Document:

Exhibit 10.4

 

AMENDMENT
NO. 3 TO CREDIT AGREEMENT

 

AMENDMENT dated as of April [    ],
2005 to the Amended and Restated Credit Agreement dated as of April 8, 2004 (as
amended from time to time, the “Credit
Agreement”) among WMG ACQUISITION CORP. (the “Company”), the Overseas Borrowers party
thereto, WMG HOLDINGS CORP. (“Holdings”), the
LENDERS party thereto (the “Lenders”),
BANC OF AMERICA SECURITIES LLC and DEUTSCHE BANK SECURITIES INC., as Joint Lead
Arrangers and Joint Book Managers, LEHMAN BROTHERS INC. and MERRILL LYNCH,
PIERCE, FENNER & SMITH INCORPORATED, as Co-Arrangers and Joint Book
Managers, DEUTSCHE BANK SECURITIES INC. and LEHMAN COMMERCIAL PAPER INC., as
Co-Syndication Agents, MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,
as Documentation Agent, and BANK OF AMERICA, N.A., as Administrative Agent (the
“Administrative Agent”), Swing Line
Lender and L/C Issuer.

 

PRELIMINARY STATEMENTS

 

(1)           WHEREAS,
the Company desires to refinance and replace all Term Loans outstanding under
the Credit Agreement immediately prior to giving effect to this Amendment (the “Existing Term Loans”) with a new class of term loans under
the Credit Agreement (the “Replacement Term Loans”),
in an amount equal to the aggregate principal amount of the Existing Term Loans
plus $250,000,000.  The Replacement Term
Loans shall have terms identical with, and have the same rights and obligations
under the Loan Documents as, the Existing Term Loans, except as such terms are
amended hereby.

 

(2)           WHEREAS,
each Term Lender who has an Existing Term Loan and who executes and delivers
this Amendment (each, a “Consenting Term Lender”)
shall be deemed, on the Third Amendment Effective Date (as defined in Section 15
of this Amendment), to have exchanged its Existing Term Loans for Replacement Term
Loans under the Credit Agreement in the same aggregate principal amount as such
Consenting Term Lender’s Existing Term Loans.

 

(3)           WHEREAS,
each Person who executes and delivers this Amendment as a term lender, other
than pursuant to an exchange of outstanding Term Loans described in paragraph
(2) above (the “Additional Term Lenders”), will
make the remaining Replacement Term Loans on the Third Amendment Effective Date
to the Company (the “Additional Term Loans”).
 The proceeds of the Additional Term
Loans will be used by the Company to, among other things, refinance in full the
outstanding principal amount of the Existing Term Loans of Existing Term
Lenders, if any, who do not execute and deliver this Amendment 

 

 

(the “Non-Consenting Term Lenders”).  It is understood and agreed that an
Additional Term Lender may be a Person that is an Existing Term Lender.

 

(4)           WHEREAS,
the Company has requested that the Lenders amend the Credit Agreement to effect
the changes described above, and certain other changes described herein, and the
Lenders have agreed, subject to the terms and conditions hereinafter set forth,
to amend the Credit Agreement to effect such changes as set forth below.

 

NOW, THEREFORE, in consideration of the mutual
covenants and agreements herein contained and for other good and valuable
consideration, the sufficiency and receipt of which is hereby acknowledged, the
parties hereto hereby agree as follows:

 

SECTION 1. 
Defined Terms; References.  Unless otherwise specifically
defined herein, each term used herein that is defined in the Credit Agreement
has the meaning assigned to such term in the Credit Agreement.  Each reference to “hereof”, “hereunder”, “herein”
and “hereby” and each other similar reference and each reference to “this Agreement”
and each other similar reference contained in the Credit Agreement, and each
reference in any other Loan Document to “the Credit Agreement” or “thereunder”,
“thereof” or other similar reference to the Credit Agreement, shall, after the Third
Amendment Effective Date (as defined in Section 15 of this Amendment), refer to
the Credit Agreement as amended hereby.

 

SECTION 2.  Amendments to Definitions.

 

(a)   Section 1.01 of the Credit Agreement is amended by adding the
following definitions in appropriate alphabetical order:

 

““Approved Bank” has the meaning specified in clause (b) of
the definition of “Cash Equivalents”

 

“Canadian LC Obligations” means Indebtedness permitted by
Section 7.03(b)(xxiv).

 

“Debt Rating” means, as of any date of determination, the
senior secured debt rating for the Company, as determined
by either S&P or Moody’s.

 

“Third Amendment” means the Third Amendment to this
Agreement, dated as of April [   ], 2005, among Holdings, the
Company, the Administrative Agent and the Lenders party thereto.

 

“Third Amendment Effective Date” has the meaning specified in
Section 15 of the Third Amendment.”

 

2

 

(b)   Section 1.01 of the Credit Agreement is further amended as
follows:

 

(i)       By
amending the following definitions to read in their entirety as follows:

 

““Cash Equivalents” means any of the following types of
Investments, to the extent owned by the Company or any of its Restricted
Subsidiaries free and clear of all Liens:

 

(a)           readily
marketable obligations issued or directly and fully guaranteed or insured by
the United States or any agency or instrumentality thereof having maturities of
not more than three hundred and sixty five (365) days from the date of
acquisition thereof;

 

(b)           time
deposits with, or insured certificates of deposit or bankers’ acceptances of,
any commercial bank that (i) (A) is a Lender or (B) is organized under the laws
of the United States, any state thereof or the District of Columbia or is the
principal banking subsidiary of a bank holding company organized under the laws
of the United States, any state thereof or the District of Columbia, and is a
member of the Federal Reserve System, (ii) issues (or the parent of which
issues) commercial paper rated at least P 1 (or the then equivalent grade) by
Moody’s or at least “A 1” (or the then equivalent grade) by S&P, and (iii)
has combined capital and surplus of at least $500,000,000 (any such bank being
an “Approved Bank”), in each case with
maturities of not more than three hundred and sixty five (365) days from the
date of acquisition thereof;

 

(c)           commercial
paper issued by an Approved Bank (or by the parent company thereof) or any note
issued by, or guaranteed by a corporation rated A 1 or A, as applicable (or the
equivalent thereof) or better by S&P or P 1 or A2, as applicable (or the
equivalent thereof) or better by Moody’s, in each case with maturities of not
more than three hundred and sixty five (365) days from the date of acquisition
thereof;

 

(d)           repurchase
agreements entered into by any Person with a bank or trust company (including
any of the Lenders) or recognized securities dealer having capital and surplus
in excess of $500,000,000 for direct obligations issued by or fully guaranteed
by the United States in which such Person shall have a perfected first priority
security interest (subject to no other Liens) and 

 

3

 

having, on the date of
purchase thereof, a fair market value of at least 100% of the amount of the repurchase
obligations;

 

(e)           Investments,
classified in accordance with GAAP as Current Assets of the Company or any of
its Restricted Subsidiaries, in money market investment programs which are
administered by financial institutions having capital of at least $500,000,000,
and the portfolios of which are limited such that 95% of such investments are
of the character, quality and maturity described in clauses (a), (b), (c) and
(d) of this definition;

 

(f)            solely
with respect to any Foreign Subsidiary, (i) certificates of deposit of,
bankers acceptances of, or time deposits with, any commercial bank which is
organized and existing under the laws of the country in which such Foreign
Subsidiary maintains its chief executive office and principal place of business
provided such country is a member of the Organization for Economic Cooperation
and Development (any such bank being a “Qualifying Bank”),
and whose senior unsecured long-term debt is rated at least A by S&P or A2
by Moody’s or is assigned an equivalent rating in such country (any such bank
being an “Approved Foreign Bank”) and maturing
within twelve (12) months of the date of acquisition, (ii) equivalents of
demand deposit accounts which are maintained with an Approved Foreign Bank,
(iii) certificates of deposit of, bankers acceptances of, time deposits with,
or equivalents of demand deposit accounts maintained with, any Qualifying Bank
that is not an Approved Bank, to the extent that the aggregate amount thereof
for all Foreign Subsidiaries does not exceed $20,000,000, and (iv) any offshore
funds offered by any Approved Foreign Bank or any of its Affiliates so long as
such offshore fund’s senior unsecured long term debt is rated AAA by S&P or
Aaa by Moody’s or is assigned an equivalent rating in the applicable
jurisdiction; and

 

(g)           auction
rate securities having a credit rating of AAA from S&P or Aaa from Moody’s
and having a reset date of not more than 365 days from the date of acquisition
thereof.

 

“Term Commitment” means, as to each Term Lender, its obligation
to make a Term Loan to the Company pursuant to Section 2.01(a) in an aggregate
amount not to exceed the amount set forth opposite such Lender’s name on
Schedule 2.01 under the caption “Term Commitment.”

 

4

 

(ii)   By
deleting the definitions of “Approved Domestic Bank” and “Specified Equity
Issuance”.

 

(iii)  By
amending paragraph (a) of the definition of “Applicable Rate” to read in its
entirety as follows:

 

“(a)           with respect to Term Loans, the following percentages per
annum based upon the Company’s Debt Rating:

 

	
  Applicable Rate

  	
   

  
	
  Pricing Level

  	
   

  	
  Eurodollar 

  Rate

  	
   

  	
  Base Rate

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1

  	
   

  	
  1.75

  	
  %

  	
  0.75

  	
  %

  
	
  2

  	
   

  	
  2.00

  	
  %

  	
  1.00

  	
  %

  

 

Pricing
Level 1 shall apply if the Debt Rating assigned by S&P is at least BB- and the Debt Rating assigned by Moody’s is at least Ba2.

 

Pricing
Level 2 shall apply if Level 1 does not apply.

 

Upon the Third Amendment Effective Date, the Applicable Rate with
respect to Term Loans shall be determined based upon the Debt Rating specified
in the certificate delivered pursuant to Section 15(j) of the Third
Amendment.  Thereafter, each change in
the Applicable Rate resulting from a publicly announced change in the Debt
Rating shall be effective, in the case of an upgrade, on the date of delivery
by a Responsible Officer of the Company to the Administrative Agent of notice
thereof and, in the case of a downgrade, on the date of the public announcement
thereof.”

 

(iv)  By
adding immediately after “the Company” in the definition of “Qualifying IPO”
the following new paranthetical:

 

“(or,
for the purposes of the definition of “Change of Control”, Warner Music Group
Corp.)”

 

(v)   By
(A) deleting the words “any fiscal year period of” in the first sentence of the
definition of “Excess Cash Flow”, (B) adding "and Section 7.06(m)"
immediately after the reference to Section 7.06(h) in clause (b)(v) thereof,
and (C) replacing the first occurrence of "such fiscal year" in clause
(b)(xxiii) thereof with "the period for which Excess Cash Flow is being
calculated" and replacing each subsequent reference in such clause to
"such fiscal year" with "such period."

 

(vi)  By
re-lettering clauses “(x)”, “(y)” and “(z)” of the definition of “Obligations”
as clauses “(w)”, “(x)” and “(y)” respectively, 

 

5

 

replacing
“and” immediately prior to new clause (y) with a comma, and adding at the end
of new clause (y) the following new clause (z):

 

“and
(z) the Canadian LC Obligations”

 

SECTION 3.  Replacement of Term Loans.

 

(a)        Subject to the terms and conditions hereof, each Consenting
Term Lender severally agrees to exchange its Existing Term Loans for a like
principal amount in Dollars of Replacement Term Loans on the Third Amendment
Effective Date, and from and after the Third Amendment Effective Date such
Existing Term Loans shall be deemed refinanced in full and such Replacement
Term Loans shall be deemed to be “Term Loans” made under Section 2.01(a) of the
Credit Agreement.  The Replacement Term
Loans shall be of the same Type as such Consenting Term Lender’s Existing Term
Loans.  In the case of any Consenting
Term Lender’s Existing Term Loans that are Eurodollar Rate Loans, the Interest
Period in effect immediately prior to the Third Amendment Effective Date with
respect to such Existing Term Loans shall be deemed to continue on and after
the Third Amendment Effective Date with respect to such Consenting Term Lender’s
Replacement Term Loans, so that (i) such Consenting Term Lender’s Replacement
Term Loans shall bear interest based on the Eurodollar Rate in effect with
respect to such Consenting Term Lender’s Existing Term Loans immediately prior
to the Third Amendment Effective Date, (ii) the initial Interest Period for
such Consenting Term Lender’s Replacement Term Loans shall end on the last day
of the Interest Period with respect to such Consenting Term Lender’s Existing
Term Loans in effect immediately prior to the Third Amendment Effective Date,
(iii) interest on such Consenting Term Lender’s Existing Term Loans shall be
payable at the end of the initial Interest Period for such Consenting Term
Lender’s Replacement Term Loans and (iv) no amounts shall be payable on the
Third Amendment Effective Date pursuant to Section 3.05 of the Credit Agreement
as a result of the replacement of such Consenting Term Lender’s Existing Term
Loans with Replacement Term loans.

 

(b)        Subject to the terms and conditions hereof, each Additional
Term Lender severally agrees to make Replacement Term Loans in Dollars to the Company
on the Third Amendment Effective Date. 
The aggregate principal amount of each Additional Term Leader’s
Replacement Term Loans (including Replacement Term Loans deemed to have been
made by such Additional Term Lender under paragraph (a) above (if any)) shall
equal such Additional Term Lender’s Term Commitment as defined in the Credit
Agreement after giving effect to this Amendment.  The Company shall apply the proceeds of the
Additional Term Loans first, to refinance and replace in full all Existing
Term Loans of the Non-Consenting Term Lenders and second, to (a) repay
all or any portion of the Permitted Holdco Debt, (b) pay management and
monitoring fees to the Sponsors pursuant to Section 7.08(d) of the Credit
Agreement as amended 

 

6

 

hereby, (c) make Restricted Payments pursuant to
Section 7.06(l)(z) of the Credit Agreement as amended hereby and/or (d)
repurchase from affiliates of Time Warner Inc. certain warrants to purchase
Equity Interests of Warner Music Group Corp. and Holdings.

 

(c)        Upon the Third Amendment Effective Date, the Replacement Term
Loans shall have the same terms, rights and obligations as the Term Loans as
set forth in the Loan Documents, except as modified by this Amendment, and all
references to (i) ”Term Lender” shall be deemed to be a reference to each Consenting
Term Lender and each Additional Term Lender and (ii) “Term Loan” shall be
deemed to be a reference to each Replacement Term Loan.

 

SECTION 4.  Amendments relating to
Replacement Term Loans.  (a)
Section 2.01(a) of the Credit Agreement is hereby amended by replacing the
reference to “ARCA Effective Date” therein with “Third Amendment Effective Date”.

 

(b)        Section 2.06(b) of the Credit Agreement is hereby amended by
replacing the reference to “ARCA Effective Date” therein with “Third Amendment
Effective Date”.

 

(c)        Section 2.07(a) of the Credit Agreement is amended by
replacing amortization schedule set forth therein with the following
amoritzation schedule:

 

	
  Date

  	
   

  	
  Aggregate Term 

  Loan Principal 

  Amortization Payment

  	
   

  
	
  May 2005

  	
   

  	
  $

  	
  4,220,200.00

  	
   

  
	
  August 2005

  	
   

  	
  $

  	
  4,220,200.00

  	
   

  
	
  November 2005

  	
   

  	
  $

  	
  4,220,200.00

  	
   

  
	
  February 2006

  	
   

  	
  $

  	
  4,220,200.00

  	
   

  
	
  May 2006

  	
   

  	
  $

  	
  4,220,200.00

  	
   

  
	
  August 2006

  	
   

  	
  $

  	
  4,220,200.00

  	
   

  
	
  November 2006

  	
   

  	
  $

  	
  4,220,200.00

  	
   

  
	
  February 2007

  	
   

  	
  $

  	
  4,220,200.00

  	
   

  
	
  May 2007

  	
   

  	
  $

  	
  4,220,200.00

  	
   

  
	
  August 2007

  	
   

  	
  $

  	
  4,220,200.00

  	
   

  
	
  November 2007

  	
   

  	
  $

  	
  4,220,200.00

  	
   

  
	
  February 2008

  	
   

  	
  $

  	
  4,220,200.00

  	
   

  
	
  May 2008

  	
   

  	
  $

  	
  4,220,200.00

  	
   

  
	
  August 2008

  	
   

  	
  $

  	
  4,220,200.00

  	
   

  
	
  November 2008

  	
   

  	
  $

  	
  4,220,200.00

  	
   

  
	
  February 2009

  	
   

  	
  $

  	
  4,220,200.00

  	
   

  
	
  May 2009

  	
   

  	
  $

  	
  4,220,200.00

  	
   

  
	
  August 2009

  	
   

  	
  $

  	
  4,220,200.00

  	
   

  
	
  November 2009

  	
   

  	
  $

  	
  4,220,200.00

  	
   

  
	
  February 2010

  	
   

  	
  $

  	
  4,220,200.00

  	
   

  
	
  May 2010

  	
   

  	
  $

  	
  4,220,200.00

  	
   

  
	
  August 2010

  	
   

  	
  $

  	
  4,220,200.00

  	
   

  
	
  November 2010

  	
   

  	
  $

  	
  4,220,200.00

  	
   

  
	
  February 2011

  	
   

  	
  $

  	
  1,340,935,400.00

  	
   

  

 

7

 

SECTION 5.  Mandatory Prepayments Specified
Equity Issuances.  Section
2.05(b) of the Credit Agreement is amended  by amending clause (iii) thereof to read in
its entirety as follows:

 

“(iii)  [Intentionally Omitted].”

 

SECTION 6. Prepayment Premium. Section 2.09 of the Credit Agreement is
amended by adding the following new clasuse (c) thereto:

 

"(c)         Prepayment Premium. Upon any prepayment in whole or in part
of the Term Loans after the Third Amendemnt Effective Date and on or prior to
the first anniversary of the Third Amendment Effective Date in connection with
any Refinancing (as defined below), 
Company shall pay to the Administrative Agent for the account of each
Term Lender an amount equal to one percent (1.0%) of the amount of the Term
Loan so prepaid. For the purposes hereof, "Refinancing"
means any replacement, refinancing or prepayment of all or any portion of the
Term Loans with or from the proceeds of a new term loan having an
"Applicable Rate" (or other equivalent term) that is not equal to or
greater than the Applicable Rate for the Term Loans.''

 

SECTION 7.  Amendments to the Investments
Covenant. Section 7.02 of the Credit Agreement is amended as
follows:

 

(a)           By amending clause (i)(B) thereof to
read in its entirety as follows:

 

"(B)         The total cash consideration
(including, without limitation, earnouts and other contingent payment
obligations to the sellers thereof but excluding any Excluded Consideration) paid
by or on behalf of the Company and its Restricted Subsidiaries for any such
purchase or other acquisition, when aggregated with the total cash
consideration paid by or on behalf of the Company and its Restricted
Subsidiaries for all other purchases and other acqusitions made by the Company
and its Restricted Subsidiaries pursuant to this Section 7.02(i), shall not
exceed $250,000,000 in any fiscal year (with any unused amounts in any fiscal
year being carried forward to any succeeding fiscal year);"

 

(b)        By amending Clause (n) thereof to read in its entirety as
follows:

 

“(n)         so long as immediately after giving
effect to any such Investment, no Event of Default has occurred and is
continuing, other Investments that (net of any cash repayment of or return on
such Investments theretofore received) do not exceed $50,000,000 in any fiscal
year; provided that, such amounts may be
increased by (x) the Net Cash Proceeds of Permitted Equity Issuances which are
Not Otherwise Applied, (y) with respect to Investments other than Investments
in Joint Ventures, (i) the Net Cash Proceeds of Permitted Subordinated
Indebtedness permitted by Section 7.03(a)(iii)(A) which are Not Otherwise
Applied and (ii) the sum of the Rollover Amounts for the two preceding fiscal
years, to the extent that such Rollover Amounts have not been used to make
Capital Expenditures pursuant to Section 7.19(b); provided that
the Company shall promptly notify the Administrative Agent of any application
of any Rollover Amount pursuant to this clause (n) and (z) with respect to
Investments in Joint Ventures, the amount of any Investments made in Joint
Ventures in existence on the Closing Date as required by, or made pursuant to
buy/sell arrangements between the joint venture parties set forth in, joint
venture 

 

8

 

agreements
and similar binding arrangements in effect on the Closing Date; provided  further that,
to the extent that any such Investment (or series of related Investments) made
pursuant to this clause (n) consists of the contribution(s) or other
transfer(s) of property (other than cash) having an aggregate net book value in
excess of $5,000,000 to a Joint Venture for consideration less than the fair
market value of such property, then the Company shall have delivered to the
Administrative Agent a pro forma Compliance Certificate demonstrating that,
after giving Pro Forma Effect to such
Investment(s), the Loan Parties would be in compliance with the financial
covenants set forth in Section 7.11;”

 

SECTION 8.  Amendments to the Indebtedness
Covenant.  Section 7.03 of the
Credit Agreement is amended as follows:

 

(a)        By replacing “$50,000,000” where it appears in clause (b)(vi)(A)
thereof with “$100,000,000”.

