**Exhibit 10.20**

 

**INDEMNIFICATION AGREEMENT**

 

This Agreement is made as ofthe      day of              2004, by and between Guitar Center, Inc., a Delaware corporation (the “Company”),and the undersigned **                      **(the“Indemnitee”), with reference to the following facts:

 

The Indemnitee is willing, under certain circumstances, to serve as aDirector****and\or Officer****of theCompany.  The Indemnitee has indicatedthat he does not regard the indemnities available under the Company’s Bylaws asadequate to protect him against the risks associated with his service to theCompany.  In this connection, the Companyand the Indemnitee now agree that they should enter into this IndemnificationAgreement in order to provide greater protection to Indemnitee against suchrisks of service to the Company.

 

Section 145 of the General Corporation Law of the State of Delaware,under which Law the Company is organized, empowers corporations to indemnify aperson serving as a director, officer, employee or agent of the Company and aperson who serves at the request of the Company as a director, officer,employee or agent of another corporation, partnership, joint venture, trust, orother enterprise, and said Section 145 and the Bylaws of the Company specifythat the indemnification set forth in said Section 145 and in the Bylaws,respectively, shall not be deemed exclusive of any other rights to which thoseseeking indemnification may be entitled under any Bylaw, agreement, vote ofstockholders or disinterested directors or otherwise.

 

In order to induce the Indemnitee to serve as a Director and\or Officerof the Company and in consideration of his continued service, the Companyhereby agrees, as of the date first set forth above, to indemnify theIndemnitee as follows:

 

1.  Indemnity.  The Company will indemnify the Indemnitee,his executors, administrators or assigns, for any Expenses (as defined below)which the Indemnitee is or becomes legally obligated to pay in connection withany Proceeding.  As used in this Agreementthe term “Proceeding” shall include any threatened, pending or completedclaim, action, arbitration, alternate dispute resolution mechanism,investigation, administrative hearing, suit or proceeding, whether brought byor in the right of the Company or otherwise and whether of a civil, criminal,administrative or investigative nature, in which the Indemnitee may be or mayhave been involved as a party or otherwise, by reason of the fact thatIndemnitee is or was, or has agreed to become, a director or officer of theCompany, by reason of any actual or alleged error or misstatement or misleadingstatement made or suffered by the Indemnitee, by reason of any action taken byhim or of any inaction on his part while acting as such director or officer, orby reason of the fact that he was serving at the request of the Company as adirector, trustee, officer, employee or agent of the Company or anothercorporation, partnership, joint venture, trust or other enterprise; *provided*, that in each such caseIndemnitee acted in good faith and in a manner which he reasonably believed tobe in or not opposed to the best interests of the Company, and, in the case ofa criminal proceeding, in addition had no reasonable cause to believe that hisconduct was unlawful.  As used in thisAgreement, the term “other enterprise” shall include (without limitation)employee benefit plans and administrative committees thereof, and the term “fines”shall include (without limitation) any excise tax assessed with respect to anyemployee

 

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benefit plan.

 

2.  Expenses.  As used in this Agreement, the term “Expenses”shall include (without limitation) damages, judgments, fines, penalties,settlements and costs, retainers, court costs, transcript costs, fees ofwitnesses, travel expenses, duplicating costs, printing and binding costs,telephone charges, postage and delivery fees, service fees, attorneys’ fees anddisbursements and costs of attachment or similar bonds, investigations, and allother reasonable costs and expenses of the types customarily incurred inconnection with prosecuting, defending, preparing to prosecute or defend,investigating or being or preparing to be a witness in a Proceeding and anyexpenses of establishing a right to indemnification under this Agreement.

 

3.  Enforcement.  If a claim or request under this Agreement isnot paid by the Company, or on its behalf, within thirty days after a writtenclaim or request has been received by the Company, the Indemnitee may at anytime thereafter bring suit against the Company to recover the unpaid amount ofthe claim or request and if successful in whole or in part, the Indemniteeshall be entitled to be paid also the Expenses of prosecuting such suit.  The Company shall have the right to recoupfrom the Indemnitee the amount of any item or items of Expenses theretoforepaid by the Company pursuant to this Agreement, to the extent such Expenses arenot reasonable in nature or amounts; *provided,however*, that the Company shall have the burden of proving suchExpenses to be unreasonable.  The burdenof proving that the Indemnitee is not entitled to indemnification for any otherreason shall be upon the Company.

 

4.  Subrogation.  In the event of payment under this Agreement,the Company shall be subrogated to the extent of such payment to all of therights of recovery of the Indemnitee, who shall execute all papers required andshall do everything that may be necessary to secure such rights, including theexecution of such documents necessary to enable the Company effectively tobring suit to enforce such rights.

