Document:

Exhibit
10.1

 

GUITAR CENTER, INC.

 

STOCK OPTION AGREEMENT

 

1.             Plan
Incorporated by Reference.  This option is
issued pursuant to The 2004 Guitar Center, Inc. Incentive Stock Award Plan (the
“Plan”), the terms of which are hereby incorporated by reference and thereby
constitute part of this Agreement. 
Capitalized terms not otherwise defined herein shall have the meanings
given to them in the attached Notice of Grant of Stock Options and in the Plan.  In the event of any conflict between the
provisions of this Agreement and those of the Plan, the provisions of the Plan
shall control.  You acknowledge
receipt of a copy of the Plan and represent that you are familiar with the
terms and provisions of the Plan.  You
hereby agree to accept as binding, conclusive and final all decisions or
interpretations of the Administrator of the Plan upon any questions related to
this Agreement or arising under the Plan.

 

2.             Option Shares
and Exercise Price.  The Company hereby grants to
you an option to purchase the Common Stock (the “Shares”) set forth in the
Notice of Grant of Stock Options, at the exercise price per Share set forth in
the Notice of Grant of Stock Options.  To
the extent provided in the Notice of Grant of Stock Options, this option is intended
to qualify as an incentive stock option within the meaning of Section 422
of the Internal Revenue Code of 1986, as amended.

 

3.             Exercisability Schedule.  Provided you have remained in continuous service as an Employee,
Director or Consultant as of each applicable vesting date, as required by the
Plan, this option shall become vested and exercisable in accordance with the
Vesting Schedule set forth in the Notice of Grant of Stock Options.  You acknowledge and agree
that the vesting of shares pursuant to this option is earned only by continuing
service as an Employee, Director or Consultant at the will of the Company (not
through the act of being hired, being granted this option or acquiring shares
hereunder).

 

4.             Payment of Exercise Price.  Payment of the exercise price per share is
due in full upon exercise of all or any part of each installment which has
accrued to you plus  payment of any applicable withholding tax. 
You may elect, to the extent permitted by applicable statutes and
regulations, to make payment of the exercise price under one of the following
alternatives:

 

(a)           Payment of the exercise price per share in cash (including check)
at the time of exercise;

 

(b)           With the consent of the Administrator of
the Plan, payment, in whole or in part, through the delivery of shares of
Common Stock owned by you for at least six (6) months, duly endorsed for
transfer to the Company with a Fair Market Value on the date of delivery equal
to the aggregate exercise price of the option or exercised portion thereof; 

 

(c)           With the consent of the Administrator of
the Plan, payment, in whole or in part, through the surrender of shares of
Common Stock then issuable upon exercise of the option having a Fair Market
Value on the date of option exercise equal to the aggregate exercise price of
the option or exercised portion; 

 

(d)           With the consent of the Administrator of
the Plan, payment, in whole or in part, through the delivery of property of any
kind which constitutes good and valuable consideration;

 

(e)           With the consent of the Administrator of
the Plan, payment, in whole or in part, through the delivery of a full recourse
promissory note bearing interest (at no less than a market rate of interest
which then precludes the imputation of interest under the Code) and payable
upon such terms as may be prescribed by the Administrator of the Plan;

 

(f)            With the consent of the Administrator of
the Plan, payment, in whole or in part, through the delivery of a notice that
the Optionee has placed a market sell order with a broker with respect to shares
of Common Stock then issuable upon exercise of the option, and that the broker
has been directed to pay a sufficient portion of the net proceeds of the sale
to the Company in satisfaction of the option exercise price, provided, that payment of such proceeds is
then made to the Company upon settlement of such sale; or

 

(g)           With the
consent of the Administrator of the Plan, payment by a combination of the methods of payment permitted
by subparagraphs 4(a) through 4(f) above.

 

 

5.             No Fractional
Shares.  This option may
not be exercised for any number of shares which would require the issuance of
anything other than whole shares.

