**Exhibit10.46**

 

**SEPARATIONAGREEMENT**

 

This SEPARATION AGREEMENT (this “Agreement”) isentered into as of August 5, 2003, between Barry Soosman (the “Executive”),and Guitar Center, Inc. (the “Company”), effective eight (8) days afterExecutive’s signature, unless Executive revokes his acceptance as provided inSection 15(c), below (the “Effective Date”).

 

**Recitals:**

 

WHEREAS, Executive was the Executive Vice President,Chief Strategic Officer and General Counsel of the Company pursuant to thatcertain Second Amended and Restated Employment Agreement dated as of July 1,2001 (the “Employment Agreement”);

 

WHEREAS, the Executive tendered his resignation, andthe Company accepted such resignation; and

 

WHEREAS, the Company and Executive now wish todocument the termination of Executive’s employment relationship and to resolveall matters between them.

 

**Agreement:**

 

THEREFORE, in exchange for the good and valuableconsideration set forth herein, the adequacy of which is specificallyacknowledged, the Executive and the Company hereby agree as follows:

 

# 1.                                       Resignation of Employment. Executive hereby confirms his resignation of his employment with theCompany and all positions that Executive held as an officer, director oremployee of the Company and all subsidiaries of the Company, and the Companyconfirms its acceptance of such resignations, effective June 16, 2003 (the“Officer Resignation Date”), except that Executive shall be deemed anon-officer employee of the Company for the period from June 17, 2003through August 8, 2003 for the sole purpose of providing transitionalassistance, such employment status to terminate for all purposes at the closeof business on August 8, 2003 (the “Final Resignation Date”).

#  

2.                                       Paymentof Accrued Wages and Expenses.  Onthe Final Resignation Date, the Company shall pay to Executive, in cash, (a)all accrued wages at the current base compensation rate of $300,000 per year)and (b) all accrued but unused vacation (which the parties agree is threeweeks, representing a gross wage payment of $17,308), in each case through theFinal Resignation Date.

 

3.                                       SeveranceBenefits.  As of the Effective Date,Executive shall be entitled to receivethe following severance benefits, which shall be the exclusive severancebenefit payable to Executive, unless Executive has breached the provisions ofthis Agreement, in which case the provisions of Section 18(b) shall apply:

 

(a)                                  ContinuedPayment of Base Salary.  The Companyshall pay to the Executive his currentbase salary of $300,000 through June 30, 2004. Such payments shall be

 

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made in accordance with the Company’s regular payroll practices.  For clarity, the parties acknowledge thatthe purpose of this Section 3(a), in combination with Section 2(a), is toprovide for the payment of Executive’s current base compensation of $300,000per year through June 30, 2004.

 

(b)                                 Bonus.  The Company shall pay to Executive a bonusequal to $225,000, such bonus to be paid on or before February 14, 2004.

 

(c)                                  Benefits.  In theevent that Executive elects to continue group health insurance coverage forhimself and his eligible dependents who were covered under the Company’smedical plans as of the Officer Resignation Date, at the same level in effectas of the Officer Resignation Date, pursuant to the Consolidated Omnibus BudgetReconciliation Act of 1985, as amended (“COBRA”), the Company shall pay for theamount of his premium payments for such coverage through June 30, 2004. In the event Executive desires to discontinue this coverage, he shallnotify the Chief Administrative Officer of the Company in writing who shallpromptly terminate the coverage benefit.

 

(d)                                 CompanyCar.  The Company shall pay themonthly lease fees for the Mercedes-Benz S430 presently provided by the Companyfor Executive’s use (the “Company Car”) and continue to include suchCompany Car on the Company’s insurance policy through June 30, 2004 (the “AutomobileUse Period”).  In addition, duringsuch period, the Company shall reimburse Executive for reasonable and normalmaintenance and care expenses and gasoline costs (up to two (2) tanks ofgasoline per week) for such Company Car with respect to the Automobile UsePeriod.  Such amounts shall be paid bythe Company on a monthly basis within 30 days following receipt of an invoicefrom Executive setting forth in reasonable detail such expenses.  The Company shall be responsible for thecosts incurred in the disposition of the Company Car at the end of theAutomobile Use Period, except that Executive shall return the car to adesignated location and shall be responsible for any charges for (i) excessmileage beyond 66,000 miles or (ii) excess wear and tear.

