2.                                        POSITION AND DUTIES .

(a)                                   During the Employment Period, the Executive shall initially serve as the President and Chief Executive Officer of the Company and shall have the normal duties, responsibilities and authority of the President and Chief Executive Officer of the Company, or such other duties and responsibilities with the Company or any present or future subsidiary, parent, Affiliate or division of the Company (collectively, the “ Affiliates ”) as the Board of Directors (the “ Board ”) of Guitar Center, Inc., a Delaware corporation and the parent of GCSI (the “ Parent ”), or the Chief Executive Officer of Parent may request from time to time.  The general business policy of the Company shall be established by the Company’s Board of Directors.

(b)                                  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 Affiliates.  The Executive shall perform his duties and responsibilities to the best of his abilities in a diligent, trustworthy, and businesslike manner.  Except with the prior written approval of the Board, Executive during the Employment Period will not (i) accept any other employment with a third party, (ii) serve on the board of directors or similar body of any other business entity or (iii) engage, directly or indirectly, in any other business activity (whether or not pursued for pecuniary advantage) that in the reasonable determination of the Board is or may be competitive with, or that might place him in a competing position to or otherwise conflict with, that of the Company or any of its Affiliates.

3.                                        BASE SALARY AND BENEFITS .

(a)                                   During the Employment Period, the Executive’s base salary shall be $350,000 per annum or such higher rate as the Board 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 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 the employee benefit programs for which all executives of Parent and the Company are generally eligible.

(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 performance bonus of up to 75% of Base Salary at the discretion of the Compensation Committee of the Board; such amount to be pro rated with respect to the applicable fiscal year.  Executive must be an employee on the last day of the relevant fiscal year for which the bonus relates in order to be eligible to participate therein.

(c)                                   The Company shall reimburse the Executive for all reasonable expenses incurred by him in the course of performing his duties under this Agreement that 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.

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(d)                                  During the employment period, the Executive shall be entitled to three weeks paid vacation during each 12-month period worked.

(e)                                   Executive shall be granted options to purchase 35,000 shares of Parent common stock to be granted at the same time during the first year of this Agreement as the annual general grants made to employees of it and its other Affiliates and on the same terms; provided , however , that if the Board elects to provide alternative forms of equity compensation for senior management (e.g., restricted stock, performance stock, performance options, etc.), such grant shall be the equivalent level of such an alternative security as determined by the Board.

4.                                        TERM; SEVERANCE .

(a)                                   Unless renewed by mutual agreement between the Company and the Executive, the Employment Period provided for in this Agreement shall end on the May 1, 2010 (the “ Scheduled Termination Date ”) whereupon this Agreement shall terminate; provided , however , that (i) the Employment Period shall terminate prior to such date upon the death or Disability (as hereinafter defined) of Executive; (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; and (iii) the Employment Period may be terminated by the Executive for Reasonable Justification (as defined below).

(b)                                  If the Employment Period is terminated by the Company without Cause or by the Executive for Reasonable Justification on or prior to the Scheduled Termination Date, the Executive shall be entitled to receive as severance (i) accrued but unpaid Base Salary, plus the continuation of Executive’s current annual Base Salary as in effect immediately prior to the date of termination for (A) a twenty-four (24) month period commencing on the date of termination in the event that the Executive’s employment is terminated on or prior to the second anniversary of this Agreement, and (B) a twelve (12) month period commencing on the date of termination in the event that the Executive’s employment is terminated at any time after the second anniversary of this Agreement and prior to the Scheduled Termination Date (such period, as applicable, the “ Severance Period ”); (ii) a lump sum amount equal to the last annual cash bonus (excluding any portion thereof that the Chief Executive Officer of the Parent considered extraordinary and non-recurring) Executive received prior to termination, if any (the Company shall not be obligated to pay any bonus with respect to the fiscal year in which the date of termination occurs, regardless of the financial performance of the Company or any other Company policy or prior practice); (iii) any unpaid vacation accrued through the date of termination in accordance with Company policy, if any; (iv) reimbursement for all outstanding expenses incurred by Executive prior to the date of termination in compliance with Section 3(c); and (v) during the Severance Period (or, if shorter, the maximum period for which Executive is eligible for coverage under COBRA), payment of Executive’s applicable monthly premium under COBRA, unless in the case of any of the foregoing clauses (i) through (v) the Executive shall materially violate the provisions of this Agreement or any Ancillary Agreement to which he is a party, in which case the provisions of Section 12(a)(iii) shall apply.  For purposes of this Section 4(b), benefits will not include participation in any bonus or equity incentive pool.  The aforementioned severance payments will be made periodically in the same amounts and at the same intervals as Base Salary, bonus, expense reimbursement and medical benefits (as applicable) were paid immediately prior to termination of employment.

