**Exhibit 10.2**

 

**RESTRICTED STOCK AGREEMENT**

 

THIS RESTRICTED STOCK AGREEMENT**,**datedas of _____________, 200_ (the “Effective Date”), is made by and amongGuitar Center, Inc., a Delaware corporation (the “Company”), and_____________, a key Employee or Consultant or Director of the Company or asubsidiary of the Company (the “Holder”):

 

WHEREAS, the Company has established The 2004 GuitarCenter, Inc. Incentive Stock Award Plan (the “Plan”);

 

WHEREAS, the Company wishes to carry out the Plan (theterms of which are hereby incorporated by reference and made a part of thisAgreement);

 

WHEREAS,****the Planprovides for the issuance of shares of the Company’s Common Stock (as definedherein) subject to certain restrictions thereon; and

 

WHEREAS, the Compensation Committee of the Company’sBoard of Directors (the “Committee”), has determined that it would be tothe advantage and in the best interest of the Company and its stockholders toobtain and retain the services of Directors, key Employees and Consultantsconsidered essential to the long range success of the Company by offering theman opportunity to own stock in the Company.

 

NOW, THEREFORE, in consideration of the mutualcovenants herein contained and other good and valuable consideration, receiptof which is hereby acknowledged, the parties hereto do hereby agree as follows:

 

# **ARTICLE I.**DEFINITIONS

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## 1.1           General.  Wherever thefollowing terms are used in this Agreement they shall have the meaningsspecified below, unless the context clearly indicates otherwise.  Capitalized terms not defined herein shallhave the meanings assigned to such terms in the Plan.  The masculine pronoun shall include thefeminine and neuter, and the singular the plural, where the context so indicates.

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## 1.2           Consultant.  “Consultant”shall mean any consultant or adviser if:

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### (a)           the consultant or adviser rendersbona fide services to the Company or any Subsidiary;

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### (b)           the services rendered by theconsultant or adviser are not in connection with the offer or sale ofsecurities in a capital-raising transaction and do not directly or indirectlypromote or maintain a market for the Company’s securities; and

 

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### (c)           the consultant or adviser is anatural person who has contracted directly with the Company or any Subsidiaryto render such services.

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## 1.3           Disability.  “Disability”shall mean permanent and total disability (within the meaning of Section 22(e)(3)of the Code).

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# **ARTICLE II.**AWARD OF RESTRICTED STOCK

 

## 2.1           Award of Shares.  For good andvaluable consideration which the Committee has determined to exceed the parvalue of its Common Stock, on the date hereof, the Company issues to the Holder                       (                       )shares of its Common Stock, par value $0.01, (the “Shares”) upon theterms and conditions set forth in this Agreement.

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## 2.2           Consideration to the Company. As consideration for the issuance of the Shares by the Company, theHolder agrees to remain in the employ of or as a Consultant or Director to theCompany or any Subsidiary, with such duties and responsibilities as the Companyor any Subsidiary (as applicable) shall from time to time prescribe, for aperiod of at least one year after the Shares are issued.  Nothing in this Agreement or in the Planshall confer upon the Holder any right to continue in the employ of or in theservice of the Company or any Subsidiary or shall interfere with or restrict inany way the rights of the Company or any Subsidiary which are hereby expresslyreserved, to discharge a Holder who is an Employee or Consultant or Director atany time for any reason whatsoever, with or without cause and with or withoutadvance notice.

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# **ARTICLE III.**RESTRICTIONS

 

## 3.1           Forfeiture.** **Upon the Holder’s Termination ofEmployment, Termination of Consultancy or Termination of Directorship (each asdefined in the Plan), all of the Unreleased Shares (as defined below) shallthereupon be forfeited immediately and without any further action by theCompany (the “Forfeiture Restriction”).

 

## 3.2           Unreleased Shares Not Transferable. Unless otherwise permitted by the Committee pursuant to the Plan, noUnreleased Shares or any interest or right therein or part thereof shall beliable for the debts, contracts or engagements of the Holder or his successorsin interest or shall be subject to disposition by transfer, alienation,anticipation, pledge, encumbrance, assignment or any other means whether suchdisposition be voluntary or involuntary or by operation of law by judgment,levy, attachment, garnishment or any other legal or equitable proceedings(including bankruptcy), and any attempted disposition thereof shall be null andvoid and of no effect (the “Transfer Restriction”); provided, however,that this Section 3.2 shall not prevent transfers by will or by applicablelaws of descent and distribution.