 

# 4.                                       Stock Options. As of August 4, 2003, Executive has been granted and not exercised optionsto purchase shares of the Company’s common stock pursuant to the Stock OptionAgreements as identified on Exhibit A attached hereto (the “OptionAgreements”).  In accordance withthe terms of such options, on the Effective Date, all of the unvested stockoptions held by Executive pursuant to the Option Agreements shall immediatelyvest and become exercisable.  Inaccordance with the Option Agreements and the related plan, such options willremain exercisable until the close of business 90 days after the FinalResignation Date.

#  

5.                                       ConsultingFollowing Resignation Date.  For theperiod commencing on the Resignation Date and ending on the first to occur of(a) February 28, 2004 and (b) the date that Executive obtains substituteemployment which is incompatible with providing consulting services hereunder(the “Consulting Period”), should Executive make himself available tothe Company at the Company’s request, as a consultant, the Company shall paythe Executive $225 per hour for any consulting services provided, except thatExecutive will in any event answer phone inquiries of short duration at nocharge to the Company through June 30, 2004. Availability (other than for phone inquiries of short duration) will beon a good faith basis, with

 

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no obligation by either party. Consulting fees due shall be paid by the Company on a monthly basisfollowing receipt of an invoice from Executive setting forth in reasonabledetail the time spent providing consulting services to the Company.  The Company agrees to reimburse Executivefor his reasonable expenses incurred in connection with the performance of suchconsulting services within thirty (30) days after receipt of an invoice fromExecutive setting forth in reasonable detail such expenses.  Any travel required in connection withconsulting duties shall be approved by the Company in advance and reimbursed asfollows:  (a) first class air fare and(b) hotel, living and entertainment expenses consistent with past practicesduring Executive’s tenure as an employee of the Company.

 

6.                                       OtherMatters.

 

(a)                                  SecondHand Dealer Licenses.  The Companyand its subsidiaries shall cause Executive to be removed from all second handdealer licenses by June 30, 2004.

 

(b)                                 401-K.  The Company confirms that the current policyof the Company is that, in the case of balances of greater than $5,000, aterminated employee may leave his or her profit sharing and deferral accountbalances in the Company’s plan indefinitely, or roll over such balances into asubstitute qualified plan.

 

(c)                                  ESPP.  Withholdings since the closing of the mostrecent option period (June 30, 2003) will be refunded to Executive promptlyafter the Final Resignation Date.

 

7.                                       Publicity.  Except to the extent required to comply withapplicable legal requirements (including the terms of the listing of theCompany’s stock), neither party shall issue any press release or make anypublic statement regarding the matters contemplated hereby without the priorapproval of the other parties.  Theparties acknowledge that this Agreement must be filed with the Securities andExchange Commission as an exhibit to the Form 10-Q for the current quarterending September 30, 2003, and consent to such filing.

 

8.                                       References.  All requests for references or comment onExecutive’s employment history with the Company (other than dates ofemployment) will be referred to Larry Thomas, who, based on the facts known tohim as of the date of this Agreement, will provide a favorable recommendationand will not revise this recommendation unless (a) material objective newinformation comes to his attention after the date hereof regarding theExecutive’s willful misconduct or gross negligence in the conduct of his dutieswhile an employee of the Company and (b) such information has been discussedwith Executive.  In the event Mr. Thomasis no longer in the Company’s employ, Executive and an appropriate seniorexecutive of the Company will meet and agree on an appropriate subsequentrepresentative of the Company for reference purposes.

 

9.                                       Applicationof Insider Trading Policies Applicable to Executive.  On the third business day following theCompany’s release of earnings for the second quarter of 2003 (August 4, 2003),Executive will be released from the Company’s insider trading policy providedhe does not obtain material non-public information subsequent to such date dueto his continued consulting services to the Company.  Executive acknowledges that he is aware of the prohibitions oninsider trading contained in the federal securities laws.

 

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10.                                 Section16.  Executive acknowledges thatfollowing the Officer Resignation Date he will continue to be subject tocertain provisions of Section 16 of the Securities Exchange Act of 1934, asamended, and he agrees to comply with such provisions.  Absent a legal determination to thecontrary, the Company’s records will show that the Officer Resignation Date wasthe last date that Executive was an “Executive Officer” of the Company (as suchterm is used under the Securities Exchange Act of 1934, as amended).

