Document:

Exhibit 10.44

 

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 Marty Albertson  (“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

 

1

 

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

 

2

 

accrued through the date of termination and
(ii) a cash bonus equal to 100% of the Adjusted Base 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)

 

3

 

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/ Marty
  Albertson

  
	
   

  	
   

  	
  Marty
  Albertson

  

 

 

4Exhibit 10.45

 

THIRD AMENDED AND RESTATED EMPLOYMENT
AGREEMENT

 

This THIRD
AMENDED AND RESTATED EMPLOYMENT AGREEMENT is made effective as of July 1, 2003
(the “Agreement”), between GUITAR CENTER, INC., a Delaware corporation
(the “Company”), and Bruce Ross (the “Executive”).

 

This Agreement
amends and restates that certain Second Amended and Restated Employment
Agreement, dated as of July 1, 2001, between the Executive and the Company,
which agreement amended and restated that certain Amended and Restated Employment
Agreement, dated as of July 1, 1998, between the Executive and the Company,
which agreement amended and restated that certain Employment Agreement, dated
as of June 5, 1996, between the Executive and the Company’s predecessor, Guitar
Center Management, Inc., as amended by Amendment No. 1 dated October 15, 1996
and Amendment No. 2 dated as of January 30, 1997 (as so amended, the “Original
Agreement”).  The Original Agreement
was executed and delivered in connection with the closing of the Stock Purchase
Agreement (the “Purchase Agreement”) dated June 5, 1996 (the “Commencement
Date”) by and among the Company, Chase Venture Capital Associates, L.P.,
Wells Fargo Small Business Investment Company, Inc., Weston Presidio Capital
II, L.P., and the security holder of the Company.

 

In
consideration of the mutual 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.                                       EMPLOYMENT.  The Company shall employ the Executive, and
the Executive accepts employment with the Company, upon the terms and
conditions set forth in this Agreement for the period beginning on the
Commencement Date and ending as provided in Section 4 hereof (the “Employment
Period”).

 

2.                                       POSITION
AND DUTIES.

 

(a)                                  During
the Employment Period, the Executive shall serve as the Executive Vice
President and Chief Financial Officer of the Company and shall have the normal
duties, responsibilities and authority thereof, subject to the power of the
board of directors of the Company (the “Board”) and the powers delegated
to the Executive’s superiors (if any) by the Board.

 

(b)                                 The Executive shall report to the Board or its
designee, and the Executive shall devote his best efforts and substantially all
of his business time, attention and energies (except for permitted vacation
periods and reasonable periods of illness or other incapacity) to the business
and affairs of the Company and its Subsidiaries (as defined below).  The Executive shall perform his duties and
responsibilities to the best of his abilities in a diligent, trustworthy, and
businesslike manner.  During the
Employment Period, the Executive shall not engage in any business activity
which, in the reasonable judgment of the Board, materially conflicts with the
duties of the Executive hereunder, whether or not such activity is pursued for
gain, profit or other pecuniary advantage; provided, however,
that nothing herein is

 

 

intended to prohibit Executive
from managing his own investment portfolio so long as Executive shall at all
times adequately fulfill his obligations pursuant to this Section 2(b).

 

(c)                                  For purposes of this Agreement, (i) “Subsidiaries”
shall mean any corporation, partnership, limited liability company or similar
business organization of which the securities having a majority of the voting
power in electing directors or the comparable governing body or Person are, at
the time of determination, owned by the Company, directly or through one or
more Subsidiaries; and (ii) “Person” shall be construed broadly and
shall include, without limitation, an individual, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization, a limited
liability company and a governmental entity or any department or agency
thereof.

 

3.                                       BASE SALARY
AND BENEFITS.

 

(a)                                  During the Employment Period, the Executive’s base
salary shall be $290,000 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.  In
addition, during the Employment Period, the Executive shall be entitled to
participate in all employee benefit programs for which all 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.

 

(b)                                 In addition to the Base Salary, for each fiscal year
ending during the Employment Period, Executive shall also be eligible to
receive an annual bonus in a target amount of 50% of the Executive’s
then-current Base Salary.  The amount of
such bonus will be determined by the Board or its designee(s), in their sole
discretion.

 

(c)                                  The Company shall reimburse the Executive for all
reasonable expenses incurred by him in the course of performing his duties
under this Agreement which are consistent with the Company’s policies in effect
from time to time with respect to travel, entertainment and other business
expenses, subject to the Company’s requirements with respect to reporting and
documenting such expenses.