 

In case of a permitted transfer, the transferee orother recipient shall receive and hold the Shares so transferred subject to theprovisions of this Agreement, and there shall be no further transfer of suchShares except in accordance with the terms of this Section.  Any transferee shall acknowledge the same bysigning a

 

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copy of this Agreement.  Transfer or sale of the Shares is subject torestrictions on transfer imposed by any applicable state and federal securitieslaws.

 

## 3.3           Release of Shares from Restrictions.

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## (a)           Subject to Sections 3.1, 3.6 and3.7, the Shares shall be released from the Forfeiture Restriction and theTransfer Restriction as follows:

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## [                            of the Shares shall be released from the Forfeiture Restriction and the TransferRestriction on the                               anniversary of the Effective Date.  (Theremaining                              of the Shares shall be released from the Forfeiture Restriction and the TransferRestriction on the            anniversaryof the Effective Date.)]

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(b)           Any of the Shares which, from time totime, have not yet been released from the Forfeiture Restriction and theTransfer Restriction are referred to herein as “UnreleasedShares.”

 

## 3.4           Legend.  Certificatesrepresenting Shares issued pursuant to this Agreement shall, until such Sharesare released from the Forfeiture Restriction and the Transfer Restriction andnew certificates are issued therefore, bear the following legend:

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“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARESUBJECT TO FORFEITURE AND CERTAIN RESTRICTIONS ON TRANSFERABILITY UNDER THETERMS OF THAT CERTAIN RESTRICTED STOCK AGREEMENT BY AND BETWEEN GUITAR CENTER,INC. (THE “COMPANY”) AND THE REGISTERED OWNER OF SUCH SHARES, AND SUCHSHARES  MAY NOT BE, DIRECTLY ORINDIRECTLY, OFFERED, TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OROTHERWISE DISPOSED OF UNDER ANY CIRCUMSTANCES, EXCEPT PURSUANT TO THEPROVISIONS OF SUCH AGREEMENT.”

 

## 3.5           Issuance of Certificates for Vested Shares. Subject to Section 3.7, upon the release of Shares from theForfeiture Restriction and the Transfer Restriction, the Company shall causenew certificates to be issued with respect to such vested Shares and deliveredto the Holder or his legal representative, free from the legend provided for inSection 3.4.  Such vested Sharesshall cease to be subject to the terms and conditions of this Agreement.

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## 3.6           Restrictions On New Shares. In the event that the Holder receives any new or additional or differentshares or securities which are attributable to the Holder in his capacity asthe registered owner of Shares then subject to Forfeiture Restriction and theTransfer Restriction, such new or additional or different shares or securitiesshall be considered to be Shares under this Agreement and shall be subject tothe Forfeiture Restriction and the Transfer Restriction, unless the Board orthe Committee provides otherwise.

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3.7           Tax Withholding. Notwithstanding anything to the contrary in this Agreement, the Companyshall be entitled to require payment in cash or deduction from othercompensation payable

 

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to the Holder of any sums required by federal, stateor local tax law to be withheld with respect to the issuance, lapsing ofrestrictions on or exercise of the Shares. The Board or the Committee may, in their discretion, allow the Holder todeliver shares of Common Stock owned by the Holder duly endorsed for transferto the Company with an aggregate Fair Market Value on the date of deliveryequal to the statutory minimum sums to be withheld.  The Company shall not be obligated to deliverany new certificate representing vested Shares to the Holder or his legalrepresentative unless and until the Holder or his legal representative shallhave paid or otherwise satisfied in full the amount of all federal, state andlocal taxes applicable to the taxable income of the Holder resulting from thegrant of the Shares or the lapse or removal of the Forfeiture Restriction andthe Transfer Restriction.

