Exhibit 10.1


 


AMENDMENT

TO THE

GUITAR CENTER, INC.

AMENDED 1997 EQUITY PARTICIPATION PLAN


 


                Pursuant
to the authority reserved to the Board of Directors (the “Board”) of Guitar Center, Inc. (the “Company”), a corporation organized under
the laws of State of Delaware, under Section 10.2 of the Guitar Center, Inc. Amended
1997 Equity Participation Plan (the “Plan”),
the Board hereby amends the Plan as follows.


 


1.             Effective as of November 2, 2006, Article I of the Plan
is hereby amended to incorporate a new section following the definition of “Employee”
and preceding the definition of “Exchange Act”, to read in its entirety as
follows:


                                EQUITY RESTRUCTURING.  “Equity Restructuring” shall mean a
non-reciprocal transaction between the Company and its stockholders, such as a
stock dividend, stock split, spin-off, rights offering or recapitalization
through a large, nonrecurring cash dividend, that affects the shares of Common Stock
(or other securities of the Company) or the share price of Common Stock (or
other securities) and causes a change in the per share value of the Common Stock
underlying outstanding Awards.


2.             Effective as of November 2, 2006, Section 10.3(a) of the
Plan is hereby amended to read in its entirety as follows:


               (a)           Subject to Section 10.3(d), in the event that the
Committee (or the Board, in the case of Options granted to Independent
Directors) determines that other than an Equity Restructuring any dividend or
other distribution (whether in the form of cash, Common Stock, other
securities, or other property), recapitalization, reclassification, stock
split, reverse stock split, reorganization, merger, consolidation, split-up,
spin-off, combination, repurchase, liquidation, dissolution, or sale, transfer,
exchange or other disposition of all or substantially all of the assets of the
Company (including, but not limited to, a Corporate Transaction), or exchange
of Common Stock or other securities of the Company, issuance of warrants or
other rights to purchase Common Stock or other securities of the Company, or
other similar corporate transaction or event, in the Committee’s sole
discretion (or in the case of Options granted to Independent Directors, the
Board’s sole discretion), affects the Common Stock such that an adjustment is
determined by the Committee to be appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under the Plan or with respect to an Option, Restricted Stock award,
Performance Award, Stock Appreciation Right, Dividend Equivalent, Deferred
Stock award or Stock Payment, then the Committee (or the Board, in the case of
Options granted to Independent Directors) shall, in such manner as it may deem
equitable, adjust any or all of


 


                                (i)            the number and kind of shares of
Common Stock (or other securities or property) with respect to which Options,
Performance Awards, Stock Appreciation Rights, Dividend Equivalents or Stock Payments
may be granted under the Plan, or which may be granted as Restricted Stock or
Deferred Stock 


 


 

















(including,
but not limited to, adjustments of the limitations in Section 2.1 on the
maximum number and kind of shares which may be issued and adjustments of the
Award Limit),


 


                                (ii)           the number and kind of shares of
Common Stock (or other securities or property) subject to outstanding Options,
Performance Awards, Stock Appreciation Rights, Dividend Equivalents, or Stock
Payments, and in the number and kind of shares of outstanding Restricted Stock
or Deferred Stock, and


 


                                (iii)          the grant or exercise price with
respect to any Option, Performance Award, Stock Appreciation Right, Dividend
Equivalent or Stock Payment.


 


3.             Effective as of November 2, 2006, Section 10.3 of the
Plan is hereby amended to incorporate a new subsection (e) following existing
subsection (d), to read in its entirety as follows:


(f)
           In connection with the
occurrence of any Equity Restructuring, and notwithstanding anything to the
contrary in Section 10.3(a) and 10.3(b):


                                (i)            The number and type of securities
subject to each outstanding Option, Performance Award, Stock Appreciation
Right, Dividend Equivalent, Stock Payment, Restricted Stock or Deferred Stock and
the exercise price or grant price thereof, if applicable, will be
proportionately adjusted.  The
adjustments provided under this Section 10.3(e)(i) shall be nondiscretionary
and shall be final and binding on the affected Optionee or Grantee and the
Company.


 


                                (ii)           The Committee shall make such
proportionate adjustments, if any, as the Committee in its discretion may deem
appropriate to reflect such Equity Restructuring with respect to the aggregate
number and kind of shares that may be issued under the Plan (including, but not
limited to, adjustments of the limitations in Section 2.1 and the Award Limit).


 


4.             Notwithstanding
anything in this Amendment to the Plan to the contrary, this Amendment to the
Plan shall not apply to, and instead Section 10.3(a) of the Plan shall apply to,
any Option, Performance Award, Stock Appreciation Right, Dividend Equivalent,
Stock Payment, Restricted Stock or Deferred Stock to which the adoption of this
Amendment to the Plan by the Board would (A) result in a penalty tax under
Section 409A of the Code and the Department of Treasury proposed and final
regulations and guidance thereunder or (B) cause any Incentive Stock Option to
fail to qualify as an “incentive stock option” under Section 422 of the Code.


 


 


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* * * * * * * *


Executed
on November 2, 2006


	
  GUITAR CENTER, INC.

  
	
   

  
	
   

  
	
  By:

  
	
   

  
	
  /s/ Leland P. Smith

  
	
  Officer

  



 


 


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