 

(d)                                 During the Employment Period, the Executive shall be
entitled to paid vacation consistent with the Company’s policy applicable to
its executives at the Executive Vice President level generally.  Vacation time not used in a given year will
not accrue and may not be carried forward to any future period.

 

4.                                       TERM;
SEVERANCE.

 

(a)                                  Unless renewed by mutual
agreement of the Company and the Executive, the Employment Period shall end on
June 30, 2006; provided, however, that (i) the Employment Period
shall terminate prior to such date upon the Executive’s resignation pursuant to
the provisions of Section 4(h) or 4(i) hereof, or the death or Disability (as
hereinafter defined)

 

2

 

of Executive; and (ii) the
Employment Period may be terminated by the Company at any time prior to such
date for Cause (as defined below) or without Cause.  For purposes of this Agreement the term “Disability” means
any long-term disability or incapacity which (i) renders the Executive unable
to substantially perform all of his duties hereunder for 180 days during any
18-month period or (ii) would reasonably be expected to render the Executive
unable to substantially perform all of his duties for 180 days during any
18-month period, in each case as determined by the Board (excluding the
Executive if he should be a member of the Board at the time of such
determination) in its good faith judgment after seeking and reviewing advice
from a qualified physician.

 

(b)                                 If the Employment Period is terminated by the Company
without Cause or by the Executive with Reasonable Justification prior to July
1, 2005, the Executive shall be entitled to receive as severance, for the
period beginning on the date of such termination and ending on June 30, 2006,
(i) the Base Salary for such severance period, (ii) an annual cash bonus equal
to the last annual bonus (excluding any portion thereof that the Co-Chief
Executive Officers of the Company considered extraordinary and non-recurring)
he received prior to termination (such bonus to be pro-rated for any partial
year), and (iii) continuation of his medical benefits (or, if such continuation
is not permitted by the Company’s insurers beyond the Employment Period, an
annual cash payment equal to the average premium the company pays to obtain
health insurance for an employee), unless the Executive has breached the
provisions of this Agreement, in which case the provisions of Section 12(a)(iii)
shall apply.  If the Employment Period
is terminated by the Company without Cause or by the Executive with Reasonable
Justification on or after July 1, 2005, the Executive shall be entitled to
receive as severance, for a period of one year, (i) the Base Salary for such
severance period, (ii) an annual cash bonus equal to the last annual bonus
(excluding any portion thereof that the Co-Chief Executive Officers of the
Company considered extraordinary and non-recurring) he received prior to
termination (such bonus to be pro-rated for any partial year), and (iii)
continuation of his medical benefits (or, if such continuation is not permitted
by the Company’s insurers beyond the Employment Period, an annual cash payment
equal to the average premium the company pays to obtain health insurance for an
employee), unless the Executive has breached the provisions of this Agreement,
in which case the provisions of Section 12(a)(iii) shall apply.  For purposes of this Section 4(b), benefits
will not include future participation in any discretionary bonus or equity
incentive pool, other than continuation of annual cash bonuses as contemplated
in the previous sentence.  Such
severance payments will be made periodically in the same amounts and at the
same intervals as the Base Salary, annual bonus and benefits (as applicable)
were paid immediately prior to termination of employment.  Executive shall have no duty to mitigate any
damages which Executive may suffer as a result of such termination nor shall
the severance benefits payable be reduced by any sums actually earned by
Executive as a result of any other employment obtained by Executive during the
original Employment Period.

 

(c)                                  If the Employment Period is terminated for any reason
(including pursuant to Section 4(i)) other than by the Company without Cause or
by the Executive with Reasonable Justification, the Executive shall be entitled
to receive only the Base Salary and then only to the extent such amount has
accrued through the date of termination.

 

3

 

(d)                                 Except as otherwise expressly required by law (e.g.,
COBRA) or as specifically provided herein, all of the Executive’s rights to
salary, severance, benefits, bonuses and other amounts hereunder (if any)
accruing after the termination of the Employment Period shall cease upon such
termination.  In the event that the
Employment Period is terminated by the Company without Cause or by the
Executive with Reasonable Justification, the Executive’s sole remedy shall be to
receive the severance payments and benefits described in Section 4(b) hereof.