 

11.                                 IndemnificationAgreement.  The Company herebyreaffirms its obligations under that certain Indemnification Agreement betweenthe Company and Executive substantially in the form filed as Exhibit 10.11 tothe Company’s Annual Report on Form 10-K for the year ended December 31, 1997(the “Indemnification Agreement”). The Company’s obligations under the Indemnification Agreement shallsurvive Executive’s termination of employment.

 

12.                                 Reserved.

 

# 13.                                 Litigation Cooperation. Executive agrees to give reasonable cooperation, at the Company’srequest, in any pending or future litigation or arbitration brought against theCompany and in any investigation the Company may conduct.  Executive shall be reimbursed for all timespent at a rate of $225 per hour.  Suchamounts shall be paid by the Company on a monthly basis following receipt of aninvoice from Executive setting forth in reasonable detail the time spent providingsuch cooperation to the Company.  TheCompany agrees to reimburse Executive for his reasonable expenses incurred inconnection with such cooperation within thirty (30) days after receipt of aninvoice from Executive setting forth in reasonable detail such expenses.  Air travel, hotel costs and entertainmentexpenses will be reimbursed consistent with the Company’s past practices withrespect to Executive, as determined by the Company’s Co-Chief Executive Officers,in their reasonable discretion.  Notwithstandingthe foregoing, the Company shall have no obligation by virtue of this Section13 to pay Executive for time spent and expenses incurred by Executive in anypending or future litigation or arbitration where Executive is a co-defendantor party to the arbitration or litigation.

#  

# 14.                                 Confidential Information; Return ofCompany Property.

#  

(a)                                  Executiveacknowledges and reaffirms his obligations to the Company pursuant to Sections5, 6 and 7 of the Employment Agreement. Without limiting the provisions of Sections 5, 6 and 7 of the EmploymentAgreement, Executive understands and agrees that (i) in the course of hisemployment with the Company, he has been acquiring confidential information andtrade secrets concerning their operations, their future plans and their methodsof doing business, (ii) it would be extremely damaging to the Company if hedisclosed such information to a competitor or made it available to any otherperson or company, (iii) such information was divulged to him in confidence, and(iv) he will keep such information secret and confidential unless disclosure isrequired by court order or otherwise by compulsion of law.  In view of the nature of his employment andthe information and trade secrets which he has been receiving during the courseof his employment, Executive also agrees that the Company would be irreparablyharmed by any violation, or threatened violation of the agreements in thisSection 14 or Sections 5, 6 and 7 of the Employment Agreement and that,therefore, the Company shall be entitled to an injunction prohibiting Executivefrom any violation or threatened violation of such agreements or sectionswithout the requirement that any bond be posted.  Notwithstanding

 

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the foregoing, it is agreed that Executive’s obligations under Section7 of the Employment Agreement shall survive only until the first to occur of(a) June 30, 2004 or (b) a material breach of this Agreement by the Companywhich remains uncured after written notice and thirty (30) days to cure (suchperiod, the “Section 7 Continuation Period”).

##  

## (b)                                 Executive shall deliver to the Company onthe Final Resignation Date all originals and copies of correspondence,drawings, manuals, letters, notes, notebooks, reports, programs, plans,proposals, financial documents, or any other documents concerning the Company’scustomers, business plans, marketing strategies, products, processes orbusiness of any kind and/or which contain proprietary information or trade secretswhich are in the possession or control of Executive or his agents orrepresentatives.

##  

## (c)                                  Subject to Section 3(d), Executive shallreturn to the Company on the Final Resignation Date all equipment of theCompany in his possession or control (including without limitation any computerequipment) and relinquish access to the Company’s facilities and computersystems, except that (i) Executive may retain his cellular phone provided thatthe service obligation will promptly be transferred to his responsibility and(ii) executive may retain his laptop personal computer; provided, however,that upon request Executive shall submit such computer to the Company’s ITdepartment to have any Company confidential information and any systems accesssoftware removed.  Executive may retainaccess to the voicemail on his telephone station in the main office throughSeptember 30, 2003 provided that Executive shall check the voicemail regularlyand will immediately forward any messages relating to the Company’s business tothe appropriate official of the Company for handling.