 

# **ARTICLE IV.**MISCELLANEOUS

 

## 4.1           Conditions to Issuance ofStock Certificates.  The Company shall not be required to issue ordeliver any certificate or certificates for shares of stock pursuant to thisAgreement prior to fulfillment of all of the following conditions:

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### (a)           The admission of such shares tolisting on all stock exchanges on which such class of stock is then listed; and

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### (b)           The payment by the Holder of allamounts required to be withheld, under federal, state and local tax laws, withrespect to the issuance of Shares and/or the lapse or removal of the ForfeitureRestriction and/or the Transfer Restriction; and

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### (c)           The lapse of such reasonable periodof time as the Committee may from time to time establish for reasons ofadministrative convenience; and

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### (d)           The completion of any registrationor other qualification of such shares under any state or federal law or underrulings or regulations of the Securities and Exchange Commission or of anyother governmental regulatory body, which the Committee shall, in its absolutediscretion, deem necessary or advisable; and

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### (e)           The obtaining of any approval orother clearance from any state or federal governmental agency which theCommittee shall, in its absolute discretion, determine to be necessary oradvisable.

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## 4.2           Escrow.

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(a)           Holderhereby authorizes and directs the Secretary of the Company, or such otherperson designated by the Company, to transfer the Unreleased Shares as to whichthe Forfeiture Option is effective from Holder to the Company.

 

(b)           Toinsure the availability for delivery of Holder’s Unreleased Shares uponforfeiture pursuant to Section 3.1, Holder hereby appoints the Secretary,or any other person designated by the Company as escrow agent, as itsattorney-in-fact to sell, assign and transfer

 

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unto the Company, such Unreleased Shares, ifany, forfeited pursuant to the Forfeiture Option and shall, upon execution ofthis Agreement, deliver and deposit with the Secretary of the Company, or suchother person designated by the Company, the share certificates representing theUnreleased Shares, together with the stock assignment duly endorsed in blank,attached hereto as Exhibit A.  Ifmarried, Holder shall obtain the consent of his or her spouse to this Agreementin the form attached hereto as Exhibit B.  The Unreleased Shares and stock assignmentshall be held by the Secretary in escrow, pursuant to the Joint EscrowInstructions of the Company and Holder attached as Exhibit Chereto, until the Forfeiture Restriction becomes effective as provided in Section 3.1,until such Unreleased Shares are vested, or until such time as this Agreementno longer is in effect.  Upon vesting ofthe Unreleased Shares, the escrow agent shall deliver to the Holder, uponrequest, the certificate or certificates representing such Shares in the escrowagent’s possession belonging to the Holder, and the escrow agent shall bedischarged of all further obligations hereunder; provided, however, that theescrow agent shall nevertheless retain such certificate or certificates asescrow agent if so required pursuant to other restrictions imposed pursuant tothis Agreement.

 

(c)           TheCompany, or its designee, shall not be liable for any act it may do or omit todo with respect to holding the Shares in escrow and while acting in good faithand in the exercise of its judgment.

 

## 4.3           Notices.  Any notice tobe given under the terms of this Agreement to the Company shall be addressed tothe Company in care of its Secretary, and any notice to be given to the Holdershall be addressed to him at the address given beneath his signature hereto. Bya notice given pursuant to this Section 4.3, either party may hereafterdesignate a different address for notices to be given to it or him. Any noticewhich is required to be given to the Holder shall, if the Holder is thendeceased, be given to the Holder’s personal representative if suchrepresentative has previously informed the Company of his status and address bywritten notice under this Section 4.3. Any notice shall have been deemed duly given when enclosed in a properlysealed envelope or wrapper addressed as aforesaid, deposited (with postageprepaid) in a post office or branch post office regularly maintained by theUnited States Postal Service.

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## 4.4           Rights as Stockholder.** **Except as otherwise providedherein, upon delivery of the Shares to the escrow holder pursuant to Section 4.2,the Holder shall have all the rights of a stockholder with respect to saidshares, subject to the restrictions herein, including the right to vote theshares and to receive all dividends or other distributions paid or made withrespect to the Shares; provided, however, that any and all sharesof Common Stock received by the Holder with respect to such Shares as a resultof stock dividends, stock splits or any other form of recapitalization shallalso be subject to the Forfeiture Restriction and the Transfer Restrictionuntil such restrictions on the underlying Shares lapse or are removed pursuantto this Agreement.