 

(e)                                  If (i) the Employment Period
is terminated as a result of the Executive’s death or Disability, (ii) there is
a Sale of the Company, or (iii) the
Employment Period is terminated by the Company without Cause or by the
Executive with Reasonable Justification,
all stock options held by the Executive shall immediately vest pursuant to the
terms of the agreements by which such options were issued.

 

(f)                                    As a condition to the Executive’s receipt of any
benefits described in Section 4(b) or (e) hereof, the Executive shall be
required to execute a Release (the “Release”) of all claims arising out
of his employment or the termination thereof, in a form reasonably acceptable
to the Company.  Such Release shall
specifically relate to all of the Executive’s rights and claims in existence at
the time of such execution but shall exclude any continuing obligations the
Company may have to the Executive following the date of termination under this
Agreement or any other agreement providing for obligations to survive the
Executive’s termination of employment.

 

(g)                                 For purposes of this Agreement, “Cause” means
any termination by the Company of Executive’s employment within 90 days after
the Board becomes aware of the occurrence of any of the following:

 

(i)                                     the ongoing and repeated
failure by the executive to perform such lawful duties consistent with
executive’s position as are reasonably requested by the board in good faith as
documented in writing to the executive (other than as a result of executive’s
illness or disability);

 

(ii)                                  the executive’s ongoing and
repeated material neglect of his duties on a general basis (other than as a
result of executive’s illness or disability), notwithstanding written notice of
objection from the board and the expiration of a 30 day cure period;

 

(iii)                               the commission by the
executive of any act of fraud, theft or criminal dishonesty with respect to the
company or any of its subsidiaries or affiliates, or the conviction of the
executive of any felony;

 

(iv)                              the commission of any act
involving moral turpitude which (a) brings the company or any of its affiliates
into public disrepute or disgrace, or (b) causes material injury to the
customer relations, operations or the business prospects of the company or any
of its affiliates, or

 

4

 

(v)                                 material breach by the
executive of this agreement, including, without limitation, any breach by the
executive of the provisions of sections 5, 6 or 7 hereof, not cured within 30
days after written notice to executive from the board;

 

provided,
however, that in the event of an intentional breach of the provisions of
sections 5, 6 or 7 hereof, the executive shall not have the opportunity to
cure.

 

(h)                                 For purposes of this Agreement, “Reasonable
Justification” means any voluntary termination by the Executive of his
employment with the Company within 90 days after the occurrence of any of the
following events without Executive’s written consent:

 

(i)                                     the Executive is directed to perform an act that the
Executive reasonably believes to be in contravention of law, or which the
Executive reasonably believes would subject the Company and himself to material
liability, despite his express written objection addressed to the Board with
respect to such action;

 

(ii)                                  there has been any change in the Executive’s title or
any material reduction in the nature or scope of his responsibilities, or the
Executive is assigned duties that are inconsistent with his position;

 

(iii)                               there is any material reduction in the Executive’s
compensation or a material reduction in Executive’s other benefits (other than
reductions in benefits that generally affect all employees entitled to such
benefits ratably);

 

(iv)                              the Executive is required by the Company, after
written objection by the Executive, to relocate his principal place of
employment outside a radius of fifty miles from his place of employment
immediately prior to such relocation; or

 

(v)                                 there is a material failure by the Company to perform
any of its obligations to the Executive under this Agreement;

 

provided,
however, that with respect to unintentional Company breaches of Sections
4(h)(ii), (iii) and (v), the Company shall be given written notice by Executive
of such breach and 30 days to cure such breach, if curable.

 

(i)                                     If at any time during the Employment Period, there is
a Sale of the Company (as defined below), Executive may resign within 90 days
of the occurrence of such event by notifying the Company in writing, whereupon
the Employment Period shall be terminated and Executive shall be entitled
solely to receive Base Salary accrued through the date of termination as
specified in Section 4(c), and no separate severance benefit.

 

(j)                                     For
purposes of this Agreement, “Sale of the Company” shall mean a
transaction or series of integrated transactions involving an Independent Third
Party or group of Independent Third Parties acting in concert pursuant to which
such party or parties acquire (i) capital stock of the Company possessing the
voting power to elect a majority of the entire board of directors of the
Company (whether by merger, consolidation or issuance of the Company’s capital
stock), or (ii) all or substantially all of the Company’s assets determined on
a

 

5

 

consolidated basis, or (iii)
60% or more of all of the Company’s common stock, on a fully-diluted basis.

