Document:

Exhibit 10.3

 

GUITAR
CENTER, INC.

 

DEFERRED
STOCK AGREEMENT

 

Guitar Center, Inc. (the “Company”)
hereby grants
                     
(the “Director”), an award of Deferred Stock (“Deferred Stock Award”)
under the Company’s 2004 Incentive Stock Award Plan (the “Plan”).  The date of this Agreement is
                 
(the “Vesting Commencement Date”). 
Subject to the provisions of Appendix A (attached) and of
the Plan, the principal features of this award are as follows:

 

Number of Shares of Common Stock Subject to
Deferred Stock Award:  
                          

 

Vesting of Deferred Stock:  The Deferred Stock Award will vest according
to the following schedule:  One hundred
percent (100%) of the Deferred Stock Award shall be vested as of the earliest
of:  (i) the fifth (5th)
anniversary of the Vesting Commencement Date; (ii) a Change in Control (as
defined in the Plan), in which event the Deferred Stock Award shall be vested
immediately prior to the Change in Control; or (iii) the Qualified Retirement
(as defined below) of the Director from service as a member of the Company’s
Board of Directors or of the board of directors of any successor (the “Board”);
provided that during the period
between the Vesting Commencement Date and such vesting date the Director
continuously serves as a member of the Board.

 

For purposes of this Agreement, a “Qualified
Retirement” shall mean that the Director resigns or elects not to stand for
reelection to the Board in connection with (i) reaching a mandatory retirement
age, (ii) a general cessation of such person’s business activities approved by
the Compensation Committee of the Board (the “Committee”), or (iii) any
other similar event as determined by the Committee, subject in the case of (ii)
and (iii) to Paragraph 11 of Appendix A.

 

Unless otherwise defined herein or in Appendix
A, capitalized terms herein or in Appendix A shall have the defined
meanings ascribed to them in the Plan.

 

Your signature below indicates your agreement
and understanding that this award is subject to all of the terms and conditions
contained in Appendix A and the Plan. 
For example, important additional information on vesting and forfeiture
of the Deferred Stock is contained in Paragraphs 3 through 5 of Appendix A.  PLEASE BE SURE TO READ ALL OF APPENDIX A,
WHICH CONTAINS THE SPECIFIC TERMS AND CONDITIONS OF THIS AGREEMENT.

 

 

	
  GUITAR
  CENTER, INC.

  	
  DIRECTOR

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name/Title:

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  
	
  Date:

  	
  , 2004

  	
   

  	
  Date:

  	
  , 2004

  	
   

  
											

 

 

APPENDIX
A

 

TERMS
AND CONDITIONS OF DEFERRED STOCK AWARD

 

1.             Grant.  The Company hereby grants to the Director
under the Plan an award of                  
shares of  Deferred Stock, subject to all of
the terms and conditions in this Agreement and the Plan.

 

2.             Company’s
Obligation to Pay.  Each share of
Common Stock subject to this Deferred Stock Award has a value equal to the Fair
Market Value of a share of Common Stock on the date it becomes vested.  Unless and until the Deferred Stock will have
vested in the manner set forth in Section 3, the Director will have no
right to payment of any such Deferred Stock. 
Prior to actual payment of any vested Deferred Stock, such Deferred
Stock will represent an unsecured obligation of the Company, payable (if at
all) only from the general assets of the Company.

 

3.             Vesting
Schedule.  The Deferred Stock awarded
by this Agreement will vest in the Director according to the vesting schedule set
forth on the attached Deferred Stock Agreement, subject to the Director’s
continuing to be a member of the Board through the vesting date.

 

4.             Forfeiture
upon Termination as Service Provider. 
Notwithstanding any contrary provision of this Agreement, if the
Director terminates service as a member of the Board for any or no reason, the
then-unvested Deferred Stock awarded by this Agreement will thereupon be
forfeited at no cost to the Company and the Director shall have no further
rights thereunder.

 

5.             Payment
after Vesting.  Any Deferred Stock
that vests in accordance with Section 3 will be paid to the Director in
whole shares of Common Stock as soon as practicable on or after such vesting
date (subject to Section 6, below), provided that to the extent determined
appropriate by the Company, any federal, state and local withholding taxes with
respect to such Deferred Stock will be paid by reducing the number of shares of
Common Stock actually paid to the Director by that number of shares of Common
Stock having a Fair Market Value equal to the statutory minimum amount required
to be withheld.

 

6.             Deferral
of Stock Issuance.  Pursuant to an
advance written election in accordance with an administrative procedure
implemented by the Chief Financial Officer, the Director may irrevocably elect
to defer until a specified date or event the receipt of vested shares of Common
Stock otherwise issuable under this Deferred Stock Award.

