	
   

  
	
  Providence

  	
   

  	
  $

  	
  9,000,000

  	
   

  

 

(b)           During
the Term, Parent, Holdings and the Company, jointly and severally, will pay to
the Managers (or such affiliates as they may respectively designate) an
aggregate annual periodic fee (the “Periodic Fee”) of $10,000,000 in
exchange for the ongoing services provided by the Managers under this
Agreement, such fee being payable by the Company quarterly in advance;
provided, however, that the Periodic Fee for the first four quarters following execution
of this Agreement shall be paid in advance at the closing of the Acquisition.
The Periodic Fee shall be divided among the Managers pro rata in proportion to
the amount of Investor Shares held at the time by the investment funds

 

2

 

affiliated with each Manager (provided that,
for purposes of this Agreement, Music Capital Partners, L.P. and ALP Music
Partners, L.P. and their respective Permitted Transferees (as defined in that
certain Stockholders Agreement dated as of the date hereof among Parent,
Holdings, the Company and the other parties thereto) shall be deemed to be
investment funds affiliated with Music). In this Agreement, the term “Investor
Shares” means at any time all shares of capital stock of Parent and
Holdings (and any successor or survivor to Parent or Holdings).

 

(c)           During
the Term, the Managers will advise Parent, Holdings and the Company in
connection with financing, acquisition and disposition transactions involving
Parent, Holdings, the Company or any of the Company’s direct or indirect
subsidiaries (however structured), and Parent, Holdings and the Company,
jointly and severally, will pay to the Managers (or such affiliates as they may
respectively designate) an aggregate fee (the “Subsequent Fee”) in
connection with each such transaction equal to 1% of the gross transaction
value of such transaction, such fee to be due and payable for the foregoing
services at the closing of such transaction. Each Subsequent Fee shall be
divided among the Managers pro rata in proportion to the amount of Investor
Shares held at the time by the investment funds affiliated with each Manager.

 

(d)           Each
payment made pursuant to this Section 2 shall be paid by wire transfer of
immediately available federal funds to the accounts specified on Schedule 1
hereto, or to such other account(s) as the Managers may specify to the Company
in writing prior to such payment.

 

3.             Term. This
Agreement shall continue in full force and effect until December 30, 2014; provided, however, that the Managers may cause this
Agreement to terminate at any time upon the agreement of (i) Managers
affiliated with a majority of the Investor Shares then outstanding and (ii) two
out of three of THL, Bain and Providence, including the Manager that, at any
such time as between these three Managers, is affiliated with the greatest
number of Investor Shares. In the event of the termination of this Agreement,
Parent, Holdings and the Company, jointly and severally, shall pay each of THL,
Bain, Providence and Music (i) all unpaid Periodic Fees (pursuant to Section
2(b) above), Subsequent Fees (pursuant to Section 2(c) above) and expenses
(pursuant to Section 4(a) below) due with respect to periods prior to the date
of termination plus (ii) the net present value (using a discount rate equal to
the then yield on U.S. Treasury Securities of like maturity) of the Periodic
Fees that would have been payable with respect to the period from the date of
termination until December 30, 2014.

 

4.             Expenses: Indemnification.

 

(a)           Expenses.
The Company, Holdings and Parent, jointly and severally, will pay on demand all
reasonable expenses incurred by any of the Managers or their affiliates (i) in
connection with this Agreement, the Acquisition (whether or not consummated) or
any related transactions, (ii) relating to operations of, or services provided
by the Managers to, the Company, Holdings, Parent or any of their affiliates
from time to time (including, without limitation, all air travel (by first
class on a commercial airline or by charter, as determined to be appropriate by
the Manager) and other travel related expenses) or (iii) otherwise in any way
relating to the Company, Holdings or Parent or in any way relating

 