 

5.  Exclusions.  The Company shall not be liable under thisAgreement to pay any Expenses in connection with any claim made against theIndemnitee:

 

(a)           to the extent thatpayment is actually made to the Indemnitee under a valid, enforceable andcollectible insurance policy;

 

(b)           to the extent thatthe Indemnitee is indemnified and actually paid otherwise than pursuant to thisAgreement;

 

(c)           in connection with ajudicial action by or in the right of the Company, in respect of any claim,issue or matter as to which the Indemnitee shall have been adjudged to beliable for negligence or misconduct in the performance of his duty to theCompany unless and only to the extent that any court in which such action wasbrought shall determine upon application that, despite the adjudication ofliability but in view of all the circumstances of the case, the Indemnitee isfairly and reasonably entitled to indemnity for such expenses as such courtshall deem proper;

 

(d)           with respect toproceedings or claims initiated or brought voluntarily by Indemnitee and not byway of defense, except with respect to

 

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proceedingsbrought to establish or enforce a right to indemnification under this Agreementor any other statute or law or as otherwise required under the GeneralCorporation Law of the State of Delaware, but such indemnification oradvancement of expenses may be provided by the Company in specific cases if theBoard has approved the initiation or bringing of such suit;

 

(e)           if it is proved byfinal judgment in a court of law or other final adjudication to have been basedupon or attributable to the Indemnitee’s in fact having gained any personalprofit or advantage to which he was not legally entitled;

 

(f)            for a disgorgementof profits made from the purchase and sale by the Indemnitee of securitiespursuant to Section 16(b) of the Securities Exchange Act of 1934 and amendmentsthereto or similar provisions of any state statutory law or common law;

 

(g)           brought about orcontributed to by the dishonesty of the Indemnitee seeking payment hereunder;however, notwithstanding the foregoing, the Indemnitee shall be protected underthis Agreement as to any claims upon which suit may be brought against him byreason of any alleged dishonesty on his part, unless a judgment or other finaladjudication thereof adverse to the Indemnitee shall establish that hecommitted (i) acts of active and deliberate dishonesty, (ii) with actualdishonest purpose and intent, (iii) which acts were material to the cause ofaction so adjudicated;

 

(h)           for any judgment,fine or penalty which the Company is prohibited by applicable law from payingas indemnity or for any other reason; or

 

(i)            arising out ofIndemnitee’s breach of an employment agreement with the Company (if any) or anyother agreement with the Company or any of its subsidiaries.

 

6.  Indemnification of Expenses of SuccessfulParty.  Notwithstanding any otherprovision of this Agreement, to the extent that the Indemnitee has beensuccessful on the merits or otherwise in defense of any Proceeding or indefense of any claim, issue or matter therein, including dismissal withoutprejudice, Indemnitee shall be indemnified against any and all Expensesincurred in connection therewith.

 

7.  Partial Indemnification.  If the Indemnitee is entitled under anyprovision of this Agreement to indemnification by the Company for some or aportion of Expenses, but not, however, for the total amount thereof, theCompany shall nevertheless indemnify the Indemnitee for the portion of suchExpenses to which the Indemnitee is entitled.

 

8.  Advance of Expenses.  Expenses incurred by the Indemnitee inconnection with any Proceeding, except the amount of any settlement, shall bepaid by the Company in advance upon request of the Indemnitee that the Companypay such Expenses.  The Indemnitee herebyundertakes to repay to the Company the amount of any Expenses theretofore paidby the Company to the extent that it is ultimately determined that suchExpenses were not reasonable or that the Indemnitee is not entitled toindemnification.

 

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9.  Approval of Expenses.  No Expenses for which indemnity shall besought under this Agreement, other than those in respect of judgments andverdicts actually rendered, shall be incurred without the prior consent of theCompany, which consent shall not be unreasonably withheld.

 

10.  Assumption of Defense.  In the event the Company shall be obligatedto pay the expenses of any proceeding against the Indemnitee, the Company, ifappropriate, shall be entitled to assume the defense of such proceeding withcounsel approved by Indemnitee which approval shall not be unreasonablywithheld, upon the delivery to Indemnitee of written notice of its election todo so.  After delivery of such notice,approval of such counsel by Indemnitee and the retention of such counsel by theCompany, the Company will not be liable to Indemnitee under this Agreement forany fees of counsel subsequently incurred by Indemnitee with respect to thesame proceeding, unless (i) the employment of counsel by Indemnitee isauthorized by the Company, (ii) Indemnitee shall have reasonably concluded, basedupon written advice of counsel, that there may be a conflict of interest ofsuch counsel retained by the Company between the Company and Indemnitee in theconduct of such defense, or (iii) the Company ceases or terminates theemployment of such counsel with respect to the defense of such proceeding, inany of which events then the fees and expenses of Indemnitee’s counsel shall beat the expense of the Company.  At alltimes, Indemnitee shall have the right to employ other counsel in any suchproceeding at Indemnitee’s expense, and to participate in the defense of theproceeding or claim through such counsel.