 

(k)                                  For
purposes of this Agreement, “Independent Third Party” shall mean any
Person who, immediately prior to a contemplated transaction, individually and
with its Group or Family Group, as the case may be, does not own in excess of
10% of the Company’s common stock, on a fully-diluted basis.

 

(l)                                     For
purposes of this Agreement, “Group” shall mean:

 

(i)                                     in
the case of a partnership, (A) such partnership and any of its limited or
general partners, (B) any corporation or other business organization to which
such partnership shall sell all or substantially all of its assets or with
which it shall be merged, (C) any Affiliate of such partnership, and (D) with
respect to any individual identified in clauses (A) through (C) above, members
of his Family Group; and

 

(ii)                                  in
the case of a corporation, (A) such corporation, (B) any corporation or other business
organization to which such corporation shall sell or transfer all or
substantially all of its assets or with which it shall be merged, (C) any
Affiliate of such corporation, and (D) with respect to any individual
identified in clauses (A) through (C) above, members of his Family Group.

 

(m)                               For
purposes of this Agreement, “Family Group” shall mean an individual’s
spouse, ancestors and/or descendants (whether natural or adopted) and the
estate of and any trust solely for the benefit of such individual and/or the
individual’s spouse, ancestors and/or descendants.

 

(n)                                 For
purposes of this Agreement, “Affiliate” shall mean with respect to any
Person, (i) a director, officer or partner of such Person or any Person
identified in clause (iii) below, (ii) a spouse, parent, sibling or descendant
of such Person (or a spouse, parent, sibling or descendant of any director or
executive officer of such Person), and (iii) any other Person that, directly or
indirectly, through one or more intermediaries, controls, or is controlled by,
or is under common control with, such Person. 
The term “control” includes, without limitation, the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.

 

5.                                       NONDISCLOSURE
AND NONUSE OF CONFIDENTIAL INFORMATION.

 

(a)                                  The Executive will not disclose to a third party or
use for his personal benefit or for the benefit of a third party, at any time,
either during the Employment Period or thereafter, any Confidential Information
(as defined below) of which the Executive is or becomes aware, whether or not
such information is developed by him, except to the extent that such disclosure
or use is directly related to and required by the Executive’s performance in
good faith of duties assigned to the Executive by the Company or as required by
law or as necessary for Executive to enforce his rights hereunder.  The Executive will take all reasonable and

 

6

 

appropriate steps to safeguard
Confidential Information and to protect it against disclosure, misuse,
espionage, loss and theft.  The
Executive shall deliver to the Company at the termination of the Employment
Period or at any time the Company may request all memoranda, notes, plans,
records, reports, computer tapes and software and other documents and data (and
copies thereof) relating to the Confidential Information, Work Product (as
defined below) or the business of the Company or any of its Subsidiaries which
the Executive may then possess or have under his control.

 

(b)                                 As used in this Agreement, the term “Confidential
Information” means information that is not generally known to the public
and that is used, developed or obtained by the Company in connection with its
business, including but not limited to (i) information, observations and data
obtained by the Executive while employed by the Company (including those
obtained prior to the date of this Agreement) concerning the business or
affairs of the Company, (ii) products or services, (iii) fees, costs and
pricing structures, (iv) designs, (v) analyses, (vi) drawings, photographs and
reports, (vii) computer software, including operating systems, applications and
program listings, (viii) flow charts, manuals and documentation, (ix) data
bases, (x) accounting and business methods, (xi) inventions, devices, new
developments, methods and processes, whether patentable or unpatentable and
whether or not reduced to practice, (xii) customers and clients and customer or
client lists, (xiii) other copyrightable works, (xiv) all production methods,
processes, technology and trade secrets, and (xv) all similar and related
information in whatever form. 
Confidential Information will not include any information that has been
published in a form generally available to the public prior to the date the
Executive proposes to disclose or use such information.  Confidential Information will not be deemed
to have been published merely because individual portions of the information
have been separately published, but only if all material features comprising
such information have been published in combination.