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(d)                                 TheCompany will facilitate and cooperate with the removal by Executive of hispersonal property from the Company’s premises.

 

15.                                 GeneralRelease of Claims by Executive.

 

(a)                                  Asof the Effective Date, Executive, on behalf of himself and his executors,heirs, administrators, representatives and assigns, hereby releases and foreverdischarges the Company and all predecessors, successors and their respectiveparent corporations, affiliates, related, and/or subsidiary entities, and allof their past and present investors, directors, shareholders, officers, generalor limited partners, employees, attorneys, agents and representatives, andemployee benefit plans in which Executive is or has been a participant byvirtue of his employment with the Company, from any and all claims, debts,demands, accounts, judgments, rights, causes of action, equitable relief,damages, costs, charges, complaints, obligations, promises, agreements,controversies, suits, expenses, compensation, responsibility and liability ofevery kind and character whatsoever (including attorneys’ fees and costs),whether in law or equity, known or unknown, asserted or unasserted, suspectedor unsuspected (collectively, “Claims”), which Executive has or may havehad against such entities based on any events or circumstances arising oroccurring on or prior to the date hereof or on or prior to the FinalResignation Date, arising directly or indirectly out of, relating to, or in anyother way involving in any manner whatsoever Executive’s employment by theCompany or the separation thereof, and any and all claims arising underfederal, state, or local laws relating to employment, including withoutlimitation claims of wrongful discharge, breach of express or implied contract,fraud, misrepresentation, defamation, or liability in tort, claims of any kindthat

 

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may be brought in any court or administrative agency, any claimsarising under Title VII of the Civil Rights Act of 1964, the Age Discriminationin Employment Act, the Americans with Disabilities Act, the Older WorkersBenefit Protection Act, the Fair Labor Standards Act, the Employee RetirementIncome Security Act, the Family and Medical Leave Act, and similar state orlocal statutes, ordinances, and regulations; provided, however, that thisrelease shall not apply to any right of indemnification provided to Executiveby statute, charter or the Indemnification Agreement.

 

(b)                                 EXECUTIVEACKNOWLEDGES THAT HE HAS BEEN ADVISED OF AND IS FAMILIAR WITH THE PROVISIONS OFCALIFORNIA CIVIL CODE SECTION 1542, WHICH PROVIDES AS FOLLOWS:

 

“A GENERAL RELEASE DOESNOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST INHIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVEMATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.”

 

BEING AWARE OF SAID CODE SECTION, EXECUTIVE HEREBY EXPRESSLY WAIVES ANYRIGHTS HE MAY HAVE THEREUNDER, AS WELL AS UNDER ANY OTHER STATUTES OR COMMONLAW PRINCIPLES OF SIMILAR EFFECT.

 

(c)                                  Inaccordance with the Older Workers Benefit Protection Act of 1990, Executiveacknowledges that he is aware of the following:

 

(i)                                     Hehas a right to consult with an attorney before accepting this offer;

 

(ii)                                  He has twenty-one (21) days from the datethis offer is received to consider this offer; and

 

(iii)                               Hehas seven (7) days after accepting this offer to revoke his acceptance, and hisacceptance will not be effective until that revocation period has expired.

 

16.                                 Releaseof Claims by the Company.

 

(a)                                  Asof the Effective Date, the Company hereby releases and forever dischargesExecutive and his executors, heirs, representatives and assigns, from any andall Claims which the Company has or may have against the Executive based on anyevents or circumstances arising or occurring on or prior to the date hereof oron or prior to the Final Resignation Date, arising directly or indirectly outof, relating to, or in any other way involving in any manner whatsoever Executive’semployment by the Company or the separation thereof, and any and all claimsarising under federal, state, or local laws relating to employment, includingwithout limitation claims of breach of express or implied contract, fraud,misrepresentation, defamation, or liability in tort, claims of any kind thatmay be brought in any court or administrative agency, and similar state orlocal statutes, ordinances, and regulations; provided, however, that thisSection 16 shall not apply or otherwise release any Claim which a

 

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corporation may not provide an officer with exculpation of, orindemnification from, under applicable Delaware law.

