**Exhibit 10.45**

 

**THIRD AMENDED AND RESTATED EMPLOYMENTAGREEMENT**

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This THIRDAMENDED AND RESTATED EMPLOYMENT AGREEMENT is made effective as of July 1, 2003(the “Agreement”), between GUITAR CENTER, INC., a Delaware corporation(the “Company”), and Bruce Ross (the “Executive”).

 

This Agreementamends and restates that certain Second Amended and Restated EmploymentAgreement, dated as of July 1, 2001, between the Executive and the Company,which agreement amended and restated that certain Amended and Restated EmploymentAgreement, dated as of July 1, 1998, between the Executive and the Company,which agreement amended and restated that certain Employment Agreement, datedas of June 5, 1996, between the Executive and the Company’s predecessor, GuitarCenter Management, Inc., as amended by Amendment No. 1 dated October 15, 1996and Amendment No. 2 dated as of January 30, 1997 (as so amended, the “OriginalAgreement”).  The Original Agreementwas executed and delivered in connection with the closing of the Stock PurchaseAgreement (the “Purchase Agreement”) dated June 5, 1996 (the “CommencementDate”) by and among the Company, Chase Venture Capital Associates, L.P.,Wells Fargo Small Business Investment Company, Inc., Weston Presidio CapitalII, L.P., and the security holder of the Company.

 

Inconsideration of the mutual covenants contained herein and other good andvaluable consideration, the receipt and sufficiency of which are herebyacknowledged, the parties hereto agree as follows:

 

1.                                       EMPLOYMENT.  The Company shall employ the Executive, andthe Executive accepts employment with the Company, upon the terms andconditions set forth in this Agreement for the period beginning on theCommencement Date and ending as provided in Section 4 hereof (the “EmploymentPeriod”).

 

2.                                       POSITIONAND DUTIES.

 

(a)                                  Duringthe Employment Period, the Executive shall serve as the Executive VicePresident and Chief Financial Officer of the Company and shall have the normalduties, responsibilities and authority thereof, subject to the power of theboard of directors of the Company (the “Board”) and the powers delegatedto the Executive’s superiors (if any) by the Board.

 

## **(b)**                                 The Executive shall report to the Board or itsdesignee, and the Executive shall devote his best efforts and substantially allof his business time, attention and energies (except for permitted vacationperiods and reasonable periods of illness or other incapacity) to the businessand affairs of the Company and its Subsidiaries (as defined below).  The Executive shall perform his duties andresponsibilities to the best of his abilities in a diligent, trustworthy, andbusinesslike manner.  During theEmployment Period, the Executive shall not engage in any business activitywhich, in the reasonable judgment of the Board, materially conflicts with theduties of the Executive hereunder, whether or not such activity is pursued forgain, profit or other pecuniary advantage; provided, however,that nothing herein is

 

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intended to prohibit Executivefrom managing his own investment portfolio so long as Executive shall at alltimes adequately fulfill his obligations pursuant to this Section 2(b).

 

## **(c)**                                  For purposes of this Agreement, (i) “Subsidiaries”shall mean any corporation, partnership, limited liability company or similarbusiness organization of which the securities having a majority of the votingpower in electing directors or the comparable governing body or Person are, atthe time of determination, owned by the Company, directly or through one ormore Subsidiaries; and (ii) “Person” shall be construed broadly andshall include, without limitation, an individual, a partnership, a jointventure, a corporation, a trust, an unincorporated organization, a limitedliability company and a governmental entity or any department or agencythereof.

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# 3.                                       BASE SALARYAND BENEFITS.

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## **(a)**                                  During the Employment Period, the Executive’s basesalary shall be $290,000 per annum or such higher rate as the Board or theCompensation Committee of the Board (excluding the Executive if he should be amember of the Board at the time of such determination) may designate from timeto time (the “Base Salary”), which salary shall be payable in suchinstallments as is the policy of the Company with respect to its seniorexecutive employees and shall be subject to Federal, state and localwithholding and other payroll taxes.  Inaddition, during the Employment Period, the Executive shall be entitled toparticipate in all employee benefit programs for which all executives of theCompany are generally eligible and the Executive shall be eligible toparticipate in all insurance plans available generally to all executives of theCompany.

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## **(b)**                                 In addition to the Base Salary, for each fiscal yearending during the Employment Period, Executive shall also be eligible toreceive an annual bonus in a target amount of 50% of the Executive’sthen-current Base Salary.  The amount ofsuch bonus will be determined by the Board or its designee(s), in their solediscretion.

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## **(c)**                                  The Company shall reimburse the Executive for allreasonable expenses incurred by him in the course of performing his dutiesunder this Agreement which are consistent with the Company’s policies in effectfrom time to time with respect to travel, entertainment and other businessexpenses, subject to the Company’s requirements with respect to reporting anddocumenting such expenses.