 

(b)        By replacing “125,000,000” where it appears in (b)(xv)
thereof with “$175,000,000”.

 

SECTION 9.  Amendments to the Restricted
Payments Covenant.  (a) The last sentence of Section 7.06(i) of the Credit
Agreement is amended to read in its entirety as follows:

 

“For the purpose of this clause (i), “Cumulative
Excess Cash Flow” means the sum of Excess Cash Flow for (x) the period
commencing on the Third Amendment Effective Date and ending on September 30,
2005 and (y) each subsequent fiscal year commencing with the fiscal year ending
September 30, 2006 and ending with the Company’s most recently ended fiscal
year;”

 

(b)  Section 7.06(l) of the Credit Agreement is
amended by deleting “and” immediately prior to clause (y) thereof, and adding
at the end of clause (y) the following new clause (z):

 

“and (z) additional Restricted Payments consisting of cash dividends to
Holdings in an aggregate amount up to $160,000,000, the proceeds of which may
be used by Holdings to make additional Restricted Payments consisting of cash
dividends in an amount up to the amount of such Restricted Payments made by the
Company to Holdings; provided that
all such Restricted Payments referred to in this clause (z) shall be made
substantially simultaneously; and”

 

(c)        Section 7.06 of the Credit Agreement is amended by deleting “and”
at the end of paragraph (k) thereof, and adding the following new clause (m):

 

9

 

“(m)        In addition to the foregoing,
the Company may make additional Restricted Payments to Holdings and Holdings
may use the proceeds thereof to make additional Restricted Payments; provided that (i) the proceeds of such Restricted Payments
shall be applied solely to pay cash dividends on the common stock of Warner
Music Group Corp. and (ii) the amount of such Restricted Payments shall not
exceed $90,000,000 in any fiscal year.”

 

SECTION 10.  Management Fee Settlement.  (a) Section 7.08(d) of the Credit
Agreement is amended to read in its entirety as follows:

 

“(d) so long as no Event of Default shall have occurred and be
continuing under Section 8.01(f), the payment of management and monitoring fees
to the Sponsors in settlement of all amounts payable pursuant to the Sponsor
Management Agreement in an aggregate amount not to exceed $75,000,000,”.

 

SECTION 11.  Amendment to Restrictions on
Prepayments.  Section 7.14(a)
of the Credit Agreement is amended by replacing “and” immediately prior to
clause (ii) thereof with a comma and by adding immediately after clause (ii)
thereof the following new clause (iii):

 

“and
(iii)  the repayment of all or any
portion of the Permitted Holdco Debt with the proceeds of the Restricted
Payment permitted by Section 7.06(l)(z).”

 

SECTION 12.  Amendment to Application
of Funds.  Section 8.03 of the
Credit Agreement is amended by adding immediately after “Secured Hedge
Obligations” where it appears in paragraph Fourth thereof
the words “, the Canadian LC Obligations”.

 

SECTION 13.  Amendment to Schedule
2.01.  Upon the Third
Amendment Effective Date, Schedule 2.01 to the Credit Agreement shall be replaced
in its entirety by the new Schedule 2.01 attached hereto as Schedule I.

 

SECTION 14.  Technical Amendments.  (a) Section
10.01 of the Credit Agreement is hereby amended by replacing the words “Applicable
Margin” each time they appear with the words “Applicable Rate”.

 

(b)        Schedule 5.12 to the Credit Agreement is hereby amended by
adding “Warner Music Ireland Finance Limited” thereto under the heading “Newly
Created Subsidiaries”.

 

10

 

(c)        Exhibit D to the Credit Agreement is amended by replacing
Schedule 2 to the Form of Compliance Certificate set forth therein with the
Schedule 2 attached hereto as Exhibit A.

 

SECTION 15.  Conditions to
Effectiveness.  This Amendment
shall become effective on the date (the “Third Amendment Effective Date”) when,
and only when, each of the following conditions shall have been satisfied to
the satisfaction of the Administrative Agent:

 

(a)        The Execution of Counterparts.  The Administrative Agent shall have received
from each of Holdings, the Company, the Required Lenders and the Requisite Term
Lenders (defined below) a counterpart hereof signed by such party or facsimile
or other written confirmation (in form reasonably satisfactory to the
Administrative Agent) that such party has signed a counterpart hereof.  For the purposes hereof “Requisite
Term Lenders” means Consenting Term Lenders and Additional Term
Lenders providing Replacement Term Loans in an amount equal to (i) an amount
sufficient to refinance the Existing Term Loans, plus (ii) $250,000,000.

 

(b)        Expenses.  The
Administrative Agent shall have received reimbursement for all costs and
expenses (including fees, charges and disbursements of counsel to the Administrative
Agent) incurred in connection with the preparation, negotiation and execution
of this Amendment for which the Company shall have received written notice.

 

(c)        Evidence of Debt. 
Each Consenting Term Lender and each Additional Term Leader shall have
received, if requested by it, one or more Term Notes payable to the order of
such Term Lender duly executed by the Company in substantially the form of
Exhibit C-1 to the Credit Agreement, evidencing the Replacement Term Loans.

 

(d)        Interest, Etc. 
Simultaneously with the making of the Replacement Term Loans, the Company
shall have paid to all the Non-Consenting Term Lenders accrued and unpaid
interest on the Existing Term Loans to the Third Amendment Effective Date plus
additional amounts, if any, owing pursuant to Section 3.05 of the Credit
Agreement.

 

(e)        Execution of Consent. The Administrative Agent shall
have received counterparts of a consent substantially in the form of Exhibit B
to this Amendment, duly executed by each Subsidiary Guarantor.

 

(f)         Representations. 
The representations and warranties of Holdings, the Company and each
other Loan Party contained in Article 5 of the Credit Agreement or any other
Loan Document shall be true and correct in all material respects on and as of
the Third Amendment Effective Date, except to the extent 

 

11

 

that such representations and warranties
specifically refer to an earlier date, in which case they shall be true and
correct in all material respects as of such earlier date.

 

(g)        No Default.  No
Default or Event of Default shall exist on the Third Amendment Effective Date
after giving effect to this Amendment.

 

(h)        Consummation of Initial Public Offering.  On or prior to the earlier of (i) the Third
Amendment Effective Date and (ii) November 1, 2005, Warner Music Group Corp.
shall have consummated an initial public offering of its common stock generating
cash proceeds of not less than $500,000,000.

 

(i)         Leverage Ratio. 
After giving Pro Forma Effect
to the Replacement Term Loans and the application of proceeds thereof and the
initial public offering by Warner Music Group Corp and the application of
proceeds thereof, the Leverage Ratio shall be less than 4.25:1; provided that for the purpose of this paragraph (i) only, “Consolidated EBITDA” shall mean “EBITDA” as defined in the
Senior Subordinated Notes Indenture and as adjusted for the purpose of
calculating the “Fixed Charge Coverage Ratio” thereunder.

 

(j)         Debt Ratings Certificate.  The Administrative Agent shall have received
a certificate signed by a Responsible Officer of the Company certifying the current
Debt Ratings.

 

(k)        Mortgages.  The
Administrative Agent shall have received (x) evidence satisfactory to it that
mortgage amendments with respect to the Mortgages have been duly executed,
acknowledged and delivered by the Loan Party party thereto and are in form suitable
for filing and recording in all filing or recording offices that the
Administrative Agent may deem necessary or desirable, and that all filing and
recording taxes and fees have been paid or otherwise provided for in a manner
reasonably satisfactory to the Administrate Agent and (y) endorsement to title
insurance policies with respect to the mortgaged properties in form and
substances satisfactory to the Administrative Agent.

 

(l)         Responsible Officer’s Authority.  The Administrative Agent shall have received
such certificates of resolutions or other action, incumbency certificates
and/or other certificates of Responsible Officers of each Loan Party as the
Administrative Agent may reasonably require evidencing the identity, authority
and capacity of each Responsible Officer thereof authorized to act as a
Responsible Officer in connection with this Agreement and the other Loan
Documents to which such Loan Party is a party or is to be a party.

 

(m)       Existence, Authority, Good Standing etc.  The Administrative Agent shall have received
such documents and certifications as the Administrative Agent may reasonably
require to evidence that each Loan Party is duly organized or 

 

12

 

formed, and that each of the Borrowers and the
Guarantors is validly existing, in good standing and qualified to engage in
business in each jurisdiction where its ownership, lease or operation of
properties or the conduct of its business requires such qualification, except to
the extent that failure to be so qualified could not reasonably be expected to
have a Material Adverse Effect.

 

(n)        Opinions.  The
Administrative Agent shall have received such opinions as may reasonably be
requested by it, including an opinion of (A) Simpson, Thacher & Bartlett
LLP, New York counsel to the Loan Parties and (B) Paul Robinson, internal
counsel to the Loan Parties, each dated as of the Third Amendment Effective
Date, and each reasonably satisfactory to the Administrative Agent.

 

(o)        Committed Loan Notice. 
A Committed Loan Notice, as applicable, relating to the Replacement Term
Loans be made on the Third Amendment Effective Date.

 

SECTION 16.  Certain Consequences Of
Effectiveness.  On and after
the Third Amendment Effective Date, the rights and obligations of the parties
hereto shall be governed by the Credit Agreement as amended by this Amendment; provided that the rights and obligations of the parties to
the Credit Agreement with respect to the period prior to the Third Amendment
Effective Date shall continue to be governed by the provisions of the Credit
Agreement prior to giving effect to this Amendment.  Each Loan Document, as specifically amended
hereby, is, and shall continue to be, in full force and effect and is hereby
ratified and confirmed in all respects. 
Without limiting the foregoing, the Collateral Documents and all of the
Collateral do and shall continue to secure the payment of all Secured
Obligations (except to the extent limited by the terms of the Collateral
Documents), as amended hereby.

 

SECTION 17. 
Governing Law.  This Amendment shall be governed
by and construed in accordance with the laws of the State of New York.

 

SECTION 18. 
Counterparts.  This Amendment may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.  Delivery by telecopier of an executed
counterpart of a signature page to this Amendment shall be effective as
delivery of an original executed counterpart of this Amendment.

 

13

 

IN WITNESS WHEREOF, the parties hereto have caused
this Amendment to be duly executed as of the date first above written.

 

	
   

  	
  WMG
  ACQUISITION CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  WMG
  HOLDINGS CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

	
   

  	
  BANK
  OF AMERICA, N.A., as Administrative Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BANK
  OF AMERICA, N.A., as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

 

	
   

  	
  DEUTSCHE
  BANK AG, NEW YORK BRANCH  

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
  Title:

  
					

 

 

	
   

  	
  Name
  of Lender:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
					

 

 

	
   

  	
  Name
  of Lender: 

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:Exhibit 10.16

 

AMENDED AND RESTATED STOCKHOLDERS
AGREEMENT

among

Warner Music Group
Corp.

 

WMG Holdings Corp.

WMG Acquisition
Corp.

and

Certain Stockholders of Warner Music Group Corp.

 

 

As Amended and Restated as of May __, 2005

 

 

 

 

 

TABLE OF CONTENTS

	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
  EFFECTIVENESS;
  DEFINITIONS.

  	
  2

  
	
   

  	
  1.1.

  	
  Closing

  	
  2

  
	
   

  	
  1.2.

  	
  Definitions

  	
  2

  
	
  2.

  	
  VOTING
  AGREEMENT.

  	
  2

  
	
   

  	
  2.1.

  	
  Election
  of Directors.

  	
  2

  
	
   

  	
   

  	
  2.1.1.

  	
  Board Size

  	
  2

  
	
   

  	
   

  	
  2.1.2.

  	
  Designation of Directors

  	
  2

  
	
   

  	
   

  	
  2.1.3.

  	
  Sell-Down
  Provisions.

  	
  4

  
	
   

  	
   

  	
  2.1.4.

  	
  CEO Director

  	
  4

  
	
   

  	
   

  	
  2.1.5.

  	
  Independent Directors

  	
  4

  
	
   

  	
   

  	
  2.1.6.

  	
  Further
  Assurances

  	
  4

  
	
   

  	
  2.2.

  	
  Removal and Replacement;
  Vacancies

  	
  4

  
	
   

  	
  2.3.

  	
  Grant of
  Proxies

  	
  5

  
	
   

  	
  2.4.

  	
  Reserved.

  	
  5

  
	
   

  	
  2.5.

  	
  Committees

  	
  5

  
	
   

  	
  2.6.

  	
  Significant Transactions

  	
  5

  
	
   

  	
  2.7.

  	
  Reserved.

  	
  5

  
	
   

  	
  2.8.

  	
  Reserved.

  	
  5

  
	
   

  	
  2.9.

  	
  The Company

  	
  6

  
	
   

  	
  2.10.

  	
  Period

  	
  6

  
	
  3.

  	
  TRANSFER RESTRICTIONS.

  	
  6

  
	
   

  	
  3.1.

  	
  Transfers
  Allowed

  	
  6

  
	
   

  	
   

  	
  3.1.1.

  	
  Permitted Transferees

  	
  6

  
	
   

  	
   

  	
  3.1.2.

  	
  Distributions
  and Charitable Contributions

  	
  6

  
	
   

  	
   

  	
  3.1.3.

  	
  Public
  Transfers

  	
  6

  
	
   

  	
   

  	
  3.1.4.

  	
  Tag Along and Drag Along

  	
  6

  
	
   

  	
   

  	
  3.1.5.

  	
  Other Private Transfers

  	
  7

  
	
   

  	
  3.2.

  	
  Permitted Transferees

  	
  7

  
	
   

  	
  3.3.

  	
  Restrictions on Public
  Transfers

  	
  7

  
	
   

  	
  3.4.

  	
  Restrictions
  on Transfers to Strategic Investors

  	
  8

  
	
   

  	
  3.5.

  	
  Impermissible Transfer

  	
  9

  
	
   

  	
  3.6.

  	
  Notice
  of Transfer

  	
  9

  
	
   

  	
  3.7.

  	
  Period

  	
  9

  
	
  4.

  	
  “TAG ALONG” AND “DRAG
  ALONG” RIGHTS.

  	
  9

  
	
   

  	
  4.1.

  	
  Tag Along

  	
  9

  
	
   

  	
   

  	
  4.1.1.

  	
  Notice

  	
  9

  
	
   

  	
   

  	
  4.1.2.

  	
  Exercise

  	
  10

  

 

i

 

	
   

  	
   

  	
  4.1.3.

  	
  Exercise by Holders of
  Warrants

  	
  10

  
	
   

  	
   

  	
  4.1.4.

  	
  Irrevocable
  Offer

  	
  10

  
	
   

  	
   

  	
  4.1.5.

  	
  Reduction of Shares Sold

  	
  10

  
	
   

  	
   

  	
  4.1.6.

  	
  Additional Compliance

  	
  11

  
	
   

  	
  4.2.

  	
  Drag Along

  	
  11

  
	
   

  	
   

  	
  4.2.1.

  	
  Exercise

  	
  11

  
	
   

  	
  4.3.

  	
  Miscellaneous

  	
  12

  
	
   

  	
   

  	
  4.3.1.

  	
  Certain Legal Requirements

  	
  12

  
	
   

  	
   

  	
  4.3.2.

  	
  Further
  Assurances

  	
  13

  
	
   

  	
   

  	
  4.3.3.

  	
  Sale Process

  	
  13

  
	
   

  	
   

  	
  4.3.4.

  	
  Treatment
  of Options, Warrants and Convertible Securities

  	
  14

  
	
   

  	
   

  	
  4.3.5.

  	
  Expenses

  	
  14

  
	
   

  	
   

  	
  4.3.6.

  	
  Closing

  	
  14

  
	
   

  	
  4.4.

  	
  Reserved.

  	
  15

  
	
   

  	
  4.5.

  	
  Period

  	
  15

  
	
   

  	
  4.6.

  	
  Post-Termination Tag Along

  	
  15

  
	
  5.

  	
  RESERVED.

  	
  15

  
	
  6.

  	
  REGISTRATION
  RIGHTS.

  	
  15

  
	
   

  	
  6.1.

  	
  Demand
  Registration Rights for Investor Registrable Securities.

  	
  15

  
	
   

  	
   

  	
  6.1.1.

  	
  General

  	
  15

  
	
   

  	
   

  	
  6.1.2.

  	
  Form

  	
  16

  
	
   

  	
   

  	
  6.1.3.

  	
  Payment
  of Expenses

  	
  16

  
	
   

  	
   

  	
  6.1.4.

  	
  Additional Procedures

  	
  17

  
	
   

  	
   

  	
  6.1.5.

  	
  Suspension of Registration

  	
  17

  
	
   

  	
  6.2.

  	
  Piggyback Registration
  Rights.

  	
  18

  
	
   

  	
   

  	
  6.2.1.

  	
  Piggyback Registration.

  	
  18

  
	
   

  	
   

  	
  6.2.2.

  	
  Payment
  of Expenses

  	
  19

  
	
   

  	
   

  	
  6.2.3.

  	
  Additional Procedures

  	
  19

  
	
   

  	
   

  	
  6.2.4.

  	
  Registration Statement Form

  	
  19

  
	
   

  	
  6.3.

  	
  Certain Other Provisions.

  	
  19

  
	
   

  	
   

  	
  6.3.1.

  	
  Underwriter’s
  Cutback

  	
  19

  
	
   

  	
   

  	
  6.3.2.

  	
  Registration Procedures

  	
  21

  
	
   

  	
   

  	
  6.3.3.

  	
  Selection of
  Underwriters and Counsel

  	
  24

  
	
   

  	
   

  	
  6.3.4.

  	
  Holder
  Lock-Up

  	
  25

  
	
   

  	
   

  	
  6.3.5.

  	
  Company
  Lock-Up

  	
  25

  
	
   

  	
   

  	
  6.3.6.

  	
  Other
  Agreements

  	
  25

  
	
   

  	
  6.4.

  	
  Indemnification and
  Contribution.

  	
  25

  
	
   

  	
   

  	
  6.4.1.

  	
  Indemnities of the Company

  	
  25

  
	
   

  	
   

  	
  6.4.2.

  	
  Indemnities to the Company

  	
  27

  
	
   

  	
   

  	
  6.4.3.

  	
  Contribution

  	
  27

  
	
   

  	
   

  	
  6.4.4.

  	
  Limitation
  on Liability of Holders of Registrable Securities

  	
  28

  
	
   

  	
   

  	
  6.4.5.

  	
  Indemnification Procedures

  	
  28

  
	
   

  	
   

  	
  6.5.

  	
  Permitted
  Assignees.

  	
  29

  

 

ii

 

	
   

  	
   

  	
  6.5.1.

  	
  Piggyback Registration
  Rights

  	
  29

  
	
  7.

  	
  COVENANTS.

  	
  29

  
	
   

  	
  7.1.

  	
  Reserved.

  	
  29

  
	
   

  	
  7.2.

  	
  Confidentiality

  	
  29

  
	
   

  	
  7.3.

  	
  Directors’ and
  Officers’ Insurance

  	
  30

  
	
  8.

  	
  REMEDIES.

  	
  30

  
	
   

  	
  8.1.

  	
  Generally

  	
  30

  
	
   

  	
  8.2.

  	
  Deposit

  	
  30

  
	
  9.

  	
  LEGENDS.

  	
  31

  
	
   

  	
  9.1.

  	
  Restrictive
  Legend

  	
  31

  
	
   

  	
  9.2.

  	
  1933
  Act Legends

  	
  31

  
	
   

  	
  9.3.

  	
  Stop Transfer Instruction

  	
  31

  
	
   

  	
  9.4.

  	
  Termination of 1933 Act
  Legend

  	
  31

  
	
  10.

  	
  AMENDMENT,
  TERMINATION, ETC.

  	
  32

  
	
   

  	
  10.1.

  	
  Oral
  Modifications

  	
  32

  
	
   

  	
  10.2.

  	
  Written Modifications

  	
  32

  
	
   

  	
  10.3.

  	
  Withdrawal from Agreement

  	
  33

  
	
   

  	
  10.4.

  	
  Effect
  of Termination

  	
  33

  
	
  11.

  	
  DEFINITIONS

  	
  34

  
	
   

  	
  11.1.

  	
  Certain Matters of
  Construction

  	
  34

  
	
   

  	
  11.2.

  	
  Definitions

  	
  34

  
	
  12.

  	
  MISCELLANEOUS.

  	
  44

  
	
   

  	
  12.1.

  	
  Authority; Effect

  	
  44

  
	
   

  	
  12.2.

  	
  Notices

  	
  44

  
	
   

  	
  12.3.

  	
  Binding
  Effect, Etc

  	
  45

  
	
   

  	
  12.4.

  	
  Descriptive
  Headings

  	
  45

  
	
   

  	
  12.5.

  	
  Counterparts

  	
  45

  
	
   

  	
  12.6.

  	
  Severability

  	
  45

  
	
   

  	
  12.7.

  	
  No Recourse

  	
  45

  
	
   

  	
  12.8.

  	
  Aggregation
  of Shares

  	
  46

  
	
  13.

  	
  GOVERNING
  LAW.

  	
  46

  
	
   

  	
  13.1.

  	
  Governing Law

  	
  46

  
	
   

  	
  13.2.

