QuickLinks
 -- Click here to rapidly navigate through this document

Exhibit 10.35  


 
 

GUITAR CENTER, INC.
  SENIOR EXECUTIVE
  PERFORMANCE BONUS PLAN    
    


1.  PURPOSE  


        This Senior Executive Performance Bonus Plan (the "Bonus Plan") is intended to provide an incentive for superior
work and to motivate eligible executives of Guitar Center, Inc., a Delaware corporation (the "Company"), toward even higher achievement and
business results, to tie their goals and interests to those of the Company and its stockholders and to enable the Company to attract and retain highly qualified executives. The Bonus Plan is for the
benefit of Covered Executives (as defined below). The Bonus Plan is designed to ensure the bonuses paid hereunder to Covered Executives are deductible without limit under Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"), and the regulations and interpretations promulgated thereunder. 


2.  COVERED EXECUTIVES  


        From time to time, the Compensation Committee of the Board of Directors of the Company (respectively, the "Compensation
Committee" and "Board") may select certain key executives who are or who at some future date may be "covered employees" as
defined in Section 162(m)(3) of the Code (the "Covered Executives") to be eligible to receive bonuses hereunder. 


3.  ADMINISTRATION  


        Unless otherwise determined by the Board, this Bonus Plan shall be administered by the Compensation Committee. At all times the Compensation Committee shall
consist of at least two members of the Board who shall qualify as "outside directors" under Section 162(m) of the Code. Unless otherwise determined by the Board, the Compensation Committee
shall have the sole discretion and authority to administer and interpret the Bonus Plan. 


4.  BONUS DETERMINATIONS  


        A Covered Executive may receive a bonus payment under the Bonus Plan based upon the attainment of performance objectives which are established by the Compensation
Committee and relate to one or more of the following corporate business criteria (the "Performance Goals"): the Company's net income, operating income,
after-tax cash flow, earnings per share, return on equity, return on invested capital or assets, funds from operations, cost reductions and savings, appreciation in the fair market value
of the Company's stock, or earnings before any one or more of the following items: interest, taxes, depreciation, amortization, or extraordinary or similar non-recurring items or
adjustments. 


        Any
bonuses paid to Covered Executives under the Bonus Plan shall be based upon objectively determinable bonus formulas that tie such bonuses to one or more objective performance
objectives relating to the Performance Goals. Bonus formulas for Covered Executives shall be adopted by the Compensation Committee no later than the latest time permitted by Section 162(m) of
the Code (generally, for performance periods of one year or more, no later than 90 days after the commencement of the performance period). No bonuses shall be paid to Covered Executives unless
and until the Compensation Committee makes a certification in writing with respect to the attainment of the performance objectives as required by Section 162(m) of the Code. The Compensation
Committee shall have no discretion to increase the amount of a Covered Executive's bonus as determined under the applicable bonus formula. 





 



5.  FORM OF BONUS PAYMENT  


        Bonuses payable under this Bonus Plan shall be paid in cash, in a single lump sum. 


6.  MAXIMUM BONUS  


        The maximum bonus payable to a Covered Executive under the Bonus Plan shall not exceed $1,500,000 with respect to any calendar year. 



        The
payment of a bonus hereunder to a Covered Executive with respect to a performance period shall be conditioned upon the Covered Executive's employment by the Company on the last day
of the performance period. 


        All
bonuses paid hereunder shall be subject to applicable state, federal and local tax withholding. 


7.  PAYMENT OF BONUSES  


        Bonuses shall be payable to a Covered Executive who remains continuously employed by the Company throughout the performance period as soon as practicable
following the Compensation Committee's certification in accordance with Section 4 above that the performance objectives with regard to such Covered Executive and performance period have been
attained. 


8.  AMENDMENT AND TERMINATION  


        Subject to the terms of any written employment agreement between a Covered Executive and the Company, as amended, the Company reserves the right to amend or
terminate the Bonus Plan at any time in its sole discretion. Any amendments to the Bonus Plan shall require stockholder approval only to the extent required by Section 162(m) of the Code. 



9.  STOCKHOLDER APPROVAL  


        No bonuses shall be paid under this Bonus Plan unless and until the Company's stockholders shall have approved the Bonus Plan and the Performance Goals as
required by Section 162(m) of the Code. So long as the Bonus Plan shall not have been previously terminated by Company, it shall be resubmitted for approval by the Company's stockholders in the
fifth year after it shall have first been approved by the Company's stockholders, and every fifth year thereafter. In addition, the Bonus Plan shall be resubmitted to the Company's stockholders for
approval as required by Section 162(m) of the Code if it is amended in any way which changes the material terms of the Plan's Performance Goals set forth in the first paragraph of
Section 4, including by materially modifying such Performance Goals, increasing the maximum bonus payable under the Bonus Plan or changing the Plan's eligibility requirements. 


 * * * * * *  


2









QuickLinks


GUITAR CENTER, INC. SENIOR EXECUTIVE PERFORMANCE BONUS PLAN