 

6.             Option
Term.  The term of
this option commences on the date of grant of the option set forth in the
Notice of Grant of Stock Option and, unless sooner terminated as set forth
below or in the Plan, terminates on the expiration date of the option set forth
in the Notice of Grant of Stock Option. 
This option may not be exercised to any extent by anyone after the first
to occur of the following events:

 

(a)           The expiration date of the option set
forth in the Notice of Grant of Stock Option (which date shall be no more than ten (10) years from the
date of grant of the option);

 

(b)           The expiration of three (3) months from
the date of the later of Optionee’s Termination of Employment, Termination of
Directorship or Termination of Consultancy for any reason other than as a
result of the Optionee’s death or permanent and total disability (within the
meaning of Section 22(e)(3) of the Code) (“Disability”);

 

(c)           The expiration of one (1) year from the
date of the later of Optionee’s Termination of Employment, Termination of
Directorship or Termination of Consultancy by reason of Optionee’s Disability;
or

 

(d)           The expiration
of one (1) year from the date of the Optionee’s death.

 

However, this option may be
exercised following Optionee’s termination only as to that number of shares as
to which it was vested and exercisable on the date of such termination.

 

7.             Method of Exercise. 
This option may
be exercised, to the extent specified above, by delivering a notice of exercise
(in a form designated by the Company) together with the exercise price to the
Secretary of the Company, or to such other person as the Company may designate,
during regular business hours, together with such additional documents as the
Company may then require pursuant to the Plan. 
By exercising this option you agree that the Company may require you to
enter into an arrangement providing for the payment by you to the Company of
any tax withholding obligation of the Company.

 

8.             Option Not
Transferable.  This option is
not transferable, except by will or by the laws of descent and distribution or,
with respect to Non-Qualified Stock Options only, pursuant to a DRO, and is
exercisable during your life only by you unless, with respect to Non-Qualified
Stock Options only, the option has been transferred pursuant to a DRO.  By delivering written notice to the Company,
in a form satisfactory to the Company, you may designate a third party who, in
the event of your death, shall thereafter be entitled to exercise this option.

 

9.             No Right to
Employment/Continued Consultancy.  You acknowledge and agree
that nothing in this Agreement nor in the Plan shall confer upon you any right
with respect to continuation of employment or consultancy by the Company, nor
shall it interfere in any way with your right or the Company’s right to
terminate your employment or consultancy at any time, with or without notice
and with or without cause.  You acknowledge
that you are an “employee at will.”

 

10.          Notices.  Any notices provided for in this Agreement or the Plan shall be
given in writing and shall be deemed effectively given upon receipt or, in the
case of notices delivered by the Company to you, five (5) days after deposit in
the United States mail, postage prepaid, addressed to you at the address
specified on the Notice of Grant of Stock Options or at such other address as
you hereafter designate by express written notice to the Company.

 

11.          ISO Limitation.  To the extent that the aggregate Fair Market
Value (determined at the time of grant) of Common Stock with respect to which
Incentive Stock Options are exercisable for the first time by the optionholder
during any calendar year (under all plans of the Company and its affiliates)
exceeds $100,000, the options or portions thereof which exceed such limit
(according to the order in which they were granted) shall be treated as
Non-Qualified Stock Options.

 

12.          Forfeiture Provisions.  Any shares of Common Stock received by you
upon any exercise of this option, and any proceeds, gains or other economic benefit
actually or constructively received by you upon the resale
of any Common Stock underlying this option, must be paid to the Company, and
this option shall terminate and any unexercised portion of this option (whether
or not vested) shall be forfeited, if (i)  at any time prior to six (6) months after any exercise
of this option, you provide services for any organization or engage directly or
indirectly  in any
business in competition with the Company or any Subsidiary, or engage
in any conduct which is inimical, contrary or

 

2

 

harmful
to the interests of the Company or any such Subsidiary, or (ii)
you, during the term of this option, incur a Termination of Employment or
Termination of Consultancy for Cause.  For
purposes hereof, the term “Cause” means (1) “Cause” as defined in an individual
employment agreement between you and the Company or any Subsidiary, if any, (2)
in the judgment of the Chief Executive Officer of the Company or the Board, you
are negligent in the course of providing services to the Company or any
Subsidiary, or commit any act of personal dishonesty, fraud or breach of
fiduciary duty or trust, (3) conduct of a criminal nature that has or that may
have an adverse effect on the Company or any Subsidiary’s reputation or
standing in the community, or on its continuing relationships with customers or
those who purchase or use its products or services, (4) any act or acts by you
of personal conduct that are in violation of a policy or policies as set forth
in the Employee Handbook of the Company or any Subsidiary in effect at the time
of the act or acts, (5) any act or acts by you in violation of specific
directions of the your supervisor or continued or repeated failure by you to
perform duties assigned by such supervisor, or (6) any material
misrepresentation or omission regarding employment history, education or
experience made by you in connection with your negotiations to become an
employee of the Company or any Subsidiary.