  	
  Consent to Jurisdiction

  	
  46

  
	
   

  	
  13.3.

  	
  WAIVER
  OF JURY TRIAL

  	
  47

  
	
   

  	
  13.4.

  	
  Exercise of Rights and
  Remedies

  	
  47

  

 

iii

 

AMENDED AND RESTATED

STOCKHOLDERS
AGREEMENT

 

 

This Amended and Restated Stockholders Agreement made
as of May __, 2005 (the “Agreement”) amends and restates the
Stockholders Agreement made as of February 29, 2004 and amended as of July 30,
2004 (the “Original Agreement”) by and among:

 

(i)                                     Warner Music Group Corp., a Delaware
corporation formerly known as WMG Parent Corp. (the “Company”);

 

(ii)                                  WMG Holdings Corp., a Delaware
corporation (“Midco”);

 

(iii)                               WMG Acquisition Corp., a Delaware
corporation (the “Purchaser”);

 

(iv)                              each Person executing this Agreement and
listed as an Investor on the signature pages hereto (collectively, so long as
they remain parties to this Agreement, the “Investors”);

 

(v)                                 each Person executing this Agreement or
the Original Agreement and listed as a Manager on the signature pages hereto or
thereto, together with each Person joining this Agreement as a Manager pursuant
to Section 10.2(j) (collectively, so long as they remain parties to this
Agreement, the “Managers” and together with the Investors, the “Stockholders”);
and

 

(vi)                              such other Persons, if any, that from
time to time become party hereto as holders of Other Holder Shares (as defined
below) pursuant to Section 6.5 solely in the capacity of permitted assignees
with respect to certain registration rights hereunder (collectively, the “Other
Holders”).

 

 

RECITALS

 

1.             The
Company was formed for the purpose of acquiring (the “Acquisition”),
indirectly through one or more subsidiaries, pursuant to a Purchase Agreement,
dated as of November 24, 2003 (the “Acquisition Agreement”), between
Time Warner Inc. and the Purchaser, the Warner Recorded Music Business and the
Warner Music Publishing Business (as defined in the Acquisition Agreement).

 

2.             As
of the effectiveness of this Agreement pursuant to Section 1.1, the outstanding
Shares (as defined below) were held as set forth on Schedule 1
hereto.

 

3.             The parties believe that it is in the best interests of
the Company, Midco and the Stockholders to set forth their agreements on
certain matters.

 

 

AGREEMENT

 

Therefore, the parties hereto hereby agree as follows:

 

1.     EFFECTIVENESS;
DEFINITIONS.

1.1.          Closing. 
This Agreement shall become effective on the later of (i) the closing of
the Company’s Initial Public Offering or (ii) the date on which this Agreement has
been executed by the Company, Midco, the holders of a Majority in Interest of
the Shares and each of the Investor Groups in accordance with Section 10.2 of
the Original Agreement (it being understood that, for purposes of this
sentence, capitalized terms shall have the meanings ascribed to them in the
Original Agreement), provided that the amendment hereby of Section 3.1.2(b)
shall become effective immediately upon full execution hereof as set forth in
clause (ii) above.  The Original
Agreement became effective upon consummation of the closing under the
Acquisition Agreement (the “Closing”).

1.2.          Definitions.  Certain terms are used in this Agreement as
specifically defined herein.  These
definitions are set forth or referred to in Section 11.2 hereof.

2.     VOTING AGREEMENT.

2.1.          Election of Directors.

2.1.1.  Board Size.  Each holder of Company Shares hereby agrees
to cast all votes to which such holder is entitled in respect of the Company
Shares, whether at any annual or special meeting, by written consent or
otherwise, to fix the number of members of the board of directors of the
Company (the “Board”):

2.1.1.1.    At fourteen at all times prior to the first
anniversary of the date on which the Company ceases to be a Controlled Company.

2.1.1.2.    At such number (as shall be determined from
time to time by the Investor Groups) at all times on or after the first
anniversary of the date on which the Company ceases to be a Controlled Company.

2.1.2.  Designation
of Directors.  Each holder of
Company Shares hereby agrees to cast all votes to which such holder is entitled
in respect of the Company Shares, whether at any annual or special meeting, by
written consent or otherwise:

(a)           so as to cause the Company’s
directors, at all times prior to the first anniversary of the date on which the
Company ceases to be a Controlled Company, to consist of: (i) five THL Directors,
(ii) three Bain Directors, (iii) one Providence Director, (iv) one Lexa
Director, (v) one director who at all times shall be the then current chief
executive officer of the Company (the “CEO Director”), who shall
initially be Edgar Bronfman, Jr., with Mr. Bronfman also to

 

-2-

 

serve as Chairman of the Board during his tenure as
the CEO Director, and (vi) three additional directors (the “Independent
Directors”);

(b)           so as to cause the Company’s directors,
at all times on or after the first anniversary of the date on which the Company
ceases to be a Controlled Company, to consist of such directors as shall have
been designated pursuant to such procedures as the Investor Groups shall agree
from time to time, subject to the requirements of applicable law (including the
rules of the Commission and any exchange upon which equity securities of the
Company might be listed); and

(c)           so as to elect as the Company’s
directors:

(i)            the number of THL Directors as
determined under or in accordance with procedures established pursuant to this Section
2.1.2, designated as follows: (A) first, one director designated by Thomas H.
Lee Equity Fund V, L.P., if it then holds any Company Shares, (B) then, one
director designated by Thomas H. Lee Parallel Fund V, L.P., if it then holds
any Company Shares, (C) then, one director designated by THL WMG Equity
Investors, L.P., if it then holds any Company Shares and (D) then, such other
directors designated by the Majority THL Investors as the remaining THL
Directors;

(ii)           the number of Bain Directors as
determined under or in accordance with procedures established pursuant to this Section
2.1.2, designated as follows: (A) first, one director designated by Bain
Capital VII Coinvestment Fund, L.P., if (1) it then holds any Company Shares or
(2) it is then the sole member of Bain Capital VII Coinvestment Fund, LLC and
the latter then holds any Company Shares, it being understood and agreed that
Bain Capital VII Coinvestment Fund, L.P. is intended to be a third party
beneficiary of this Section 2.1.2(c)(ii)(A) and the related provisions of
Section 2.2 and shall be entitled to enforce such provisions of this Agreement
as though it were a party hereto, and (B) then, such other directors designated
by the Majority Bain Investors as the remaining Bain Directors;

(iii)          the number of Providence Directors as
determined under or in accordance with procedures established pursuant to this Section
2.1.2, designated by Providence Equity Partners IV, L.P., if it then holds any
Company Shares, otherwise by the Majority Providence Investors;

(iv)          the number of Lexa Directors as
determined under or in accordance with procedures established pursuant to this Section
2.1.2, designated by Music Capital Partners, L.P., if it then holds any Company
Shares, otherwise by the Majority Lexa Investors;

(v)           the CEO Director; and

 

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(vi)          the number of Independent Directors as
determined under or in accordance with procedures established pursuant to this
Section 2.1.2, each of whom shall be  designated unanimously by the members of the
Board elected pursuant to clauses (i) through (v) above.

2.1.3.  Investor
Directors.  Upon any reduction in
the number of THL Directors, Bain Directors, Providence Directors or Lexa
Directors in accordance with procedures established pursuant to Section 2.1.2,
the applicable Investor Group promptly shall cause one or more of its
designated directors, as the case may be, to resign.

2.1.4.  CEO Director.  If at any time a person serving as the CEO
Director ceases to be the chief executive officer of the Company, the Company
and the holders of Company Shares agree promptly to act in accordance with the
provisions hereof to cause the removal of such director and, at such time as a
succeeding chief executive officer of the Company is appointed in conformity
with the provisions hereof, the election of such person as the CEO
Director.  The CEO Director may not be
removed, with or without cause, so long as such director continues to serve as
the chief executive officer of the Company.

2.1.5.  Independent
Directors.  An Independent
Director may be removed with, and only with, the consent of each Investor Group
then entitled to designate at least one director pursuant to Section 2.1.

2.1.6.  Further
Assurances.  Each holder of
Company Shares hereby agrees to take, at any time and from time to time, all
actions necessary to accomplish the provisions of this Section 2.1.  The Company, subject to the Board’s fiduciary
duties, hereby agrees to take, at any time and from time to time, all actions within
its control necessary to accomplish the provisions of this Section 2.1 (including
(i) causing the nomination of any person designated in accordance with this Section
2.1 in connection with any election in respect of the applicable directorship
and (ii) to the extent permitted by applicable law (including the rules of the
Commission and any exchange upon which equity securities of the Company might
be listed), causing the size of the Board to be adjusted in accordance with any
determination from time to time by the Investor Groups pursuant to Section
2.1.2 as to the size and composition of the Board to be in effect on or after
the first anniversary of the date on which the Company ceases to be a
Controlled Company).

2.2.          Removal and Replacement;
Vacancies.  Members
of the Board designated by a particular Investor Group (or member thereof) may
be removed by, and only by, the Investor Group (or member thereof) entitled to
designate such member of the Board.  The CEO Director and the Independent Directors
may be removed only in accordance with Section 2.1.4 or 2.1.5,
respectively.  If, prior to his or her
election to the Board, any designee for Investor Director or Independent
Director is unable or unwilling to serve as a director, then the applicable
designating Person or group, as set forth in Section 2.1.2, shall be entitled
to nominate a replacement.  If, following
election to the Board, any Investor Director or Independent Director resigns,
is

 

-4-

 

removed, or is unable to serve for any reason prior to
the expiration of his or her term as a director, then the applicable
designating Person or group, determined under or in accordance with procedures
established pursuant to Section 2.1.2, shall designate a replacement.  If any designating Person or group fails to
designate a person to fill any directorship, then such directorship shall be
vacant.

2.3.          Grant of Proxies.  Each holder of Company Shares hereby grants
an irrevocable proxy coupled with an interest to vote, including in any action
by written consent, such holder’s Company Shares in accordance with such holder’s
agreements contained in Sections 2.1 and 2.2 to: (a) each Investor Group then
entitled to designate any Investor Directors solely in respect of the election
or removal of such Investor Group’s Investor Directors and (b) the Company
otherwise.  Each of the foregoing proxies
shall be valid and remain in effect until the provisions of Sections 2.1 and 2.2
expire pursuant to Section 2.10.

2.4.          Reserved.

2.5.          Committees. 
The Company shall, and each holder of Company Shares shall use its best
efforts to, cause the Board to maintain the following committees: (i) an
Executive Committee, to be chaired by a THL Director, if any, selected by the
Majority THL Investors, and including a Bain Director and a Providence
Director, if any, selected by the applicable Investor Group, and the CEO
Director (ii) an Audit Committee, (iii) a Compensation Committee and (iv) if
the Board determines in its discretion, a Governance Committee.  No committee shall have the power to act for
the Board where such action would otherwise require the vote or consent of a
majority of the entire Board under applicable law, pursuant to the Company’s
certificate of incorporation or by-laws or pursuant to this Agreement.

2.6.          Significant Transactions.  If a vote of holders of Shares is required
under any applicable law or stock exchange regulations in connection with a
Change of Control transaction being implemented pursuant to Section 4.2, each
holder of Shares agrees to cast all votes to which such holder is entitled in
respect of the Shares, whether at any annual or special meeting, by written
consent or otherwise, in such manner as the Requisite Stockholder Majority may
instruct by written notice to approve any sale, recapitalization, merger,
consolidation, reorganization or any other transaction or series of
transactions involving the Company or its subsidiaries (or all or any portion
of their respective assets) in connection with, or in furtherance of, the
exercise by the Requisite Stockholder Majority of their rights under
Section 4.2.  Each holder of Shares
hereby grants to each member of such Requisite Stockholder Majority an
irrevocable proxy coupled with an interest to vote, including in any action by
written consent, such holder’s Shares in accordance with such holder’s
agreements contained in this Section 2.6, which proxy shall be valid and remain
in effect until the provisions of this Section 2.6 expire pursuant to
Section 2.10.

2.7.          Reserved.

2.8.          Reserved.

 

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2.9.          The Company.  The Company will not to give effect to any
action by any holder of Shares or any other Person which is in contravention of
this Section 2.

2.10.        Period. 
Each of the foregoing provisions of this Section 2 shall expire on
the earlier of (a) a Change of Control and (b) with respect to any particular
provision, the last date permitted by applicable law (including the rules of
the Commission and any exchange upon which equity securities of the Company
might be listed).

3.     TRANSFER RESTRICTIONS.

3.1.          Transfers Allowed.  Until the expiration of the provisions of
this Section 3, no holder of Shares shall Transfer any of such holder’s Shares
to any other Person except as follows:

3.1.1.  Permitted
Transferees.  Subject to Section 3.4,
but without regard to any other restrictions on transfer contained elsewhere in
this Agreement, any holder of Shares may Transfer any or all of such Shares to
such holder’s Permitted Transferees, so long as such Permitted Transferee
agrees to be bound by the terms of this Agreement in accordance with Section 3.2
(if not already bound hereby).

3.1.2.  Distributions and Charitable
Contributions.  Any holder of
Shares may Transfer any or all of such Shares (a) in a pro rata Transfer to its
partners, members or stockholders or (b) to a Charitable Organization
(whether directly or indirectly by means of one or more intermediate Transfers
to any one or more direct or indirect partners, members or stockholders),
without regard to any other restrictions on transfer contained elsewhere in
this Agreement (other than the provisions of Section 6.3.4, if applicable).  Any Shares so Transferred shall conclusively
be deemed thereafter not to be Shares under this Agreement but may be deemed
Other Holder Shares if and to the extent so provided in Section 6.5.

3.1.3.  Public
Transfers.  Any holder of Shares
may Transfer any or all of such Shares: (a) in a Public Offering or (b)
pursuant to Rule 144 or a block sale to a financial institution in the
ordinary course of its trading business, in each case in compliance with
Section 3.3 and Section 3.4, but without regard to any other restrictions on
transfer contained elsewhere in this Agreement (other than the provisions of
Section 6.3.4, if applicable).  Shares
Transferred pursuant to this Section 3.1.3 shall conclusively be deemed
thereafter not to be Shares under this Agreement.

3.1.4.  Tag
Along and Drag Along.  Any holder
of Shares may Transfer any or all of such Shares pursuant to Section 4.2,
without regard to any other restrictions on transfer contained elsewhere in
this Agreement (other than the provisions of Section 6.3.4, if
applicable).  A Participating Seller may
Transfer Shares pursuant to and in accordance with the provisions of Section 4.1
without regard to any other restrictions on transfer contained elsewhere in
this Agreement (other than the provisions of Section 6.3.4, if
applicable).  Shares so Transferred shall
conclusively be deemed thereafter not to be Shares under this Agreement.

 

-6-

 

3.1.5.  Other
Private Transfers.  In addition
to any Transfers made in accordance with Sections 3.1.1, 3.1.2, 3.1.3 and 3.1.4,
any holder of Shares may Transfer any or all of such Shares subject to
compliance with all of the following conditions:

(i)            Reserved;

(ii)           in compliance with Section 4.1;

(iii)          in compliance with Section 3.4; and

(iv)          if applicable, in compliance with
Section 6.3.4.

Any Shares so Transferred to a Person other than a
Stockholder or a Permitted Transferee shall conclusively be deemed thereafter
not to be Shares under this Agreement but may be deemed Other Holder Shares if
and to the extent so provided in Section 6.5.

 

3.2.          Permitted Transferees.  Any Permitted
Transferee receiving Shares in a Transfer pursuant to Section 3.1.1 or 3.1.5
shall be subject to the terms and conditions of, and be entitled to enforce, this
Agreement to the same extent, and in the same capacity, as the Stockholder that
Transfers the Shares to such Permitted Transferee as if such Permitted
Transferee were such Stockholder.  Prior
to the initial Transfer of any Shares to any Permitted Transferee pursuant to
Section 3.1.1 or 3.1.5, and as a condition thereto, each holder of Shares
effecting such Transfer shall (i) cause such Permitted Transferee to deliver to
the Company and each of the Stockholders (other than the transferor or the
Managers) its written agreement, in form and substance reasonably satisfactory
to the Company, to be bound by the terms and conditions of this Agreement to
the extent described in the preceding sentence and (ii) remain directly liable
for the performance by the Permitted Transferee of all obligations of such
Permitted Transferee under this Agreement. 
To the extent a Permitted Transferee is not an individual, a trust or an
estate, and the transferor or an Affiliate thereof shall cease to control such
Permitted Transferee, (i) such change of control shall be deemed to be a
Transfer of the Shares held by such Permitted Transferee subject to the
Transfer restrictions contained or referenced in this Section 3 and (ii) to the
extent such Permitted Transferee then holds assets in addition to Shares, the
determination of the purchase price deemed to have been paid for the Shares
held by such Permitted Transferee in such deemed Transfer for purposes of the
provisions of Sections 3 and 4 shall be made by the Board in good faith; provided that, Music
Capital Partners, L.P. ceasing to control its Permitted Transferee ALP Music
Capital Partners, L.P. following the transfer referred to in the second
sentence of the definition of Permitted Transferee shall not be a deemed a
Transfer of Shares pursuant to the provisions of the foregoing sentence.

3.3.          Restrictions on Public Transfers.
 Each Specified Holder promptly shall
notify each Related Stockholder (i) when it has commenced a measurement period
for purposes of the Rule 144 group volume limit in connection with a Sale that
is subject to such limit and (ii) what the volume limit for that measurement
period, determined as of its commencement, will be.  Each Related Stockholder shall be entitled to
effect Sales that are subject to the Rule 144 group volume limit pro rata
during the applicable measurement period based on its percentage

 

-7-

 

ownership of Shares held by all holders of Shares at
the start of such measurement period.  In
the event any Related Stockholder agrees to forego its full pro rata share of
the Rule 144 group volume limit by written notice to the Specified Holder and
all other Related Stockholders, the remainder shall be re-allocated pro rata
among Specified Holder and all other Related Stockholders in like manner
(except that the Shares held by such forfeiting Related Holder at the start of
such measurement period shall be excluded from such calculation).  The provisions of this Section 3.3 shall not
apply to any Transfer of Shares (i) in a Public Offering or (ii) not subject to
volume limitation under Rule 144.  For
purposes of this Section 3.3, a “Specified Holder” means a holder of
Shares whose sale of Shares pursuant to Rule 144 would be subject to
aggregation with another Stockholder (such other Stockholder being a “Related
Stockholder”).

3.4.          Restrictions on Transfers to
Strategic Investors.  In addition
to any other provision of this Agreement, no holder of Shares shall Transfer
any Shares pursuant to Sections 3.1.1, 3.1.3 or 3.1.5 of this Agreement to a
Strategic Investor without the approval of a majority of the entire Board and
the approval of the Requisite Stockholder Majority.  If any Prospective Selling Stockholder
proposes to Transfer any Shares pursuant to Sections 3.1.1, 3.1.3 or 3.1.5 to
any Prospective Buyer, the Prospective Selling Stockholder shall furnish a
written notice (which notice may be the same notice as the Tag Along Notice, if
any, delivered pursuant to Section 4.1, so long as such notice includes all of
the information required by the next sentence) to the Company and each other
holder of Shares at least ten business days prior to such proposed
Transfer.  Such notice shall set forth
the principal terms of the proposed Transfer, including (i) the number and
class of the Shares to be Transferred, (ii) the per share purchase price or the
formula by which such price is to be determined and (iii) the name and
address of the Prospective Buyer.  If the
Prospective Buyer (or an Affiliate thereof) has previously been determined by a
majority of the entire Board and the Requisite Stockholder Majority to be a
Strategic Investor, or is presumed to be a Strategic Investor pursuant to the
definition thereof, and such determination or presumption has not been reversed
by written notice to all holders of Shares, the Prospective Selling Stockholder
shall not Transfer any Shares to such Prospective Buyer without the written
approval of a majority of the entire Board and of the Requisite Stockholder
Majority.   If the Prospective Buyer (or
an Affiliate thereof) has not previously been determined by a majority of the
entire Board and the Requisite Stockholder Majority to be a Strategic Investor,
or is not presumed to be a Strategic Investor pursuant to the definition
thereof, the Prospective Selling Stockholder may Transfer Shares to such
Prospective Buyer unless, within eight business days after the date of delivery
of the notice required by the second preceding sentence, the majority of the
entire Board and the Requisite Stockholder Majority deliver written notice to
the Prospective Selling Stockholder and all other Stockholders that such
Prospective Buyer has been designated a Strategic Investor.  If, within such time period, a notice
designating such Prospective Buyer a Strategic Investor is delivered, than the
Prospective Selling Stockholder shall not Transfer any Shares to such
Prospective Buyer.  In the event any
proposed Transfer to a Strategic Investor is approved in accordance with the
foregoing, such approval shall also apply to Transfers made to such Prospective
Buyer by any Tag Along Sellers. 
Notwithstanding anything in this Agreement to the contrary, the restrictions
in this Section 3.4 shall not apply to any Transfers (i) to the Company or any
of its subsidiaries, (ii) to any Stockholder, (iii) to any Affiliated Fund of
any Stockholder, (iv) pursuant to Rule 144 effected as “brokers’ transactions”
(as defined in Rule 144); or (v) pursuant to an underwritten Public

 

-8-

 

Offering or pursuant to Rule 144 directly to a “market
maker” (as defined in Rule 144) or pursuant to a block sale to a financial
institution in the ordinary course of its trading business, in each case of
this clause (vi) in which, to the knowledge of the Prospective Selling
Stockholder (after reasonable due inquiry), the underwriter(s), market maker(s)
or block sale purchaser(s) do not intend to resell such Shares to any Person
that, after giving effect to such resale, would own, directly or indirectly,
more than five percent (5%) of then outstanding shares of the applicable class
of Shares.