 

7.             Rights
as Stockholder.  Neither the Director
nor any person claiming under or through the Director will have any of the
rights or privileges of a stockholder of the Company in respect of any shares
of Common Stock deliverable hereunder unless and until certificates
representing such shares of Common Stock will have been issued, recorded on the
records of the Company or its transfer agents or registrars, and delivered to
the Director.

 

8.             Grant
is Not Transferable.  The rights and
privileges conferred hereby shall not be transferred, assigned, pledged or
hypothecated in any way (whether by operation of law or otherwise) and shall
not be subject to sale under execution, attachment or similar process.  Upon any attempt to transfer, assign, pledge,
hypothecate or otherwise dispose of this grant, or any right or privilege
conferred hereby, or upon any attempted sale under any execution, attachment or
similar process, this grant and the rights and privileges conferred hereby
immediately will become null and void.

 

9.             Additional
Conditions to Issuance of Stock.  If
at any time the Company will determine, in its sole discretion, that the
listing, registration or qualification of the shares of Common Stock upon any

 

 

securities exchange or under any state or federal law, or the consent
or approval of any governmental regulatory authority is necessary or desirable
as a condition to the issuance of shares of Common Stock to the Director (or
his estate), such issuance will not occur unless and until such listing,
registration, qualification, consent or approval will have been effected or
obtained free of any conditions not acceptable to the Company.  The Company will make all reasonable efforts
to meet the requirements of any such state or federal law or securities
exchange and to obtain any such consent or approval of any such governmental
authority.

 

10.           Plan
Governs.  This Agreement is subject
to all terms and provisions of the Plan. 
In the event of a conflict between one or more provisions of this Agreement
and one or more provisions of the Plan, the provisions of the Plan will govern.

 

11.           Authority
to Amend.  Without limiting the
general authority of the Administrator, the Administrator hereby expressly
reserves the authority at any time to amend, with the consent of the Director,
the circumstances under which an Award may become vested by operation of clause
(ii) or clause (iii) of the definition of “Qualified Retirement.”

 

12.           Administrator
Authority.  The Committee shall act
as the Administrator with regard to this Agreement unless and until otherwise
determined by the Board in its sole discretion and shall have the power to
interpret the Plan and this Agreement, to adopt such rules for the
administration, interpretation and application of the Plan as are consistent
therewith and to interpret or revoke any such rules (including, but not limited
to, the determination of whether or not any Deferred Stock has vested).  All actions taken and all interpretations and
determinations made by the Administrator in good faith will be final and
binding upon Director, the Company and all other interested persons.  No member of the Administrator will be
personally liable for any action, determination or interpretation made in good
faith with respect to the Plan or this Agreement.

 

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

 

14.           Agreement
Severable.  In the event that any
provision in this Agreement will be held invalid or unenforceable, such
provision will be severable from, and such invalidity or unenforceability will
not be construed to have any effect on, the remaining provisions of this
Agreement.

 

15.           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.

 

* * *
* * * * * * *Exhibit 10.45

 

FIRST AMENDMENT TO

FINANCING AGREEMENT

 

This FIRST AMENDMENT TO
FINANCING AGREEMENT (this “Amendment”),
dated as of August 13, 2004, is entered into by and between SPECIALTY
LABORATORIES, INC., a California corporation (“Company”), and THE CIT
GROUP/BUSINESS CREDIT, INC., a New York corporation, (“CIT”).

 

RECITALS

 

A.            Company
and CIT previously entered into that certain Financing Agreement dated as of
September 24, 2003 (the “Financing Agreement”),
pursuant to which CIT provides loans and other financial accommodations to
Company from time to time.

 

B.            Company
and CIT wish to amend certain terms of the Financing Agreement.

 

C.            Company
and CIT are willing to agree to such amendments to the Financing Agreement on
the terms and subject to the conditions set forth below.

 

AGREEMENT

 

NOW THEREFORE, in consideration of the foregoing and
the terms and conditions hereof, the parties do hereby agree as follows,
effective as of the date set forth above:

 

1.             Definitions.  Capitalized terms used herein and not
otherwise defined herein, shall have the respective meanings set forth in the
Financing Agreement.

 

2.             Amendments.

 

a.             The
definition of “Letter of Credit Sub-Line” as set forth in Section 1 of the
Financing Agreement is hereby amended and restated in its entirety to read as
follows:

 

“Letter of Credit 
Sub-Line  shall
mean the commitment of CIT to assist the Company in obtaining Letters of
Credit, pursuant to Section 5 hereof, in an aggregate amount of up to Ten
Million, One Hundred Thousand Dollars ($10,100,000).”