3

 

to, or arising out of, the Equity Investments or the ownership thereof
by affiliates of the Managers. Without limiting the generality of the
foregoing, the Company, Holdings and Parent, jointly and severally, agree to
pay on demand all reasonable expenses incurred by any of the Managers or their
affiliates in connection with, or relating to, (x) the preparation, negotiation
and execution of this Agreement and any other agreement executed in connection
with, or related to, this Agreement, the Acquisition, the Senior Financing, the
Bridge Financing, the Equity Investments or the consummation of the
transactions contemplated hereby or thereby, (y) any and all amendments,
modifications, restructurings and waivers of, and exercises and preservations of
rights and remedies relating to, any of the foregoing or (z) the Equity
Investments or the provision of services under this Agreement. The expenses
referred to in clause (x) of the immediately preceding sentence shall
specifically include the fees and charges of (A) Simpson Thacher & Bartlett
LLP, (B) Ropes & Gray, (C) Paul, Weiss, Rifkind, Wharton & Garrison
LLP, (D) Edwards & Angell LLP, (E) KPMG LLP and (F) any other consultants
or advisors retained by the Managers with the agreement of all Managers in connection
with such transactions.

 

(b)           Indemnity
and Liability. The Company, Holdings and Parent, jointly and severally,
will indemnify, exonerate and hold each Manager and each of its partners,
shareholders, members, affiliates, directors, officers, fiduciaries, managers,
employees, and agents and each of the partners, shareholders, Affiliates,
directors, officers, fiduciaries, managers, members, controlling Persons,
employees and agents of each of the foregoing (collectively, the “Indemnitees”)
free and harmless from and against any and all actions, causes of action,
suits, claims, liabilities, losses, damages, claims, costs and expenses
(including reasonable attorneys’ fees and expenses), awards or settlements
incurred by an Indemnitee (a “Loss”) before or after the date of this
Agreement and arising out of, resulting from, or relating to: (i) this
Agreement, the Acquisition, the Equity Investments or the ownership thereof by
the Indemnitee or its affiliate or other related person or any related transactions
purchase and/or ownership of any Investor Shares or (ii) operations of, or
services provided by any of the Managers to, the Company, Holdings or Parent or
any of their respective affiliates (including but not limited to any
indemnification obligations assumed or incurred by any Indemnitee to or on
behalf of the Seller or any of its accountants or other representatives, agents
or affiliates); provided that the foregoing
indemnification rights shall not be available to the extent that (a) any such
Losses are incurred as a result of such Indemnitee’s willful misconduct or
gross negligence or (b) subject to the rights of contribution provided for
below, to the extent indemnification for any Losses would violate any
applicable law, regulation or public policy. For purposes of this Section 4(b),
none of the circumstances described in the limitations contained in the proviso
in the immediately preceding sentence shall be deemed to apply absent a final
non-appealable judgment of a court of competent jurisdiction to such effect, in
which case to the extent any such limitation is so determined to apply to any
Indemnitee as to any previously advanced indemnity payments made by the
Company, Holdings or Parent under this Section 4(b), then such payments shall
be promptly repaid by such Indemnitee to the Company, Holdings or Parent, as
applicable. The rights of any Indemnitee to indemnification hereunder will be
in addition to any other rights any such person may have under any other
agreement or instrument referenced above or any other agreement or instrument
to which such Indemnitee is or becomes a party or is or otherwise becomes a
beneficiary or under law

 

4

 

or regulation. If the indemnification provided for above is unavailable
in respect of any Losses, then the Company, Holdings and Parent, in lieu of
indemnifying an Indemnitee, shall contribute to the amount paid or payable by
such Indemnitee in such proportion as is appropriate to reflect the relative
fault of the Company, Holdings, Parent and their direct and indirect
subsidiaries, on the one hand, and such Indemnitee, on the other hand, in
connection with the actions which resulted in such Losses, as well as any other
equitable considerations. None of the Indemnitees shall be liable to the
Company or any of its affiliates for any act or omission suffered or taken by
such Indemnitee that does not constitute either breach of this Agreement or
gross negligence or willful misconduct.