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## **(d)**                                 During the Employment Period, the Executive shall beentitled to paid vacation consistent with the Company’s policy applicable toits executives at the Executive Vice President level generally.  Vacation time not used in a given year willnot accrue and may not be carried forward to any future period.

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# 4.                                       TERM;SEVERANCE.

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## **(a)**                                  Unless renewed by mutualagreement of the Company and the Executive, the Employment Period shall end onJune 30, 2006; provided, however, that (i) the Employment Periodshall terminate prior to such date upon the Executive’s resignation pursuant tothe provisions of Section 4(h) or 4(i) hereof, or the death or Disability (ashereinafter defined)

 

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of Executive; and (ii) theEmployment Period may be terminated by the Company at any time prior to suchdate for Cause (as defined below) or without Cause.  For purposes of this Agreement the term “Disability” meansany long-term disability or incapacity which (i) renders the Executive unableto substantially perform all of his duties hereunder for 180 days during any18-month period or (ii) would reasonably be expected to render the Executiveunable to substantially perform all of his duties for 180 days during any18-month period, in each case as determined by the Board (excluding theExecutive if he should be a member of the Board at the time of suchdetermination) in its good faith judgment after seeking and reviewing advicefrom a qualified physician.

 

## **(b)**                                 If the Employment Period is terminated by the Companywithout Cause or by the Executive with Reasonable Justification prior to July1, 2005, the Executive shall be entitled to receive as severance, for theperiod beginning on the date of such termination and ending on June 30, 2006,(i) the Base Salary for such severance period, (ii) an annual cash bonus equalto the last annual bonus (excluding any portion thereof that the Co-ChiefExecutive Officers of the Company considered extraordinary and non-recurring)he received prior to termination (such bonus to be pro-rated for any partialyear), and (iii) continuation of his medical benefits (or, if such continuationis not permitted by the Company’s insurers beyond the Employment Period, anannual cash payment equal to the average premium the company pays to obtainhealth insurance for an employee), unless the Executive has breached theprovisions of this Agreement, in which case the provisions of Section 12(a)(iii)shall apply.  If the Employment Periodis terminated by the Company without Cause or by the Executive with ReasonableJustification on or after July 1, 2005, the Executive shall be entitled toreceive as severance, for a period of one year, (i) the Base Salary for suchseverance period, (ii) an annual cash bonus equal to the last annual bonus(excluding any portion thereof that the Co-Chief Executive Officers of theCompany considered extraordinary and non-recurring) he received prior totermination (such bonus to be pro-rated for any partial year), and (iii)continuation of his medical benefits (or, if such continuation is not permittedby the Company’s insurers beyond the Employment Period, an annual cash paymentequal to the average premium the company pays to obtain health insurance for anemployee), unless the Executive has breached the provisions of this Agreement,in which case the provisions of Section 12(a)(iii) shall apply.  For purposes of this Section 4(b), benefitswill not include future participation in any discretionary bonus or equityincentive pool, other than continuation of annual cash bonuses as contemplatedin the previous sentence.  Suchseverance payments will be made periodically in the same amounts and at thesame intervals as the Base Salary, annual bonus and benefits (as applicable)were paid immediately prior to termination of employment.  Executive shall have no duty to mitigate anydamages which Executive may suffer as a result of such termination nor shallthe severance benefits payable be reduced by any sums actually earned byExecutive as a result of any other employment obtained by Executive during theoriginal Employment Period.

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## **(c)**                                  If the Employment Period is terminated for any reason(including pursuant to Section 4(i)) other than by the Company without Cause orby the Executive with Reasonable Justification, the Executive shall be entitledto receive only the Base Salary and then only to the extent such amount hasaccrued through the date of termination.

 

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## **(d)**                                 Except as otherwise expressly required by law (e.g.,COBRA) or as specifically provided herein, all of the Executive’s rights tosalary, severance, benefits, bonuses and other amounts hereunder (if any)accruing after the termination of the Employment Period shall cease upon suchtermination.  In the event that theEmployment Period is terminated by the Company without Cause or by theExecutive with Reasonable Justification, the Executive’s sole remedy shall be toreceive the severance payments and benefits described in Section 4(b) hereof.

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## **(e)**                                  If (i) the Employment Periodis terminated as a result of the Executive’s death or Disability, (ii) there isa Sale of the Company, or (iii) theEmployment Period is terminated by the Company without Cause or by theExecutive with Reasonable Justification,all stock options held by the Executive shall immediately vest pursuant to theterms of the agreements by which such options were issued.

