Exhibit
10.43


 


AMENDMENT NO. 2 TO AMENDED AND RESTATED


 


EMPLOYMENT AGREEMENT


 


 


This  AMENDMENT No. 2 TO
AMENDED AND RESTATED EMPLOYMENT AGREEMENT (“Amendment”) is
entered into as of this 1st day of July, 2003, by and between Larry
Thomas  (“Executive”) and GUITAR CENTER, INC., a
Delaware corporation (the “Company”).


 


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


 


In consideration of the mutual promises and covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:


 


1.                                      The
Prior Agreement is amended by amending Section 3(a) in its entirety to read as
follows:


 


(a)                                  During
the Employment Period, the Executive’s base salary shall be $625,000 per annum
or 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 of
such determination) may designate from time to time (the “Base Salary”),
which salary shall be payable in such installments as is the policy of the
Company with respect to its senior executive employees and shall be subject to
Federal, state and local withholding and other payroll taxes. During the
Employment Period, the Compensation Committee shall review Executive’s Base
Salary and performance bonuses on at least an annual basis and consider in good
faith industry practices for compensation for similarly-situated executives, it
being understood that the ultimate amount and terms of any increase in
compensation, if any, shall be within the discretion of the Compensation
Committee or the Board, as the case may be. 
In addition, during the Employment Period, the Executive shall be
entitled to participate in all employee benefit plans and programs for which
senior executives of the Company are generally eligible and the Executive shall
be eligible to participate in all insurance plans available generally to all
executives of the Company.


 


2.                                      The
Prior Agreement is amended by amending Section 3(b) in its entirety to read as
follows:


 


(b)                                 In
addition to the Base Salary, for each fiscal year ending during the Employment
Period, Executive shall be eligible to participate in and receive incentive
compensation payments (the “Annual Bonus”) pursuant to the terms of the
Employer’s Senior Executive Performance Bonus Plan (the “Performance Bonus
Plan”) upon attainment of the performance goals specified thereunder by the
Compensation Committee of the Board. 
Upon full achievement of the performance goals, the Annual Bonus will be
equal to 100% of Executive’s then-current Adjusted Base Salary (as defined
below), but for less than full achievement of the performance


 


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


 


3.                                      The
Prior Agreement is amended by amending the first sentence of Section 4(a) to
read as follows:


 


(a)                                  In
the event of a Qualifying Termination of Executive, the Executive shall be
entitled to receive as severance, for the period beginning on the date of such
termination 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 be
paid on each annual anniversary of the date of termination during the severance
period, in each case equal to 100% of the Adjusted Base Salary, and (iii)
continuation of the benefits under Section 3(e) above.


 


4.                                      The
Prior Agreement is amended by amending the first sentence of Section 4(b) to
read as follows:


 


(b)                                 In
the event of a Qualifying Termination of Executive within two years following a
Sale 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 the
third anniversary of the date of termination, (i) the Base Salary for such
severance period, (ii) an annual cash bonus to be paid on each annual
anniversary of the date of termination during the severance period, in each
case equal to 100% of the Adjusted Base Salary, and (iii) continuation of the
benefits under Section 3(e) above.


 


5.                                      The
Prior Agreement is amended by amending Section 4(d) in its entirety to read as
follows:


 


(d)                                 If
the Employment Period is terminated for any reason other than a Qualifying
Termination, the Executive shall be entitled to receive on the date of
termination only the Base Salary and then only to the extent such amount has
accrued through the date of termination. 
If the Employment Period is terminated as a result of a Qualifying
Termination, in addition to any severance payable to Executive pursuant to
Sections 4(a) and (b) above, the Executive shall be entitled to receive on the
date of termination (i) the Base Salary to the extent such amount has accrued
through the date of termination and (ii) a cash bonus equal to 100% of the Adjusted
Base


 


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Salary pro-rated for any partial year ending on the date of
termination.


 


6.                                      The
Prior Agreement is amended by amending Section 13(b) in its entirety to read as
follows:


 


(b)                                 COMPLETE
AGREEMENT.  This Agreement and those
documents expressly referred to herein embody the complete agreement and
understanding among the parties and supersede and preempt any prior
understandings, agreements or representations by or among the parties, written
or 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 Executive
may have under benefit plans, agreements or arrangements to which he is a party
or is a participant, and this Agreement shall not abrogate any such rights.


 


7.                                      Executive
hereby acknowledges and consents to the termination, effective as of June 30,
2003, of the Expense Reimbursement and Reporting Policy Applicable to the Chief
Executive Officer or any Co-Chief Executive Officer previously approved by the
Compensation Committee of the Company’s Board of Directors on December 5,
2001.  Executive further agrees that no
expenses incurred by Executive on or after July 1, 2003 shall be reimbursed
pursuant to such policy.


 


8.                                      Except
as expressly provided for in this Amendment, no other term or provision of the
Prior Agreement is amended or modified in any respect.


 


(Signature Page Follows)


 


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


 


	
   

  	
  GUITAR
  CENTER, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Bruce Ross

  
	
   

  	
  Name:

  	
  Bruce Ross

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Larry Thomas

  
	
   

  	
   

  	
  Larry Thomas

  



 


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