 

6.                                       INVENTIONS
AND PATENTS.

 

(a)                                  The Executive agrees that all inventions, innovations,
improvements, technical information, systems, software developments, methods,
designs, analyses, drawings, reports, service marks, trademarks, tradenames,
logos and all similar or related information (whether patentable or
unpatentable) which relates to the Company’s or any of its Subsidiaries’ actual
or anticipated business, research and development or existing or future
products or services and which are conceived, developed or made by the
Executive (whether or not during usual business hours and whether or not alone
or in conjunction with any other person) while employed by the Company
(including those conceived, developed or made prior to the date of this
Agreement) together with all patent applications, letters patent, trademark, tradename
and service mark applications or registrations, copyrights and reissues thereof
that may be granted for or upon any of the foregoing (collectively referred to
herein as, the “Work Product”) belong to the Company or such
Subsidiary.  The Executive will promptly
disclose such Work Product as may be susceptible of such manner of
communication to the Board and perform all actions reasonably requested by the
Board (whether during or after the Employment Period) to establish and confirm
such ownership (including, without limitation, the execution and delivery of
assignments, consents, powers of attorney and other instruments) and to provide
reasonable assistance to the Company or any of its Subsidiaries in connection
with the 

 

7

 

prosecution of any applications
for patents, trademarks, trade names, service marks or reissues thereof or in
the prosecution or defense of interferences relating to any Work Product.

 

(b)                                 CALIFORNIA EMPLOYEE PATENT ACT NOTIFICATION.  In accordance with Section 2872 of the
California Employee Patent Act, West’s Cal. Lab. Code Section 2870 et. seq.,
Executive is hereby advised that Section 6(a) does not apply to any invention,
new development or method (and all copies and tangible embodiments thereof)
made solely by Executive for which no equipment, facility, material,
Confidential Information or intellectual property of the Company or any of its
Subsidiaries was used and which was developed entirely on Employee’s own time; provided,
however, that Section 6(a) shall apply if the invention, new development
or method (i) relates to the Company’s or any of its Subsidiaries’ actual or
demonstrably anticipated businesses or research and development, or (ii)
results from any work performed by Executive for the Company or any of its
Subsidiaries.

 

7.                                       NON-COMPETE
AND NON-SOLICITATION.

 

(a)                                  The Executive acknowledges and agrees with the Company
that during the course of the Executive’s involvement and/or employment with
the Company, such Executive has had and will continue to have the opportunity
to develop relationships with existing employees, vendors, suppliers, customers
and other business associates of the Company which relationships constitute
goodwill of the Company, and the Company would be irreparably damaged if the
Executive were to take actions that would damage or misappropriate such
goodwill.  Accordingly, the Executive
agrees as follows:

 

(i)                                     The Executive acknowledges that the Company currently
conducts its business throughout the United States, including without
limitation the areas listed on Exhibit A attached hereto (the “Territory”).  Accordingly, during the period commencing on
the date hereof and ending on the later of (x) the termination of the
Employment Period or (y) if the Executive was terminated without Cause or
resigns with Reasonable Justification, for so long as severance payments are
being made pursuant to Section 4(b) (such period is referred to herein as the “Non-Compete
Period”), the Executive shall not, directly or indirectly, enter into,
engage in, assist, give or lend funds to or otherwise finance, be employed by
or consult with, or have a financial or other interest in, any business which
engages in selling, at the retail level, musical instruments, pro-audio equipment
or related accessories within the Territory (the “Line of Business”),
whether for or by himself or as a representative for any other Person.

 

(ii)                                  Notwithstanding the foregoing, the aggregate ownership
by the Executive of no more than two percent (on a fully-diluted basis) of the
outstanding equity securities of any entity, which securities are traded on a
national or foreign securities exchange, quoted on the Nasdaq Stock Market or
other automated quotation system, and which entity competes with the Company
(or any part thereof) within the Territory, shall not (by itself) be deemed to
be giving or lending funds to, otherwise financing or having a financial
interest in a competitor.  In the event
that any entity in which the Executive has any financial or other interest
directly or indirectly enters into the Line of Business during the Non-Compete
Period, the Executive shall use his reasonable best efforts to divest all of
his interest (other than any amount permitted to be

 

8

 

held pursuant
to the first sentence of this Section 7(a)(ii)) in such entity within 30 days
after learning that such entity has entered the Line of Business.

 

(iii)                               The Executive covenants and agrees that during the
Non-Compete Period, the Executive will not, directly or indirectly, either for
himself or for any other person or entity, solicit any employee of the Company
(other than such Executive’s personal assistant or secretary) or any Subsidiary
to terminate his or her employment with the Company or any Subsidiary or employ
any such individual during his or her employment with the Company or any
Subsidiary and for a period of six months after such individual terminates his
or her employment with the Company or any Subsidiary.