 

(b)                                 THECOMPANY ACKNOWLEDGES THAT IT HAS BEEN ADVISED OF AND IS FAMILIAR WITH THEPROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542, WHICH PROVIDES AS FOLLOWS:

 

“A GENERAL RELEASE DOESNOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST INHIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVEMATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.”

 

BEING AWARE OF SAID CODESECTION, THE COMPANY HEREBY EXPRESSLY WAIVES ANY RIGHTS IT MAY HAVE THEREUNDER,AS WELL AS UNDER ANY OTHER STATUTES OR COMMON LAW PRINCIPLES OF SIMILAR EFFECT.

 

# 17.                                 Withholding;Taxes.  Any amounts payable underthis Agreement shall be subject to any applicable state, federal or localincome and employment tax withholding obligations.

#  

18.                                 Severability;Enforcement.

 

### (a)                                  It is thedesire and intent of the parties hereto that the provisions of this Agreementbe enforced to the fullest extent permissible under the laws and publicpolicies applied in each jurisdiction in which enforcement is sought.  Accordingly, if any particular provision ofthis Agreement shall be adjudicated by a court of competent jurisdiction to beinvalid, prohibited or unenforceable for any reason, such provision, as to suchjurisdiction, shall be ineffective, without invalidating the remainingprovisions of this Agreement or affecting the validity or enforceability ofthis Agreement or affecting the validity or enforceability of such provision inany other jurisdiction.  Notwithstandingthe foregoing, if such provision could be more narrowly drawn so as not to beinvalid, prohibited or unenforceable in such jurisdiction, it shall, as to suchjurisdiction, be so narrowly drawn, without invalidating the remainingprovisions of this Agreement or affecting the validity or enforceability ofsuch provision in any other jurisdiction. Without limiting the generality of the preceding sentence, if at thetime of enforcement of this Agreement or Sections 5, 6 and 7 of the Employment Agreement(subject to the Section 7 Continuation Period provided for in this Agreement), a court holds that the restrictions statedtherein are unreasonable under circumstances then existing, the parties heretoagree that 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.

###  

### (b)                                 In addition to the foregoing, and not inany way in limitation thereof, or in limitation of any right or remedyotherwise available to the Company, if the Executive materially violates anyprovision of this Agreement or Section 5, 6 or 7 (subject to the Section 7Continuation Period) of the Employment Agreement, (and such violation, ifunintentional on the part of the Executive, continues for a period of thirty(30) days following receipt of written notice from the Company), any severancepayments then or thereafter due from the Company to

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the Executive may be terminated forthwith and upon such election by theCompany, the Company’s obligation to pay and the Executive’s right to receivesuch severance payments shall terminate and be of no further force or effect.  The Executive’s obligations under thisAgreement or Sections 5, 6 and 7 (subject to the Section 7 Continuation Period)of the Employment Agreement shall not be limited or affected by, and suchprovisions shall remain in full force and effect notwithstanding the terminationof any severance payments by the Company in accordance with this Section18(b).  The exercise of the right toterminate such payments shall not be deemed to be an election of remedies bythe Company and shall not in any manner modify, limit or preclude the Companyfrom exercising any other rights or seeking any other remedies available to itat law or in equity.  Notwithstandingthe foregoing, in the event the Company elects to exercise its terminationrights hereunder, it shall promptly (a) remit any withheld payments into aseparate account and notify Executive thereof in writing and (b) unlessotherwise agreed with Executive, commence a declaratory relief action seekingan appropriate court determination of the validity of such interpretation (withthe costs thereof allocated in accordance with Section 25 of this Agreement).

 

# 19.                                 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.

#  

# 20.                                 Notices.  All notices,demands or other communications regarding this Agreement shall be in writingand shall be sufficiently given if either personally delivered or sent byfacsimile or overnight courier, addressed as follows:

#  

If to the Company, to:

 

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

 

With copies to:

 

Latham &Watkins LLP

135 Commonwealth Drive

Menlo Park, California94025

Attention:  Anthony J. Richmond, Esq.

 

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Telephone:  (650) 328-4600

Telecopier:  (650) 463-2600

 

If to the Executive, to:

 

Barry Soosman852 Country Valley RoadWestlake Village, California 91362Telephone:  (805) 373-1937

 

With copies to:

 

Winston &Strawn

333 S. GrandAvenue, 38th Floor

Los Angeles, California90071

Attention:  Paul J. Coady, Esq.