 

11.  Attorneys’ Fees.  In the event that any action is instituted byIndemnitee under this Agreement to enforce or interpret any of the terms hereof,Indemnitee shall be entitled to be paid all court costs and expenses, includingreasonable attorneys’ fees, incurred by Indemnitee with respect to such action,unless as a part of such action, the court of competent jurisdiction determinesthat the action was not instituted in good faith or was frivolous.  In the event of an action instituted by or inthe name of the Company under this Agreement, Indemnitee shall be entitled tobe paid all court costs and expenses, including attorneys’ fees, incurred by Indemniteein defense of such action (including with respect to Indemnitee’s counterclaimsand cross-claims made in such action), unless as a part of such action thecourt determines that Indemnitee’s defenses to such action were not made ingood faith or were frivolous.

 

12.  Officer and DirectorLiability Insurance.  The Companyshall, from time to time, make the good faith determination whether or not itis practicable for the Company to obtain and maintain a policy or policies ofinsurance with reputable insurance companies providing the officers anddirectors of the Company with coverage for losses from wrongful acts, or toensure the Company’s performance of its indemnification obligations under thisAgreement.  Among other considerations,the Company will weigh the costs of obtaining such insurance coverage againstthe protection afforded by such coverage. Notwithstanding the foregoing, the Company shall have no obligation toobtain or maintain such insurance if the Company determines in good faith thatsuch insurance is not reasonably available, or if the premium costs for suchinsurance are disproportionate to the amount of coverage provided, if thecoverage provided by such insurance is limited by exclusions so as to providean insufficient benefit, or if Indemnitee is covered by similar insurancemaintained by a subsidiary or parent of the Company.

 

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13.  Notice of Claim.  The Indemnitee, as a condition precedent tohis right to be indemnified under this Agreement, shall give to the Companynotice in writing as soon as practicable of any claim made against him forwhich indemnity will or could be sought under this Agreement.  Notice to the Company shall be given at itsprincipal office and shall be directed to the Corporate Secretary (or suchother address as the Company shall designate in writing to the Indemnitee);notice shall be deemed received if sent by prepaid mail properly addressed, thedate of such notice being the date postmarked. In addition, the Indemnitee shall give the Company such information andcooperation as it may reasonably require and as shall be within the Indemnitee’spower.

 

14.  Entire Agreement.  This Agreement supersedes all prioragreements and understandings, both written and oral, among the parties withrespect to the subject matter hereof and is not intended to confer upon anyperson other than the parties hereto any rights or remedies hereunder.

 

15.  Counterparts.  This Agreement may be executed in any numberof counterparts, all of which taken together shall constitute one instrument.

 

16.  Indemnification HereunderNot Exclusive.  Nothing herein shallbe deemed to diminish or otherwise restrict the Indemnitee’s right toindemnification under any provision of the Certificate of Incorporation orBylaws of the Company and amendments thereto or under law.

 

17.  Governing Law.  This Agreement shall be governed by andconstrued in accordance with Delaware law, without regard to the conflicts oflaw provisions thereof.

 

18.  Saving Clause.  Wherever there is conflict between anyprovision of this Agreement and any applicable present or future statute, lawor regulation contrary to which the Company and the Indemnitee have no legalright to contract, the latter shall prevail, but in such event the affectedprovisions of this Agreement shall be curtailed and restricted only to theextent necessary to bring them within applicable legal requirements.

 

19.  Coverage.  The provisions of this Agreement shall applywith respect to the Indemnitee’s service as a Director and\or Officer of theCompany prior to the date of this Agreement and with respect to all periods ofsuch service after the date of this Agreement, even though the Indemnitee mayhave ceased to be a Director and\or Officer of the Company.

 

(Signature Page Follows)

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to beduly executed and signed as of the day and year first above written.

 

 
|   | GUITAR CENTER, INC.    |
|--------|------------------------|
|   |                   |
|   |                   |
|   | By:                    |   |
|   | Authorized Officer     |
|   |                   |
|   | “INDEMNITEE” |
|   |                   |
|   |                   |
|   |                   |   |

 

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