3.5.          Impermissible Transfer.  Any attempted Transfer of Shares not
permitted under the terms of this Section 3 shall be null and void, and the
Company shall not in any way give effect to any such impermissible Transfer.

3.6.          Notice of Transfer.  To the extent any Stockholder or Permitted
Transferee shall Transfer any Shares, such Stockholder or Permitted Transferee
shall, within three business days following consummation of such Transfer,
deliver notice thereof to the Company and each other Stockholder (other than
the Managers).

3.7.          Period. 
Each of the foregoing provisions of this Section 3 shall expire
upon a Change of Control.

4.     “TAG
ALONG” AND “DRAG ALONG” RIGHTS.

4.1.          Tag Along. 
If any Prospective Selling Stockholder proposes to Sell any Shares to
any Prospective Buyer(s) in a Transfer pursuant to Section 3.1.5, other than a
Transfer by a holder pursuant to the exercise of such holder’s rights under this
Section 4.1:

4.1.1.  Notice.  The Prospective Selling Stockholder shall,
prior to any such proposed Transfer, furnish a written notice (the “Tag
Along Notice”) to each of the other holders of Shares (each, a “Tag
Along Holder”).  The Tag Along Notice
shall include:

(a)           the principal terms and conditions of
the proposed Sale, including (i) the number and class of the Shares to be
purchased from the Prospective Selling Stockholder, (ii) the fraction(s)
expressed as a percentage, determined by dividing the number of Shares of each
class to be purchased from the Prospective Selling Stockholder by the total
number of Shares of each such class held by the Prospective Selling Stockholder
(the “Tag Along Sale Percentage”), (iii) the per share purchase
price or the formula by which such price is to be determined and the payment
terms, including a description of any non-cash consideration sufficiently
detailed to permit valuation thereof, (iv) the name and address of each
Prospective Buyer and (v) the proposed Transfer date; and

(b)           an invitation to each Tag Along
Holder to make an offer to include in the proposed Sale to the applicable
Prospective Buyer(s) Shares of the same class(es) being sold by the Prospective
Selling Stockholder held by such Tag Along Holder (not in any event to exceed
the Tag Along Sale Percentage of the

 

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total number of Shares of the applicable class held by
such Tag Along Holder), on the same terms and conditions (subject to Section 4.3.4
in the case of Options, Warrants and Convertible Securities), with respect to
each Share Sold, as the Prospective Selling Stockholder shall Sell each of its
Shares.

4.1.2.  Exercise.  Within ten business days after the date of
delivery of the Tag Along Notice (such date the “Tag-Along Deadline”),
each Tag Along Holder desiring to make an offer to include Shares in the
proposed Sale (each a “Participating Seller” and, together with the
Prospective Selling Stockholder, collectively, the “Tag Along Sellers”)
shall furnish a written notice (the “Tag Along Offer”) to the
Prospective Selling Stockholder indicating the number of Shares which such
Participating Seller desires to have included in the proposed Sale (subject to
the limitation set forth in Section 4.1.1(b)). 
Each Tag Along Holder who does not make a Tag Along Offer in compliance
with the above requirements, including the time period, shall be deemed to have
waived all of such holder’s rights with respect to such Sale, and the Tag Along
Sellers shall thereafter be free to Sell to the Prospective Buyer, at a per
share price no greater than the per share price set forth in the Tag Along
Notice and on other principal terms and conditions which are not materially
more favorable to the Tag Along Sellers than those set forth in the Tag Along
Notice, without any further obligation to such non-accepting Tag Along Holder
pursuant to this Section 4.1.

4.1.3.  Reserved.

4.1.4.  Irrevocable
Offer.  The offer of each
Participating Seller contained in such holder’s Tag Along Offer shall be
irrevocable, and, to the extent such offer is accepted, such Participating
Seller shall be bound and obligated to Sell in the proposed Sale on the same
terms and conditions, with respect to each Share Sold (subject to Section 4.3.4
in the case of Options, Warrants and Convertible Securities), as the
Prospective Selling Stockholder, up to such number of Shares as such
Participating Seller shall have specified in such holder’s Tag Along Offer; provided,
however, that if the principal terms of the proposed Sale change with
the result that the per share price shall be less than the per share price set
forth in the Tag Along Notice or the other principal terms and conditions shall
be materially less favorable to the Tag Along Sellers than those set forth in
the Tag Along Notice, each Participating Seller shall be permitted to withdraw
the offer contained in such holder’s Tag Along Offer by written notice to the
Prospective Selling Stockholder and upon such withdrawal shall be released from
such holder’s obligations thereunder.

4.1.5.  Reduction
of Shares Sold.  The Prospective
Selling Stockholder shall attempt to obtain the inclusion in the proposed Sale
of the entire number of Shares which each of the Tag Along Sellers requested to
have included in the Sale (as evidenced in the case of the Prospective Selling
Stockholder by the Tag Along Notice and in the case of each Participating
Seller by such Participating Seller’s Tag Along Offer).  In the event the Prospective Selling
Stockholder shall be unable to obtain the inclusion of such entire number of
Shares in the proposed Sale, the number of Shares

 

-10-

 

to be sold in the
proposed Sale shall be allocated among the Tag Along Sellers in proportion, as
nearly as practicable, as follows:

(i)            there shall be first allocated to
each Tag Along Seller a number of Shares equal to the lesser of (A) the number
of Shares offered (or proposed, in the case of the Prospective Selling
Stockholder) to be included by such Tag Along Seller in the proposed Sale
pursuant to this Section 4.1, and (B) a number of Shares equal to such Tag
Along Seller’s Pro Rata Portion; and

(ii)           the balance, if any, not allocated
pursuant to clause (i) above shall be allocated to the Prospective Selling
Stockholder, or in such other manner as the Prospective Selling Stockholder may
otherwise agree.

4.1.6.  Additional
Compliance.  If prior to
consummation, the terms of the proposed Sale shall change with the result that
the per share price to be paid in such proposed Sale shall be greater than the
per share price set forth in the Tag Along Notice or the other principal terms
of such proposed Sale shall be materially more favorable to the Tag Along
Sellers than those set forth in the Tag Along Notice, the Tag Along Notice
shall be null and void, and it shall be necessary for a separate Tag Along
Notice to be furnished, and the terms and provisions of this Section 4.1
separately complied with, in order to consummate such proposed Sale pursuant to
this Section 4.1; provided, however, that in the case of
such a separate Tag Along Notice, the applicable period to which reference is
made in Sections 4.1.1 and 4.1.2 shall be three business days and two business
days, respectively.  In addition,
if the Prospective Selling Stockholders have not completed the proposed
Sale by the end of the 180th day
after the date of delivery of the Tag Along Notice, each Participating Seller
shall be released from such holder’s obligations under such holder’s Tag Along
Offer, the Tag Along Notice shall be null and void, and it shall be necessary
for a separate Tag Along Notice to be furnished, and the terms and provisions
of this Section 4.1 separately complied with, in order to consummate such
proposed Sale pursuant to this Section 4.1, unless the failure to complete
such proposed Sale resulted from any failure by any Participating Seller to
comply with the terms of this Section 4.

4.2.          Drag Along. 
Each holder of Shares hereby agrees, if requested by the Requisite
Stockholder Majority, to Sell the same percentage (the “Drag Along Sale
Percentage”) of each class of such Shares that is proposed to be sold by the
Prospective Selling Stockholders to a Prospective Buyer in a Change of
Control transaction approved by a majority of the entire Board, in the manner
and on the terms set forth in this Section 4.2; provided, however,
that no such Prospective Buyer shall be a member of a Principal Investor Group
forming part of the acting Requisite Stockholder Majority, any Affiliate of any
such member or any Person more than five percent (5%) of the economic interests
in or voting power of which are directly or indirectly beneficially owned by
any such member, unless such proposed Sale is approved by vote or written
consent of each of the Investor Groups, each voting separately.

4.2.1.  Exercise.  The Prospective Selling Stockholders shall
furnish a written notice (the “Drag Along Notice”) to each other holder
of Shares at least ten

 

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business days prior to
the consummation of the Change of Control transaction.  The Drag Along Notice shall set forth the
principal terms and conditions of the proposed Sale, including (i) the
number and class of Shares to be acquired from the Prospective Selling
Stockholders, (ii) the Drag Along Sale Percentage for each class, (iii)
the per share consideration to be received in the proposed Sale for each class,
(iv) the name and address of the Prospective Buyer and (v) if known, the
proposed Transfer date.  If the
Prospective Selling Stockholders consummate the proposed Sale to which
reference is made in the Drag Along Notice, each other holder of Shares (each a
“Participating Seller”, and, together with the Prospective Selling
Stockholders, collectively, the “Drag Along Sellers”) shall: (i) be
bound and obligated to Sell the Drag Along Sale Percentage of such holder’s
Shares of each class in the proposed Sale on the same terms and conditions,
with respect to each Share Sold (subject to Section 4.3.4 in the case of
Options, Warrants and Convertible Securities) as the Prospective Selling
Stockholders shall Sell each Share in the Sale (subject to Section 4.3.4 in the
case of Options, Warrants and Convertible Securities); and (ii) except as
provided in Section 4.3.1, shall receive the same form and amount of
consideration per Share to be received by the Prospective Selling Stockholders
for the corresponding class of Shares (on an as converted basis, if
applicable).  Except as provided in
Section 4.3.1, if any holders of Shares of any class are given an option as to
the form and amount of consideration to be received, all holders of Shares of
such class will be given the same option. 
Unless otherwise agreed by the Drag Along Sellers, any non-cash
consideration shall be allocated among the Drag Along Sellers pro rata based
upon the aggregate amount of consideration to be received by such Drag Along
Sellers.  If at the end of the 180th day after the
date of delivery of the Drag Along Notice the Prospective Selling Stockholders
have not completed the proposed Sale, the Drag Along Notice shall be null and
void, each Participating Seller shall be released from such holder’s obligation
under the Drag Along Notice and it shall be necessary for a separate Drag Along
Notice to be furnished and the terms and provisions of this Section 4.2
separately complied with, in order to consummate such proposed Sale pursuant to
this Section 4.2.

4.3.          Miscellaneous.  The following provisions shall be applied to
any proposed Sale to which Sections 4.1 or 4.2 applies:

4.3.1.  Certain
Legal Requirements.  In the event
the consideration to be paid in exchange for Shares in a proposed Sale pursuant
to Section 4.1 or Section 4.2 includes any securities, and the
receipt thereof by a Participating Seller would require under applicable law
(a) the registration or qualification of such securities or of any Person as a
broker or dealer or agent with respect to such securities where such
registration or qualification is not otherwise required for the Sale by the
Prospective Selling Stockholder(s) or (b) the provision to any Tag Along Seller
or Drag Along Seller of any specified information regarding the Company or any
of its subsidiaries, such securities or the issuer thereof that is not
otherwise required to be provided for the Sale by the Prospective Selling
Stockholder(s), then such Participating Seller shall not have the right to Sell
Shares in such proposed Sale.  In such
event, the Prospective

 

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Selling Stockholder(s)
shall (i) in the case of a Sale pursuant to Section 4.1, have the right, but
not the obligation, and (ii) in the case of a Sale pursuant to Section 4.2,
have the obligation to cause to be paid to such Participating Seller in lieu
thereof, against surrender of the Shares (in accordance with Section 4.3.6
hereof) which would have otherwise been Sold by such Participating Seller to
the Prospective Buyer in the proposed Sale, an amount in cash equal to the Fair
Market Value of such Shares as of the date such securities would have been
issued in exchange for such Shares.

4.3.2.  Further
Assurances.  Each Participating
Seller, whether in such holder’s capacity as a Participating Seller,
stockholder, officer or director of the Company (subject to such officer’s or
director’s fiduciary duty), or otherwise, shall take or cause to be taken all
such actions as may be necessary or reasonably desirable in order expeditiously
to consummate each Sale pursuant to Section 4.1 or Section 4.2 and
any related transactions, including executing, acknowledging and delivering
consents, assignments, waivers and other documents or instruments; furnishing
information and copies of documents; filing applications, reports, returns,
filings and other documents or instruments with governmental authorities; and
otherwise cooperating with the Prospective Selling Stockholder(s) and the
Prospective Buyer; provided, however, that Participating Sellers
shall be obligated to become liable in respect of any representations,
warranties, covenants, indemnities or otherwise to the Prospective Buyer solely
to the extent provided in the immediately following sentence.  Without limiting the generality of the
foregoing, each Participating Seller agrees to execute and deliver such
agreements as may be reasonably specified by the Prospective Selling
Stockholder(s) to which such Prospective Selling Stockholder(s) will also be
party, including agreements to (a) (i) make individual
representations, warranties, covenants and other agreements as to the
unencumbered title to its Shares and the power, authority and legal right to
Transfer such Shares and the absence of any Adverse Claim with respect to such
Shares and (ii) be liable as to such representations, warranties,
covenants and other agreements, in each case to the same extent (on a pro rata
basis) as the Prospective Selling Stockholder(s), and (b) in the case of a
Sale pursuant to Sections 4.1 or 4.2, be liable (whether by purchase price
adjustment, indemnity payments or otherwise) in respect of representations,
warranties, covenants and agreements in respect of the Company and its
subsidiaries; provided, however, that the aggregate amount of
liability described in this clause (b) in connection with any Sale of
Shares shall not exceed the lesser of (i) such Participating Seller’s pro rata
portion of any such liability, to be determined in accordance with such
Participating Seller’s portion of the aggregate proceeds to all Participating
Sellers and Prospective Selling Stockholder(s) in connection with such Sale or
(ii) the proceeds to such Participating Seller in connection with such
Sale.

4.3.3.  Sale Process.  The Requisite Stockholder Majority, in the
case of a proposed Sale pursuant to Section 4.2, or the Prospective Selling
Stockholder, in the case of a proposed Sale pursuant to Section 4.1, shall, in
their sole discretion, decide whether or not to pursue, consummate, postpone or
abandon any proposed Sale and the terms and conditions thereof.  No holder of Shares nor any Affiliate of any
such holder

 

-13-

 

shall have any liability
to any other holder of Shares or
the Company arising from, relating to or in connection with the pursuit,
consummation, postponement, abandonment or terms and conditions of any proposed
Sale except to the extent such holder shall have failed to comply with the
provisions of this Section 4.

4.3.4.  Treatment
of Options, Warrants and Convertible Securities.  Each Participating Seller agrees that to the
extent such Participating Seller desires to include Options, Warrants or
Convertible Securities in any Sale of Shares pursuant to Section 4, such
Participating Seller shall be deemed to have exercised, converted or exchanged
such Options, Warrants or Convertible Securities immediately prior to the
closing of such Sale to the extent necessary to Sell Stock to the Prospective
Buyer, except to the extent permitted under the terms of any such Option,
Warrant or Convertible Security and agreed by the Prospective Buyer.  If any Participating Seller shall Sell
Options, Warrants or Convertible Securities in any Sale pursuant to Section 4,
such Participating Seller shall receive in exchange for such Options, Warrants
or Convertible Securities consideration in the amount (if greater than zero)
equal to the purchase price received by the Prospective Selling
Stockholder(s) in such Sale for the number of shares of each class of Stock
that would be issued upon exercise, conversion or exchange of such Options,
Warrants or Convertible Securities less the exercise price, if any, of such
Options, Warrants or Convertible Securities (to the extent exercisable,
convertible or exchangeable at the time of such Sale), subject to reduction for
any tax or other amounts required to be withheld under applicable law.

4.3.5.  Expenses.  All reasonable costs and expenses incurred by
the Prospective Selling Stockholder(s) or the Company in connection with any
proposed Sale pursuant to Section 4.2 (whether or not consummated), and
all reasonable costs and expenses incurred by the Prospective Selling
Stockholder(s) or the Company in order to comply with the requirements of this
Section 4 in connection with any proposed Sale pursuant to Section 4.1 (whether
or not consummated), including all attorneys fees and charges, all accounting
fees and charges and all finders, brokerage or investment banking fees, charges
or commissions, shall be paid by the Company. 
The reasonable fees and expenses of a single legal counsel representing
any or all of the Participating Sellers in connection with any proposed Sale
pursuant to this Section 4 (whether or not consummated) shall be paid by
the Company.  Any other costs and
expenses incurred by or on behalf of any or all of the Participating Sellers in
connection with any proposed Sale pursuant to this Section 4 (whether or
not consummated) shall be borne by such Participating Seller(s).

4.3.6.  Closing.  The closing of a Sale to which Section 4.1
or 4.2 applies shall take place (i) on the proposed Transfer date, if any, specified
in the Tag Along Notice or Drag Along Notice, as applicable (provided
that consummation of any Transfer may be extended beyond such date to the
extent necessary to obtain any applicable governmental approval or other
required approval or to satisfy other conditions), (ii) if no proposed Transfer
date was required to be specified in the Drag Along Notice, at such time as the
Prospective Selling

 

-14-

 

Stockholders shall
specify by notice to each Participating Seller and (iii) at such place as the
Prospective Selling Stockholder(s) shall specify by notice to each
Participating Seller.  At the closing of
such Sale, each Participating Seller shall deliver the certificates evidencing the
Shares to be Sold by such Participating Seller, duly endorsed, or with stock
(or equivalent) powers duly endorsed, for transfer with signature guaranteed,
free and clear of any liens or encumbrances, with any stock (or equivalent)
transfer tax stamps affixed, against delivery of the applicable consideration.

4.4.          Reserved.

4.5.          Period. 
The provisions of this Section 4 above shall expire on a Change of
Control.

4.6.          Post-Termination Tag Along.  In connection with a Change of Control in
which any Investor Group immediately prior to such Change of Control continues
to hold Shares or receives securities of another Person or Persons in
consideration thereof, which Shares or securities are of a class that is not
publicly traded, if any such Investor Group or member thereof receives “tag
along” rights in respect of its Shares or such securities in connection with
such Change of Control (whether such “tag along” rights are in respect of
another Investor Group or any other holder of Shares or such securities), each
other holder of Acquisition Shares shall receive pari passu “tag along” rights
on a pro rata basis.

5.             RESERVED.  

6.             REGISTRATION RIGHTS.  The Company will perform and comply, and
cause each of its subsidiaries to perform and comply, with such of the
following provisions as are applicable to it. 
Each Holder will perform and comply with such of the following
provisions as are applicable to such Holder.

6.1.          Demand Registration Rights
for Investor Registrable Securities.

6.1.1.  General.  One or more members of an Investor Group (the
“Initiating Investors”), by notice to the Company specifying the
intended method or methods of disposition, may request that the Company effect
the registration under the Securities Act for a Public Offering of all or a
specified part of the Registrable Securities held by such Initiating Investors;
provided, however, that the value of Registrable Securities that
the Initiating Investors propose to sell in such Public Offering is at least
twenty million dollars ($20,000,000); and provided, further, that
the Initial Public Offering may not be initiated pursuant to this Section 6.1
without the approval of a majority of the entire Board and the approval of the
Requisite Stockholder Majority.  The
Company will then use its best efforts to (i) effect the registration under the
Securities Act (including by means of a shelf registration pursuant to Rule 415
under the Securities Act if so requested and if the Company is then eligible to
use such registration) of the Registrable Securities which the Company has been
requested to register by such Initiating Investors together with all other
Registrable Securities which the Company has been requested to register
pursuant to Section 6.2 by other Holders, all to the extent requisite to
permit the disposition (in

 

-15-

 

accordance with the
intended methods thereof as aforesaid and as otherwise specified by the
Principal Participating Holders) of the Registrable Securities which the
Company has been so requested to register, and (ii) if requested by the
Principal Participating Holders, obtain acceleration of the effective date of
the registration statement relating to such registration; provided, however,
that the Company shall not be obligated to take any action to effect any such
registration pursuant to this Section 6.1.1:

(a)           during the effectiveness of any
Principal Lock-Up Agreement entered into in connection with any registration
statement pertaining to an underwritten public offering of securities of the
Company for its own account (other than a Rule 145 Transaction, or a
registration relating solely to employee benefit plans); or

(b)           upon the request of any member of an
Investor Group on any form other than Form S-3 (or any successor form) if
the Company has previously effected a number of registrations of Registrable
Securities under this Section 6.1.1 upon the request of the members of
such Investor Group on any form other than Form S-3 (or any successor form)
equaling or exceeding five (5), two (2), one (1) and one (1) with respect to
the THL Investors, the Bain Investors, the Providence Investors and the Lexa
Investors, respectively; provided, however, that any registration
of Registrable Securities (i) which does not become and remain effective for at
least 270 days
in accordance with the provisions of this Section 6 or (ii) pursuant to
which the Initiating Investors and all other holders of Registrable Securities
joining therein are not able to include at least 90% of the Registrable
Securities which they desired to include, shall not be included in the
calculation of the numbers of registrations contemplated by this clause (b).