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## **(f)**                                    As a condition to the Executive’s receipt of anybenefits described in Section 4(b) or (e) hereof, the Executive shall berequired to execute a Release (the “Release”) of all claims arising outof his employment or the termination thereof, in a form reasonably acceptableto the Company.  Such Release shallspecifically relate to all of the Executive’s rights and claims in existence atthe time of such execution but shall exclude any continuing obligations theCompany may have to the Executive following the date of termination under thisAgreement or any other agreement providing for obligations to survive theExecutive’s termination of employment.

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## **(g)**                                 For purposes of this Agreement, “Cause” meansany termination by the Company of Executive’s employment within 90 days afterthe Board becomes aware of the occurrence of any of the following:

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### **(i)**                                     the ongoing and repeatedfailure by the executive to perform such lawful duties consistent withexecutive’s position as are reasonably requested by the board in good faith asdocumented in writing to the executive (other than as a result of executive’sillness or disability);

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### **(ii)**                                  the executive’s ongoing andrepeated material neglect of his duties on a general basis (other than as aresult of executive’s illness or disability), notwithstanding written notice ofobjection from the board and the expiration of a 30 day cure period;

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### **(iii)**                               the commission by theexecutive of any act of fraud, theft or criminal dishonesty with respect to thecompany or any of its subsidiaries or affiliates, or the conviction of theexecutive of any felony;

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### **(iv)**                              the commission of any actinvolving moral turpitude which (a) brings the company or any of its affiliatesinto public disrepute or disgrace, or (b) causes material injury to thecustomer relations, operations or the business prospects of the company or anyof its affiliates, or

 

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### **(v)**                                 material breach by theexecutive of this agreement, including, without limitation, any breach by theexecutive of the provisions of sections 5, 6 or 7 hereof, not cured within 30days after written notice to executive from the board;

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provided,however, that in the event of an intentional breach of the provisions ofsections 5, 6 or 7 hereof, the executive shall not have the opportunity tocure.

 

## **(h)**                                 For purposes of this Agreement, “ReasonableJustification” means any voluntary termination by the Executive of hisemployment with the Company within 90 days after the occurrence of any of thefollowing events without Executive’s written consent:

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### **(i)**                                     the Executive is directed to perform an act that theExecutive reasonably believes to be in contravention of law, or which theExecutive reasonably believes would subject the Company and himself to materialliability, despite his express written objection addressed to the Board withrespect to such action;

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### **(ii)**                                  there has been any change in the Executive’s title orany material reduction in the nature or scope of his responsibilities, or theExecutive is assigned duties that are inconsistent with his position;

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### **(iii)**                               there is any material reduction in the Executive’scompensation or a material reduction in Executive’s other benefits (other thanreductions in benefits that generally affect all employees entitled to suchbenefits ratably);

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### **(iv)**                              the Executive is required by the Company, afterwritten objection by the Executive, to relocate his principal place ofemployment outside a radius of fifty miles from his place of employmentimmediately prior to such relocation; or

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### **(v)**                                 there is a material failure by the Company to performany of its obligations to the Executive under this Agreement;

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provided,however, that with respect to unintentional Company breaches of Sections4(h)(ii), (iii) and (v), the Company shall be given written notice by Executiveof such breach and 30 days to cure such breach, if curable.

 

## **(i)**                                     If at any time during the Employment Period, there isa Sale of the Company (as defined below), Executive may resign within 90 daysof the occurrence of such event by notifying the Company in writing, whereuponthe Employment Period shall be terminated and Executive shall be entitledsolely to receive Base Salary accrued through the date of termination asspecified in Section 4(c), and no separate severance benefit.

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(j)                                     Forpurposes of this Agreement, “Sale of the Company” shall mean atransaction or series of integrated transactions involving an Independent ThirdParty or group of Independent Third Parties acting in concert pursuant to whichsuch party or parties acquire (i) capital stock of the Company possessing thevoting power to elect a majority of the entire board of directors of theCompany (whether by merger, consolidation or issuance of the Company’s capitalstock), or (ii) all or substantially all of the Company’s assets determined ona

 

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consolidated basis, or (iii)60% or more of all of the Company’s common stock, on a fully-diluted basis.

 

(k)                                  Forpurposes of this Agreement, “Independent Third Party” shall mean anyPerson who, immediately prior to a contemplated transaction, individually andwith its Group or Family Group, as the case may be, does not own in excess of10% of the Company’s common stock, on a fully-diluted basis.