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## 4.5           Titles.  Titles areprovided herein for convenience only and are not to serve as a basis forinterpretation or construction of this Agreement.

 

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## 4.6           Conformity to Securities Laws. The Holder acknowledges that the Plan and this Agreement are intended toconform to the extent necessary with all provisions of  all applicable federal and state laws, rulesand regulations (including but not limited to, the Securities Act and theExchange Act) and to such approvals by any listing, regulatory or othergovernmental authority as may, in the opinion of counsel for the Company, benecessary or advisable in connection therewith. Notwithstanding anything herein to the contrary, this Agreement shall beadministered, and the Shares shall be issued, only in such a manner as toconform to such laws, rules and regulations. To the extent permitted byapplicable law, the Plan, this Agreement and the Shares issued hereunder shallbe deemed amended to the extent necessary to conform to such laws, rules andregulations.

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## 4.7           Limitations Applicable to Section 16 Persons. Notwithstanding any other provision of this Agreement or the Plan, thisAgreement shall be subject to any additional limitations set forth in anyapplicable exemptive rule under Section 16 of the Exchange Act (includingany amendment to Rule 16b-3) that are requirements for the application ofsuch exemptive rule.  To the extentpermitted by applicable law and the Plan, this Agreement shall be deemedamended to the extent necessary to conform to such applicable exemptive rule.

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## 4.8           Governing Law.** **The laws of the State of Delawareshall govern the interpretation, validity, administration, enforcement andperformance of the terms of this Agreement regardless of the law that might beapplied under principles of conflicts of laws.

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## 4.9           Survival of Terms.  ThisAgreement shall apply to and bind Holder and the Company and their respectivepermitted assignees and transferees, heirs, legatees, executors, administratorsand legal successors.

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## 4.10         Counterparts.  ThisAgreement may be executed simultaneously in two or more counterparts, each ofwhich shall be deemed an original, but all of which together shall constituteone and the same instrument.

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## 4.11         Assignment.  Except asotherwise provided herein, the Company’s rights and obligations hereunder maybe assigned to any Subsidiary of the Company or to any successor pursuant to amerger, consolidation or similar event. Subject to the foregoing, this Agreement and the respective rights andobligations of the parties hereto shall inure to the benefit of and be bindingupon, the successors and assigns of the parties.

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## 4.12         Invalid Provision.  Theinvalidity or unenforceability of any particular provision hereof shall notaffect the other provisions hereof, and this Agreement shall be construed inall respects as if such invalid or unenforceable provision was omitted.

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(Signature pagefollows)

 

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IN WITNESSHEREOF, this Agreement has been executed and delivered by the parties hereto.

 

 
|   | Guitar Center, Inc., a Delaware corporation  |
|--------|----------------------------------------------|
|   |                                         |
|   |                                         |
|   | By:                                          |   |
|   |                                         |
|   | Name:                                        |   |
|   |                                         |
|   | Title:                                       |   |
|   |                                         |
|   |                                         |
|   | Holder:                                      |
|   |                                         |
|   |                                         |
|   |                                         |
|   |                                         |
|   |                                         |
|   | Address                                      |
|   |                                         |
|   | City, State, Zip Code                        |
|   |                                         |
|   | Holder’s Taxpayer Identification Number |
|        |                                              |  |  |  |

 

 

* * ** *

 

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**EXHIBITA**

 

**ASSIGNMENTSEPARATE FROM CERTIFICATE(S)**

 

FOR VALUE RECEIVED I,                                  ,hereby sell, assign and transfer unto                                   (__________)shares of the Common Stock of Guitar Center, Inc. registered in my name on thebooks of said corporation represented by CertificateNo(s).                                          herewith and do hereby irrevocably constitute and appoint                       to transfer the said stock on the books of the within named corporation withfull power of substitution in the premises.

 

This Assignment Separate from Certificate(s)may be used only in accordance with the Restricted Stock Agreement betweenGuitar Center, Inc. and the undersigned dated                                 ,                 .