 

13.          Amendments and Waivers.  Except as otherwise set forth in the Plan,
the provisions of this Agreement and
the attached Notice of Grant of Stock Options may be amended and
waived only with the written consent of the Company and you.  No course of conduct or failure or delay in
enforcing the provisions of this Agreement shall affect the validity, binding
effect or enforceability of this Agreement or any provision hereof.

 

14.          Governing Law.  The Plan, this Agreement and the attached
Notice of Grant of Stock Options shall be administered, interpreted and
enforced under the internal laws of the State of Delaware without regard to
conflicts of laws thereof.

 

3Exhibit 10.2

 

RESTRICTED STOCK AGREEMENT

 

THIS RESTRICTED STOCK AGREEMENT, dated
as of _____________, 200_ (the “Effective Date”), is made by and among
Guitar Center, Inc., a Delaware corporation (the “Company”), and
_____________, a key Employee or Consultant or Director of the Company or a
subsidiary of the Company (the “Holder”):

 

WHEREAS, the Company has established The 2004 Guitar
Center, Inc. Incentive Stock Award Plan (the “Plan”);

 

WHEREAS, the Company wishes to carry out the Plan (the
terms of which are hereby incorporated by reference and made a part of this
Agreement);

 

WHEREAS,  the Plan
provides for the issuance of shares of the Company’s Common Stock (as defined
herein) subject to certain restrictions thereon; and

 

WHEREAS, the Compensation Committee of the Company’s
Board of Directors (the “Committee”), has determined that it would be to
the advantage and in the best interest of the Company and its stockholders to
obtain and retain the services of Directors, key Employees and Consultants
considered essential to the long range success of the Company by offering them
an opportunity to own stock in the Company.

 

NOW, THEREFORE, in consideration of the mutual
covenants herein contained and other good and valuable consideration, receipt
of which is hereby acknowledged, the parties hereto do hereby agree as follows:

 

ARTICLE I.

DEFINITIONS

 

1.1           General.  Wherever the
following terms are used in this Agreement they shall have the meanings
specified below, unless the context clearly indicates otherwise.  Capitalized terms not defined herein shall
have the meanings assigned to such terms in the Plan.  The masculine pronoun shall include the
feminine and neuter, and the singular the plural, where the context so indicates.

 

1.2           Consultant.  “Consultant”
shall mean any consultant or adviser if:

 

(a)           the consultant or adviser renders
bona fide services to the Company or any Subsidiary;

 

(b)           the services rendered by the
consultant or adviser are not in connection with the offer or sale of
securities in a capital-raising transaction and do not directly or indirectly
promote or maintain a market for the Company’s securities; and

 

 

(c)           the consultant or adviser is a
natural person who has contracted directly with the Company or any Subsidiary
to render such services.

 

1.3           Disability.  “Disability”
shall mean permanent and total disability (within the meaning of Section 22(e)(3)
of the Code).

 

ARTICLE II.

AWARD OF RESTRICTED STOCK

 

2.1           Award of Shares.  For good and
valuable consideration which the Committee has determined to exceed the par
value of its Common Stock, on the date hereof, the Company issues to the Holder
                       (                       )
shares of its Common Stock, par value $0.01, (the “Shares”) upon the
terms and conditions set forth in this Agreement.

 

2.2           Consideration to the Company. 
As consideration for the issuance of the Shares by the Company, the
Holder agrees to remain in the employ of or as a Consultant or Director to the
Company or any Subsidiary, with such duties and responsibilities as the Company
or any Subsidiary (as applicable) shall from time to time prescribe, for a
period of at least one year after the Shares are issued.  Nothing in this Agreement or in the Plan
shall confer upon the Holder any right to continue in the employ of or in the
service of the Company or any Subsidiary or shall interfere with or restrict in
any way the rights of the Company or any Subsidiary which are hereby expressly
reserved, to discharge a Holder who is an Employee or Consultant or Director at
any time for any reason whatsoever, with or without cause and with or without
advance notice.

