**Exhibit 10.44**

** **

**AMENDMENT NO. 2 TOAMENDED AND RESTATED**

 

**EMPLOYMENT AGREEMENT**

 

ThisAMENDMENT No. 2 TO AMENDED AND RESTATEDEMPLOYMENT AGREEMENT (“Amendment”) is entered into as ofthis 1st day of July, 2003, by and between Marty Albertson****(“Executive”) and GUITAR CENTER, INC., aDelaware corporation (the “Company”).

 

Executive andthe Company wish to amend that certain Amended and Restated EmploymentAgreement entered into between the two parties as of June 6, 2001, as amendedby that certain Amendment to Amended and Restated Employment Agreement dated asof March 24, 2003 (the “Prior Agreement”) to revise the base salaryprovisions therein.

 

Inconsideration of the mutual promises and covenants contained herein and othergood and valuable consideration, the receipt and sufficiency of which arehereby acknowledged, the parties hereto agree as follows:

 

**1.****                                     **ThePrior Agreement is amended by amending Section 3(a) in its entirety to read asfollows:

 

(a)                                  Duringthe Employment Period, the Executive’s base salary shall be $625,000 per annumor such higher rate as the Board or the Compensation Committee of the Board(excluding the Executive if he should be a member of the Board at the time ofsuch determination) may designate from time to time (the “Base Salary”),which salary shall be payable in such installments as is the policy of theCompany with respect to its senior executive employees and shall be subject toFederal, state and local withholding and other payroll taxes. During theEmployment Period, the Compensation Committee shall review Executive’s BaseSalary and performance bonuses on at least an annual basis and consider in goodfaith industry practices for compensation for similarly-situated executives, itbeing understood that the ultimate amount and terms of any increase incompensation, if any, shall be within the discretion of the CompensationCommittee or the Board, as the case may be. In addition, during the Employment Period, the Executive shall beentitled to participate in all employee benefit plans and programs for whichsenior executives of the Company are generally eligible and the Executive shallbe eligible to participate in all insurance plans available generally to allexecutives of the Company.

 

**2.****                                     **ThePrior Agreement is amended by amending Section 3(b) in its entirety to read asfollows:

 

(b)                                 Inaddition to the Base Salary, for each fiscal year ending during the EmploymentPeriod, Executive shall be eligible to participate in and receive incentivecompensation payments (the “Annual Bonus”) pursuant to the terms of theEmployer’s Senior Executive Performance Bonus Plan (the “Performance BonusPlan”) upon attainment of the performance goals specified thereunder by theCompensation Committee of the Board. Upon full achievement of the performance goals, the Annual Bonus will beequal to 100% of Executive’s then-current Adjusted Base Salary (as definedbelow), but for less than full achievement of the performance

 

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goals, the Annual Bonus shallbe a lesser amount in accordance with a specific formula determined by theCompensation Committee.  In addition, tothe extent the performance goals are exceeded, the Annual Bonus shall exceed100% of the Executive’s then-current Adjusted Base Salary in accordance with aspecific formula determined by the Compensation Committee.  In no event, however, shall the Annual Bonusfor any fiscal year exceed 200% of the Executive’s Adjusted Base Salary payablewith respect to such fiscal year.  TheAnnual Bonus shall be paid to Executive in a lump sum promptly following theend of the fiscal year with respect to which it is payable.  Notwithstanding the foregoing, Company andExecutive understand and agree that the Annual Bonuses are intended toconstitute “qualified performance-based compensation” satisfying therequirements of Treasury Regulations Sections 1.162-27(e)(2) through (e)(5),and that the material terms of the performance criteria under which amounts areto be paid pursuant to the Performance Bonus Plan, and the payment of anyamounts under the Performance Bonus Plan, shall be subject to approval by theshareholders of the Company.  Forpurposes of this Agreement, “Adjusted Base Salary” shall mean theExecutive’s then-current Base Salary less $100,000.

 

**3.****                                     **ThePrior Agreement is amended by amending the first sentence of Section 4(a) toread as follows:

 

(a)                                  Inthe event of a Qualifying Termination of Executive, the Executive shall beentitled to receive as severance, for the period beginning on the date of suchtermination and ending on the second anniversary of the date of termination,(i) the Base Salary for such severance period, (ii) an annual cash bonus to bepaid on each annual anniversary of the date of termination during the severanceperiod, in each case equal to 100% of the Adjusted Base Salary, and (iii)continuation of the benefits under Section 3(e) above.

 

**4.****                                     **ThePrior Agreement is amended by amending the first sentence of Section 4(b) toread as follows:

 

(b)                                 Inthe event of a Qualifying Termination of Executive within two years following aSale of the Company, the Executive shall be entitled to receive as severance,for the period beginning on the date of such termination and ending on thethird anniversary of the date of termination, (i) the Base Salary for suchseverance period, (ii) an annual cash bonus to be paid on each annualanniversary of the date of termination during the severance period, in eachcase equal to 100% of the Adjusted Base Salary, and (iii) continuation of thebenefits under Section 3(e) above.

 

**5.****                                     **ThePrior Agreement is amended by amending Section 4(d) in its entirety to read asfollows:

 

(d)                                 If the EmploymentPeriod is terminated for any reason other than a Qualifying Termination, theExecutive shall be entitled to receive on the date of termination only the BaseSalary and then only to the extent such amount has accrued through the date oftermination.  If the Employment Periodis terminated as a result of a Qualifying Termination, in addition to anyseverance payable to Executive pursuant to Sections 4(a) and (b) above, theExecutive shall be entitled to receive on the date of termination (i) the BaseSalary to the extent such amount has

 

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accrued through the date of termination and(ii) a cash bonus equal to 100% of the Adjusted Base Salary pro-rated for anypartial year ending on the date of termination.

 

**6.****                                     **ThePrior Agreement is amended by amending Section 13(b) in its entirety to read asfollows:

 

(b)                                 COMPLETEAGREEMENT.  This Agreement and thosedocuments expressly referred to herein 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 rights Executivemay have under benefit plans, agreements or arrangements to which he is a partyor is a participant, and this Agreement shall not abrogate any such rights.

 

**7.****                                     **Executivehereby acknowledges and consents to the termination, effective as of June 30,2003, of the Expense Reimbursement and Reporting Policy Applicable to the ChiefExecutive Officer or any Co-Chief Executive Officer previously approved by theCompensation Committee of the Company’s Board of Directors on December 5,2001.  Executive further agrees that noexpenses incurred by Executive on or after July 1, 2003 shall be reimbursedpursuant to such policy.

 

**8.****                                     **Exceptas expressly provided for in this Amendment, no other term or provision of thePrior Agreement is amended or modified in any respect.

 

(Signature Page Follows)

 

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In witness whereof, the parties have executed thisAgreement on the day and year first above written.

 
|   | GUITAR CENTER, INC. |
|--------|---------------------|
|   |                |   |
|   | By:                 | /s/ Bruce  Ross |
|   | Name:               | Bruce Ross |
|   | Title:              | Chief  Financial Officer |
|   |                |   |
|   | EXECUTIVE           |
|   |                |   |
|   |                | /s/ Marty  Albertson |
|   |                | Marty  Albertson |

 

 

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