 

(l)                                     Forpurposes of this Agreement, “Group” shall mean:

 

(i)                                     inthe case of a partnership, (A) such partnership and any of its limited orgeneral partners, (B) any corporation or other business organization to whichsuch partnership shall sell all or substantially all of its assets or withwhich it shall be merged, (C) any Affiliate of such partnership, and (D) withrespect to any individual identified in clauses (A) through (C) above, membersof his Family Group; and

 

(ii)                                  inthe case of a corporation, (A) such corporation, (B) any corporation or other businessorganization to which such corporation shall sell or transfer all orsubstantially all of its assets or with which it shall be merged, (C) anyAffiliate of such corporation, and (D) with respect to any individualidentified in clauses (A) through (C) above, members of his Family Group.

 

(m)                               Forpurposes of this Agreement, “Family Group” shall mean an individual’sspouse, ancestors and/or descendants (whether natural or adopted) and theestate of and any trust solely for the benefit of such individual and/or theindividual’s spouse, ancestors and/or descendants.

 

(n)                                 Forpurposes of this Agreement, “Affiliate” shall mean with respect to anyPerson, (i) a director, officer or partner of such Person or any Personidentified in clause (iii) below, (ii) a spouse, parent, sibling or descendantof such Person (or a spouse, parent, sibling or descendant of any director orexecutive officer of such Person), and (iii) any other Person that, directly orindirectly, through one or more intermediaries, controls, or is controlled by,or is under common control with, such Person. The term “control” includes, without limitation, the possession,directly or indirectly, of the power to direct or cause the direction of themanagement or policies of a Person, whether through the ownership of votingsecurities, by contract or otherwise.

 

# 5.                                       NONDISCLOSUREAND NONUSE OF CONFIDENTIAL INFORMATION.

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## **(a)**                                  The Executive will not disclose to a third party oruse for his personal benefit or for the benefit of a third party, at any time,either during the Employment Period or thereafter, any Confidential Information(as defined below) of which the Executive is or becomes aware, whether or notsuch information is developed by him, except to the extent that such disclosureor use is directly related to and required by the Executive’s performance ingood faith of duties assigned to the Executive by the Company or as required bylaw or as necessary for Executive to enforce his rights hereunder.  The Executive will take all reasonable and

 

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appropriate steps to safeguardConfidential Information and to protect it against disclosure, misuse,espionage, loss and theft.  TheExecutive shall deliver to the Company at the termination of the EmploymentPeriod or at any time the Company may request all memoranda, notes, plans,records, reports, computer tapes and software and other documents and data (andcopies thereof) relating to the Confidential Information, Work Product (asdefined below) or the business of the Company or any of its Subsidiaries whichthe Executive may then possess or have under his control.

 

## **(b)**                                 As used in this Agreement, the term “ConfidentialInformation” means information that is not generally known to the publicand that is used, developed or obtained by the Company in connection with itsbusiness, including but not limited to (i) information, observations and dataobtained by the Executive while employed by the Company (including thoseobtained prior to the date of this Agreement) concerning the business oraffairs of the Company, (ii) products or services, (iii) fees, costs andpricing structures, (iv) designs, (v) analyses, (vi) drawings, photographs andreports, (vii) computer software, including operating systems, applications andprogram listings, (viii) flow charts, manuals and documentation, (ix) databases, (x) accounting and business methods, (xi) inventions, devices, newdevelopments, methods and processes, whether patentable or unpatentable andwhether or not reduced to practice, (xii) customers and clients and customer orclient lists, (xiii) other copyrightable works, (xiv) all production methods,processes, technology and trade secrets, and (xv) all similar and relatedinformation in whatever form. Confidential Information will not include any information that has beenpublished in a form generally available to the public prior to the date theExecutive proposes to disclose or use such information.  Confidential Information will not be deemedto have been published merely because individual portions of the informationhave been separately published, but only if all material features comprisingsuch information have been published in combination.

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# 6.                                       INVENTIONSAND PATENTS.

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## **(a)**                                  The Executive agrees that all inventions, innovations,improvements, technical information, systems, software developments, methods,designs, analyses, drawings, reports, service marks, trademarks, tradenames,logos and all similar or related information (whether patentable orunpatentable) which relates to the Company’s or any of its Subsidiaries’ actualor anticipated business, research and development or existing or futureproducts or services and which are conceived, developed or made by theExecutive (whether or not during usual business hours and whether or not aloneor in conjunction with any other person) while employed by the Company(including those conceived, developed or made prior to the date of thisAgreement) together with all patent applications, letters patent, trademark, tradenameand service mark applications or registrations, copyrights and reissues thereofthat may be granted for or upon any of the foregoing (collectively referred toherein as, the “Work Product”) belong to the Company or suchSubsidiary.  The Executive will promptlydisclose such Work Product as may be susceptible of such manner ofcommunication to the Board and perform all actions reasonably requested by theBoard (whether during or after the Employment Period) to establish and confirmsuch ownership (including, without limitation, the execution and delivery ofassignments, consents, powers of attorney and other instruments) and to providereasonable assistance to the Company or any of its Subsidiaries in connectionwith the 

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prosecution of any applicationsfor patents, trademarks, trade names, service marks or reissues thereof or inthe prosecution or defense of interferences relating to any Work Product.