 

ARTICLE III.

RESTRICTIONS

 

3.1           Forfeiture.  Upon the Holder’s Termination of
Employment, Termination of Consultancy or Termination of Directorship (each as
defined in the Plan), all of the Unreleased Shares (as defined below) shall
thereupon be forfeited immediately and without any further action by the
Company (the “Forfeiture Restriction”).

 

3.2           Unreleased Shares Not Transferable. 
Unless otherwise permitted by the Committee pursuant to the Plan, no
Unreleased Shares or any interest or right therein or part thereof shall be
liable for the debts, contracts or engagements of the Holder or his successors
in interest or shall be subject to disposition by transfer, alienation,
anticipation, pledge, encumbrance, assignment or any other means whether such
disposition be voluntary or involuntary or by operation of law by judgment,
levy, attachment, garnishment or any other legal or equitable proceedings
(including bankruptcy), and any attempted disposition thereof shall be null and
void and of no effect (the “Transfer Restriction”); provided, however,
that this Section 3.2 shall not prevent transfers by will or by applicable
laws of descent and distribution.

 

In case of a permitted transfer, the transferee or
other recipient shall receive and hold the Shares so transferred subject to the
provisions of this Agreement, and there shall be no further transfer of such
Shares except in accordance with the terms of this Section.  Any transferee shall acknowledge the same by
signing a

 

2

 

copy of this Agreement.  Transfer or sale of the Shares is subject to
restrictions on transfer imposed by any applicable state and federal securities
laws.

 

3.3           Release of Shares from Restrictions.

 

(a)           Subject to Sections 3.1, 3.6 and
3.7, the Shares shall be released from the Forfeiture Restriction and the
Transfer Restriction as follows:

 

[                            
of the Shares shall be released from the Forfeiture Restriction and the Transfer
Restriction on the
                               
anniversary of the Effective Date.  (The
remaining
                              
of the Shares shall be released from the Forfeiture Restriction and the Transfer
Restriction on the
            anniversary
of the Effective Date.)]

 

(b)           Any of the Shares which, from time to
time, have not yet been released from the Forfeiture Restriction and the
Transfer Restriction are referred to herein as “Unreleased  Shares.”

 

3.4           Legend.  Certificates
representing Shares issued pursuant to this Agreement shall, until such Shares
are released from the Forfeiture Restriction and the Transfer Restriction and
new certificates are issued therefore, bear the following legend:

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO FORFEITURE AND CERTAIN RESTRICTIONS ON TRANSFERABILITY UNDER THE
TERMS OF THAT CERTAIN RESTRICTED STOCK AGREEMENT BY AND BETWEEN GUITAR CENTER,
INC. (THE “COMPANY”) AND THE REGISTERED OWNER OF SUCH SHARES, AND SUCH
SHARES  MAY NOT BE, DIRECTLY OR
INDIRECTLY, OFFERED, TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF UNDER ANY CIRCUMSTANCES, EXCEPT PURSUANT TO THE
PROVISIONS OF SUCH AGREEMENT.”

 

3.5           Issuance of Certificates for Vested Shares. 
Subject to Section 3.7, upon the release of Shares from the
Forfeiture Restriction and the Transfer Restriction, the Company shall cause
new certificates to be issued with respect to such vested Shares and delivered
to the Holder or his legal representative, free from the legend provided for in
Section 3.4.  Such vested Shares
shall cease to be subject to the terms and conditions of this Agreement.

 

3.6           Restrictions On New Shares. 
In the event that the Holder receives any new or additional or different
shares or securities which are attributable to the Holder in his capacity as
the registered owner of Shares then subject to Forfeiture Restriction and the
Transfer Restriction, such new or additional or different shares or securities
shall be considered to be Shares under this Agreement and shall be subject to
the Forfeiture Restriction and the Transfer Restriction, unless the Board or
the Committee provides otherwise.