Telephone:  (213) 615-1721

Telecopier:  (213) 615-1750

 

or such other address as the recipient party to whom notice is to begiven may have furnished to the other party in writing in accordance herewith.

 

# 21.                                 Understanding and Authority. The parties understand and agree that all terms of this Agreement arecontractual and are not a mere recital, and represent and warrant that they arecompetent to covenant and agree as herein provided.  The parties have carefully read this Agreement in its entirety;fully understand and agree to its terms and provisions; and intend and agreethat it is final and binding on all parties.

#  

22.                                 IntegrationClause.  This Agreement constitutesthe entire agreement and understanding of the Company and Executive withrespect to the terms set forth herein and supersedes all prior andcontemporaneous written or verbal agreements and understandings betweenExecutive and the Company relating to such subject matter, including, withoutlimitation, the Employment Agreement; provided, however, thatSections 5, 6 and 7 of the Employment Agreement shall survive Executive’stermination of employment and continue in full force and effect.  This Agreement may only be amended bywritten instrument signed by a duly authorized officer of the Company andExecutive which expressly states its intent to amend this Agreement.

 

## 23.                                 Jurisdiction,Etc.

##  

### (a)                                  Each of theparties hereto hereby irrevocably and unconditionally submits, for itself andits property, to the nonexclusive jurisdiction of any California state court orfederal court of the United States of America sitting in the State ofCalifornia, County of Los Angeles, and any appellate court from any thereof, inany action or proceeding arising out of or relating to this Agreement or forrecognition or enforcement of any judgment, and each of the parties heretohereby irrevocably and unconditionally agrees that all claims in respect of anysuch action or proceeding may be heard and determined in any such Californiastate court or, to the extent permitted by law, in such federal court.  Each of the parties hereto agrees that afinal judgment in

 

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any such action or proceeding shall be conclusive and may be enforcedin other jurisdictions by suit on the judgment or in any other manner providedby law.  Nothing in this Agreement shallaffect any right that any party may otherwise have to bring any action orproceeding relating to this Agreement in the courts of any jurisdiction.

###  

### (b)                                 Each of theparties hereto irrevocably and unconditionally waives, to the fullest extent itmay legally and effectively do so, any objection that it may now or hereafterhave to the laying of venue of any suit, action or proceeding arising out of orrelating to this Agreement in any California state or federal court in and foror otherwise located in Los Angeles County. 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.

###  

### (c)                                  The Company andthe Executive further agree that the mailing by certified or registered mail,return receipt requested, of any process required by any such court shallconstitute valid and lawful service of process against them, without thenecessity for service by any other means provided by law.

###  

24.                                 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.

 

25.                                 Attorneys Fees.  Inconnection with any action to enforce this Agreement, the prevailing partyshall be entitled, in addition to any other remedy available to such party, toreceive reimbursement for the reasonable attorneys fees and costs actuallyincurred by such party in connection therewith.

 

26.                                 Executionin Counterparts.  This Agreement maybe executed in counterparts with the same force and effectiveness as thoughexecuted in a single document.

 

# 27.                                 RIGHT TO ADVICE OF COUNSEL. EXECUTIVE ACKNOWLEDGES THAT HE HAS THE RIGHT, AND IS ENCOURAGED, TOCONSULT WITH HIS LAWYER; BY HIS SIGNATURE BELOW, EXECUTIVE ACKNOWLEDGES THATYOU HE HAS CONSULTED WITH HIS LAWYER CONCERNING THIS AGREEMENT.