 

## **(b)**                                 CALIFORNIA EMPLOYEE PATENT ACT NOTIFICATION.  In accordance with Section 2872 of theCalifornia Employee Patent Act, West’s Cal. Lab. Code Section 2870 et. seq.,Executive is hereby advised that Section 6(a) does not apply to any invention,new development or method (and all copies and tangible embodiments thereof)made solely by Executive for which no equipment, facility, material,Confidential Information or intellectual property of the Company or any of itsSubsidiaries was used and which was developed entirely on Employee’s own time; provided,however, that Section 6(a) shall apply if the invention, new developmentor method (i) relates to the Company’s or any of its Subsidiaries’ actual ordemonstrably anticipated businesses or research and development, or (ii)results from any work performed by Executive for the Company or any of itsSubsidiaries.

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# 7.                                       NON-COMPETEAND NON-SOLICITATION.

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## **(a)**                                  The Executive acknowledges and agrees with the Companythat during the course of the Executive’s involvement and/or employment withthe Company, such Executive has had and will continue to have the opportunityto develop relationships with existing employees, vendors, suppliers, customersand other business associates of the Company which relationships constitutegoodwill of the Company, and the Company would be irreparably damaged if theExecutive were to take actions that would damage or misappropriate suchgoodwill.  Accordingly, the Executiveagrees as follows:

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### **(i)**                                     The Executive acknowledges that the Company currentlyconducts its business throughout the United States, including withoutlimitation the areas listed on Exhibit A attached hereto (the “Territory”).  Accordingly, during the period commencing onthe date hereof and ending on the later of (x) the termination of theEmployment Period or (y) if the Executive was terminated without Cause orresigns with Reasonable Justification, for so long as severance payments arebeing made pursuant to Section 4(b) (such period is referred to herein as the “Non-CompetePeriod”), the Executive shall not, directly or indirectly, enter into,engage in, assist, give or lend funds to or otherwise finance, be employed byor consult with, or have a financial or other interest in, any business whichengages in selling, at the retail level, musical instruments, pro-audio equipmentor related accessories within the Territory (the “Line of Business”),whether for or by himself or as a representative for any other Person.

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### **(ii)**                                  Notwithstanding the foregoing, the aggregate ownershipby the Executive of no more than two percent (on a fully-diluted basis) of theoutstanding equity securities of any entity, which securities are traded on anational or foreign securities exchange, quoted on the Nasdaq Stock Market orother automated quotation system, and which entity competes with the Company(or any part thereof) within the Territory, shall not (by itself) be deemed tobe giving or lending funds to, otherwise financing or having a financialinterest in a competitor.  In the eventthat any entity in which the Executive has any financial or other interestdirectly or indirectly enters into the Line of Business during the Non-CompetePeriod, the Executive shall use his reasonable best efforts to divest all ofhis interest (other than any amount permitted to be

 

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held pursuantto the first sentence of this Section 7(a)(ii)) in such entity within 30 daysafter learning that such entity has entered the Line of Business.

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### **(iii)**                               The Executive covenants and agrees that during theNon-Compete Period, the Executive will not, directly or indirectly, either forhimself or for any other person or entity, solicit any employee of the Company(other than such Executive’s personal assistant or secretary) or any Subsidiaryto terminate his or her employment with the Company or any Subsidiary or employany such individual during his or her employment with the Company or anySubsidiary and for a period of six months after such individual terminates hisor her employment with the Company or any Subsidiary.

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## **(b)**                                 The Executive understands that the foregoingrestrictions may limit his ability to earn a livelihood in a business similarto the business of the Company, but he nevertheless believes that he hasreceived and will receive sufficient consideration and other benefits as anemployee of the Company and as otherwise provided hereunder to clearly justifysuch restrictions which, in any event (given his education, skills andability), the Executive does not believe would prevent him from otherwiseearning a living.

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## **(c)**                                  The covenants contained in Section 7(a) and 7(b) arefor the sole benefit of the Company and may be reduced (but not increased) inscope, or curtailed as to Territory, time period, or both, without resulting ina modification of any other provision of this Agreement, as the Company maydetermine in its sole discretion.

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## **(d)**                                 The provisions of this Section 7 shall terminate inthe event the Company fails to make any payments required by Section 4(b) andsuch failure remains uncured for a period equal to at least 30 days afterwritten notice of such event from Executive.