 

3.7           Tax Withholding. 
Notwithstanding anything to the contrary in this Agreement, the Company
shall be entitled to require payment in cash or deduction from other
compensation payable

 

3

 

to the Holder of any sums required by federal, state
or local tax law to be withheld with respect to the issuance, lapsing of
restrictions on or exercise of the Shares. 
The Board or the Committee may, in their discretion, allow the Holder to
deliver shares of Common Stock owned by the Holder duly endorsed for transfer
to the Company with an aggregate Fair Market Value on the date of delivery
equal to the statutory minimum sums to be withheld.  The Company shall not be obligated to deliver
any new certificate representing vested Shares to the Holder or his legal
representative unless and until the Holder or his legal representative shall
have paid or otherwise satisfied in full the amount of all federal, state and
local taxes applicable to the taxable income of the Holder resulting from the
grant of the Shares or the lapse or removal of the Forfeiture Restriction and
the Transfer Restriction.

 

ARTICLE IV.

MISCELLANEOUS

 

4.1           Conditions to Issuance of  Stock Certificates.  The Company shall not be required to issue or
deliver any certificate or certificates for shares of stock pursuant to this
Agreement prior to fulfillment of all of the following conditions:

 

(a)           The admission of such shares to
listing on all stock exchanges on which such class of stock is then listed; and

 

(b)           The payment by the Holder of all
amounts required to be withheld, under federal, state and local tax laws, with
respect to the issuance of Shares and/or the lapse or removal of the Forfeiture
Restriction and/or the Transfer Restriction; and

 

(c)           The lapse of such reasonable period
of time as the Committee may from time to time establish for reasons of
administrative convenience; and

 

(d)           The completion of any registration
or other qualification of such shares under any state or federal law or under
rulings or regulations of the Securities and Exchange Commission or of any
other governmental regulatory body, which the Committee shall, in its absolute
discretion, deem necessary or advisable; and

 

(e)           The obtaining of any approval or
other clearance from any state or federal governmental agency which the
Committee shall, in its absolute discretion, determine to be necessary or
advisable.

 

4.2           Escrow.

 

(a)           Holder
hereby authorizes and directs the Secretary of the Company, or such other
person designated by the Company, to transfer the Unreleased Shares as to which
the Forfeiture Option is effective from Holder to the Company.

 

(b)           To
insure the availability for delivery of Holder’s Unreleased Shares upon
forfeiture pursuant to Section 3.1, Holder hereby appoints the Secretary,
or any other person designated by the Company as escrow agent, as its
attorney-in-fact to sell, assign and transfer

 

4

 

unto the Company, such Unreleased Shares, if
any, forfeited pursuant to the Forfeiture Option and shall, upon execution of
this Agreement, deliver and deposit with the Secretary of the Company, or such
other person designated by the Company, the share certificates representing the
Unreleased Shares, together with the stock assignment duly endorsed in blank,
attached hereto as Exhibit A.  If
married, Holder shall obtain the consent of his or her spouse to this Agreement
in the form attached hereto as Exhibit B.  The Unreleased Shares and stock assignment
shall be held by the Secretary in escrow, pursuant to the Joint Escrow
Instructions of the Company and Holder attached as Exhibit C
hereto, until the Forfeiture Restriction becomes effective as provided in Section 3.1,
until such Unreleased Shares are vested, or until such time as this Agreement
no longer is in effect.  Upon vesting of
the Unreleased Shares, the escrow agent shall deliver to the Holder, upon
request, the certificate or certificates representing such Shares in the escrow
agent’s possession belonging to the Holder, and the escrow agent shall be
discharged of all further obligations hereunder; provided, however, that the
escrow agent shall nevertheless retain such certificate or certificates as
escrow agent if so required pursuant to other restrictions imposed pursuant to
this Agreement.

 

(c)           The
Company, or its designee, shall not be liable for any act it may do or omit to
do with respect to holding the Shares in escrow and while acting in good faith
and in the exercise of its judgment.

 

4.3           Notices.  Any notice to
be given under the terms of this Agreement to the Company shall be addressed to
the Company in care of its Secretary, and any notice to be given to the Holder
shall be addressed to him at the address given beneath his signature hereto. By
a notice given pursuant to this Section 4.3, either party may hereafter
designate a different address for notices to be given to it or him. Any notice
which is required to be given to the Holder shall, if the Holder is then
deceased, be given to the Holder’s personal representative if such
representative has previously informed the Company of his status and address by
written notice under this Section 4.3. 
Any notice shall have been deemed duly given when enclosed in a properly
sealed envelope or wrapper addressed as aforesaid, deposited (with postage
prepaid) in a post office or branch post office regularly maintained by the
United States Postal Service.