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(c)                                   If the Employment Period is terminated for any reason other than by the Company without Cause or by the Executive for Reasonable Justification, the Executive shall be entitled to receive only (i) the Base Salary and then only to the extent such amount has accrued through the date of termination and (ii) the amounts described in subsection 4(b)(iii) and (iv).

(d)                                  Except as otherwise expressly required by law ( e.g ., COBRA) or as specifically provided herein or as required under this Agreement, 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 for Reasonable Justification, the Executive’s sole and exclusive remedy shall be to receive the severance payments and benefits described in Section 4(b) hereof.

(e)                                   From and after any termination of employment with the Company, Executive agrees that he will not disparage or denigrate to any person any aspect of his past relationship with the Company or any of its Affiliates, nor the character of the Company or any of its Affiliates or their respective agents, representatives, products, or operating methods, whether past, present, or future, and whether or not based on or with reference to their past relationship; provided , however , that this subsection shall have no application to any evidence or testimony requested of Executive by any court or government agency.  In the event any government agency or any of Company’s or any of its Affiliates’ present or future labor unions, adverse parties in actual or potential litigation, suppliers, service providers, employees or customers initiate communications with the Executive, the Executive agrees that he will inform any such persons, consistent with this paragraph, of his change in status and direct such persons to an appropriate office or current employee of Company.

(f)                                     For purposes of this Agreement, “ Cause ” means (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 or the Chief Executive Officer of Parent in good faith as documented in writing to the Executive; (ii) the Executive’s ongoing and repeated neglect of his duties on a general basis, notwithstanding written notice of objection from the Board or a Chief Executive Officer and the expiration of a thirty (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 Affiliates, or the conviction of the Executive of any felony; (iv)  the Executive’s failure to adhere to all policies and procedures established by the Company from time to time in its discretion, generally applicable to all executives of the Company and disclosed to Executive, including without limitation, any policies related to sexual harassment, anti-discrimination and similar employment practices; (v) the commission of any act involving moral turpitude that (x) brings the Company or any of its Affiliates into public disrepute or disgrace, or (y) causes material injury to the customer relations, operations or the business prospects of the Company or any of its Affiliates; or (vi) material breach by the Executive of this Agreement, including, without limitation, any breach by the Executive of the provisions of Sections 6 or 7 hereof or of the Noncompetion Agreement dated even herewith, not cured within thirty (30) days after written notice to Executive from the Board; provided , however , that in the event of an intentional breach, the Executive shall not have the opportunity to cure.

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(g)                                  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 ninety (90) days during any 180 day period or (ii) would reasonably be expected to render the Executive unable to substantially perform all of his duties for ninety (90) days during any 180 day period, in each case as determined by the Board in its good faith judgment after seeking and reviewing advice from a qualified physician.

(h)                                  For purposes of this Agreement, the term “ Reasonable Justification ” means any voluntary termination by the Executive of his employment with the Company within ninety (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 after consultation with counsel to be in contravention of law, or which the Executive reasonably believes would subject the Company and himself to material liability, despite his prior express written objection addressed to the Board of Parent with respect to such action; (ii) there has been any material reduction in the nature or scope of Executive’s responsibilities, or the Executive is assigned duties that are materially inconsistent with his position (in each case, other than on a temporary basis); (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 or any of its Affiliates, after written objection by the Executive addressed to the Chief Executive Officer of the Parent, to relocate his principal place of employment outside a radius of fifty (50) miles from his place of employment immediately prior to such relocation; or (v) there is a material failur