 

5.             Disclaimer and
Limitation of Liability; Opportunities.

 

(a)           Disclaimer;
Standard of Care. None of the Managers make any representations or
warranties, express or implied, in respect of the services to be provided by
them hereunder. In no event shall any of the Managers be liable to the Company,
Holdings, Parent or any of their affiliates for any act, alleged act, omission
or alleged omission that does not constitute gross negligence or willful
misconduct of such Manager as determined by a final, non-appealable
determination of a court of competent jurisdiction.

 

(b)           Freedom
to Pursue Opportunities. In recognition that each Manager and its
respective affiliates currently have, and will in the future have or will
consider acquiring, investments in numerous companies with respect to which
each Manager or its respective affiliates may serve as an advisor, a director
or in some other capacity, and in recognition that each Manager and its
respective affiliates has myriad duties to various investors and partners, and
in anticipation that the Company, Holdings and Parent, on the one hand, and
each of the Managers (or one or more affiliates, associated investment funds or
portfolio companies), on the other hand, may engage in the same or similar
activities or lines of business and have an interest in the same areas of
corporate opportunities, and in recognition of the benefits to be derived by
the Company, Holdings and Parent hereunder and in recognition of the
difficulties which may confront any advisor who desires and endeavors fully to
satisfy such advisor’s duties in determining the full scope of such duties in
any particular situation, the provisions of this Section 5(b) are set forth to
regulate, define and guide the conduct of certain affairs of the Company,
Holdings and Parent as they may involve such Manager. Except as each of the
Managers may otherwise agree in writing after the date hereof:

 

(i)            Each
Manager and its respective affiliates shall have the right: (A) to directly or
indirectly engage in any business (including, without limitation, any business
activities or lines of business that are the same as or similar to those
pursued by, or competitive with, the Company and its subsidiaries, (B) to
directly or indirectly do business with any client or customer of the Company
or any of its subsidiaries, (C) to take any other action that such Manager
believes in good faith is necessary to or appropriate to fulfill its
obligations as described in the first sentence of this Section 5(b), and (D)
not to present potential transactions, matters or business opportunities to
Parent, Holdings the Company or any of their

 

5

 

subsidiaries, and to pursue, directly or indirectly, any such
opportunity for itself, and to direct any such opportunity to another person.

 

(ii)           Each
Manager and its respective partners, shareholders, members, affiliates,
directors, officers, fiduciaries, managers, employees, agents and other
associated entities shall have no duty (contractual or otherwise) to
communicate or present any corporate opportunities to the Company, Holdings or
Parent or any of their affiliates or to refrain from any actions specified in
Section 5(b)(i), and the Company, Holdings and Parent, on their own behalf and
on behalf of their affiliates, hereby renounce and waive any right to require
such Manager or any of its affiliates to act in a manner inconsistent with the
provisions of this Section 5(b).

 

(iii)          None
of the Managers, nor any partner, shareholder, member, affiliate, director,
officer, fiduciary, manager, employee, agent or associated entity thereof shall
be liable to the Company, Holdings, Parent or any of their affiliates for
breach of any duty (contractual or otherwise) by reason of any activities or
omissions of the types referred to in this Section 5(b) or of any such person’s
participation therein.

 

(c)           Limitation
of Liability. In no event will any of the Managers or any of their
affiliates be liable to Parent, Holdings or the Company or any of their
affiliates or either of the other Managers or their affiliates for any
indirect, special, incidental or consequential damages, including, without
limitation, lost profits or savings, whether or not such damages are
foreseeable, or for any third party claims (whether based in contract, tort or
otherwise), relating to the services to be provided by the Managers hereunder.

 

6.             Assignment, etc.
Except as provided below, none of the parties hereto shall have the right to
assign this Agreement without the prior written consent of each of the other
parties hereto. Notwithstanding the foregoing, any Manager may assign all or
part of its rights and obligations hereunder to any of its respective
affiliates which provides services similar to those called for by this
Agreement, in which event such Manager shall be released of all of its rights
and obligations hereunder.