 

b.             The
first sentence of Section 8.2 of the Financing Agreement is hereby amended and
restated in its entirety to read as follows:

 

“If
the average of the net balances owing by the Company to CIT in the Revolving
Loan Account at the close of each day during any month is less than Five
Million Dollars ($5,000,000), CIT shall charge Company a fee equal to interest
(applying the Chase Bank Rate plus the applicable margin in accordance with
this Financing Agreement) on the amount of such difference, provided  however,
so long as the aggregate undrawn amount of outstanding Letters of Credit is
equal to or exceeds the amount of Nine Million Dollars 

 

 

($9,000,000) at
all times during any month, CIT will not charge Company such fee for such
month.”

 

3.             Conditions
to Effectiveness.  The foregoing
amendment shall become effective only upon the satisfaction of all of the
following conditions precedent (the date of satisfaction of all such conditions
being referred to as the “Amendment Effective Date”):

 

(a)           CIT
shall have received this Amendment, duly executed and delivered by the Company
on or prior to August 31, 2004.

 

(b)           Each
of the representations and warranties set forth in this Amendment shall be true
and correct as of the Amendment Effective Date.

 

(c)           No
Event of Default shall have occurred and be continuing or be existing.

 

4.             Representations
and Warranties.  In order to induce
CIT to enter into this Amendment and to amend the Financing Agreement in the
manner provided in this Amendment, Company represents and warrants to CIT as of
the Amendment Effective Date as follows:

 

(a)           Power
and Authority.  Company has all
requisite corporate power and authority to enter into this Amendment and to
carry out the transactions contemplated by, and perform its obligations under,
the Financing Agreement as amended by this Amendment.

 

(b)           Authorization
of Agreements.  The execution and
delivery of this Amendment by Company and the performance by Company of the
Financing Agreement, as amended hereby, have been duly authorized by all
necessary action, and this Amendment has been duly executed and delivered by
Company.

 

(c)           Representations
and Warranties in the Financing Agreement. Company confirms that as of the
Amendment Effective Date, the representations and warranties contained in
Section 7 of the Financing Agreement are (before and after giving effect to
this Amendment) true and correct in all material respects (except to the extent
any such representation and warranty is expressly stated to have been made as
of a specific date, in which case it shall be true and correct as of such
specific date) and that no Event of Default has occurred and is continuing.

 

5.             Miscellaneous.

 

(a)           Reference
to and Effect on the Existing Financing Agreement.

 

(i)            Except
as specifically amended by this Amendment and the documents executed and
delivered in connection herewith, the Financing 

 

2

 

Agreement shall remain in
full force and effect and is hereby ratified and confirmed.

 

(ii)           The
execution and delivery of this Amendment and performance of the Financing
Agreement shall not, except as expressly provided herein, constitute a waiver
of any provision of, or operate as a waiver of any right, power or remedy of
CIT under, the Financing Agreement or any agreement or document executed in
connection therewith.

 

(iii)          Upon
the conditions precedent set forth herein being satisfied, this Amendment shall
be construed as one with the existing Financing Agreement, and the existing
Financing Agreement shall, where the context requires, be read and construed
throughout so as to incorporate this Amendment.

 

(b)           Fees
and Expenses.  The Company
acknowledges that all costs, fees and expenses incurred in connection with this
Amendment will be paid in accordance with Section 8 of the Financing Agreement.

 

(c)           Headings.  Section and subsection headings in this
Amendment are included for convenience of reference only and shall not
constitute a part of this Amendment for any other purpose or be given any
substantive effect.

 

(d)           Counterparts.  This Amendment may be executed in one or more
counterparts, each of which shall be 5deemed an original but all of which
together shall constitute one and the same instrument.

 

(e)           Governing
Law.  This Amendment shall be
governed by and construed according to the laws of the State of California.

 

3

 

IN WITNESS WHEREOF, the
parties hereto have duly executed this Amendment as of the date first above
written.

 

	
   

  	
  SPECIALTY
  LABORATORIES, INC.

  
	
   

  	
  a California
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Nicholas Simmons

  	
   

  
	
   

  	
  Name:

  	
  Nicholas Simmons

  	
   

  
	
   

  	
  Title:

  	
  V.P. and General
  Counsel

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE
  CIT GROUP/BUSINESS

  
	
   

  	
  CREDIT,
  INC.,

  
	
   

  	
  a New York corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Donald Caskey

  	
   

  
	
   

  	
  Name:

  	
  Donald Caskey

  	
   

  
	
   

  	
  Title:

  	
  V.P.

  	
   

  
	
   

  	
   

  
								

 

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