Exhibit 10.1

 

AIRCRAFT TIME SHARING AGREEMENT

 

This AIRCRAFT TIME SHARING AGREEMENT (“Agreement”) is made and entered as of the
15th day of February 2006, by and between GUITAR CENTER, INC., a Delaware
corporation (the “Company”), with an address of 5795 Lindero Canyon Road,
Westlake Village, CA, 91362; and Marty Albertson (“Executive”), with an address
of 5795 Lindero Canyon Road, Westlake Village, CA, 91362.

 

WHEREAS, the Company is the owner of a Dassault-Brequet Falcon 50 aircraft (the
“Aircraft”); and

 

WHEREAS, the Executive desires to lease the Aircraft with flight crew from the
Company pursuant to the time sharing arrangement set forth below.

 

NOW, THEREFORE, in consideration of the promises set forth below, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Executive agree as follows:

 

1.                                       Lease of Aircraft. Subject to the terms
and conditions of this Agreement, the Company agrees, at the request of the
Executive and when and to the extent available, to lease the Aircraft to the
Executive on a flight-by-flight and time sharing basis under Federal Aviation
Regulation (“FAR”) Sections 91.501(b)(6) and (c)(1). The Company agrees to make
the Aircraft available to the Executive for flights at such times as the Company
does not require the Aircraft to be available for flights for Company business
purposes. The Company shall be responsible for maintaining appropriate records
that identify those specific flights where the Aircraft has been leased to the
Executive pursuant to the terms of this Agreement.

 

2.                                       Consideration. The Executive shall
incur and pay the Company the following costs and expenses associated with
operation of the specific flights when the Aircraft is leased by Executive from
the Company pursuant to the terms of this Agreement:

 

a.               Expenses for fuel, oil, lubricants and other additives;

 

b.              Crew travel expenses, including food, lodging, and ground
transportation;

 

c.               Hangar and tie-down costs when the Aircraft is required by the
Executive to be away from the Aircraft’s base of operation;

 

d.              Insurance obtained for the specific flight;

 

e.               Landing fees, airport taxes, and similar assessments;

 

f.                 Customs, foreign permit, and similar fees directly related to
the flight;

 

g.              In-flight food and beverage;

 

h.              Passenger ground transportation; and

 

--------------------------------------------------------------------------------

 

i.                  Flight planning and weather contract services.

 

Notwithstanding the foregoing, the amount or allocable share of such costs shall
not, in any event, exceed the costs permitted to be charged by the Company to
the Executive pursuant to Section 91.501(d) of the FAR, as the same may be
revised from time to time.

 

3.                                       Payments. The Company will invoice the
Executive for the costs and expenses of specific flights as incurred. The
invoices will be due within thirty (30) days of receipt. Payment of such
invoices shall be made in full to the Company at 5795 Lindero Canyon Road,
Westlake Village, CA, 91362, or as otherwise agreed by the parties.

 

4.                                       Taxes. The amounts payable by the
Executive under FAR Section 91.501(d) for leasing the Aircraft will be increased
by the applicable federal excise tax as imposed under Internal Revenue Code
Section 4261. It is the responsibility of the Company to collect and remit the
tax on the amounts paid. The Company is responsible for the collection and
payment of all other State or Federal taxes that may arise from the transactions
contemplated by this Agreement.

 

5.                                       Operational Control. At all times when
the Aircraft is leased by the Executive pursuant to this Agreement, the Company
shall be responsible for, and retain full and complete operational control of,
the Aircraft. The Company is responsible for providing the crew, the physical
and technical operation of the Aircraft, and the safe performance of all
flights. The Company will furnish two experienced and competent pilots
satisfactory to the Executive on all occasions when the Aircraft is in use
pursuant to this Agreement. Such pilots shall be under the direction and control
of the Company at all times. One of such pilots shall be the captain of the
Aircraft and shall have full control of its operations at all times, and the
judgment of such pilot as to the suitability of the weather, terrain, mechanical
condition or capacity of the Aircraft and other similar decisions shall be
conclusive.

 

6.                                       Aircraft Use. The Company and the
Executive agree to use the Aircraft in accordance with the time sharing
provisions contained in 91.501 of the FAR, as well as any other applicable
portions of FAR Part 91.

 

7.                                       Maintenance. The Company, at its own
cost and expense, will service, maintain and repair the Aircraft in compliance
with all maintenance standards of the Aircraft and all requirements of FAR
Part 91. The Company will also provide suitable hangar and storage facilities
for the Aircraft at its own expense. Aircraft maintenance and inspection takes
precedence over Aircraft scheduling unless such maintenance or inspections can
be safely deferred in accordance with applicable laws and regulations and within
the sound discretion of the captain.

 

8.                                       Insurance. The Company, at its own
expense, shall maintain liability insurance upon the Aircraft with limits for
bodily injury and for property damage which are satisfactory to Executive.