6.1.2.  Form.  Except as otherwise provided above, each
registration requested pursuant to Section 6.1.1 shall be effected by the
filing of a registration statement on Form S-1 (or any other form which
includes substantially the same information as would be required to be included
in a registration statement on such form as currently constituted), unless the
use of a different form has been agreed to in writing by the Principal
Participating Holders; provided that if any registration requested
pursuant to this Section 6.1 is proposed to be effected on Form S-3 (or any
successor or similar short-form registration statement) and is in connection
with an underwritten offering, and if the managing underwriter shall advise the
Company in writing that, in its opinion, it is of material importance to the
success of such proposed offering to include in such registration statement
information not required to be included pursuant to such form, then the Company
will supplement such registration statement as reasonably requested by such
managing underwriter.

6.1.3.  Payment
of Expenses.  The Company shall
pay all Registration Expenses in connection with registrations of Registrable
Securities pursuant to this Section 6.1, including all reasonable expenses
(other than fees and disbursements of counsel that do not constitute
Registration Expenses) that any Holder incurs in

 

-16-

 

connection with each
registration of Registrable Securities requested pursuant to this Section 6.1.

6.1.4.  Additional
Procedures.  In the case of a
registration pursuant to Section 6.1 hereof, whenever the Principal
Participating Holders shall request that such registration shall be effected
pursuant to an underwritten offering, the Company shall include such
information in the written notices to Holders referred to in Section 6.2.  In such event, the right of any Holder to
have securities owned by such Holder included in such registration pursuant to
Section 6.1 shall be conditioned upon such Holder’s participation in such
underwriting and the inclusion of such Holder’s Registrable Securities in the
underwriting (unless otherwise mutually agreed upon by the Principal
Participating Holders and such Holder). 
If requested by the Principal Participating Holders, the Company
together with the Holders proposing to distribute their securities through the
underwriting will enter into an underwriting agreement with the underwriters
for such offering containing such representations and warranties by the Company
and such Holders and such other terms and provisions as are customarily
contained in underwriting agreements with respect to secondary distributions,
including customary indemnity and contribution provisions (subject, in each
case, to the limitations on such liabilities set forth in this Agreement).

6.1.5.  Suspension
of Registration.  If the filing,
initial effectiveness or continued use of a registration statement, including a
shelf registration statement pursuant to Rule 415 under the Securities Act, in
respect of a registration pursuant to this Section 6.1 at any time would
require the Company to make a public disclosure of material non-public
information, which disclosure in the good faith judgment of the Board (after
consultation with external legal counsel) (i) would be required to be made in
any registration statement so that such registration statement would not be
materially misleading, (ii) would not be required to be made at such time but
for the filing, effectiveness or continued use of such registration statement
and (iii) would have a material adverse effect on the Company or its business
or on the Company’s ability to effect a material proposed acquisition,
disposition, financing, reorganization, recapitalization or similar
transaction, then the Company may, upon giving prompt written notice of such
action to the Holders participating in such registration, delay the filing or
initial effectiveness of, or suspend use of, such registration statement; provided,
that the Company shall not be permitted to do so (i) more than two times during
any 12 month period, (ii) for a period exceeding 30 days on any one occasion or
(iii) for a period exceeding 60 days in any 12 month period.  In the event the Company exercises its rights
under the preceding sentence, such Holders agree to suspend, promptly upon
their receipt of the notice referred to above, their use of any prospectus
relating to such registration in connection with any sale or offer to sell
Registrable Securities.  The Company
shall promptly notify such Holders of the expiration of any period during which
it exercised its rights under this Section 6.1.5.  The Company agrees that, in the event it
exercises its rights under this Section 6.1.5, it shall, within 30 days
following such Holders’ receipt of the notice of suspension, update the
suspended registration statement as may be necessary to permit the Holders to
resume

 

-17-

 

use thereof in connection
with the offer and sale of their Registrable Securities in accordance with
applicable law.

6.2.          Piggyback Registration Rights.

6.2.1.  Piggyback
Registration.

6.2.1.1.    General.  Each time the Company proposes to register
any shares of Common Stock under the Securities Act on a form which would
permit registration of Registrable Securities for sale to the public, for its
own account and/or for the account of any other Person (pursuant to Section 6.1
or otherwise) for sale in a Public Offering, the Company will give notice to
all Holders of its intention to do so. 
Any Holder may, by written response delivered to the Company within 20
days after the date of delivery of such notice, request that all or a specified
part of such Holder’s Registrable Securities be included in such
registration.  The Company thereupon will
use its reasonable efforts to cause to be included in such registration under
the Securities Act all Registrable Securities which the Company has been so
requested to register by such Holders, to the extent required to permit the
disposition (in accordance with the methods to be used by the Company or other
Holders in such Public Offering) of the Registrable Securities to be so
registered; provided that (i) if, at any time after giving written
notice of its intention to register any securities, the Company shall determine
for any reason not to proceed with the proposed registration of the securities
to be sold by it, the Company may, at its election, give written notice of such
determination to each Holder and, thereupon, shall be relieved of its
obligation to register any Registrable Securities in connection with such
registration (but not from its obligation to pay the Registration Expenses in
connection therewith), and (ii) if such registration involves an underwritten
offering, all Holders requesting to be included in the Company’s registration
must sell their Registrable Securities to the underwriters selected by the
Company on the same terms and conditions as apply to the Company, with such
differences as may be customary or appropriate in combined primary and
secondary offerings.  No registration of
Registrable Securities effected under this Section 6.2 shall relieve the
Company of any of its obligations to effect registrations of Registrable
Securities pursuant to Section 6.1 hereof.

6.2.1.2.    Excluded Transactions.  The Company shall not be obligated to effect
any registration of Registrable Securities under this Section 6.2
incidental to the registration of any of its securities in connection with:

(a)           Any Public Offering relating to
employee benefit plans or dividend reinvestment plans;

(b)           Any Public Offering relating to the
acquisition or merger after the date hereof by the Company or any of its subsidiaries
of or with any other businesses; or

 

-18-

 

(c)           The Initial Public Offering, unless
such offering shall have been initiated pursuant to Section 6.1.1.

6.2.2.  Payment
of Expenses.  The Company will pay
all Registration Expenses in connection with registrations of Registrable
Securities pursuant to this Section 6.2

6.2.3.  Additional
Procedures.  Holders
participating in any Public Offering pursuant to this Section 6.2 shall
take all such actions and execute all such documents and instruments that are
reasonably requested by the Company to effect the sale of their Registrable
Securities in such Public Offering, including being parties to the underwriting
agreement entered into by the Company and any other selling shareholders in
connection therewith and being liable in respect of the representations and
warranties and the other agreements (including customary selling stockholder
representations, warranties, indemnifications and “lock-up” agreements) for the
benefit of the underwriters contained therein; provided, however,
that (a) with respect to individual representations, warranties, indemnities
and agreements of sellers of Registrable Securities in such Public Offering,
the aggregate amount of such liability shall not exceed such holder’s net
proceeds from such offering and (b) to the extent selling stockholders give
further representations, warranties and indemnities, then with respect to all
other representations, warranties and indemnities of sellers of shares in such
Public Offering, the aggregate amount of such liability shall not exceed the
lesser of (i) such holder’s pro rata portion of any such liability, in
accordance with such holder’s portion of the total number of Registrable
Securities included in the offering, and (ii) such holder’s net proceeds from
such offering.

6.2.4.  Registration
Statement Form.  The Company
shall select the registration statement form for any registration pursuant to
this Section 6.2 (other than a registration that is also pursuant to Section 6.1);
provided that if any registration requested pursuant to this Section 6.2
is proposed to be effected on Form S-3 (or any successor form) and is in
connection with an underwritten offering, and if the managing underwriter shall
advise the Company in writing that, in its opinion, it is of material
importance to the success of such proposed offering to include in such
registration statement information not required to be included pursuant to such
form, then the Company will supplement such registration statement as
reasonably requested by such managing underwriter.

6.3.          Certain
Other Provisions.

6.3.1.  Underwriter’s
Cutback.  In connection with any
registration of shares, the underwriter may determine that marketing factors
(including an adverse effect on the per share offering price) require a
limitation of the number of shares to be underwritten.  Notwithstanding any contrary provision of
this Section 6 and subject to the terms of this Section 6.3.1, the
underwriter may limit the number of shares which would otherwise be included in
such registration by excluding any or all Registrable Securities from such
registration (it being understood that, if the registration in

 

-19-

 

question involves a
registration for sale of securities for the Company’s own account, then the
number of shares which the Company seeks to have registered in such
registration shall not be subject to exclusion, in whole or in part, under this
Section 6.3.1).  Upon receipt of
notice from the underwriter of the need to reduce the number of shares to be
included in the registration, the Company shall advise all holders of the
Company’s securities that would otherwise be registered and underwritten
pursuant hereto, and the number of shares of such securities, including
Registrable Securities, that may be included in the registration shall be
allocated in the following manner, unless the underwriter shall determine that
marketing factors require a different allocation: shares, other than
Registrable Securities, requested to be included in such registration by other
shareholders shall be excluded unless the Company, with the consent of the
parties required to approve any amendment or waiver of this Agreement pursuant
to Section 10.2, has granted registration rights which are to be treated on an
equal basis with Registrable Securities for the purpose of the exercise of the
underwriter cutback (such shares afforded such equal treatment being “Parity
Shares”); and, if a limitation on the number of shares is still required,
the number of Registrable Securities, Parity Shares and other shares of Common
Stock that may be included in such registration shall be allocated among the
holders thereof in proportion, as nearly as practicable, as follows:

(i)            there shall be first allocated to
each such holder requesting that its Registrable Securities or Parity Shares be
registered in such registration a number of such shares to be included in such
registration equal to the lesser of (A) the number of such shares requested to
be registered by such holder, and (B) a number of such shares equal to such
holder’s Pro Rata Portion;

(ii)           the balance, if any, not allocated
pursuant to clause (i) above shall be allocated to those holders requesting that
their Registrable Securities or Parity Shares be registered in such
registration which requested to register a number of such shares in excess of
such holder’s Pro Rata Portion pro rata to each such holder based upon the
number of Registrable Securities and Parity Shares held by such holder, or in
such other manner as the holders requesting that their Registrable Securities
or Parity Shares be registered in such registration may otherwise agree; and

(iii)          the balance, if any, not allocated
pursuant to clause (ii) above shall be allocated to shares, other than
Registrable Securities and Parity Shares, requested to be included in such
registration by other stockholders.

For purposes of any underwriter cutback, all
Registrable Securities held by any Holder shall also include any Registrable
Securities held by the partners, retired partners, shareholders or Affiliates
of such Holder, or the estates and family members of any such Holder or such
partners and retired partners, any trusts for the benefit of any of the
foregoing Persons and, at the election of such Holder or such partners, retired
partners, trusts or Affiliates, any Charitable Organization to which any of the
foregoing shall have contributed Common Stock prior to the execution of the
underwriting agreement in

 

-20-

 

connection with such underwritten offering, and such
Holder and other Persons shall be deemed to be a single selling Holder, and any
pro rata reduction with respect to such selling Holder shall be based upon the
aggregate amount of Common Stock owned by all entities and individuals included
in such selling Holder, as defined in this sentence.  No securities excluded from the underwriting
by reason of the underwriter’s marketing limitation shall be included in such
registration.  Upon delivery of a written
request that Registrable Securities be included in the underwriting pursuant to
Section 6.1.1 or 6.2.1.1, the Holder thereof may not thereafter elect to
withdraw therefrom without the written consent of the Principal Participating
Holders; provided that, if the managing underwriter of any underwritten offering
shall advise the Holders participating in a registration pursuant to Section 6.1
that the Registrable Securities covered by the registration statement cannot be
sold in such offering within a price range acceptable to the Principal
Participating Investors, then the Principal Participating Investors shall have
the right to notify the Company that they have determined that the registration
statement be abandoned or withdrawn, in which event the Company shall abandon
or withdraw such registration statement.

 

6.3.2.  Registration
Procedures.  If and in each case
when the Company is required to effect a registration of any Registrable
Securities as provided in this Section 6, the Company shall promptly:

(i)            prepare and, in any event within
sixty days (forty-five days in the case of a Form S-3 registration) after the
end of the period under Section 6.2.1.1 within which a piggyback request for registration
may be given to the Company, file with the Commission a registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective within ninety days of the
initial filing;

(ii)           prepare and file with the Commission
such amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep such
registration statement effective for a period not in excess of 270 days (or
such shorter period which will terminate when all Registrable Securities
covered by such registration statement have been sold) and to comply with the
provisions of the Securities Act and the Exchange Act with respect to the
disposition of all securities covered by such registration statement during
such period in accordance with the intended methods of disposition by the
seller or sellers thereof set forth in such registration statement; provided
that before filing a registration statement or prospectus, or any amendments or
supplements thereto in accordance with Sections 6.1 or 6.2, the Company will
furnish to counsel selected pursuant to Section 6.3.3 hereof copies of all
documents proposed to be filed, which documents will be subject to the review
of such counsel;

(iii)          furnish to each seller of such
Registrable Securities such number of copies of such registration statement and
of each amendment and supplement thereto (in each case including all exhibits
filed therewith), such number of copies

 

-21-

 

of the prospectus included in such registration
statement (including each preliminary prospectus and summary prospectus), in
conformity with the requirements of the Securities Act, and such other documents
as such seller may reasonably request in order to facilitate the disposition of
the Registrable Securities by such seller;

(iv)          use its best efforts to register or
qualify such Registrable Securities covered by such registration in such
jurisdictions as each seller shall reasonably request, and do any and all other
acts and things which may be reasonably necessary or advisable to enable such
seller to consummate the disposition in such jurisdictions of the Registrable
Securities owned by such seller, except that the Company shall not for any such
purpose be required to qualify generally to do business as a foreign
corporation in any jurisdiction where, but for the requirements of this clause
(iv), it would not be obligated to be so qualified or to consent to general
service of process in any such jurisdiction;

(v)           notify each seller of any such
Registrable Securities covered by such registration statement, at any time when
a prospectus relating thereto is required to be delivered under the Securities
Act, of the Company’s becoming aware that the prospectus included in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in the light of the
circumstances then existing, and at the request of any such seller, prepare and
furnish to such seller a reasonable number of copies of an amended or
supplemental prospectus as may be necessary so that, as thereafter delivered to
the purchasers of such Registrable Securities, such prospectus shall not
include an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing;

(vi)          otherwise use its best efforts to
comply with all applicable rules and regulations of the Commission, and make
available to its security holders, as soon as reasonably practicable (but not
more than 18 months) after the effective date of the registration statement, an
earnings statement which shall satisfy the provisions of Section 11(a) of the
Securities Act;

(vii)         (i) if such Registrable Securities are
Common Stock (including Common Stock issuable upon conversion, exchange or
exercise of another security), use its best efforts to list such Registrable
Securities on any securities exchange or authorize for quotation on each other
market (including, if applicable, the National Association of Securities
Dealers, Inc. (the “NASD”) Automated Quotation System) on which the
Common Stock is then listed or authorized for quotation if such Registrable
Securities are not already so listed or authorized for quotation; and (ii) use
its best efforts to provide a transfer agent and registrar for such Registrable
Securities covered by such registration statement not later than the effective
date of such registration statement;

 

-22-

 

(viii)        enter into such customary agreements
(including an underwriting agreement in customary form), which may include
indemnification provisions in favor of underwriters and other Persons in
addition to the provisions of Section 6.4 hereof, and take such other actions
as the Principal Participating Holders or the underwriters, if any, reasonably
requested in order to expedite or facilitate the disposition of such
Registrable Securities;

(ix)           obtain a “cold comfort” letter or
letters from the Company’s independent public accountants in customary form and
covering matters of the type customarily covered by “cold comfort” letters as
the Principal Participating Holders shall reasonably request;

(x)            make available for inspection by any
seller of such Registrable Securities covered by such registration statement,
by any managing underwriter or underwriters participating in any disposition to
be effected pursuant to such registration statement and by any attorney,
accountant or other agent retained by any such seller or any such managing
underwriter(s), all pertinent financial and other records, pertinent corporate
documents and properties of the Company, and cause all of the Company’s
officers, directors and employees to supply all information reasonably
requested by any such seller, underwriter, attorney, accountant or agent in
connection with such registration statement (subject to each party referred to
in this clause (x) entering into customary confidentiality agreements in a form
reasonably acceptable to the Company);

(xi)           notify counsel (selected pursuant to
Section 6.3.3 hereof) for the Holders of Registrable Securities included in
such registration statement and the managing underwriter or agent, immediately,
and confirm the notice in writing (a) when the registration statement, or any
post-effective amendment to the registration statement, shall have become
effective, or any supplement to the prospectus or any amendment to the
prospectus shall have been filed, (b) of the receipt of any comments from the
Commission, (c) of any request of the Commission to amend the registration
statement or amend or supplement the prospectus or for additional information,
and (d) of the issuance by the Commission of any stop order suspending the
effectiveness of the registration statement or of any order preventing or
suspending the use of any preliminary prospectus, or of the suspension of the
qualification of the registration statement for offering or sale in any
jurisdiction, or of the institution or threatening of any proceedings for any
of such purposes;

(xii)          make every commercially reasonable
effort to prevent the issuance of any stop order suspending the effectiveness
of the registration statement or of any order preventing or suspending the use
of any preliminary prospectus and, if any such order is issued, to obtain the
withdrawal of any such order as soon as practicable;

 

-23-

 

(xiii)         if requested by the managing
underwriter or agent or any Holder of Registrable Securities covered by the
registration statement, incorporate in a prospectus supplement or
post-effective amendment such information as the managing underwriter or agent
or such Holder reasonably requests to be included therein, including, with
respect to the number of Registrable Securities being sold by such Holder to
such underwriter or agent, the purchase price being paid therefor by such
underwriter or agent and with respect to any other terms of the underwritten
offering of the Registrable Securities to be sold in such offering; and make all
required filings of such prospectus supplement or post-effective amendment as
soon as practicable after being notified of the matters incorporated in such
prospectus supplement or post-effective amendment;

(xiv)        cooperate with the Holders of
Registrable Securities covered by the registration statement and the managing
underwriter or agent, if any, to facilitate the timely preparation and delivery
of certificates (not bearing any restrictive legends) representing securities
to be sold under the registration statement, and enable such securities to be
in such denominations and registered in such names as the managing underwriter
or agent, if any, or such Holders may request;

(xv)         obtain for delivery to the Holders of
Registrable Securities being registered and to the underwriter or agent an
opinion or opinions from counsel for the Company in customary form and in form,
substance and scope reasonably satisfactory to such Holders, underwriters or
agents and their counsel;

(xvi)        cooperate with each seller of Registrable
Securities and each underwriter or agent participating in the disposition of
such Registrable Securities and their respective counsel in connection with any
filings required to be made with the NASD; and

(xvii)       use its commercially reasonable best efforts
to make available the executive officers of the Company to participate with the
Holders of Registrable Securities and any underwriters in any “road shows” that
may be reasonably requested by the Holders in connection with distribution of
the Registrable Securities.

6.3.3.  Selection of Underwriters
and Counsel.  The underwriters
and legal counsel to be retained by the Company in connection with any Public
Offering shall be selected by the Board; provided that, in the case of
an offering following a request therefor under Section 6.1.1, such
underwriters and counsel shall be reasonably acceptable to the Principal
Participating Holders.  In connection
with any registration of Registrable Securities pursuant to Sections 6.1 and
6.2 hereof, the Principal Participating Holders may select one counsel to
represent all Holders of Registrable Securities covered by such registration; provided,
however, that in the event that the counsel selected as provided above
is also acting as counsel to the Company in

 

-24-

 

connection with such
registration, the remaining Holders shall be entitled to select one additional
counsel to represent, at such Holders’ expense, all such remaining Holders.

6.3.4.  Holder
Lock-Up.  In connection with each
underwritten Public Offering each Holder agrees to become bound by and to
execute and deliver such lock-up agreement with the underwriter(s) of such
Public Offering restricting such Holder’s right to (a) Transfer, directly
or indirectly, any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for such Common Stock or (b) enter into any swap or
other arrangement that transfers to another any of the economic consequences of
ownership of Common Stock, as is entered into by the Principal Participating
Holders with
the underwriter(s) of such Public Offering (the “Principal Lock-Up Agreement”);
provided, however, that no Holder shall be required to enter into
a lock-up agreement covering a period of greater than 90 days (180 days in the
case of the Initial Public Offering) following the effectiveness of the related
registration statement.  Notwithstanding
the foregoing, such lock-up agreement shall not apply to (i) transactions
relating to shares of Common Stock or other securities acquired in open market
transactions after the completion of the Initial Public Offering, (ii)
Transfers to Permitted Transferees of such Holder in accordance with the terms
of this Agreement, (iii) conversions of shares of Stock into other classes
of Stock without change of holder and (iv) during the period preceding the
execution of the underwriting agreement, Transfers to a Charitable Organization
in accordance with the terms of this Agreement.