 

4.4           Rights as Stockholder.  Except as otherwise provided
herein, upon delivery of the Shares to the escrow holder pursuant to Section 4.2,
the Holder shall have all the rights of a stockholder with respect to said
shares, subject to the restrictions herein, including the right to vote the
shares and to receive all dividends or other distributions paid or made with
respect to the Shares; provided, however, that any and all shares
of Common Stock received by the Holder with respect to such Shares as a result
of stock dividends, stock splits or any other form of recapitalization shall
also be subject to the Forfeiture Restriction and the Transfer Restriction
until such restrictions on the underlying Shares lapse or are removed pursuant
to this Agreement.

 

4.5           Titles.  Titles are
provided herein for convenience only and are not to serve as a basis for
interpretation or construction of this Agreement.

 

5

 

4.6           Conformity to Securities Laws. 
The Holder acknowledges that the Plan and this Agreement are intended to
conform to the extent necessary with all provisions of  all applicable federal and state laws, rules
and regulations (including but not limited to, the Securities Act and the
Exchange Act) and to such approvals by any listing, regulatory or other
governmental authority as may, in the opinion of counsel for the Company, be
necessary or advisable in connection therewith. 
Notwithstanding anything herein to the contrary, this Agreement shall be
administered, and the Shares shall be issued, only in such a manner as to
conform to such laws, rules and regulations. To the extent permitted by
applicable law, the Plan, this Agreement and the Shares issued hereunder shall
be deemed amended to the extent necessary to conform to such laws, rules and
regulations.

 

4.7           Limitations Applicable to Section 16 Persons. 
Notwithstanding any other provision of this Agreement or the Plan, this
Agreement shall be subject to any additional limitations set forth in any
applicable exemptive rule under Section 16 of the Exchange Act (including
any amendment to Rule 16b-3) that are requirements for the application of
such exemptive rule.  To the extent
permitted by applicable law and the Plan, this Agreement shall be deemed
amended to the extent necessary to conform to such applicable exemptive rule.

 

4.8           Governing Law.  The laws of the State of Delaware
shall govern the interpretation, validity, administration, enforcement and
performance of the terms of this Agreement regardless of the law that might be
applied under principles of conflicts of laws.

 

4.9           Survival of Terms.  This
Agreement shall apply to and bind Holder and the Company and their respective
permitted assignees and transferees, heirs, legatees, executors, administrators
and legal successors.

 

4.10         Counterparts.  This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

 

4.11         Assignment.  Except as
otherwise provided herein, the Company’s rights and obligations hereunder may
be assigned to any Subsidiary of the Company or to any successor pursuant to a
merger, consolidation or similar event. 
Subject to the foregoing, this Agreement and the respective rights and
obligations of the parties hereto shall inure to the benefit of and be binding
upon, the successors and assigns of the parties.

 

4.12         Invalid Provision.  The
invalidity or unenforceability of any particular provision hereof shall not
affect the other provisions hereof, and this Agreement shall be construed in
all respects as if such invalid or unenforceable provision was omitted.

 

(Signature page
follows)

 

6

 

IN WITNESS
HEREOF, this Agreement has been executed and delivered by the parties hereto.

 

 

	
   

  	
  Guitar Center, Inc., a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Holder:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address

  
	
   

  	
   

  
	
   

  	
  City, State, Zip Code

  
	
   

  	
   

  
	
   

  	
  Holder’s Taxpayer Identification Number

  
					

 

 

* * *
* *

 

7

 

EXHIBIT
A

 

ASSIGNMENT
SEPARATE FROM CERTIFICATE(S)

 

FOR VALUE RECEIVED I,
                                  ,
hereby sell, assign and transfer unto                        
           (__________)
shares of the Common Stock of Guitar Center, Inc. registered in my name on the
books of said corporation represented by Certificate
No(s).                                          
herewith and do hereby irrevocably constitute and appoint                       
to transfer the said stock on the books of the within named corporation with
full power of substitution in the premises.