 

(b)                                 The Executive understands that the foregoing
restrictions may limit his ability to earn a livelihood in a business similar
to the business of the Company, but he nevertheless believes that he has
received and will receive sufficient consideration and other benefits as an
employee of the Company and as otherwise provided hereunder to clearly justify
such restrictions which, in any event (given his education, skills and
ability), the Executive does not believe would prevent him from otherwise
earning a living.

 

(c)                                  The covenants contained in Section 7(a) and 7(b) are
for the sole benefit of the Company and may be reduced (but not increased) in
scope, or curtailed as to Territory, time period, or both, without resulting in
a modification of any other provision of this Agreement, as the Company may
determine in its sole discretion.

 

(d)                                 The provisions of this Section 7 shall terminate in
the event the Company fails to make any payments required by Section 4(b) and
such failure remains uncured for a period equal to at least 30 days after
written notice of such event from Executive.

 

8.                                       INDEMNIFICATION.  The Company and the Executive have entered
into an Indemnification Agreement substantially in the form filed as Exhibit
10.3 to the Company’s Annual Report on Form 10-K for the year ended December
31, 2002.

 

9.                                       INSURANCE.  The Company may, for its own benefit,
maintain “keyman” life and disability insurance policies covering the
Executive, provided the same does not prevent Executive from obtaining
reasonable amounts of insurance for his family or estate planing needs.  The Executive will cooperate with the
Company and provide such information or other assistance as the Company may
reasonably request in connection with the Company obtaining and maintaining
such policies.

 

9

 

10.                                 EXECUTIVE
REPRESENTATION.  The Executive hereby
represents and warrants to the Company that (a) the execution, delivery and
performance of this Agreement by the Executive does not and will not conflict
with, breach, violate or cause a default under any agreement, contract or
instrument to which the Executive is a party or any judgment, order or decree
to which the Executive is subject, (b) the Executive is not a party to or bound
by any employment agreement, consulting agreement, non-compete agreement,
confidentiality agreement or similar agreement with any other person or entity
and (c) upon the execution and delivery of this Agreement by the Company and
the Executive, this Agreement will be a valid and binding obligation of the
Executive, enforceable in accordance with its terms.

 

11.                                 NOTICES.  All notices, requests, demands, claims, and
other communications hereunder shall be in writing.  Any notice, request, demand, claim or other communication hereunder
shall be delivered personally to the recipient, delivered by United States Post
Office mail (postage prepaid and return receipt requested), telecopied to the
intended recipient at the number set forth therefor below (with hard copy to
follow), or sent to the recipient by reputable express courier service (charges
prepaid) and addressed to the intended recipient as set forth below:

 

If to the
Company, to:

 

Guitar Center, Inc.

5795 Lindero Canyon Road

Westlake Village, California 91362

Attention:  Chief Executive Officer

Telephone:  (818) 735-8800

Telecopier:  (818) 735-8833

 

With copies
to:

 

Latham & Watkins LLP

135 Commonwealth Drive

Menlo Park, CA 94025

Attention:  Anthony J. Richmond,
Esq.

Telephone: (650) 328-4600

Telecopier: (650) 463-2600

 

If to the
Executive, to:

 

Bruce L. Ross

972 Via Impresso

Thousand Oaks, California 91320

 

or such other address as the
recipient party to whom notice is to be given may have furnished to the other
party in writing in accordance herewith. 
Any such communication shall deemed to have been delivered and received
(a) when delivered, if personally delivered, sent by telecopier or sent by
overnight courier, and (b) on the fifth business day following the date posted,
if sent by mail.

 

10

 

12.                                 GENERAL
PROVISIONS.

 

(a)                                  SEVERABILITY/ENFORCEMENT.

 

(i)                                     It is the desire and intent of the parties hereto that
the provisions of this Agreement be enforced to the fullest extent permissible
under the laws and public policies applied in each jurisdiction in which
enforcement is sought.  Accordingly, if
any particular provision of this Agreement shall be adjudicated by a court of
competent jurisdiction to be invalid, prohibited or unenforceable for any
reason, such provision, as to such jurisdiction, shall be ineffective, without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction.  Notwithstanding the foregoing, if such
provision could be more narrowly drawn so as not to be invalid, prohibited or
unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so
narrowly drawn, without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.  Without limiting the
generality of the preceding sentence, if at the time of enforcement of Sections
5, 6 or 7 of this Agreement, a court holds that the restrictions stated therein
are unreasonable under circumstances then existing, the parties hereto agree
that the maximum period, scope or geographical area reasonable under such
circumstances shall be substituted for the stated period, scope or area and
that the failure of all or any of such provisions to be enforceable shall not
impair or affect the obligations of the Company to pay compensation or
severance obligations under this Agreement.