6.3.5.  Company
Lock-Up.  If any registration
pursuant to Section 6.1 of this Agreement shall be in connection with an
underwritten public offering, the Company agrees not to effect any public sale
or distribution of any Common Stock of the Company (or securities convertible
into or exchangeable or exercisable for Common Stock) (in each case, other than
as part of such underwritten public offering and other than pursuant to a
registration on Form S-4 or S-8) for its own account, within 90 days (or such
shorter period as the managing underwriters may require) after, the effective
date of such registration (except as part of such registration).

6.3.6.  Other
Agreements.  The Company
covenants and agrees that, so long as any Person holds any Registrable
Securities in respect of which any registration rights provided for in Section 6.1
of this Agreement remain in effect, the Company will not, directly or
indirectly, grant to any Person or agree to or otherwise become obligated in
respect of (i) rights of registration in the nature or substantially in the
nature of those set forth in Section 6.1 of this Agreement that would have
priority over the Registrable Securities with respect to the inclusion of such
securities in any registration or (ii) demand registration rights exercisable
prior to such time as the Investors can first exercise their rights under
Section 6.1.

6.4.          Indemnification and
Contribution.

6.4.1.  Indemnities
of the Company.  In the event of
any registration of any Registrable Securities or other debt or equity securities
of the Company or any of

 

-25-

 

its subsidiaries under
the Securities Act pursuant to this Section 6 or otherwise, and in
connection with any registration statement or any other disclosure document
produced by or on behalf of the Company or any of its subsidiaries including
reports required and other documents filed under the Exchange Act, and other
documents pursuant to which any debt or equity securities of the Company or any
of its subsidiaries are sold (whether or not for the account of the Company or
its subsidiaries), the Company will, and hereby does, and will cause each of
its subsidiaries, jointly and severally, to indemnify and hold harmless each
holder of Registrable Securities, any Person who is or might be deemed to be a
controlling Person of the Company or any of its subsidiaries within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act,
their respective direct and indirect partners, advisory board members,
directors, officers, trustees, members and shareholders, and each other Person,
if any, who controls any such holder or any such controlling Person within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act (each such Person being referred to herein as a “Covered Person”),
against any losses, claims, damages or liabilities (or actions or proceedings
in respect thereof), joint or several, to which such Covered Person may be or
become subject under the Securities Act, the Exchange Act, any other securities
or other law of any jurisdiction, the common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) arise out of or are based upon (i) any untrue statement or alleged
untrue statement of any material fact contained or incorporated by reference in
any registration statement under the Securities Act, any preliminary prospectus
or final prospectus included therein, or any related summary prospectus, or any
amendment or supplement thereto, or any document incorporated by reference
therein, or any other such disclosure document (including reports and other
documents filed under the Exchange Act and any document incorporated by
reference therein) or other document or report, (ii) any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading or (iii) any violation
or alleged violation by the Company or any of its subsidiaries of any federal,
state, foreign or common law rule or regulation applicable to the Company or
any of its subsidiaries and relating to action or inaction in connection with
any such registration, disclosure document or other document or report, and
will reimburse such Covered Person for any legal or any other expenses incurred
by it in connection with investigating or defending any such loss, claim,
damage, liability, action or proceeding; provided, however, that
neither the Company nor any of its subsidiaries shall be liable to any Covered
Person in any such case to the extent that any such loss, claim, damage,
liability, action or proceeding arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
such registration statement, any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement, incorporated document or other
such disclosure document or other document or report, in reliance upon and in
conformity with written information furnished to the Company or to any of its
subsidiaries through an instrument duly executed by such Covered Person
specifically stating that it is for use in the preparation thereof.  The indemnities of the Company and of its
subsidiaries contained in this Section 6.4.1 shall remain in full force
and effect regardless of any

 

-26-

 

investigation made by or
on behalf of such Covered Person and shall survive any transfer of securities
or any termination of this Agreement.

6.4.2.  Indemnities
to the Company.  Subject to
Section 6.4.4, the Company and any of its subsidiaries may require, as a
condition to including any securities in any registration statement filed
pursuant to this Section 6, that the Company and any of its subsidiaries
shall have received an undertaking satisfactory to it from the prospective
seller of such securities, severally and not jointly, to indemnify and hold
harmless the Company and any of its subsidiaries, each director of the Company
or any of its subsidiaries, each officer of the Company or any of its
subsidiaries who shall sign such registration statement and each other Person
(other than such seller), if any, who controls the Company and any of its
subsidiaries within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act and each other prospective seller of such
securities with respect to any statement in or omission from such registration
statement, any preliminary prospectus, final prospectus or summary prospectus
included therein, or any amendment or supplement thereto, or any other
disclosure document (including reports and other documents filed under the
Exchange Act or any document incorporated therein) or other document or report,
if such statement or omission was made in reliance upon and in conformity with
written information furnished to the Company or any of its subsidiaries through
an instrument executed by such seller specifically stating that it is for use
in the preparation of such registration statement, preliminary prospectus,
final prospectus, summary prospectus, amendment or supplement, incorporated
document or other document or report. 
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Company, any of its subsidiaries or
any such director, officer or controlling Person and shall survive any transfer
of securities or any termination of this Agreement.

6.4.3.  Contribution.  If the indemnification provided for in
Sections 6.4.1 or 6.4.2 hereof is unavailable to a party that would
have been entitled to indemnification pursuant to the foregoing provisions of
this Section 6.4 (an “Indemnitee”) in respect of any losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) referred
to therein, then each party that would have been an indemnifying party
thereunder shall, subject to Section 6.4.4 and in lieu of indemnifying such
Indemnitee, contribute to the amount paid or payable by such Indemnitee as a
result of such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) in such proportion as is appropriate to reflect
the relative fault of such indemnifying party on the one hand and such
Indemnitee on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof).  The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
such indemnifying party or such Indemnitee and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.  The

 

-27-

 

parties agree that it
would not be just or equitable if contribution pursuant to this Section 6.4.3
were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to in the
preceding sentence.  The amount paid or
payable by a contributing party as a result of the losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to above in
this Section 6.4.3 shall include any legal or other expenses reasonably
incurred by such Indemnitee in connection with investigating or defending any
such action or claim.  No Person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.

6.4.4.  Limitation on Liability of
Holders of Registrable Securities. 
The liability of each holder of Registrable Securities in respect of any
indemnification or contribution obligation of such holder arising under this
Section 6.4 shall not in any event exceed an amount equal to the net
proceeds to such holder (after deduction of all underwriters’ discounts and commissions)
from the disposition of the Registrable Securities disposed of by such holder
pursuant to such registration.

6.4.5.  Indemnification
Procedures.  Promptly after
receipt by an Indemnitee of written notice of the commencement of any action or
proceeding with respect to which a claim for indemnification may be made
pursuant to this Section 6.4, such Indemnitee will, if a claim in respect
thereof is to be made against an indemnifying party, give written notice to the
latter of the commencement of such action or proceeding; provided that
the failure of the Indemnitee to give notice as provided herein shall not
relieve the indemnifying party of its obligations under this Section 6.4,
except to the extent that the indemnifying party is materially prejudiced by
such failure to give notice.  In case any
such action or proceeding is brought against an Indemnitee, the indemnifying
party will be entitled to participate in and to assume the defense thereof (at
its expense), jointly with any other indemnifying party similarly notified to
the extent that it may wish, with counsel reasonably satisfactory to such
Indemnitee, and after notice from the indemnifying party to such Indemnitee of
its election so to assume the defense thereof, the indemnifying party will not
be liable to such Indemnitee for any legal or other expenses subsequently
incurred by the latter in connection with the defense thereof other than
reasonable costs of investigation and shall have no liability for any
settlement made by the Indemnitee without the consent of the indemnifying
party, such consent not to be unreasonably withheld.  Notwithstanding the foregoing, if in such
Indemnitee’s reasonable judgment a conflict of interest between such Indemnitee
and the indemnifying parties may exist in respect of such action or proceeding
or the indemnifying party does not assume the defense of any such action or
proceeding within a reasonable time after notice of commencement, the
Indemnitee shall have the right to assume or continue its own defense and the
indemnifying party shall be liable for any reasonable expenses therefor, but in
no event will bear the expenses for more than one firm of counsel for all
Indemnitees in each jurisdiction who shall be approved by the Principal
Participating Holders in the registration in respect of which such
indemnification is sought.  No
indemnifying party

 

-28-

 

will settle any action or
proceeding or consent to the entry of any judgment without the prior written
consent of the Indemnitee, unless such settlement or judgment (i) includes as
an unconditional term thereof the giving by the claimant or plaintiff of a
release to such Indemnitee from all liability in respect of such action or
proceeding and (ii) does not involve the imposition of equitable remedies or
the imposition of any obligations on such Indemnitee and does not otherwise
adversely affect such Indemnitee, other than as a result of the imposition of
financial obligations for which such Indemnitee will be indemnified hereunder.

6.5.          Permitted Assignees.

6.5.1.  Piggyback
Registration Rights.  The rights
of a holder of Registrable Securities to cause the Company to register its
Registrable Securities pursuant to Section 6.2 may be assigned (but only with
all related obligations as set forth below) in a Transfer effected in
accordance with the terms of this Agreement to: (a) an Affiliate of such
holder, (b) a Charitable Organization or (c) any other transferee that in the
case of this clause (c) acquires shares of Registrable Securities either (i)
for consideration of at least $10,000,000 or (ii) having a then fair market
value (determined in good faith by the Board) of at least $10,000,000 (the
transferees in clauses (a) through (c) each a “Permitted Piggyback Assignee”).  Without prejudice to any other or similar
conditions imposed hereunder with respect to any such Transfer, no assignment
permitted under the terms of this Section 6.5.1 shall be effective unless the
Permitted Piggyback Assignee, if not a Stockholder, has delivered to the
Company a written acknowledgment and agreement in form and substance reasonably
satisfactory to the Company that such Registrable Securities in respect of
which such assignment is made shall be deemed Other Holder Shares and shall be
subject to all of the provisions of this Agreement relating to Other Holder
Shares and that such Permitted Piggyback Assignee shall be bound by, and shall
be an Other Holder party to, this Agreement and the holder of Other Holder
Shares hereunder.  A transferee to whom rights are transferred pursuant
to this Section 6.5.1 may not again
transfer such rights to any Person, other than as provided in this
Section 6.5.1.

7.     COVENANTS.

7.1.          Reserved.

7.2.          Confidentiality.  Each holder of Shares agrees that it will
keep confidential and will not disclose, divulge or use for any purpose, other
than to monitor its investment in the Company and its subsidiaries, any
confidential information obtained from the Company pursuant to the terms of
this Agreement, unless such confidential information (i) is known or becomes
known to the public in general (other than as a result of a breach of this
Section 7.2 by such holder or its Affiliates), (ii) is or has been
independently developed or conceived by such holder without use of the Company’s
confidential information or (iii) is or has been made known or disclosed to
such holder by a third party (other than an Affiliate of such holder) without a
breach of any obligation of confidentiality such third party may have to the
Company that is known to such holder; provided, however, that a
holder may disclose confidential information (a) to its

 

-29-

 

attorneys, accountants, consultants, and other
professionals to the extent necessary to obtain their services in connection
with monitoring its investment in the Company, (b) to any prospective
purchaser of any Shares from such holder as long as such prospective purchaser
agrees to be bound by the provisions of this Section 7.2, (c) to any
Affiliate, partner or member of such holder in the ordinary course of business,
or (d) as may otherwise be required by law, provided that such holder takes
reasonable steps to minimize the extent of any such required disclosure; and provided,
further, however, that the acts and omissions of any Person to
whom such holder may disclose confidential information pursuant to clauses (a)
through (c) of the preceding proviso shall be attributable to such holder for
purposes of determining such holder’s compliance with this Section 7.2.  Each of the parties hereto acknowledge that
the holders of Shares may review the business plans and related proprietary
information of many enterprises, including enterprises which may have products
or services which compete directly or indirectly with those of the
Company.  Nothing in this Section 7.2
shall preclude or in any way restrict the holders of Shares or their Affiliates
from investing or participating in any particular enterprise, or trading in the
securities thereof, whether or not such enterprise has products or services
that compete with those of the Company.

7.3.          Directors’ and Officers’
Insurance.  The Company shall
purchase, within a reasonable period following the Closing, and maintain for
such periods as the Board shall in good faith determine, at its expense,
insurance in an amount determined in good faith by the Board to be appropriate,
on behalf of any person who after the Closing is or was a director or officer
of the Company, or is or was serving at the request of the Company as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, including any direct or indirect subsidiary
of the Company, against any expense, liability or loss asserted against such
Person and incurred by such Person in any such capacity, or arising out of such
Person’s status as such, subject to customary exclusions.  The provisions of this Section 7.3 shall
survive any termination of this Agreement.

8.     REMEDIES.

8.1.          Generally. 
The parties shall have all remedies available at law, in equity or
otherwise in the event of any breach or violation of this Agreement or any
default hereunder.  The parties
acknowledge and agree that in the event of any breach of this Agreement, in
addition to any other remedies which may be available, each of the parties
hereto shall be entitled to specific performance of the obligations of the
other parties hereto and, in addition, to such other equitable remedies
(including preliminary or temporary relief) as may be appropriate in the
circumstances.

8.2.          Deposit. 
Without limiting the generality of Section 8.1, if any holder of
Shares fails to deliver to the purchaser thereof the certificate or
certificates evidencing Shares to be Sold pursuant to Section 4, such
purchaser may, at its option, in addition to all other remedies it may have,
deposit the purchase price for such Shares with any national bank or trust
company having combined capital, surplus and undivided profits in excess of One
Hundred Million Dollars ($100,000,000) (the “Escrow Agent”) and the
Company shall  cancel on its books the
certificate or certificates representing such Shares and thereupon all of such
holder’s rights in and to such Shares shall terminate.  Thereafter, upon delivery to such purchaser
by such holder of the

 

-30-

 

certificate or certificates evidencing such Shares
(duly endorsed, or with stock powers duly endorsed, for transfer, with
signature guaranteed, free and clear of any liens or encumbrances, and with any
transfer tax stamps affixed), such purchaser shall instruct the Escrow Agent to
deliver the purchase price (without any interest from the date of the closing
to the date of such delivery, any such interest to accrue to such purchaser) to
such holder.

9.     LEGENDS.

9.1.          Restrictive Legend.  Each certificate representing Shares shall
have the following legend endorsed conspicuously thereupon:

“THE VOTING OF THE SHARES OF STOCK REPRESENTED BY THIS
CERTIFICATE, AND THE SALE, ENCUMBRANCE OR OTHER DISPOSITION THEREOF, ARE
SUBJECT TO THE PROVISIONS OF A STOCKHOLDERS AGREEMENT TO WHICH THE ISSUER AND
CERTAIN OF ITS STOCKHOLDERS ARE PARTY, A COPY OF WHICH MAY BE INSPECTED AT THE
PRINCIPAL OFFICE OF THE ISSUER OR OBTAINED FROM THE ISSUER WITHOUT CHARGE.”

Any Person who acquires
Shares which are not subject to all or part of the terms of this Agreement
shall have the right to have such legend (or the applicable portion thereof)
removed from certificates representing such Shares.

 

9.2.          1933 Act Legends.  Each certificate representing Shares shall
have the following legend endorsed conspicuously thereupon:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE
ISSUED IN A PRIVATE PLACEMENT, WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “ACT”), AND MAY NOT BE SOLD, ASSIGNED, PLEDGED OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION UNDER THE ACT
COVERING THE TRANSFER OR AN OPINION OF COUNSEL, SATISFACTORY TO THE ISSUER,
THAT REGISTRATION UNDER THE ACT IS NOT REQUIRED.”

9.3.          Stop Transfer Instruction.  The Company will instruct any transfer agent
not to register the Transfer of any Shares until the conditions specified in
the foregoing legends and this Agreement are satisfied.

9.4.          Termination of 1933 Act Legend.  The requirement imposed by Section 9.2 hereof
shall cease and terminate as to any particular Shares (a) when, in the opinion
of counsel reasonably acceptable to the Company, such legend is no longer
required in order to assure compliance by the Company with the Securities Act
or (b) when such Shares have been effectively registered under the Securities
Act or transferred pursuant to Rule 144. 
Wherever (x) such requirement shall cease and terminate as to any Shares
or (y) such Shares shall be transferable under paragraph (k) of Rule 144, the
holder thereof shall be entitled to receive from

 

-31-

 

the Company, without expense, new certificates not
bearing the legend set forth in Section 9.2 hereof.

10.  AMENDMENT,
TERMINATION, ETC.

10.1.        Oral Modifications.  This Agreement may not be orally amended,
modified, extended or terminated, nor shall any oral waiver of any of its terms
be effective.

10.2.        Written Modifications.  This Agreement may be amended, modified,
extended or terminated, and the provisions hereof may be waived, only by an
agreement in writing signed by the Company and holders of a Majority in
Interest of the Shares; provided, however, that:

(a)           the consent of each of the Investor
Groups shall be required for any amendment, modification, extension,
termination or waiver (an “Amendment”) of the provisions of Section 2,
Section 12.8 or this clause (a) of Section 10.2; provided, however,
that such consent shall not be required for any Amendment of the provisions of
Section 2 adopted with the consent of a majority of the entire Board and the
Requisite Stockholder Majority (i) in connection with the consummation of, or
at any time following, an Initial Public Offering, other than an Amendment of
the provisions of Section 2.1.1, Section 2.1.2 (excluding Amendments to the
extent relating to the Independent Directors), Section 2.1.3, Section 2.1.4 or
Section 2.10, or any related provisions of Section 2.2 or Section 2.3, or (ii) in
connection with any transaction described in Section 2.4.5 or 2.4.6 of the
Original Agreement that has been approved by a majority of the entire Board and
the Requisite Stockholder Majority, to the extent such Amendment does no more
than increase the number of directors of the Company and/or extend Board
designation rights to any Person related to such transaction other than a
member of an Investor Group or its Affiliates;

(b)           the consent of each of the Investor
Groups shall be required for any Amendment of the provisions of Section 4.1, Section
4.6, any related provisions of Section 3.1.5 or Section 4.3 or this clause (b)
of Section 10.2;

(c)           the consent of each of the Principal
Investor Groups shall be required for any Amendment of the provisions of
Section 10.3 or this clause (c) of Section 10.2;

(d)           the consent of any Investor Group
shall be required for any Amendment that discriminates against such Investor
Group as such under this Agreement;

(e)           the consent of the Requisite
Stockholder Majority shall be required for any Amendment that discriminates
against the Principal Investor Groups as such under this Agreement;

(f)            Reserved;

 

-32-

 

(g)           the consent of the holders of a
Majority in Interest of the Management Shares shall be required for any
Amendment that discriminates against the holders of Management Shares as such
under this Agreement;

(h)           the consent of the holders of a
Majority in Interest of the Other Holder Shares shall be required for any
Amendment that discriminates against the holders of Other Holder Shares as such
under this Agreement;

(i)            the consent of any party shall be
required for any Amendment that discriminates against such party; and

(j)            the Board may in its discretion from
time to time permit or require any employee of the Company or its subsidiaries
to join this Agreement as a Manager, and no consent of any Stockholder or other
party hereto shall be required to effect such an Amendment.

Each
such Amendment shall be binding upon each party hereto and each holder of Shares
or Other Holder Shares subject hereto.  
In addition, each party hereto and each holder of Shares or Other Holder
Shares subject hereto may waive any right hereunder by an instrument in writing
signed by such party or holder.  To the
extent the Amendment of any Section of this Agreement would require a specific
consent pursuant this Section 10.2, any Amendment to the definitions used in
such Section shall also require the specified consent.

10.3.        Withdrawal from Agreement.  Any holder of Shares or Other Holder Shares
(other than a holder of Management Shares) that, together with its Affiliates,
holds less than five percent (5%) of the then outstanding shares of Common
Stock may elect (on behalf of itself and its Affiliates (collectively, the “Withdrawing
Holders”)), by written notice to the other parties hereto, to withdraw from
this Agreement and thereby terminate this Agreement as to the Withdrawing
Holders.  From the date of delivery of
such withdrawal notice, the Withdrawing Holders shall cease to be parties to
this Agreement and shall no longer be subject to the obligations of this
Agreement or have rights under this Agreement, and the Shares or Other Holder
Shares held by the Withdrawing Holders shall conclusively be deemed thereafter not
to be Shares or Other Holder Shares, as the case may be, under this Agreement; provided,
however, that such Withdrawing Holders, if they constitute an Investor
Group, shall cause the resignation of any Investor Directors designated by such
Investor Group; provided, further, that the Withdrawing Holders
shall nonetheless be obligated under Section 6.3.4 with respect to any Pending
Underwritten Offering to the same extent that they would have been obligated if
they had not withdrawn; and provided, further, that the rights
and obligations of such Withdrawing Holders under Section 6.4 shall survive
such withdrawal.