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# 8.                                       INDEMNIFICATION.  The Company and the Executive have enteredinto an Indemnification Agreement substantially in the form filed as Exhibit10.3 to the Company’s Annual Report on Form 10-K for the year ended December31, 2002.

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# 9.                                       INSURANCE.  The Company may, for its own benefit,maintain “keyman” life and disability insurance policies covering theExecutive, provided the same does not prevent Executive from obtainingreasonable amounts of insurance for his family or estate planing needs.  The Executive will cooperate with theCompany and provide such information or other assistance as the Company mayreasonably request in connection with the Company obtaining and maintainingsuch policies.

 

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# 10.                                 EXECUTIVEREPRESENTATION.  The Executive herebyrepresents and warrants to the Company that (a) the execution, delivery andperformance of this Agreement by the Executive does not and will not conflictwith, breach, violate or cause a default under any agreement, contract orinstrument to which the Executive is a party or any judgment, order or decreeto which the Executive is subject, (b) the Executive is not a party to or boundby any employment agreement, consulting agreement, non-compete agreement,confidentiality agreement or similar agreement with any other person or entityand (c) upon the execution and delivery of this Agreement by the Company andthe Executive, this Agreement will be a valid and binding obligation of theExecutive, enforceable in accordance with its terms.

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# 11.                                 NOTICES.  All notices, requests, demands, claims, andother communications hereunder shall be in writing.  Any notice, request, demand, claim or other communication hereundershall be delivered personally to the recipient, delivered by United States PostOffice mail (postage prepaid and return receipt requested), telecopied to theintended recipient at the number set forth therefor below (with hard copy tofollow), or sent to the recipient by reputable express courier service (chargesprepaid) and addressed to the intended recipient as set forth below:

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If to theCompany, to:

 

Guitar Center, Inc.5795 Lindero Canyon RoadWestlake Village, California 91362Attention:  Chief Executive OfficerTelephone:  (818) 735-8800Telecopier:  (818) 735-8833

 

With copiesto:

 

Latham & Watkins LLP

135 Commonwealth Drive

Menlo Park, CA 94025

Attention:  Anthony J. Richmond,Esq.

Telephone: (650) 328-4600

Telecopier: (650) 463-2600

 

If to theExecutive, to:

 

Bruce L. Ross972 Via ImpressoThousand Oaks, California 91320

 

or such other address as therecipient party to whom notice is to be given may have furnished to the otherparty in writing in accordance herewith. Any such communication shall deemed to have been delivered and received(a) when delivered, if personally delivered, sent by telecopier or sent byovernight courier, and (b) on the fifth business day following the date posted,if sent by mail.

 

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# 12.                                 GENERALPROVISIONS.

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## **(a)**                                  SEVERABILITY/ENFORCEMENT.

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### **(i)**                                     It is the desire and intent of the parties hereto thatthe provisions of this Agreement be enforced to the fullest extent permissibleunder the laws and public policies applied in each jurisdiction in whichenforcement is sought.  Accordingly, ifany particular provision of this Agreement shall be adjudicated by a court ofcompetent jurisdiction to be invalid, prohibited or unenforceable for anyreason, such provision, as to such jurisdiction, shall be ineffective, withoutinvalidating the remaining provisions of this Agreement or affecting thevalidity or enforceability of this Agreement or affecting the validity orenforceability of such provision in any other jurisdiction.  Notwithstanding the foregoing, if suchprovision could be more narrowly drawn so as not to be invalid, prohibited orunenforceable in such jurisdiction, it shall, as to such jurisdiction, be sonarrowly drawn, without invalidating the remaining provisions of this Agreementor affecting the validity or enforceability of such provision in any otherjurisdiction.  Without limiting thegenerality of the preceding sentence, if at the time of enforcement of Sections5, 6 or 7 of this Agreement, a court holds that the restrictions stated thereinare unreasonable under circumstances then existing, the parties hereto agreethat the maximum period, scope or geographical area reasonable under suchcircumstances shall be substituted for the stated period, scope or area andthat the failure of all or any of such provisions to be enforceable shall notimpair or affect the obligations of the Company to pay compensation orseverance obligations under this Agreement.

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### **(ii)**                                  Because the Executive’s services are unique and becausethe Executive has access to Confidential Information and Work Product, theparties hereto agree that money damages would be an inadequate remedy for anybreach of this Agreement by the Executive. Therefore, in the event of a breach or threatened breach of thisAgreement, the Company or its successors or assigns may, in addition to otherrights and remedies existing in their favor, apply to any court of competentjurisdiction for specific performance and/or injunctive or other relief inorder to enforce, or prevent any violations of, the provisions hereof (withoutposting a bond or other security).