 

7.             Amendments and
Waivers. No amendment or waiver of any term, provision or condition of this
Agreement shall be effective unless in writing and executed by each of the
Managers, Parent, Holdings and the Company. No waiver on any one occasion shall
extend to or effect or be construed as a waiver of any right or remedy on any
future occasion. No course of dealing of any person nor any delay or omission
in exercising any right or remedy shall constitute an amendment of this
Agreement or a waiver of any right or remedy of any party hereto.

 

8.             Miscellaneous.

 

(a)           Choice
of Law. This Agreement and all matters arising under or related to this
Agreement shall be governed by and construed in accordance with the domestic
substantive laws of the State of Delaware without giving effect to any choice
or conflict

 

6

 

of law provision or rule that would cause the application of the
domestic substantive laws of any other jurisdiction.

 

(b)           Consent
to Jurisdiction. Each of the parties agrees that all actions, suits or
proceedings arising out of, based upon or relating to this Agreement or the
subject matter hereof shall be brought and maintained exclusively in the
federal and state courts of the State of Delaware. Each of the parties hereto
by execution hereof (i) hereby irrevocably submits to the jurisdiction of the
federal and state courts in the State of Delaware for the purpose of any
action, suit or proceeding arising out of or based upon this Agreement or the
subject matter hereof and (ii) hereby waives to the extent not prohibited by
applicable law, and agrees not to assert, by way of motion, as a defense or
otherwise, in any such action, suit or proceeding, any claim that it is not
subject personally to the jurisdiction of the above-named courts, that it is
immune from extraterritorial injunctive relief or other injunctive relief, that
its property is exempt or immune from attachment or execution, that any such
action, suit or proceeding may not be brought or maintained in one of the
above-named courts, that any such action, suit or proceeding brought or
maintained in one of the above-named courts should be dismissed on grounds of forum non conveniens, should be transferred to any court
other than one of the above-named courts, should be stayed by virtue of the
pendency of any other action, suit or proceeding in any court other than one of
the above-named courts, or that this Agreement or the subject matter hereof may
not be enforced in or by any of the above-named courts. Notwithstanding the
foregoing, to the extent that any party hereto is or becomes a party in any
litigation in connection with which it may assert indemnification rights set
forth in this agreement, the court in which such litigation is being heard
shall be deemed to be included in clause (i) above. Each of the parties hereto
hereby consents to service of process in any such suit, action or proceeding in
any manner permitted by the laws of the State of Delaware, agrees that service
of process by registered or certified mail, return receipt requested, at the
address specified in or pursuant to Section 10 is reasonably calculated to give
actual notice and waives and agrees not to assert by way of motion, as a
defense or otherwise, in any such action, suit or proceeding any claim that
service of process made in accordance with Section 10 does not constitute good
and sufficient service of process. The provisions of this Section 8 shall not
restrict the ability of any party to enforce in any court any judgment obtained
in a federal or state court of the State of Delaware.

 

(c)           Waiver
of Jury Trial. To the extent not prohibited by applicable law which cannot
be waived, each of the parties hereto hereby waives, and covenants that it will
not assert (whether as plaintiff, defendant, or otherwise), any right to trial
by jury in any forum in respect of any issue, claim, demand, cause of action,
action, suit or proceeding arising out of or based upon this Agreement or the
subject matter hereof, in each case whether now existing or hereafter arising
and whether in contract or tort or otherwise. Each of the parties hereto
acknowledges that it has been informed by each other party that the provisions
of this Section 8(c) constitute a material inducement upon which such party is
relying and will rely in entering into this Agreement and the transactions
contemplated hereby. Any of the parties hereto may file an original counterpart
or a copy of this Agreement with any court as written evidence of the consent
of each of the parties hereto to the waiver of its right to trial by jury.

 

7

 

9.             Entire Agreement. This
Agreement contains the entire understanding of the parties with respect to the
subject matter hereof and supersedes any prior communication or agreement with
respect thereto.