10.4.        Effect of Termination.  No termination under this Agreement shall
relieve any Person of liability for breach prior to termination.

 

-33-

 

11.  DEFINITIONS.  For purposes of this Agreement:

11.1.        Certain Matters of Construction.  In addition to the definitions referred to or
set forth below in this Section 11:

(i)            The words “hereof”, “herein”, “hereunder”
and words of similar import shall refer to this Agreement as a whole and not to
any particular Section or provision of this Agreement, and reference to a
particular Section of this Agreement shall include all subsections thereof;

(ii)           The word “including” shall mean
including, without limitation;

(iii)          Definitions shall be equally
applicable to both nouns and verbs and the singular and plural forms of the
terms defined; and

(iv)          The masculine, feminine and neuter
genders shall each include the other.

11.2.        Definitions.  The following terms shall have the following
meanings:

“Acquisition” shall have the meaning set forth
in the Recitals.

 

“Acquisition Agreement” shall have the meaning
set forth in the Recitals.

 

“Acquisition Shares” shall mean: (a) for
purposes of Section 4.6, all shares of Stock held by (i) the members of any
Investor Group or (ii) their respective Permitted Transferees; and (b) for all
other purposes, all Shares held by (i) the members of any Investor Group or
(ii) their respective Permitted Transferees.

 

“Adverse Claim” shall have the meaning set
forth in Section 8-102 of the applicable Uniform Commercial Code.

 

“Affiliate” shall mean, with respect to any
specified Person, (a) any other Person which directly or indirectly through one
or more intermediaries controls, or is controlled by, or is under common
control with, such specified Person (for the purposes of this definition, “control”
(including, with correlative meanings, the terms “controlling,” “controlled by”
and “under common control with”), as used with respect to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise); provided, however,
that neither the Company nor any of its subsidiaries shall be deemed an
Affiliate of any of the Stockholders (and vice  versa), (b) if such specified Person is an investment fund,
any other investment fund the primary investment advisor to which is the
primary investment advisor to such specified Person and (c) if such specified
Person is a natural Person, any Family Member of such natural Person.  Music Capital Partners, L.P and ALP Music
Partners, L.P. shall be deemed to be Affiliates of each other for purposes of
Section 12.8.

 

-34-

 

“Affiliated Fund” shall mean, with respect to
any specified Person, an investment fund that is an Affiliate of such Person.

 

“Agreement” shall have the meaning set forth in
the Preamble.

 

“Amendment” shall have the meaning set forth in
Section 10.2.

 

“Bain Director” shall mean a member of the
Board of Directors designated by one or more Bain Investors.

 

“Bain Investors” shall mean, as of any date, Bain
Capital Integral Investors, LLC, Bain Capital VII Coinvestment Fund, LLC and
BCIP TCV, LLC, and their respective Permitted Transferees, in each case only if
such Person is then a Stockholder and holds any Shares.

 

“Board” shall have the meaning set forth in
Section 2.1.1.

 

“business day” shall mean any day that is not a
Saturday, a Sunday or other day on which banks are required or authorized by
law to be closed in the City of New York.

 

“CEO Director”
shall have the meaning set forth in Section 2.1.1.

“Change of Control” shall mean the occurrence
of (a) any consolidation or merger of the Company with or into any other
corporation or other Person, or any other corporate reorganization or
transaction (including the acquisition of capital stock of the Company),
whether or not the Company is a party thereto, in which the stockholders of the
Company immediately prior to such consolidation, merger, reorganization or
transaction, own capital stock either (i) representing directly, or indirectly
through one or more entities, less than 50% of the economic interests in or
voting power of the Company or other surviving entity immediately after such
consolidation, merger, reorganization or transaction or (ii) that does not directly,
or indirectly through one or more entities, have the power to elect a majority
of the entire board of directors of the Company or other surviving entity
immediately after such consolidation, merger, reorganization or transaction,
(b) any transaction or series of related transactions, whether or not the
Company is a party thereto, after giving effect to which in excess of fifty
percent (50%) of the Company’s voting power is owned by any Person and its “affiliates”
or “associates” (as such terms are defined in the rules adopted by the Commission
under the Exchange Act), excluding (except with respect to a transaction or
series of related transactions in connection with which the “drag along right”
under Section 4.2 is being exercised) the Investor Groups; or (c) a sale, lease
or other disposition of all or substantially all of the assets of the Company; provided
that (x) any consolidation or merger effected exclusively to change the
domicile of the Corporation or to form a holding company in which the
stockholders of the Company immediately prior to such consolidation or merger
own capital stock representing economic interests and voting power with respect
to such redomiciled entity or holding company in substantially the same
proportions as their ownership of capital stock of the Company shall be
excluded from clauses (a) and (b) above and (y) any bona fide primary or
secondary public offering shall be excluded from clause (b) above.

 

-35-

 

 

“Charitable Organization” shall mean a
charitable organization as described by Section 501(c)(3) of the Internal
Revenue Code of 1986, as in effect from time to time.

 

 “Closing” shall have the meaning set
forth in Section 1.1.

“Commission” shall
mean the Securities and Exchange Commission.

“Common Stock”
shall mean the common stock, $.001 par value per share, of the Company.

“Company” shall
have the meaning set forth in the Preamble.

“Company Shares”
shall mean Shares in respect of capital stock of the Company.

“Controlled Company”
shall mean a “controlled company” as defined from time to time under the New
York Stock Exchange’s corporate governance listing standards.

“Convertible
Securities” shall mean any evidence of indebtedness, shares of stock (other
than Stock) or other securities (other than Options and Warrants) which are
directly or indirectly convertible into or exchangeable or exercisable for
shares of Stock.

“Covered Person”
shall have the meaning set forth in Section 6.4.1.

“Drag Along Notice”
shall have the meaning set forth in Section 4.2.1.

“Drag Along Sale
Percentage” shall have the meaning set forth in Section 4.2.

“Drag Along Sellers”
shall have the meaning set forth in Section 4.2.1.

“Equivalent Shares”
shall mean, at any date of determination, (a) as to any outstanding shares
of Stock, such number of shares of Stock and (b) as to any outstanding
Options, Warrants or Convertible Securities which constitute Shares, the
maximum number of shares of Stock for which or into which such Options,
Warrants or Convertible Securities may at the time be exercised, converted or
exchanged (or which will become exercisable, convertible or exchangeable on or
prior to, or by reason of, the transaction or circumstance in connection with
which the number of Equivalent Shares is to be determined).

“Escrow Agent”
shall have the meaning set forth in Section 8.2.

“Exchange Act”
shall mean the Securities Exchange Act of 1934, as in effect from time to time.

“Fair Market Value”
shall mean, as of any date, as to any Share, the Board’s good faith
determination of the fair value of such Share as of the applicable reference
date.

 

-36-

 

“Family Member”
shall mean, with respect to any natural Person, (i) any lineal descendant or
ancestor or sibling (by birth or adoption) of such natural Person, (ii) any
spouse or former spouse of any of the foregoing, (iii) any legal representative
or estate of any of the foregoing, (iv) any trust maintained for the benefit of
the foregoing and (v) any corporation, private charitable foundation or other
organization controlled by the foregoing.

“Holders” shall
mean the holders of Registrable Securities under this Agreement.

“Indemnitee” shall
have the meaning set forth in Section 6.4.3.

“Independent Directors”
shall have the meaning set forth in Section 2.1.1.

“Initial Public
Offering” shall mean the initial Public Offering registered on Form S-1
(or any successor form under the Securities Act).

“Initiating Investors”
shall have the meaning set forth in Section 6.1.1.

“Investor Directors”
shall mean the THL Directors, the Bain Directors, the Providence Directors and
the Lexa Directors.

“Investor Group”
shall mean any one of (a) the THL Investors, collectively, (b) the Bain
Investors, collectively, (c) the Providence Investors, collectively and (d) the
Lexa Investors, collectively.  Where this
Agreement provides for the vote, consent or approval of any Investor Group,
such vote, consent or approval shall be determined by the Majority THL
Investors, the Majority Bain Investors, the Majority Providence Investors or
the Majority Lexa Investors, as the case may be, except as otherwise
specifically set forth herein.

“Investors” shall
have the meaning set forth in the Preamble.

“Lexa Director”
shall mean a member of the Board of Directors designated in accordance with
Section 2.1.2(iv).

“Lexa Investors”
shall mean, as of any date, Music Capital Partners, L.P and, from and after a
Lexa Triggering Event, ALP Music Partners, L.P. and their respective Permitted
Transferees, in each case only if such Person is then a Stockholder and holds
any Shares.

“Lexa Triggering Event”
shall mean the earlier to occur of Edgar Bronfman, Jr. (a) ceasing to serve as
the chief executive officer of the Company and the senior executive officer of
the Company’s Recorded Music Business and Music Publishing Business (as such
terms are defined in the Acquisition Agreement) or (b) ceasing to control (as
such term is used in the definition of “Affiliate”) the general partner of
Music Capital Partners, L.P.

 “Majority Bain Investors” shall mean,
as of any date, the holders of a Majority in Interest of the Shares held by the
Bain Investors.

“Majority in Interest”
shall mean, (a) with respect to a set of Shares and/or Other Holder Shares of a
single class, a majority of such Shares and/or Other Holder Shares and (b) with

 

-37-

 

respect to a set
of Shares and/or Other Holder Shares of more than one class, a majority in
aggregate Fair Market Value of such Shares and/or Other Holder Shares.

“Majority Lexa
Investors” shall mean, as of any date, the holders of a Majority in
Interest of the Shares held by the Lexa Investors.

“Majority Providence
Investors” shall mean, as of any date, the holders of a Majority in
Interest of the Shares held by the Providence Investors.

“Majority THL
Investors” shall mean, as of any date, the holders of a Majority in
Interest of the Shares held by the THL Investors.

“Management Shares”
shall mean (a) all shares of Stock held by a Manager, whenever issued,
including all shares of Stock issued upon the exercise, conversion or exchange
of any Options, Warrants or Convertible Securities and (b) all Options,
Warrants and Convertible Securities held by a Manager, treating such Options,
Warrants and Convertible Securities as a number of Management Shares equal to
the maximum number of shares of Stock for which or into which such Options,
Warrants or Convertible Securities may at the time be exercised, converted or
exchanged (or which will become exercisable, convertible or exchangeable on or
prior to, or by reason of, the transaction or circumstance in connection with
which the number of Management Shares is to be determined); provided, however,
in connection with a Transfer to a Manager of any Shares that are not then
Management Shares, such Shares shall not become Management Shares as a result
of such Transfer if such Manager is then a Permitted Transferee of the holder
of such Shares.  Any Management Shares
that are Transferred by the holder thereof to such holder’s Permitted Transferees
shall remain Management Shares in the hands of such Permitted Transferee.  For the avoidance of doubt, any Shares held by
any Lexa Investor (other than Shares Transferred to such Lexa Investor under
the circumstances described in the preceding sentence) shall not be deemed
Management Shares.

“Managers” shall
have the meaning set forth in the Preamble and shall include any Permitted
Transferee of any Manager that, at any time, holds Shares or Other Shares.

“Midco” shall have
the meaning set forth in the Preamble.

“NASD” shall have
the meaning set forth in Section 6.3.2(vii).

“Options” shall
mean any options to subscribe for, purchase or otherwise directly acquire
Stock, other than any such option held by the Company or Midco or any right to
purchase shares pursuant to this Agreement.

“Other Holder Shares”
shall mean (a) all shares of Stock held by an Other Holder, whenever issued,
including all shares of Stock issued upon the exercise, conversion or exchange
of any Options, Warrants or Convertible Securities and (b) all Options,
Warrants and Convertible Securities held by an Other Holder, treating such
Options, Warrants and Convertible Securities as a number of Other Holder Shares
equal to the maximum number of shares of Stock for which or into which such Options,
Warrants or Convertible Securities may at the time be exercised,

 

-38-

 

converted or
exchanged (or which will become exercisable, convertible or exchangeable on or
prior to, or by reason of, the transaction or circumstance in connection with
which the number of Other Holder Shares is to be determined).

“Other Holders”
shall have the meaning set forth in the Preamble.

“Parity Shares”
shall have the meaning set forth in Section 6.3.1.

“Participating Seller”
shall have the meaning set forth in Section 4.1.2 and 4.2.1.

“Pending Underwritten
Offering” means, with respect to any Withdrawing Holder withdrawing from
this Agreement pursuant to Section 10.3, any underwritten Public Offering for
which a registration statement relating thereto is or has been filed with the
Commission either prior to, or not later than the sixtieth day after, the
effectiveness of such Withdrawing Holder’s withdrawal from this Agreement.

“Permitted Piggyback
Assignee” shall have the meaning set forth in Section 6.5.1.

“Permitted Transferee”
shall mean, in respect of any Stockholder or Permitted Transferee, any
Affiliate of such Stockholder or Permitted Transferee to the extent such Person
agrees to be bound by the terms of this Agreement in accordance with Section 3.2.  In addition, upon the occurrence of a Lexa
Triggering Event and until the earlier to occur of: (i) the completion of a
period of sixty (60) days thereafter and (ii) the completion of the Transfer
described in the following, ALP Music Partners, L.P. shall be deemed a
Permitted Transferee of Music Capital Partners, L.P. for purposes of a single
Transfer by Music Capital Partners, L.P. to ALP Music Partners, L.P., as one of
its limited partners, of a number of Shares equal to such limited partner’s
proportionate interest in all of the Shares then held by Music Capital
Partners, L.P., to the extent such limited partner agrees to be bound by the
terms of this Agreement in accordance with Section 3.2.  In addition, any Stockholder shall be a
Permitted Transferee of the Permitted Transferees of itself; provided, however,
that the foregoing shall not apply as between Music Capital Partners, L.P. and
ALP Music Partners, L.P.

“Person” shall
mean any individual, partnership, corporation, company, association, trust,
joint venture, limited liability company, unincorporated organization, entity
or division, or any government, governmental department or agency or political
subdivision thereof.

“Principal Investor
Group” shall mean any one of (a) the THL Investors, collectively, (b) the
Bain Investors, collectively and (c) the Providence Investors, collectively; provided,
however, that any such Investor Group shall cease to be a Principal
Investor Group at such time after the Closing, and at all times thereafter, as such
Investor Group ceases to hold the greater of (i) at least [______] shares (as
such threshold may be adjusted from time to time pursuant to the following
sentence) of adjusted Common Stock (appropriately adjusted for any stock split,
stock dividend, combination, recapitalization or the like involving the Common
Stock) or (ii) at least [______] shares of Common Stock (appropriately adjusted
for any stock split, stock dividend, combination, recapitalization or the like
involving the Common Stock).  The
threshold amount for adjusted Common Stock set forth above shall automatically
be proportionately reduced

 

-39-

 

effective
immediately prior to any Proportionate Reduction Event; provided that no
adjustment pursuant to the foregoing shall cause any former Principal Investor
Group to again become a Principal Investor Group

“Principal Lock-Up
Agreement” shall have the meaning set forth in Section 6.3.4.

“Principal
Participating Holders” shall mean, with respect to any Public Offering, (i)
the two holders (determined in accordance with Section 6.3.1) including the
greatest number of Registrable Securities in such Public Offering, (ii) if
there are more than two such holders including the greatest number of
Registrable Securities in such Public Offering, all of such holders and (iii)
if there is only one such holder including any Registrable Securities in such
Public Offering, such holder.  Where this
Agreement provides for the vote, consent or approval of the Principal
Participating Holders, such vote, consent or approval shall be required of each
such holder as identified in the preceding sentence.

“Pro Rata Portion”
shall mean:

(i)            for purposes of Section 4.1.5, with
respect to each Tag Along Seller, a number of Shares equal to the aggregate
number of Shares that the Prospective Buyer is willing to purchase in the
proposed Sale, multiplied by a fraction, the numerator of which is the
aggregate number of Shares held by such Tag Along Seller and the denominator of
which is the aggregate number of Shares held by all Tag Along Sellers; and

(ii)           for purposes of Section 6.3, with
respect to each holder of Registrable Securities or Parity Shares requesting
that such shares be registered in such registration statement, a number of such
shares equal to the aggregate number of shares of Common Stock to be registered
in such registration (excluding any shares to be registered for the account of
the Company) multiplied by a fraction, the numerator of which is the aggregate
number of Registrable Securities and Parity Shares held by such holder, and the
denominator of which is the aggregate number of Registrable Securities and
Parity Shares held by all holders requesting that their Registrable Securities or
Parity Shares be registered in such registration.

“Proportionate
Reduction Event” shall mean, at any time that immediately prior thereto
there are at least two Investor Groups each of which is then entitled to
designate at least one director pursuant to Section 2.1, the consummation of
any transaction or series of related transactions (including any dividend,
distribution, redemption, stock repurchase or comparable transaction), whether
or not the Company is a party thereto, that effects a reduction in the number
of Shares of Common Stock held by each such Investor Group that, in the good
faith determination of a majority of the entire Board, is substantially
proportionate with respect to each such Investor Group.

 “Prospective Buyer” shall mean any
Person proposing to purchase shares from a Prospective Selling Stockholder.

 

-40-

 

“Prospective Selling
Stockholder” shall mean:

(i)            for purposes of  Section 3.4, any Stockholder that proposes to
Transfer any Shares to any Prospective Buyer;

(ii)           for purposes of  Section 4.1, any Stockholder that proposes to
Transfer any Shares to any Prospective Buyer;  and

(iii)          for purposes of Section 4.2, any
Stockholder forming part of the acting Requisite Stockholder Majority that has
elected to exercise the drag along right provided by such Section.

“Providence Director”
shall mean a member of the Board of Directors designated by one or more
Providence Investors.

“Providence Investors”
shall mean, as of any date, Providence Equity Partners IV, L.P. and Providence
Equity Operating Partners IV, L.P., and their respective Permitted Transferees,
in each case only if such Person is then a Stockholder and holds any Shares.

“Public Offering”
shall mean a public offering and sale of Common Stock for cash pursuant to an
effective registration statement under the Securities Act.

 “Purchaser” shall have the meaning set
forth in the Preamble.

“Registrable
Securities” shall mean (a) all shares of Common Stock, (b) all shares
of Common Stock issuable upon exercise, conversion or exchange of any Option,
Warrant or Convertible Security and (c) all shares of Common Stock directly or
indirectly issued or issuable with respect to the securities referred to in
clauses (a) or (b) above by way of stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization, in each case constituting Shares or
Other Holder Shares.  As to any
particular Registrable Securities, such shares shall cease to be Registrable
Securities when (i) such securities shall have ceased to be Shares or Other
Holder Shares hereunder, (ii) a registration statement with respect to the
sale of such securities shall have become effective under the Securities Act and
such securities shall have been disposed of in accordance with such
registration statement, (iii) such securities shall have been Transferred
pursuant to Rule 144 or Rule 145, (iv) disposition of such securities may be
made under Rule 144 or 145 and the holder of such securities holds no more than
one percent of the shares of the applicable class outstanding as shown by the
most recent report or statement published by the Company, (v) subject to the
provisions of Section 8.2 hereof, such securities shall have been otherwise
transferred, new certificates for them not bearing a legend restricting further
transfer shall have been delivered by the Company and subsequent disposition of
them shall not require registration of them under the Securities Act and such
securities may be distributed without volume limitation or other restrictions
on transfer under Rule 144 or Rule 145 (including without application of
paragraphs (c), (e) (f) and (h) of Rule 144), (vi) such securities shall
have ceased to be outstanding or (vii) the holder thereof shall have withdrawn
from this Agreement pursuant to Section 10.3.

 

-41-

 

“Registration Expenses”
means any and all expenses incident to performance of or compliance with
Section 6 of this Agreement (other than underwriting discounts and commissions
paid to underwriters and transfer taxes, if any), including (a) all Commission
and securities exchange or NASD registration and filing fees, (b) all fees and
expenses of complying with securities or blue sky laws (including reasonable
fees and disbursements of counsel for the underwriters in connection with blue
sky qualifications of the Registrable Securities), (c) all printing, messenger
and delivery expenses, (d) all fees and expenses incurred in connection with
the listing of the Registrable Securities on any securities exchange or NASD
pursuant to Section 6.3.2(vii) and all rating agency fees, (e) the fees and
disbursements of counsel for the Company and of its independent public accountants,
including the expenses of any special audits and/or “cold comfort” letters
required by or incident to such performance and compliance, (f) the reasonable
fees and disbursements of one counsel for the Holders selected pursuant to the
terms of Section 6, (g) any fees and disbursements customarily paid by the
issuers of securities, and (h) expenses incurred in connection with any road
show (including the reasonable out-of-pocket expenses of the Holders).

“Regulation D”
shall mean Regulation D under the Securities Act.

“Requisite Stockholder
Majority” shall mean at any time the approval of  (a) (i) any Principal Investor Group then
holding a number of shares of Common Stock constituting Shares that is no less
than that held by any other Principal Investor Group and (ii) if only one
Principal Investor Group is described in clause (a)(i), any other Principal
Investor Group, if any and (b) if there are no Principal Investor Groups, the
holders of a majority of the outstanding Common Stock constituting Shares.

