Document:

Exhibit
10.1

 

AMENDMENT
NO. 3 TO AMENDED AND RESTATED

 

EMPLOYMENT
AGREEMENT

 

This
AMENDMENT NO. 3 TO AMENDED AND RESTATED EMPLOYMENT AGREEMENT (“Amendment”)
is entered into as of this 1st day of January, 2004, by and between
Larry Thomas  (“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, and as further amended by that certain Amendment No. 2 to
Amended and Restated Employment Agreement dated as of July 1, 2003
(together, the “Prior Agreement”), to revise the base salary and bonus
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 $650,000 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

 

1

 

performance goals,
the Annual Bonus will be equal to 100% of Executive’s then-current Base Salary,
but for less than full achievement of the performance 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 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 then-current 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.

 

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 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 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 accrued
through the date of termination and (ii) a cash bonus equal to 100% of the Base
Salary pro-rated for any partial year ending on the date of termination.

 

2

 

6.                                       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:

  	
  /Bruce Ross

  
	
   

  	
  Name:  Bruce Ross

  
	
   

  	
  Title:  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /Larry Thomas

  
	
   

  	
  Larry Thomas

  

 

4Exhibit
10.2

 

AMENDMENT
NO. 3 TO AMENDED AND RESTATED

 

EMPLOYMENT
AGREEMENT

 

This
AMENDMENT NO. 3 TO AMENDED AND RESTATED EMPLOYMENT AGREEMENT (“Amendment”)
is entered into as of this 1st day of January, 2004, 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, and as further amended by that certain Amendment No. 2 to
Amended and Restated Employment Agreement dated as of July 1, 2003
(together, the “Prior Agreement”), to revise the base salary and bonus
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 $650,000 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

 

1

 

performance goals,
the Annual Bonus will be equal to 100% of Executive’s then-current Base Salary,
but for less than full achievement of the performance 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 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 then-current 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.

 

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 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 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 accrued through the date of termination
and (ii) a cash bonus equal to 100% of the Base Salary pro-rated for any
partial year ending on the date of termination.

 

2

 

6.                                       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:

  	
  /Bruce Ross

  
	
   

  	
  Name:  Bruce Ross

  
	
   

  	
  Title:  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /Marty Albertson

  
	
   

  	
  Marty Albertson

  

 

4

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