 

10.           Notice. All notices, demands
and communications required or permitted under this Agreement shall be in
writing and shall effective if be served upon such other party and such other
party’s copied persons as specified below to the address set forth for it below
(or to such other address as such party shall have specified by notice to each
other party) if (i) delivered personally, (ii) sent and received by facsimile
or (iii) sent by Federal Express, DHL, UPS or any other comparably reputable
overnight courier service, postage prepaid, to the appropriate address as
follows:

 

If to the
Company, Holdings or Parent, to them at:

 

c/o Thomas H. Lee Partners, L.P.

75 State Street Suite 2600

Boston, MA 02109

Tel: 617-227-050

Fax: 617-227-3514

Attn: Scott Sperling

 

with copies to:

 

Simpson Thacher & Bartlett LLP

425 Lexington Avenue

New York, NY 10017

Tel: 212-455-2000

Fax: 212-455-2502

Attn: John Finley, Esq.

Brian Stadler, Esq.

 

and

 

Ropes & Gray LLP

One International Place

Boston, MA, 02210

Tel: 617-951-7000

Fax: 617-951-7050

Attn: Alfred Rose, Esq.

 

If to THL, to
it at:

 

c/o Thomas H. Lee Company

75 State Street, Suite 2600

Boston, MA 02109

Tel: 617-227-050

Fax: 617-227-514

Attn: Scott Sperling

 

8

 

If to Bain, to
it at:

 

c/o Bain Capital LLC

111 Huntington Avenue

Boston, MA 02199

Tel: 617-516-2000

Fax: 617-516-2010

Attn: Ian Loring

 

If to
Providence, to it at:

 

c/o Providence Equity Partners Inc

50 Kennedy Plaza, 18th Floor

Providence, RI 02903

Tel: 401-757-1700

Fax: 401-751-1790

Attn: Mark Masiello

 

If to Music,
to it at:

 

390 Park Avenue

New York, NY 10022

Tel: 212-433-1200

Fax: 212-433-1239

Attn: Edgar Bronfman, Jr.

 

With copies of
any notices to THL, Bain, Providence or Music shall be directed to:

 

Simpson Thacher & Bartlett LLP

425 Lexington Avenue

New York, NY 10017

Tel: 212-455-2000

Fax: 212-455-2502

Attn: John Finley, Esq.

Brian Stadler, Esq.

 

and

 

Ropes & Gray LLP

One International Place

Boston, MA, 02210

Tel: 617-951-7000

Fax: 617-951-7050

Attn: Alfred Rose, Esq.

 

and, with any notice delivered to Music, a copy to:

 

9

 

Paul, Weiss, Riflcind, Wharton & Garrison LLP

1285 Avenue of the Americas

New York, NY 10019-6064

Tel: 212-373-3000

Fax: 212-757-3990

Attn: Paul D. Ginsberg, Esq.

Robert B. Schumer, Esq.

 

Unless
otherwise specified herein, such notices or other communications shall be
deemed effective, (a) on the date received, if personally delivered or sent by
facsimile during normal business hours, (b) on the business day after being
received if sent by facsimile other than during normal business hours and (c)
one business day after being sent by Federal Express, DHL or UPS or other
comparably reputable delivery service. Each of the parties hereto shall be
entitled to specify a different address by giving notice as aforesaid to each
of the other parties hereto.

 

11.           Severability. If in any
proceedings a court shall refuse to enforce any provision of this Agreement,
then such unenforceable provision shall be deemed eliminated from this
Agreement for the purpose of such proceedings to the extent necessary to permit
the remaining provisions to be enforced. To the full extent, however, that the
provisions of any applicable law may be waived, they are hereby waived to the
end that this Agreement be deemed to be valid and binding agreement enforceable
in accordance with its terms, and in the event that any provision hereof shall
be found to be invalid or unenforceable, such provision shall be construed by
limiting it so as to be valid and enforceable to the maximum extent consistent
with and possible under applicable law.