 

(ii)                                  Because the Executive’s services are unique and because
the Executive has access to Confidential Information and Work Product, the
parties hereto agree that money damages would be an inadequate remedy for any
breach of this Agreement by the Executive. 
Therefore, in the event of a breach or threatened breach of this
Agreement, the Company or its successors or assigns may, in addition to other
rights and remedies existing in their favor, apply to any court of competent
jurisdiction for specific performance and/or injunctive or other relief in
order to enforce, or prevent any violations of, the provisions hereof (without
posting a bond or other security).

 

(iii)                               In addition to the foregoing, and not in any way in
limitation thereof, or in limitation of any right or remedy otherwise available
to the Company, if the Executive materially violates any provision of Sections
5, 6 or 7 (and such violation, if unintentional on the part of the Executive,
continues for a period of 30 days following receipt of written notice from the
Company), any severance payments then or thereafter due from the Company to the
Executive may be terminated forthwith and upon such election by the Company,
the Company’s obligation to pay and the Executive’s right to receive such
severance payments shall terminate and be of no further force or effect.  The Executive’s obligations under Sections
5, 6 or 7 of this Agreement shall not be limited or affected by, and such
provisions shall remain in full force and effect notwithstanding the
termination of any severance payments by the Company in accordance with this
Section 12(a)(iii).  The exercise of the
right to terminate such payments shall not be deemed to be an election of
remedies by the Company and shall

 

11

 

not in any
manner modify, limit or preclude the Company from exercising any other rights
or seeking any other remedies available to it at law or in equity.

 

(b)                                 COMPLETE AGREEMENT. 
This Agreement, those documents expressly referred to herein and all
other documents of even date herewith 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.

 

(c)                                  SUCCESSORS AND ASSIGNS.  Except as otherwise provided herein, this Agreement shall bind
and inure to the benefit of and be enforceable by the Executive and the Company
and their respective successors, assigns, heirs, representatives and estate; provided,
however, that the rights and obligations of the Executive under this
Agreement shall not be assigned without the prior written consent of the
Company.

 

(d)                                 GOVERNING LAW. 
THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
DOMESTIC LAWS OF THE STATE OF CALIFORNIA, WITHOUT GIVING EFFECT TO ANY CHOICE
OF LAW OR CONFLICTING PROVISION OR RULE (WHETHER OF THE STATE OF CALIFORNIA, OR
ANY OTHER JURISDICTION), THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER
THAN THE STATE OF CALIFORNIA TO BE APPLIED. 
IN FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW OF THE STATE OF
CALIFORNIA WILL CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT,
EVEN IF UNDER SUCH JURISDICTION’S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS,
THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY APPLY.

 

(e)                                  JURISDICTION, ETC.

 

(i)                                     Each of the parties hereto hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of any California state court or federal court of the United
States of America sitting in the State of California, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to
this Agreement or for recognition or enforcement of any judgment, and each of
the parties hereto hereby irrevocably and unconditionally agrees that all
claims in respect of any such action or proceeding may be heard and determined
in any such California state court or, to the extent permitted by law, in such
federal court.  Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law. 
Nothing in this Agreement shall affect any right that any party may
otherwise have to bring any action or proceeding relating to this Agreement in
the courts of any jurisdiction.

 

12

 

(ii)                                  Each of the parties hereto irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection that it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement in
any California state or federal court. 
Each of the parties hereto irrevocably waives, to the fullest extent
permitted by law, the defense of an inconvenient forum to the maintenance of
such action or proceeding in any such court.

 

(iii)                               The Company and the Executive further agree that the
mailing by certified or registered mail, return receipt requested, of any
process required by any such court shall constitute valid and lawful service of
process against them, without the necessity for service by any other means
provided by law.

 

(f)                                    AMENDMENT AND WAIVER. 
The provisions of this Agreement may be amended and waived only with the
prior written consent of the Company and the Executive, and 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.

 

(g)                                 WAIVER OF JURY TRIAL. 
EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE
FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, TRIAL BY JURY IN ANY SUIT,
ACTION OR PROCEEDING ARISING HEREUNDER.

 

(h)                                 HEADINGS.  The
section headings contained in this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation of this
Agreement.