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### **(iii)**                               In addition to the foregoing, and not in any way inlimitation thereof, or in limitation of any right or remedy otherwise availableto the Company, if the Executive materially violates any provision of Sections5, 6 or 7 (and such violation, if unintentional on the part of the Executive,continues for a period of 30 days following receipt of written notice from theCompany), any severance payments then or thereafter due from the Company to theExecutive may be terminated forthwith and upon such election by the Company,the Company’s obligation to pay and the Executive’s right to receive suchseverance payments shall terminate and be of no further force or effect.  The Executive’s obligations under Sections5, 6 or 7 of this Agreement shall not be limited or affected by, and suchprovisions shall remain in full force and effect notwithstanding thetermination of any severance payments by the Company in accordance with thisSection 12(a)(iii).  The exercise of theright to terminate such payments shall not be deemed to be an election ofremedies by the Company and shall

 

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not in anymanner modify, limit or preclude the Company from exercising any other rightsor seeking any other remedies available to it at law or in equity.

 

## **(b)**                                 COMPLETE AGREEMENT. This Agreement, those documents expressly referred to herein and allother documents of even date herewith embody the complete agreement andunderstanding among the parties and supersede and preempt any priorunderstandings, agreements or representations by or among the parties, writtenor oral, which may have related to the subject matter hereof in any way; provided,however, that any rights of Executive hereunder are in addition to any rightsExecutive may have under benefit plans, agreements or arrangements to which heis a party or is a participant, and this Agreement shall not abrogate any suchrights.

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## **(c)**                                  SUCCESSORS AND ASSIGNS.  Except as otherwise provided herein, this Agreement shall bindand inure to the benefit of and be enforceable by the Executive and the Companyand their respective successors, assigns, heirs, representatives and estate; provided,however, that the rights and obligations of the Executive under thisAgreement shall not be assigned without the prior written consent of theCompany.

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## **(d)**                                 GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THEDOMESTIC LAWS OF THE STATE OF CALIFORNIA, WITHOUT GIVING EFFECT TO ANY CHOICEOF LAW OR CONFLICTING PROVISION OR RULE (WHETHER OF THE STATE OF CALIFORNIA, ORANY OTHER JURISDICTION), THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHERTHAN THE STATE OF CALIFORNIA TO BE APPLIED. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW OF THE STATE OFCALIFORNIA WILL CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT,EVEN IF UNDER SUCH JURISDICTION’S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS,THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY APPLY.

## ** **

## **(e)**                                  JURISDICTION, ETC.

## ** **

### **(i)**                                     Each of the parties hereto hereby irrevocably andunconditionally submits, for itself and its property, to the nonexclusivejurisdiction of any California state court or federal court of the UnitedStates of America sitting in the State of California, and any appellate courtfrom any thereof, in any action or proceeding arising out of or relating tothis Agreement or for recognition or enforcement of any judgment, and each ofthe parties hereto hereby irrevocably and unconditionally agrees that allclaims in respect of any such action or proceeding may be heard and determinedin any such California state court or, to the extent permitted by law, in suchfederal court.  Each of the partieshereto agrees that a final judgment in any such action or proceeding shall beconclusive and may be enforced in other jurisdictions by suit on the judgmentor in any other manner provided by law. Nothing in this Agreement shall affect any right that any party mayotherwise have to bring any action or proceeding relating to this Agreement inthe courts of any jurisdiction.

 

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### **(ii)**                                  Each of the parties hereto irrevocably andunconditionally waives, to the fullest extent it may legally and effectively doso, any objection that it may now or hereafter have to the laying of venue ofany suit, action or proceeding arising out of or relating to this Agreement inany California state or federal court. Each of the parties hereto irrevocably waives, to the fullest extentpermitted by law, the defense of an inconvenient forum to the maintenance ofsuch action or proceeding in any such court.

### ** **

### **(iii)**                               The Company and the Executive further agree that themailing by certified or registered mail, return receipt requested, of anyprocess required by any such court shall constitute valid and lawful service ofprocess against them, without the necessity for service by any other meansprovided by law.

### ** **

## **(f)**                                    AMENDMENT AND WAIVER. The provisions of this Agreement may be amended and waived only with theprior written consent of the Company and the Executive, and no course ofconduct or failure or delay in enforcing the provisions of this Agreement shallaffect the validity, binding effect or enforceability of this Agreement or anyprovision hereof.

## ** **

## **(g)**                                 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THEFULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, TRIAL BY JURY IN ANY SUIT,ACTION OR PROCEEDING ARISING HEREUNDER.