 

12.           Counterparts. This Agreement
may be executed in any number of counterparts and by each of the parties hereto
in separate counterparts, each of which when so executed shall be deemed to be
an original and all of which together shall constitute one and the same
agreement

 

[Remainder of Page Intentionally Left Blank]

 

10

 

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

 

	
  THE COMPANY:

  	
  WMG ACQUISITION CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Scott Sperling

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Scott Sperling

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  
	
  HOLDINGS:

  	
  WMG HOLDINGS CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Scott Sperling

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Scott Sperling

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  
	
  PARENT:

  	
  WMG PARENT CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Scott Sperling

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Scott Sperling

  
	
   

  	
   

  	
  Title:

  	
  President

  
					

 

COUNTERPART SIGNATURE PAGE TO MANAGEMENT
AGREEMENT

[Signatures Continue on Following Page]

 

 

	
  THL:

  	
  THL MANAGERS V, L.L.C.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Thomas H. Lee Partners L.P.,

  its Managing Member

  
	
   

  	
  By:

  	
  Thomas H. Lee Advisors L.L.C. General

  Partner

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Scott Sperling

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Scott Sperling

  
	
   

  	
   

  	
  Title:

  	
  Managing Director

  
					

 

 

	
  BAIN:

  	
  BAIN CAPITAL PARTNERS, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Bain Capital LLC, its sole member

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ian Loring

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Ian Loring

  
	
   

  	
   

  	
  Title:

  	
  Managing Director

  
					

 

 

	
  PROVIDENCE:

  	
  PROVIDENCE EQUITY PARTNERS IV INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Glen Creamer

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Glen Creamer

  
	
   

  	
   

  	
  Title:

  	
  Managing Director

  
					

 

 

	
   

  	
  MUSIC PARTNERS MANAGEMENT, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Edgar M. Bronfman, jr.

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Edgar M. Bronfman, Jr.

  
	
   

  	
   

  	
  Title:

  	
  President

  
					

 

 

Schedule 1 to

Management Agreement

 

	
  Wire Transfer Instructions for

  
	
  Thomas H. Lee Partners, L.P.

  
	
   

  	
   

  
	
  Bank:

  	
  FleetBoston

  
	
  ABA #:

  	
  011000138

  
	
  Acct #:

  	
  270-07242

  
	
  Location:

  	
  100 Federal Street, Boston, MA

  
	
  Name:

  	
  THL Managers V, L.L.C.

  
	
   

  	
   

  
	
  Wire Transfer Instructions for

  
	
  Bain Capital Partners, LLC

  
	
   

  	
   

  
	
  Bank:

  	
  Citibank, NA-New York

  
	
  ABA #:

  	
  021-000-089

  
	
  For:

  	
  Brown Brothers Harriman

  
	
  Acct #:

  	
  09250276

  
	
  To Further Credit:

  
	
  Name:

  	
  Bain Capital Partners, LLC

  
	
  Acct #:

  	
  612541-3

  
	
   

  	
   

  
	
  Wire Transfer Instructions for

  
	
  Providence Entity Partners IV Inc.

  
	
   

  	
   

  
	
  Bank:

  	
  Fleet National Bank

  
	
  ABA #:

  	
  011500010

  
	
  Acct #:

  	
  944-0895507

  
	
  Account Name:

  	
  Providence Equity Partners IV Inc.

  
	
  Location:

  	
  111 Westminster Street, Providence, RI 02903

  
	
   

  	
   

  
	
  Wire Transfer Instructions for

  
	
  Music Partners Management, LLC

  
	
   

  	
   

  
	
  Bank:

  	
  Bank of New York

  
	
  ABA #:

  	
  021000018

  
	
  Acct #:

  	
  6302480115

  
	
  Reference:

  	
  For credit to the account of Music Partners Management LLC

  
	
  Location:

  	
  1290 Avenue of the Americas, 5th Floor, New York, NY 10104

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