 

 
| Dated: |   | , |   | Signature: |   |
|--------|--------|---|--------|------------|--------|

 

 

**INSTRUCTIONS:**  Please do not fill in any blanks otherthan the signature line.  The purpose ofthis assignment is to enable the Company to exercise the ForfeitureRestriction, as set forth in the Restricted Stock Agreement, without requiringadditional signatures on the part of Holder.

 

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**EXHIBITB**

 

**CONSENT OFSPOUSE**

 

 

I,                                    ,spouse of                   ,have read and approve the foregoing Agreement. In consideration of granting of the right to my spouse to purchaseshares of Guitar Center, Inc. set forth in the Restricted Stock Agreement, Ihereby appoint my spouse as my attorney-in-fact in respect to the exercise ofany rights under the Agreement and agree to be bound by the provisions of theRestricted Stock Agreement insofar as I may have any rights in said RestrictedStock Agreement or any shares issued pursuant thereto under the communityproperty laws or similar laws relating to marital property in effect in thestate of our residence as of the date of the signing of the foregoing RestrictedStock Agreement.  I understand andacknowledge that I have been advised to seek the advice of legal counsel inexecuting this consent and that I have been given a meaningful opportunityeither to consult with such legal counsel or determine to execute this consentwithout the advise of legal counsel.

 

 
| Dated: |   | ,200 |   |   |
|--------|--------|------|--------|--------|

 

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**EXHIBIT C**

 

**JOINTESCROW INSTRUCTIONS**

 

, 200_

 

Guitar Center, Inc.

Attn: Secretary

 

As Escrow Agent for Guitar Center, Inc. (the “Company”)and the undersigned purchaser of stock of the Company (the “Purchaser”),you are hereby authorized and directed to hold the documents delivered to youpursuant to the terms of that certain Restricted Stock Agreement (“Agreement”)between the Company and the undersigned, in accordance with the followinginstructions:

 

1.             Inthe event of forfeiture of any of the shares owned by Purchaser pursuant to theForfeiture Restriction set forth in the Agreement, the Company and/or anyassignee of the Company (referred to collectively for convenience herein as the“Company”) shall give to Purchaser and you a written notice specifyingthe number of shares of stock forfeited and the date of forfeiture.  Purchaser and the Company hereby irrevocablyauthorize and direct you to effect the forfeiture contemplated by such noticein accordance with the terms of said notice.

 

2.             Asof the date of forfeiture indicated in such notice, you are directed(a) to date the stock assignments necessary for the forfeiture and transferin question, (b) to fill in the number of shares being forfeited andtransferred, and (c) to deliver the same, together with the certificateevidencing the shares of stock to be forfeited and transferred, to the Companyor its assignee.

 

3.             Purchaserirrevocably authorizes the Company to deposit with you any certificatesevidencing shares of stock to be held by you hereunder and any additions andsubstitutions to said shares.  Purchaserdoes hereby irrevocably constitute and appoint you as Purchaser’sattorney-in-fact and agent for the term of this escrow to execute, with respectto such securities, all documents necessary or appropriate to make suchsecurities negotiable and to complete any transaction herein contemplated,including but not limited to the filing with any applicable state blue skyauthority of any required applications for consent to, or notice of transferof, the securities.  Subject to theprovisions of this paragraph 3, Purchaser shall exercise all rights andprivileges of a stockholder of the Company while the stock is held by you.

 

4.             Uponwritten request of Purchaser, but no more than once per calendar year, unlessthe Forfeiture Restriction has been triggered, you will deliver to Purchaser acertificate or certificates representing the number of shares of stock as arenot then subject to the Forfeiture Restriction. Within one hundred twenty (120) days after any voluntary or involuntarytermination of Purchaser’s services to the Company for any or no reason, youwill deliver to Purchaser a certificate or certificates representing theaggregate number of shares held or issued pursuant to the Agreement and notforfeited pursuant to the Forfeiture Restriction set forth in Section 3 ofthe Agreement.

 

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5.             Ifat the time of termination of this escrow you should have in your possessionany documents, securities, or other property belonging to Purchaser, you shalldeliver all of the same to Purchaser and shall be discharged of all furtherobligations hereunder.

 

6.             Yourduties hereunder may be altered, amended, modified or revoked only by a writingsigned by all of the parties hereto.