 

This Assignment Separate from Certificate(s)
may be used only in accordance with the Restricted Stock Agreement between
Guitar Center, Inc. and the undersigned dated
                                 ,
                 .

 

 

	
  Dated:

  	
   

  	
  ,

  	
   

  	
  Signature:

  	
   

  

 

 

INSTRUCTIONS:  Please do not fill in any blanks other
than the signature line.  The purpose of
this assignment is to enable the Company to exercise the Forfeiture
Restriction, as set forth in the Restricted Stock Agreement, without requiring
additional signatures on the part of Holder.

 

A-1

 

EXHIBIT
B

 

CONSENT OF
SPOUSE

 

 

I,
                                    ,
spouse of                   ,
have read and approve the foregoing Agreement. 
In consideration of granting of the right to my spouse to purchase
shares of Guitar Center, Inc. set forth in the Restricted Stock Agreement, I
hereby appoint my spouse as my attorney-in-fact in respect to the exercise of
any rights under the Agreement and agree to be bound by the provisions of the
Restricted Stock Agreement insofar as I may have any rights in said Restricted
Stock Agreement or any shares issued pursuant thereto under the community
property laws or similar laws relating to marital property in effect in the
state of our residence as of the date of the signing of the foregoing Restricted
Stock Agreement.  I understand and
acknowledge that I have been advised to seek the advice of legal counsel in
executing this consent and that I have been given a meaningful opportunity
either to consult with such legal counsel or determine to execute this consent
without the advise of legal counsel.

 

 

	
  Dated:

  	
   

  	
  ,200

  	
   

  	
   

  

 

B-1

 

EXHIBIT C

 

JOINT
ESCROW INSTRUCTIONS

 

, 200_

 

Guitar Center, Inc.

Attn: Secretary

 

As Escrow Agent for Guitar Center, Inc. (the “Company”)
and the undersigned purchaser of stock of the Company (the “Purchaser”),
you are hereby authorized and directed to hold the documents delivered to you
pursuant to the terms of that certain Restricted Stock Agreement (“Agreement”)
between the Company and the undersigned, in accordance with the following
instructions:

 

1.             In
the event of forfeiture of any of the shares owned by Purchaser pursuant to the
Forfeiture Restriction set forth in the Agreement, the Company and/or any
assignee of the Company (referred to collectively for convenience herein as the
“Company”) shall give to Purchaser and you a written notice specifying
the number of shares of stock forfeited and the date of forfeiture.  Purchaser and the Company hereby irrevocably
authorize and direct you to effect the forfeiture contemplated by such notice
in accordance with the terms of said notice.

 

2.             As
of the date of forfeiture indicated in such notice, you are directed
(a) to date the stock assignments necessary for the forfeiture and transfer
in question, (b) to fill in the number of shares being forfeited and
transferred, and (c) to deliver the same, together with the certificate
evidencing the shares of stock to be forfeited and transferred, to the Company
or its assignee.

 

3.             Purchaser
irrevocably authorizes the Company to deposit with you any certificates
evidencing shares of stock to be held by you hereunder and any additions and
substitutions to said shares.  Purchaser
does hereby irrevocably constitute and appoint you as Purchaser’s
attorney-in-fact and agent for the term of this escrow to execute, with respect
to such securities, all documents necessary or appropriate to make such
securities negotiable and to complete any transaction herein contemplated,
including but not limited to the filing with any applicable state blue sky
authority of any required applications for consent to, or notice of transfer
of, the securities.  Subject to the
provisions of this paragraph 3, Purchaser shall exercise all rights and
privileges of a stockholder of the Company while the stock is held by you.

 

4.             Upon
written request of Purchaser, but no more than once per calendar year, unless
the Forfeiture Restriction has been triggered, you will deliver to Purchaser a
certificate or certificates representing the number of shares of stock as are
not then subject to the Forfeiture Restriction. 
Within one hundred twenty (120) days after any voluntary or involuntary
termination of Purchaser’s services to the Company for any or no reason, you
will deliver to Purchaser a certificate or certificates representing the
aggregate number of shares held or issued pursuant to the Agreement and not
forfeited pursuant to the Forfeiture Restriction set forth in Section 3 of
the Agreement.