“Rule 144” shall
mean Rule 144 under the Securities Act (or any successor Rule).

“Rule 145” shall
mean Rule 145 under the Securities Act (or any successor Rule).

“Rule 145 Transaction”
shall mean a registration on Form S-4 (or any successor Form) pursuant to
Rule 145.

“Sale” shall mean
a Transfer for value and the terms “Sell” and “Sold” shall have correlative
meanings.

“Securities Act”
shall mean the Securities Act of 1933, as in effect from time to time.

“Shares” shall
mean (a) all shares of Stock held by a Stockholder, whenever issued, including
all shares of Stock issued upon the exercise, conversion or exchange of any
Options, Warrants or Convertible Securities and (b) all Options, Warrants and
Convertible Securities held by a Stockholder (treating such Options, Warrants
and Convertible Securities as a number of Shares equal to the number of
Equivalent Shares represented by such Options, Warrants and Convertible
Securities for all purposes of this Agreement except as otherwise specifically
set forth herein).  Shares shall include
Management Shares for all purposes of this Agreement except with respect to
Section 7.

 

-42-

 

“Stock” shall mean
the Common Stock.

“Stockholders”
shall have the meaning set forth in the Preamble.

“Strategic Investor”
shall mean, with respect to any proposed Transfer, any (a) Person that is
determined by (i) a majority of the entire Board and (ii) the Requisite
Stockholder Majority to be a competitor of the Company or any of its subsidiaries
or a potential strategic investor in the Company or any of its subsidiaries and
(b) any Affiliate of any such Person. 
For purposes hereof, without limiting the foregoing, any Person with
substantial operations in the Recorded Music Business (as defined in the
Acquisition Agreement) or the Music Publishing Business (as defined in the
Acquisition Agreement) shall be presumed to be a Strategic Investor unless (i)
a majority of the entire Board and (ii) the Requisite Stockholder Majority
otherwise determine.

“Tag Along Deadline”
shall have the meaning set forth in Section 4.1.2..

“Tag Along Holder”
shall have the meaning set forth in Section 4.1.1.

“Tag Along Notice”
shall have the meaning set forth in Section 4.1.1.

“Tag Along Offer”
shall have the meaning set forth in Section 4.1.2.

“Tag Along Sale
Percentage” shall have the meaning set forth in Section 4.1.1.

“Tag Along Sellers”
shall have the meaning set forth in Section 4.1.2.

“THL Director”
shall mean a member of the Board of Directors designated by one or more THL
Investors.

“THL Investors”
shall mean, as of any date, Thomas H. Lee Equity Fund V, L.P.,
Thomas H. Lee Parallel Fund V, L.P., Thomas H. Lee Equity (Cayman) Fund
V, L.P., Putnam Investment Holdings, LLC, Putnam Investments Employees’ Securities
Company I LLC, Putnam Investments Employees Securities Company II LLC, 1997
Thomas H. Lee Nominee Trust, Thomas H. Lee Investors Limited
Partnership and THL WMG Equity Investors, L.P., and their respective Permitted
Transferees, in each case only if such Person is then a Stockholder and holds
any Shares.

 “Transfer” shall mean any sale, pledge,
assignment, encumbrance or other transfer or disposition of any Shares or Other
Holder Shares to any other Person, whether directly, indirectly, voluntarily,
involuntarily, by operation of law, pursuant to judicial process or otherwise.

“Warrants” shall
mean any warrants to subscribe for, purchase or otherwise directly acquire
Stock.

“Withdrawing Holders”
shall have the meaning set forth in Section 10.3.

 

-43-

 

12.  MISCELLANEOUS.

12.1.        Authority; Effect.  Each party hereto represents and warrants to
and agrees with each other party that the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have
been duly authorized on behalf of such party and do not violate any agreement
or other instrument applicable to such party or by which its assets are
bound.  This Agreement does not, and
shall not be construed to, give rise to the creation of a partnership among any
of the parties hereto, or to constitute any of such parties members of a joint
venture or other association.  The
Company and Midco shall be jointly and severally liable for all obligations of
each such party pursuant to this Agreement.

12.2.        Notices. 
Any notices and other communications required or permitted in this
Agreement shall be effective if in writing and (a) delivered personally, (b)
sent by facsimile, or (c) sent by overnight courier, in each case, addressed as
follows:

If to the Company, the Purchaser or Midco, to it at:

 

	
   

  	
   

  	
  Warner Music
  Group Corp.

  
	
   

  	
   

  	
  75 Rockefeller
  Plaza

  
	
   

  	
   

  	
  New York, New
  York 10019

  
	
   

  	
   

  	
  Facsimile: (212)
  956-0529

  
	
   

  	
   

  	
  Attention: Trent Tappe, Esq.

  
	
   

  	
   

  	
   

  
	
   

  	
  with copies to:

  
	
   

  	
   

  
	
   

  	
   

  	
  Thomas H. Lee Partners,
  L.P.

  
	
   

  	
   

  	
  75 State Street

  
	
   

  	
   

  	
  Boston,
  Massachusetts 02109

  
	
   

  	
   

  	
  Facsimile: (617)
  227-3514

  
	
   

  	
   

  	
  Attention: Scott Sperling

  
	
   

  	
   

  	
   

  
	
   

  	
  and

  
	
   

  	
   

  
	
   

  	
   

  	
  Simpson Thacher
  & Bartlett LLP

  
	
   

  	
   

  	
  425 Lexington
  Avenue

  
	
   

  	
   

  	
  New York, New
  York 10017

  
	
   

  	
   

  	
  Facsimile: (212)
  455-2502

  
	
   

  	
   

  	
  Attention: 

  	
  John Finley, Esq.

  
	
   

  	
   

  	
   

  	
  Brian Stadler, Esq.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  and

  
	
   

  	
   

  
	
   

  	
   

  	
  Ropes & Gray
  LLP

  
	
   

  	
   

  	
  One
  International Place

  
	
   

  	
   

  	
  Boston,
  Massachusetts 02210

  

 

-44-

 

	
   

  	
   

  	
  Facsimile: (617)
  951-7050

  
	
   

  	
   

  	
  Attention: Alfred Rose, Esq.

  

 

If to a Stockholder or an
Other Holder, to it at the address set forth in the records of the Company.

Notice to the holder of
record of any shares of capital stock shall be deemed to be notice to the
holder of such shares for all purposes hereof.

Unless otherwise
specified herein, such notices or other communications shall be deemed
effective (a) on the date received, if personally delivered, (b) on the date
received if delivered by facsimile on a business day, or if not delivered on a
business day, on the first business day thereafter and (b) two business days
after being sent by overnight courier. 
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.

12.3.        Binding Effect, Etc.  Except for restrictions on the Transfer of
Shares set forth in other agreements, plans or other documents, this Agreement
constitutes the entire agreement of the parties with respect to its subject
matter, supersedes all prior or contemporaneous oral or written agreements or
discussions with respect to such subject matter, and shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
representatives, successors and permitted assigns.  Except as otherwise expressly provided
herein, no Holder party hereto may assign any of its respective rights or
delegate any of its respective obligations under this Agreement without the
prior written consent of the other parties hereto, and any attempted assignment
or delegation in violation of the foregoing shall be null and void.

12.4.        Descriptive Headings.  The descriptive headings of this Agreement
are for convenience of reference only, are not to be considered a part hereof
and shall not be construed to define or limit any of the terms or provisions
hereof.

12.5.        Counterparts.  This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one instrument.

12.6.        Severability.  In the event that any provision hereof would,
under applicable law, be invalid or unenforceable in any respect, such
provision shall be construed by modifying or limiting it so as to be valid and
enforceable to the maximum extent compatible with, and possible under,
applicable law.  The provisions hereof
are severable, and in the event any provision hereof should be held invalid or
unenforceable in any respect, it shall not invalidate, render unenforceable or
otherwise affect any other provision hereof.

12.7.        No Recourse.  Notwithstanding anything that may be
expressed or implied in this Agreement, the Company and each Stockholder
covenant, agree and acknowledge that no recourse under this Agreement or any
documents or instruments delivered in connection with this Agreement shall be
had against any current or future director, officer, employee, general or
limited partner or member of any Stockholder or of any Affiliate or assignee
thereof, as such,

 

-45-

 

whether by the enforcement of any assessment or by any
legal or equitable proceeding, or by virtue of any statute, regulation or other
applicable law, it being expressly agreed and acknowledged that no personal
liability whatsoever shall attach to, be imposed on or otherwise be incurred by
any current or future officer, agent or employee of any Stockholder or any
current or future member of any Stockholder or any current or future director,
officer, employee, partner or member of any Stockholder or of any Affiliate or assignee
thereof, as such, for any obligation of any Stockholder under this Agreement or
any documents or instruments delivered in connection with this Agreement for
any claim based on, in respect of or by reason of such obligations or their
creation.

12.8.        Aggregation of Shares.  All Shares held by a Stockholder and its
Affiliates shall be aggregated together for purposes of determining the
availability of any rights under Sections 3.3, 4 and 6.  Within any Investor Group, the Stockholders
may allocate the ability to exercise any rights under this Agreement in any
manner that such Investor Group (by a Majority in Interest of the Shares held
by such Investor Group) sees fit.

13.  GOVERNING LAW.

13.1.        Governing Law.  This Agreement and all claims arising out of
or based upon this Agreement or relating to the subject matter hereof 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 of laws
provision or rule that would cause the application of the domestic substantive
laws of any other jurisdiction.

13.2.        Consent to Jurisdiction.  Each party to this Agreement, by its
execution hereof, (a) hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the State of Delaware
for the purpose of any action, claim, cause of action or suit (in contract,
tort or otherwise), inquiry, proceeding or investigation arising out of or
based upon this Agreement or relating to the subject matter hereof, (b) hereby
waives to the extent not prohibited by applicable law, and agrees not to
assert, and agrees not to allow any of its subsidiaries to assert, by way of
motion, as a defense or otherwise, in any such action, any claim that it is not
subject personally to the jurisdiction of the above-named courts, that its
property is exempt or immune from attachment or execution, that any such
proceeding brought in one of the above-named courts is improper, or that this
Agreement or the subject matter hereof or thereof may not be enforced in or by
such court and (c) hereby agrees not to commence or maintain any action, claim,
cause of action or suit (in contract, tort or otherwise), inquiry, proceeding
or investigation arising out of or based upon this Agreement or relating to the
subject matter hereof or thereof other than before one of the above-named
courts nor to make any motion or take any other action seeking or intending to
cause the transfer or removal of any such action, claim, cause of action or
suit (in contract, tort or otherwise), inquiry, proceeding or investigation to
any court other than one of the above-named courts whether on the grounds of
inconvenient forum or otherwise. 
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 (a) above.  Notwithstanding the foregoing, any party to
this Agreement may commence and maintain an action to enforce a judgment of any
of the above-named courts in any court of

 

-46-

 

competent jurisdiction.  Each party hereto hereby consents to service
of process in any such proceeding in any manner permitted by Delaware law, and
agrees that service of process by registered or certified mail, return receipt
requested, at its address specified pursuant to Section 12.2 hereof is
reasonably calculated to give actual notice.

13.3.        WAIVER OF JURY TRIAL.  TO THE EXTENT NOT PROHIBITED BY APPLICABLE
LAW WHICH CANNOT BE WAIVED, EACH PARTY 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 OR ACTION, CLAIM, CAUSE OF
ACTION OR SUIT (IN CONTRACT, TORT OR OTHERWISE), INQUIRY, PROCEEDING OR
INVESTIGATION ARISING OUT OF OR BASED UPON THIS AGREEMENT OR THE SUBJECT MATTER
HEREOF OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE
TRANSACTIONS CONTEMPLATED HEREBY, IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING.  EACH PARTY HERETO
ACKNOWLEDGES THAT IT HAS BEEN INFORMED BY THE OTHER PARTIES HERETO THAT THIS
SECTION 13.3 CONSTITUTES A MATERIAL INDUCEMENT UPON WHICH THEY ARE RELYING AND
WILL RELY IN ENTERING INTO THIS AGREEMENT.  
ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
SECTION 13.3 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF EACH SUCH
PARTY TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.

13.4.        Exercise of Rights and Remedies.  No delay of or omission in the exercise of
any right, power or remedy accruing to any party as a result of any breach or
default by any other party under this Agreement shall impair any such right,
power or remedy, nor shall it be construed as a waiver of or acquiescence in
any such breach or default, or of any similar breach or default occurring
later; nor shall any such delay, omission nor waiver of any single breach or default
be deemed a waiver of any other breach or default occurring before or after
that waiver.

[Signature pages follow]

 

-47-

 

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

	
  THE COMPANY:

  	
  WARNER MUSIC GROUP CORP.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  MIDCO:

  	
  WMG HOLDINGS CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  PURCHASER:

  	
  WMG ACQUISITION CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
				

 

-48-

 

	
  THE INVESTORS:

  	
  THOMAS H. LEE EQUITY FUND V, L.P.

  
	
   

  	
  By: THL Equity Advisors V, LLC, its general partner

  
	
   

  	
  By: Thomas H. Lee Partners, L.P., its sole member

  
	
   

  	
  By: Thomas H. Lee Advisors, LLC, its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  *

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  THOMAS H. LEE PARALLEL FUND V, L.P.

  
	
   

  	
  By: THL Equity Advisors V, LLC, its general partner

  
	
   

  	
  By: Thomas H. Lee Partners, L.P., its sole member

  
	
   

  	
  By: Thomas H. Lee Advisors, LLC, its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  *

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  THOMAS H. LEE EQUITY (CAYMAN) FUND
  V, L.P.

  
	
   

  	
  By: THL Equity Advisors V, LLC, its general partner

  
	
   

  	
  By: Thomas H. Lee Partners, L.P., its sole member

  
	
   

  	
  By: Thomas H. Lee Advisors, LLC, its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  *

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  THL WMG EQUITY INVESTORS, L.P.

  
	
   

  	
  By: THL Equity Advisors V, LLC, its general partner

  
	
   

  	
  By: Thomas H. Lee Partners, L.P., its sole member

  
	
   

  	
  By: Thomas H. Lee Advisors, LLC, its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  *

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
				

 

*  The signature appearing
immediately below shall serve as a signature at each place indicated with an “*”
on this page above:

 

	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
  Principal Managing Director

  
				

 

-49-

 

 

	
   

  	
  1997
  THOMAS H. LEE NOMINEE TRUST

  
	
   

  	
  By:

  	
  State Street Bank and Trust Company, not personally,
  but solely as Trustee under the 1997 Thomas H. Lee Nominee Trust

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
  Gerald R. Wheeler

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  THOMAS H. LEE INVESTORS LIMITED PARTNERSHIP

  
	
   

  	
  By: 

  	
  THL Investment Management Corp., its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
  Thomas H. Lee

  
	
   

  	
  Title:

  	
  Chief Executive Officer

  
					

 

-50-

 

	
   

  	
   

  	
   

  
	
   

  	
  PUTNAM INVESTMENT HOLDINGS, LLC

  
	
   

  	
  By: 

  	
  Putnam Investments, LLC, its managing member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  *

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PUTNAM INVESTMENTS EMPLOYEES’ SECURITIES
  COMPANY I LLC

  
	
   

  	
  By: 

  	
  Putnam Investment Holdings, LLC, its managing member

  
	
   

  	
  By: 

  	
  Putnam Investments, LLC, its managing member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  *

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PUTNAM INVESTMENTS EMPLOYEES’
  SECURITIES COMPANY II LLC

  
	
   

  	
  By: 

  	
  Putnam Investment Holdings, LLC, its managing member

  
	
   

  	
  By: 

  	
  Putnam Investments, LLC, its managing member

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  *

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
  Managing Director

  
					

 

 

 

*  The signature appearing
immediately below shall serve as a signature at each place indicated with an “*”
on this page above:

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Name:

  

 

 

-51-

 

	
   

  	
  BAIN CAPITAL INTEGRAL
  INVESTORS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  *

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title: 

  	
  Authorized Person

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BAIN CAPITAL VII COINVESTMENT
  FUND, LLC

  
	
   

  	
  By: 

  	
  Bain Capital VII Coinvestment Fund, L.P.,

  
	
   

  	
   

  	
  it sole member

  
	
   

  	
  By:

  	
  Bain Capital Partners VII, L.P.,

  
	
   

  	
   

  	
  its general partner

  
	
   

  	
  By:

  	
  Bain Capital Investors, LLC,

  
	
   

  	
   

  	
  its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  *

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title: 

  	
  Managing Director

  
	
   

  	
   

  	
   

  
	
   

  	
  BCIP
  TCV, LLC

  
	
   

  	
  By: 

  	
  Bain Capital Investors, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  *

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title: 

  	
  Managing Director

  
					

 

 

 

*  The signature appearing
immediately below shall serve as a signature at each place indicated with an “*”
on this page above:

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Name:

  

 

-52-

 

	
   

  	
  PROVIDENCE EQUITY PARTNERS IV, L.P.

  
	
   

  	
  By:

  	
  Providence Equity Partners GP IV L.P.,

  
	
   

  	
   

  	
  its general partner

  
	
   

  	
  By:

  	
  Providence Equity Partners IV LLC,

  
	
   

  	
   

  	
  its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  *

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PROVIDENCE EQUITY OPERATING
  PARTNERS IV, L.P.

  
	
   

  	
  By:

  	
  Providence Equity Partners GP IV L.P.,

  
	
   

  	
   

  	
  its general partner

  
	
   

  	
  By:

  	
  Providence Equity Partners IV LLC,

  
	
   

  	
   

  	
  its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  *

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

 

 *  The signature appearing immediately below
shall serve as a signature at each place indicated with an “*” on this page
above:

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Name:

  

 

-53-

 

	
   

  	
  MUSIC CAPITAL PARTNERS, L.P.

  
	
   

  	
  By:

  	
  MUSIC PARTNERS CAPITAL LIMITED

  
	
   

  	
   

  	
  its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

-54-

 

THE MANAGERS:

 

	
   

  	
   

  	
   

  
	
  Edgar Bronfman, Jr.

  	
   

  	
  Lyor Cohen

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Julie Greenwald

  	
   

  	
  Kevin Liles

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Paul Rene Albertini

  	
   

  	
  Nick Phillips

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Alex Zubillaga

  	
   

  	
  Michael Fleisher

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dave Johnson

  	
   

  	
  Richard Blackstone

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Jason Flom

  	
   

  	
  Craig Kallman

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Gerolamo Caccia

  	
   

  	
  Lachie Rutherford

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Tom Whalley

  	
   

  	
  Michael Ward

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  David Foster

  	
   

  	
   

  

 

-55-

 

Schedule 1

Holdings of Outstanding Shares

 

 

	
  Holder

  	
   

  	
  Warner Music Group

  Corp.

  Common Stock

  	
   

  
	
  Thomas H. Lee
  Equity Fund V, L.P.

  	
   

  	
   

  	
   

  
	
  Thomas H. Lee
  Parallel Fund V, L.P.

  	
   

  	
   

  	
   

  
	
  Thomas H. Lee
  Equity (Cayman) Fund V, L.P.

  	
   

  	
   

  	
   

  
	
  Putnam
  Investment Holdings, LLC

  	
   

  	
   

  	
   

  
	
  Putnam
  Investments Employees’ Securities Company I LLC

  	
   

  	
   

  	
   

  
	
  Putnam
  Investments Employees’ Securities Company II LLC

  	
   

  	
   

  	
   

  
	
  1997 Thomas H.
  Lee Nominee Trust

  	
   

  	
   

  	
   

  
	
  Thomas H. Lee
  Investors Limited Partnership

  	
   

  	
   

  	
   

  
	
  THL WMG Equity
  Investors, L.P.

  	
   

  	
   

  	
   

  
	
  Bain Capital
  Integral Investors, LLC

  	
   

  	
   

  	
   

  
	
  BCIP TCV, LLC

  	
   

  	
   

  	
   

  
	
  Bain Capital VII
  Coinvestment Fund, LLC

  	
   

  	
   

  	
   

  
	
  Providence
  Equity Partners IV L.P.

  	
   

  	
   

  	
   

  
	
  Providence
  Equity Operating Partners IV L.P.

  	
   

  	
   

  	
   

  
	
  Music Capital
  Partners, L.P.

  	
   

  	
   

  	
   

  
	
  Edgar Bronfman,
  Jr.

  	
   

  	
   

  	
   

  
	
  Lyor Cohen

  	
   

  	
   

  	
   

  
	
  Julie Greenwald

  	
   

  	
   

  	
   

  
	
  Kevin Liles

  	
   

  	
   

  	
   

  
	
  Paul Rene
  Albertini

  	
   

  	
   

  	
   

  
	
  Nick Phillips

  	
   

  	
   

  	
   

  
	
  Alex Zubillaga

  	
   

  	
   

  	
   

  
	
  Michael Fleisher

  	
   

  	
   

  	
   

  
	
  Dave Johnson

  	
   

  	
   

  	
   

  
	
  Richard
  Blackstone

  	
   

  	
   

  	
   

  

 

-56-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00084-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00084-of-00352.parquet"}]]