 

(i)                                     COUNTERPARTS. 
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original and all of which together shall constitute
one and the same instrument.

 

(j)                                     ROLE OF COUNSEL. 
Executive acknowledges that Latham & Watkins LLP acted as counsel
solely to the Company in connection with the preparation of this Agreement.

 

(k)                                  EMPLOYEE ACKNOWLEDGMENT.  Employee represents and
agrees that he fully understands his right to discuss all aspects of this
agreement with his private attorney, and that to the extent, if any, that he
desired, he availed himself of such right. 
Employee further represents that he has carefully read and fully
understands all of the provisions of this agreement, that he is competent to
execute this agreement, that his agreement to execute this agreement has not
been obtained by any duress and that he freely and voluntarily enters into it,
and that he has read this document in its entirety and fully understands the
meaning, intent and consequences of this document.

 

(Signature Page Follows)

 

13

 

IN WITNESS
WHEREOF, the parties hereto have executed this Third Amended and Restated
Employment Agreement as of the date first written above.

 

	
   

  	
  GUITAR CENTER, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry
  Thomas

  
	
   

  	
  Name:

  	
  Larry Thomas

  
	
   

  	
  Title:

  	
  Chairman of
  the Board

  
	
   

  	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Bruce L.
  Ross

  
	
   

  	
   

  	
  Bruce L.
  Ross

  

 

 

EXHIBIT A

 

TERRITORY

 

ARIZONA:

Phoenix metropolitan area

Tucson metropolitan area

 

ARKANSAS

Little Rock metropolitan area

 

CALIFORNIA:

Los Angeles County metropolitan
areas

Orange County metropolitan
areas

San Diego County metropolitan
areas

San Francisco/Alameda/Contra Costa/Marin/San
Mateo

County metropolitan areas

San Bernardino/Riverside County
metropolitan area

Kern County metropolitan area

Fresno County metropolitan area

Sacramento County metropolitan
area

Ventura County metropolitan
area

 

COLORADO:

Denver metropolitan area

 

CONNECTICUT:

Greenwich metropolitan area

Hartford metropolitan area

 

DISTRICT OF
COLUMBIA:

Washington, D.C. metropolitan
area

 

FLORIDA:

Miami metropolitan area

Ft. Lauderdale/Hollywood/Palm
Beach metropolitan area

Orlando metropolitan area

Tampa metropolitan area

 

GEORGIA:

Atlanta metropolitan area

 

IDAHO:

Boise metropolitan area

 

ILLINOIS:

Chicago metropolitan area

 

A-1

 

INDIANA:

Indianapolis metropolitan area

Gary metropolitan area

 

LOUISIANA:

New Orleans metropolitan area

 

MARYLAND:

Baltimore metropolitan area

Washington, D.C. metropolitan
area

 

MASSACHUSETTS:

Boston metropolitan area

 

MICHIGAN:

Detroit metropolitan area

Grand Rapids metropolitan area

 

MINNESOTA:

Minneapolis/St. Paul
metropolitan area

 

MISSOURI:

St. Louis metropolitan area

 

NEVADA:

Las Vegas metropolitan area

 

NEW JERSEY:

Camden metropolitan area

Newark metropolitan area

Atlanta City metropolitan area

 

NEW YORK:

Buffalo metropolitan area

New York City metropolitan area

and adjoining Tri-State area

Rochester metropolitan area

Albany metropolitan area

 

NORTH CAROLINA

Charlotte metropolitan area

Raleigh metropolitan area

 

OHIO:

Cincinnati metropolitan area

Cleveland metropolitan area

Columbus metropolitan area

 

A-2

 

OKLAHOMA:

Oklahoma City metropolitan area

 

OREGON:

Portland metropolitan area

Medford metropolitan area

Eugene metropolitan area

 

PENNSYLVANIA:

Philadelphia metropolitan area

Pittsburgh metropolitan area

 

TENNESSEE:

Knoxville metropolitan area

Memphis metropolitan area

 

TEXAS:

Dallas/Ft. Worth metropolitan
area

Houston metropolitan area

Austin metropolitan area

Plano metropolitan area

Corpus Christi metropolitan
area

 

UTAH:

Salt Lake City metropolitan
area

 

VIRGINIA:

Virginia Beach metropolitan
area

Washington, D.C. metropolitan
area

 

WASHINGTON:

Seattle/Tacoma metropolitan
area

Spokane metropolitan area

 

A-3

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00058-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00058-of-00352.parquet"}]]