 

C-1

 

5.             If
at the time of termination of this escrow you should have in your possession
any documents, securities, or other property belonging to Purchaser, you shall
deliver all of the same to Purchaser and shall be discharged of all further
obligations hereunder.

 

6.             Your
duties hereunder may be altered, amended, modified or revoked only by a writing
signed by all of the parties hereto.

 

7.             You
shall be obligated only for the performance of such duties as are specifically
set forth herein and may rely and shall be protected in relying or refraining
from acting on any instrument reasonably believed by you to be genuine and to
have been signed or presented by the proper party or parties.  You shall not be personally liable for any
act you may do or omit to do hereunder as Escrow Agent or as attorney-in-fact
for Purchaser while acting in good faith, and any act done or omitted by you
pursuant to the advice of your own attorneys shall be conclusive evidence of
such good faith.

 

8.             You
are hereby expressly authorized to disregard any and all warnings given by any
of the parties hereto or by any other person or corporation, excepting only
orders or process of courts of law and are hereby expressly authorized to
comply with and obey orders, judgments or decrees of any court.  In case you obey or comply with any such
order, judgment or decree, you shall not be liable to any of the parties hereto
or to any other person, firm or corporation by reason of such compliance,
notwithstanding any such order, judgment or decree being subsequently reversed,
modified, annulled, set aside, vacated or found to have been entered without
jurisdiction.

 

9.             You
shall not be liable in any respect on account of the identity, authorities or
rights of the parties executing or delivering or purporting to execute or
deliver the Agreement or any documents or papers deposited or called for
hereunder.

 

10.           You
shall not be liable for the expiration of any rights under any applicable
state, federal or local statute of limitations or similar statute or regulation
with respect to these Joint Escrow Instructions or any documents deposited with
you.

 

11.           You
shall be entitled to employ such legal counsel and other experts as you may
deem necessary properly to advise you in connection with your obligations
hereunder, may rely upon the advice of such counsel, and the Company shall
reimburse you for any reasonable attorneys’ fees incurred in connection
therewith.

 

12.           Your
responsibilities as Escrow Agent hereunder shall terminate if you shall cease
to be an officer or agent of the Company or if you shall resign by written
notice to each party.  In the event of
any such termination, the Company shall appoint a successor Escrow Agent.

 

13.           If
you reasonably require other or further instruments in connection with these
Joint Escrow Instructions or obligations in respect hereto, the necessary
parties hereto shall join in furnishing such instruments.

 

14.           It
is understood and agreed that should any dispute arise with respect to the
delivery and/or ownership or right of possession of the securities held by you
hereunder, you are authorized and directed to retain in your possession without
liability to anyone all or any part of

 

C-2

 

said securities until such disputes shall have been settled either by
mutual written agreement of the parties concerned or by a final order, decree
or judgment of a court of competent jurisdiction after the time for appeal has
expired and no appeal has been perfected, but you shall be under no duty
whatsoever to institute or defend any such proceedings.

 

15.           Any
notice required or permitted hereunder shall be given in writing and shall be
deemed effectively given upon personal delivery or upon deposit in the United
States Post Office, by registered or certified mail with postage and fees
prepaid, addressed to each of the other parties thereunto entitled at the
addresses set forth on the signature pages hereto or at such other addresses as
a party may designate by ten (10) days’ advance written notice to each of the
other parties hereto.

 

16.           By
signing these Joint Escrow Instructions, you become a party hereto only for the
purpose of said Joint Escrow Instructions; you do not become a party to the
Agreement.

 

17.           This
instrument shall be binding upon and inure to the benefit of the parties
hereto, and their respective successors and permitted assigns.

 

18.           These
Joint Escrow Instructions shall be governed by, and construed and enforced in
accordance with, the laws of the State of California, excluding that body of
law pertaining to conflicts of law.

 

(Signature page follows)

 

C-3

 

IN WITNESS
HEREOF, this Agreement has been executed and delivered by the parties hereto.

 

 

	
   

  	
  Guitar Center, Inc., a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Holder:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address 

  
	
   

  	
   

  
	
   

  	
  City, State, Zip Code

  
	
   

  	
   

  
	
   

  	
  Holder’s Taxpayer Identification Number

  
					

 

C-4

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