 

9.                                       Indemnification. The Company agrees to
indemnify, defend, and hold the Executive harmless from any claims, suits,
liabilities, losses, costs or expenses for injury to persons or damage to
property arising in any way out of the operation of the Aircraft pursuant to
this Agreement.

 

2

--------------------------------------------------------------------------------

 

10.                                 Effective Date; Term. This Agreement shall
be effective as of April 1, 2005 and shall continue in full force and effect for
a term of one year, and shall thereafter be automatically renewed for continuous
periods of one year without re-execution. Notwithstanding the immediately
preceding sentence, either party may terminate this Agreement at any time for
any or no reason by giving thirty (30) days’ prior written notice to the other
party of its intention to terminate. This Agreement supersedes any prior
agreements between the parties relating to Aircraft operations and use.

 

11.                                 Assignment. No party shall have the right to
assign its interests or rights hereunder, in whole or part, without the prior
written consent of the other party, except that the Company may assign its
interest hereunder to a wholly-owned affiliate without the consent of the
Executive.

 

12.                                 Notice. Any statement, consent, or notice
required or permitted by this Agreement shall be given by mail or hand delivery
to the party concerned at the addresses listed above, except that notice with
respect to the operation or use of the Aircraft may be given by telephone.

 

13.                                 Warranties. The Executive warrants to the
Company that, during the Executive’s lease of the Aircraft, the Aircraft shall
not be used or employed, except as authorized by the FAR. The Company warrants
that the Aircraft has been maintained under Part 91 of the FAR from the date of
the Company’s purchase of the Aircraft to the date of this Agreement.

 

14.                                 No Carriage For Compensation or Hire. It is
understood and agreed that the Company and the Executive shall neither sell
seats to passengers or space for cargo, nor in any other manner use the Aircraft
for the carriage of goods or passengers for compensation or hire, and that the
Aircraft shall be operated within the applicable rules of Part 91 Subpart F of
the FAR during the term of this Agreement.

 

15.                                 Counterparts. This Agreement may be executed
in counterparts, all of which when executed shall constitute an original.

 

16.                                 Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the State of
California, without regard to the conflicts of laws provisions thereof.

 

17.                                 Truth-In-Leasing Statement Under FAR 91.23.

 

AN EXECUTED COPY OF THIS AGREEMENT WILL BE MAILED TO THE FEDERAL AVIATION
ADMINISTRATION, FLIGHT STANDARDS TECHNICAL DIVISION, POST OFFICE BOX 25724,
OKLAHOMA CITY, OKLAHOMA 73125, WITHIN 24 HOURS OF THE TIME OF EXECUTION HEREOF.

 

THE AIRCRAFT REFERENCED HEREIN HAS BEEN MAINTAINED AND INSPECTED UNDER FAR
PART 91 FOR THE ENTIRE PERIOD FROM THE DATE OF THE COMPANY’S PURCHASE OF THE
AIRCRAFT TO THE DATE HEREOF. SAID AIRCRAFT WILL BE MAINTAINED AND INSPECTED
UNDER PART 91 OF THE FEDERAL AVIATION REGULATIONS FOR OPERATIONS TO BE CONDUCTED
UNDER THIS AGREEMENT DURING THE DURATION OF THIS AGREEMENT.

 

3

--------------------------------------------------------------------------------

 

THE COMPANY, LOCATED AT THE ABOVE LISTED ADDRESS, IS CONSIDERED TO BE IN
OPERATIONAL CONTROL OF THE AIRCRAFT AND UNDERSTANDS AND IS FAMILIAR WITH ITS
RESPONSIBILITIES WITH REGARD TO THE OPERATION OF AIRCRAFT UNDER THE FEDERAL
AVIATION REGULATIONS.

 

A COPY OF THIS AGREEMENT SHALL BE CARRIED ON THE AIRCRAFT AT ALL TIMES AND SHALL
BE MADE AVAILABLE FOR REVIEW UPON REQUEST BY THE ADMINISTRATOR OR HIS
REPRESENTATIVE.

 

AN EXPLANATION OF THE FACTORS BEARING ON OPERATIONAL CONTROL AND THE PERTINENT
FEDERAL AVIATION REGULATIONS CAN BE OBTAINED FROM THE NEAREST FAA FLIGHT
STANDARDS DISTRICT OFFICE.

 

THE COMPANY CERTIFIES THAT IT UNDERSTANDS ITS RESPONSIBILITIES FOR COMPLIANCE
WITH APPLICABLE FEDERAL AVIATION REGULATIONS.

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
on their behalf by their duly authorized representatives as of the date first
above written.

 

Company:

Executive:

 

 

GUITAR CENTER, INC.

MARTY ALBERTSON

 

 

By:

/s/ Leland P. Smith

 

/s/ MARTY ALBERTSON

 

 

 

Name: Leland P. Smith

 

 

 

Title: Executive Vice President

 

 

4

--------------------------------------------------------------------------------