 

 

(Signature pagefollows)

 

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IN WITNESS WHEREOF, and intending to be legally bound,the parties have executed the foregoing on the dates shown below.

 
| EXECUTIVE:           | COMPANY:                           |
|----------------------|------------------------------------|
|                 |                               |
|                 |                               |
|                 | GUITAR CENTER, INC.                |
|                 |                               |
|                 |                               |
| /s/ Barry Soosman    |                               | By: | /s/ Larry Thomas |   |
| Barry Soosman        | Name: Larry Thomas                 |
|                 | Title: Co-Chief  Executive Officer |
|                 |                               |
| Date: August 5, 2003 | Date:August 1, 2003                |
|                      |                                    |  |  |  |

 

S-1

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EXHIBIT A

 

STOCK OPTIONS

 

 

[Attached]

 

A-1

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| **Personnel  Option Status** | **Guitar  Center, Inc.**    |                  |
|------------------------------|-----------------------------|-----------------------|
|                         | ID: 95-4600862              | File:  OPTSTMT   |
|                         | 5795, Lindero Canyon Rd.    | Date:  7/31/2003 |
|                         | Westlake Village, CA  91362 | Time:  1:15:45PM |

 

**AS OF8/4/2003**

 

**BarrySoosman**

**852Country Valley Rd.**

**WestlakeVillage, CA USA 91362**

 
| **Number** |   | **Option  Date** |   | **Plan** |   | **Type** |   | **Granted** |   | **Price** |    | **Exercised** |   | **Vested** |   | **Cancelled** |   | **Unvested** |   | **Outstanding** |   | **Exercisable** |   |
|------------|--------|------------------|--------|----------|--------|----------|--------|-------------|--------|-----------|---------|---------------|--------|------------|--------|---------------|--------|--------------|--------|-----------------|--------|-----------------|--------|
|       |   |             |   |     |   |     |   |        |   |      |    |          |   |       |   |          |   |         |   |            |   |            |   |
| 00000096   |   | 6/3/1996         |   | 1996     |   | NQ       |   | 79,599      |   | $         | 10.8900 |          | 71,500 |       | 79,599 |          | 0      |         | 0      |            | 8,099  |            | 8,099  |   |
| 00000162   |   | 6/3/1996         |   | 1996     |   | NQ       |   | 79,599      |   | $         | 10.8900 |          | 78,500 |       | 79,599 |          | 0      |         | 0      |            | 1,099  |            | 1,099  |   |
| 00000377   |   | 4/5/2000         |   | 1997     |   | ISO      |   | 40,000      |   | $         | 10.5625 |          | 0      |       | 30,000 |          | 0      |         | 10,000 |            | 40,000 |            | 30,000 |   |
| 00001426   |   | 8/2/2001         |   | 1997     |   | ISO      |   | 6,527       |   | $         | 15.3050 |          | 0      |       | 0      |          | 0      |         | 6,527  |            | 6,527  |            | 0      |   |
| 00001427   |   | 8/2/2001         |   | 1997     |   | NQ       |   | 33,473      |   | $         | 15.3050 |          | 0      |       | 20,000 |          | 0      |         | 13,473 |            | 33,473 |            | 20,000 |   |
| 00001659   |   | 5/22/2002        |   | 1997     |   | ISO      |   | 2,500       |   | $         | 16.9750 |          | 0      |       | 0      |          | 0      |         | 2,500  |            | 2,500  |            | 0      |   |
| 00001660   |   | 5/22/2002        |   | 1997     |   | NQ       |   | 7,500       |   | $         | 16.9750 |          | 0      |       | 2,500  |          | 0      |         | 5,000  |            | 7,500  |            | 2,500  |   |
|       |   |             |   |     |   |     |   |        |   |      |    |          |   |       |   |          |   |         |   |            |   |            |   |
|       |   |             |   |     |   |     |   | 249,198     |   |      |    | 150,000       |   | 211,698    |   | 0             |   | 37,500       |   | 99,198          |   | 61,698          |   |

 

**InformationCurrently on File**

 
| **Tax**         |   | **Rate%** |   | **Option SDS Broker**   |   | **Registration** |   | **Alternate Address** |   |
|-----------------|--------|-----------|--------|-------------------------|--------|------------------|--------|-----------------------|--------|
|            |   |      |   |                    |   |             |   |                  |   |
| Federal         |   | 25.000    |   | Smith Barney            |   |             |   |                  |   |
| Social Security |   | 6.200     |   | Attn: John Arnold       |   |             |   |                  |   |
| Medicare        |   | 1.450     |   | 1901 Main St. 8th Floor |   |             |   |                  |   |
| CA-State        |   | 9.300     |   | Irvine, CA 92614        |   |             |   |                  |   |
|            |   |      |   | DTC 0418                |   |             |   |                  |   |

 

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