## ** **

## **(h)**                                 HEADINGS.  Thesection headings contained in this Agreement are for reference purposes onlyand shall not affect in any way the meaning or interpretation of thisAgreement.

## ** **

## **(i)**                                     COUNTERPARTS. This Agreement may be executed in two or more counterparts, each ofwhich shall be deemed an original and all of which together shall constituteone and the same instrument.

## ** **

## **(j)**                                     ROLE OF COUNSEL. Executive acknowledges that Latham & Watkins LLP acted as counselsolely to the Company in connection with the preparation of this Agreement.

## ** **

## **(k)**                                  EMPLOYEE ACKNOWLEDGMENT.  Employee represents andagrees that he fully understands his right to discuss all aspects of thisagreement with his private attorney, and that to the extent, if any, that hedesired, he availed himself of such right. Employee further represents that he has carefully read and fullyunderstands all of the provisions of this agreement, that he is competent toexecute this agreement, that his agreement to execute this agreement has notbeen obtained by any duress and that he freely and voluntarily enters into it,and that he has read this document in its entirety and fully understands themeaning, intent and consequences of this document.

## ** **

(Signature Page Follows)

 

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IN WITNESSWHEREOF, the parties hereto have executed this Third Amended and RestatedEmployment Agreement as of the date first written above.

 
|   | GUITAR CENTER, INC. |
|--------|---------------------|
|   |                |   |
|   | By:                 | /s/ Larry  Thomas |
|   | Name:               | Larry Thomas |
|   | Title:              | Chairman of  the Board |
|   |                |   |
|   | EXECUTIVE           |
|   |                |   |
|   |                | /s/ Bruce L.  Ross |
|   |                | Bruce L.  Ross |

 

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**EXHIBIT A**

 

TERRITORY

 

ARIZONA:

Phoenix metropolitan area

Tucson metropolitan area

 

ARKANSAS

Little Rock metropolitan area

 

CALIFORNIA:

Los Angeles County metropolitanareas

Orange County metropolitanareas

San Diego County metropolitanareas

San Francisco/Alameda/Contra Costa/Marin/SanMateoCounty metropolitan areas

San Bernardino/Riverside Countymetropolitan area

Kern County metropolitan area

Fresno County metropolitan area

Sacramento County metropolitanarea

Ventura County metropolitanarea

 

COLORADO:

Denver metropolitan area

 

CONNECTICUT:

Greenwich metropolitan area

Hartford metropolitan area

 

DISTRICT OFCOLUMBIA:

Washington, D.C. metropolitanarea

 

FLORIDA:

Miami metropolitan area

Ft. Lauderdale/Hollywood/PalmBeach metropolitan area

Orlando metropolitan area

Tampa metropolitan area

 

GEORGIA:

Atlanta metropolitan area

 

IDAHO:

Boise metropolitan area

 

ILLINOIS:

Chicago metropolitan area

 

A-1

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INDIANA:

Indianapolis metropolitan area

Gary metropolitan area

 

LOUISIANA:

New Orleans metropolitan area

 

MARYLAND:

Baltimore metropolitan area

Washington, D.C. metropolitanarea

 

MASSACHUSETTS:

Boston metropolitan area

 

MICHIGAN:

Detroit metropolitan area

Grand Rapids metropolitan area

 

MINNESOTA:

Minneapolis/St. Paulmetropolitan area

 

MISSOURI:

St. Louis metropolitan area

 

NEVADA:

Las Vegas metropolitan area

 

NEW JERSEY:

Camden metropolitan area

Newark metropolitan area

Atlanta City metropolitan area

 

NEW YORK:

Buffalo metropolitan area

New York City metropolitan areaand adjoining Tri-State area

Rochester metropolitan area

Albany metropolitan area

 

NORTH CAROLINA

Charlotte metropolitan area

Raleigh metropolitan area

 

OHIO:

Cincinnati metropolitan area

Cleveland metropolitan area

Columbus metropolitan area

 

A-2

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OKLAHOMA:

Oklahoma City metropolitan area

 

OREGON:

Portland metropolitan area

Medford metropolitan area

Eugene metropolitan area

 

PENNSYLVANIA:

Philadelphia metropolitan area

Pittsburgh metropolitan area

 

TENNESSEE:

Knoxville metropolitan area

Memphis metropolitan area

 

TEXAS:

Dallas/Ft. Worth metropolitanarea

Houston metropolitan area

Austin metropolitan area

Plano metropolitan area

Corpus Christi metropolitanarea

 

UTAH:

Salt Lake City metropolitanarea

 

VIRGINIA:

Virginia Beach metropolitanarea

Washington, D.C. metropolitanarea

 

WASHINGTON:

Seattle/Tacoma metropolitanarea

Spokane metropolitan area

 

A-3

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