 

7.             Youshall be obligated only for the performance of such duties as are specificallyset forth herein and may rely and shall be protected in relying or refrainingfrom acting on any instrument reasonably believed by you to be genuine and tohave been signed or presented by the proper party or parties.  You shall not be personally liable for anyact you may do or omit to do hereunder as Escrow Agent or as attorney-in-factfor Purchaser while acting in good faith, and any act done or omitted by youpursuant to the advice of your own attorneys shall be conclusive evidence ofsuch good faith.

 

8.             Youare hereby expressly authorized to disregard any and all warnings given by anyof the parties hereto or by any other person or corporation, excepting onlyorders or process of courts of law and are hereby expressly authorized tocomply with and obey orders, judgments or decrees of any court.  In case you obey or comply with any suchorder, judgment or decree, you shall not be liable to any of the parties heretoor to any other person, firm or corporation by reason of such compliance,notwithstanding any such order, judgment or decree being subsequently reversed,modified, annulled, set aside, vacated or found to have been entered withoutjurisdiction.

 

9.             Youshall not be liable in any respect on account of the identity, authorities orrights of the parties executing or delivering or purporting to execute ordeliver the Agreement or any documents or papers deposited or called forhereunder.

 

10.           Youshall not be liable for the expiration of any rights under any applicablestate, federal or local statute of limitations or similar statute or regulationwith respect to these Joint Escrow Instructions or any documents deposited withyou.

 

11.           Youshall be entitled to employ such legal counsel and other experts as you maydeem necessary properly to advise you in connection with your obligationshereunder, may rely upon the advice of such counsel, and the Company shallreimburse you for any reasonable attorneys’ fees incurred in connectiontherewith.

 

12.           Yourresponsibilities as Escrow Agent hereunder shall terminate if you shall ceaseto be an officer or agent of the Company or if you shall resign by writtennotice to each party.  In the event ofany such termination, the Company shall appoint a successor Escrow Agent.

 

13.           Ifyou reasonably require other or further instruments in connection with theseJoint Escrow Instructions or obligations in respect hereto, the necessaryparties hereto shall join in furnishing such instruments.

 

14.           Itis understood and agreed that should any dispute arise with respect to thedelivery and/or ownership or right of possession of the securities held by youhereunder, you are authorized and directed to retain in your possession withoutliability to anyone all or any part of

 

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said securities until such disputes shall have been settled either bymutual written agreement of the parties concerned or by a final order, decreeor judgment of a court of competent jurisdiction after the time for appeal hasexpired and no appeal has been perfected, but you shall be under no dutywhatsoever to institute or defend any such proceedings.

 

15.           Anynotice required or permitted hereunder shall be given in writing and shall bedeemed effectively given upon personal delivery or upon deposit in the UnitedStates Post Office, by registered or certified mail with postage and feesprepaid, addressed to each of the other parties thereunto entitled at theaddresses set forth on the signature pages hereto or at such other addresses asa party may designate by ten (10) days’ advance written notice to each of theother parties hereto.

 

16.           Bysigning these Joint Escrow Instructions, you become a party hereto only for thepurpose of said Joint Escrow Instructions; you do not become a party to theAgreement.

 

17.           Thisinstrument shall be binding upon and inure to the benefit of the partieshereto, and their respective successors and permitted assigns.

 

18.           TheseJoint Escrow Instructions shall be governed by, and construed and enforced inaccordance with, the laws of the State of California, excluding that body oflaw pertaining to conflicts of law.

 

(Signature page follows)

 

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IN WITNESSHEREOF, this Agreement has been executed and delivered by the parties hereto.

 

 
|   | Guitar Center, Inc., a Delaware corporation  |
|--------|----------------------------------------------|
|   |                                         |
|   |                                         |
|   | By:                                          |   |
|   |                                         |
|   | Name:                                        |   |
|   |                                         |
|   | Title:                                       |   |
|   |                                         |
|   |                                         |
|   | Holder:                                      |
|   |                                         |
|   |                                         |
|   |                                         |
|   |                                         |
|   |                                         |
|   | Address                                      |
|   |                                         |
|   | City, State, Zip Code                        |
|   |                                         |
|   | Holder’s Taxpayer Identification Number |
|        |                                              |  |  |  |

 

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