SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT

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Exhibit 10.25

SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT

        This SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the " Agreement ") is made and entered into effective as of June 1, 2003 (" Commencement Date "), between Musician's Friend, Inc., a Delaware corporation (the " Company "), and Robert V. Eastman (the " Executive "). This Agreement amends and restates that certain Amended and Restated Employment Agreement that originally became effective on May 28, 1999 concurrently with the occurrence of the " Effective Time " as such term is defined in that certain Agreement and Plan of Merger, dated as of May 13, 1999, by and among Guitar Center, Inc. (" Parent "), EMIC Acquisition Corporation and the Company (the " Merger Agreement ").

RECITALS:

        A.    Upon the effectiveness of this Agreement, all prior employment agreements and related understandings between the Company and the Executive shall be terminated and replaced with this Agreement.

        B.    Executive desires to render services to the Company and the Company desires to employ Executive, upon the terms and subject to the conditions and other provisions set forth herein.

AGREEMENT:

        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; EFFECT OF THIS AGREEMENT .

        (a)   Upon the terms and subject to the conditions of this Agreement, effective as of the Effective Time, the Company shall employ the Executive, and the Executive accepts employment with the Company, for the period beginning on the Effective Time and ending as provided in Section 4 hereof (the " Employment Period ").

        (b)   Upon the occurrence of the Effective Time, this Agreement constituted the sole agreement relating to the employment and compensation of Executive by the Company and superseded all prior agreements, arrangements and understandings of any sort whatsoever relating to services provided to the Company (including, without limitation, salary, bonus, perquisites, stock-based compensation and director's fees), each of which was deemed terminated without any liability to the Company except for (i) accrued but unpaid regular salary and (ii) unreimbursed business expenses as of the Effective Time.

2.

POSITION AND DUTIES .

        (a)   During the Employment Period, the Executive shall serve initially as the Chief Executive Officer of the Company and shall have the normal duties, responsibilities and authority of the Chief Executive Officer, or such other duties and responsibilities reasonably consistent therewith with the Company or any Affiliate of the Company as the Board of Directors (" Board ") of the Company or Parent may request from time to time, subject to the power of the Board and the powers delegated to the Executive's superiors (if any) by the Board or the executive officers of Parent. At the request of Parent, Executive will also serve as a director of the Company.

        (b)   The Executive shall report to the Chairman of the Board of Parent, 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 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 of the Company, 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 of the Company is or may be competitive with, or that might place him in a competing position to or otherwise conflict with, the interests of the Company or any of its Affiliates.

        (c)   Nothing contained herein shall limit the authority of the Board of the Company or executive officers of Parent to elect one or more officers of the Company with authority senior to that of Executive with respect to Executive's duties hereunder.

3.

BASE SALARY AND BENEFITS .

        (a)   Effective June 1, 2003, the Executive's base salary shall be $375,000 per annum or such higher rate as the Board of Parent or its Compensation Committee (excluding the Executive if he should be a member of such 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 at the discretion of the Board of Parent or its Compensation Committee of up to seventy-five percent (75%) of Base Salary (the " Bonus Opportunity "). However, for any fiscal year ending during the Employment Period that the Company attains the operating income target for the Company (the " Performance Target ") as determined by the Board of Parent or its Compensation Committee in advance of such fiscal year and communicated in writing to Executive, Executive shall be paid one hundred percent (100%) of his annual Bonus Opportunity for such fiscal year ( i.e., for the avoidance of doubt, an amount equal to seventy-five percent (75%) of the Base Salary). The Board of Parent or its Compensation Committee shall adjust the Performance Target as it determines necessary to reflect unusual or non-recurring events impacting the Company's operating income.

        (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 four weeks paid vacation during each 12-month period worked. 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 the mutual agreement of the Company and the Executive, the Employment Period shall end on June 1, 2006 (as may be extended in accordance with this Agreement, the " Scheduled Termination Date "); provided , however , that (i) the Employment Period shall terminate prior to such date upon the Executive's resignation pursuant to Section 4(i) hereof, or the death or Disability (as hereinafter defined) of Executive; and

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(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; provided , further , that in the event neither party has given notice of its intent to terminate the Employment Period by the date that is 180 days prior to a given Scheduled Termination Date (as may have been extended in accordance with this Agreement), the Scheduled Termination Date shall automatically be extended an additional 12 months. In the event that at least 180 days prior to a given Scheduled Termination Date (as may have been extended) the Company provides notice of its intent to terminate the Employment Period as of such Scheduled Termination Date, then as of such Scheduled Termination Date the Employment Period shall end and Executive shall be entitled to receive as severance and in lieu of any other salary, severance, bonuses and other under this Agreement (if any): (1) continuation of the Base Salary for twelve (12) months after the relevant Scheduled Termination Date and (2) an annual bonus for the fiscal year in which the Employment Period terminates, with such bonus determined assuming 100% of the performance objectives for such fiscal year have been attained (i.e., for the avoidance of doubt, in an amount equal to seventy-five percent (75%) of the Base Salary). Such severance payments will be made periodically in the same amounts and at the same intervals as the Base Salary and annual bonus 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 subsequent to the termination of the Employment Period.

        (b)   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 365 day period or (ii) would reasonably be expected to render the Executive unable to substantially perform all of his duties for 180 days during any 365 day period, in each case as determined by the Board of the Company (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.

        (c)   If the Employment Period is terminated prior to the Scheduled Termination Date by the Company without Cause or by the Executive with Reasonable Justification, the Executive shall be entitled to receive as severance: (i) the Base Salary for the greater of (A) 12 months or (B) the period beginning on the date of such termination and ending on the then applicable Scheduled Termination Date (the " Severance Period "); (ii) with regard to the post-termination period, an annual cash bonus equal to the last annual bonus (excluding any portion thereof that the Co-Chief Executive Officers of the Parent 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 for the Severance Period (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(c), benefits will not include future participation in any 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 subsequent to the termination of the Employment Period.

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        (d)   If the Employment Period is terminated prior to the Scheduled Termination Date for any reason 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.

        (e)   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 and exclusive remedy shall be to receive the severance payments and benefits described in Section 4(c) hereof.

        (f)    If at any time that Executive is employed by the Company hereunder (i) the Employment Period is terminated as a result of the Executive's death or Disability, (ii) there is a Sale of the Business or (iii) the Employment Period is terminated by the Company without Cause or by the Executive with Reasonable Justification, all stock options then held by the Executive and granted to him on or after the Commencement Date shall immediately vest and become exercisable.

        (g)   As a condition to the Executive's receipt of any post-termination benefits described in Sections 4(a), (c) and (f) hereof, the Executive shall be required to execute a Release of all claims arising out of his employment or the termination thereof, which release will also include a customary non-disparagement covenant from Executive (the " Release "), 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.

        (h)   For purposes of this Agreement, " Cause " means any termination by the Company of Executive's employment within 90 days after the Board of Parent 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 or Parent or the Company 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 of Parent or the Company 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 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

        (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

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cured within 30 days after written notice to Executive from the Board of Parent or the Company; 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.

        (i)    The Executive may, within ninety (90) days after giving written notice to the Company and the Company's failure to cure, voluntarily terminate employment with the Company upon any event giving rise to Reasonable Justification for such voluntary termination.

        (j)    For purposes of this Agreement, " 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 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, 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 breaches of Section 4(j)(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.

        (k)   For purposes of this Agreement, " Sale of the Business " 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 Parent or the Company possessing the voting power to elect a majority of the entire board of directors of the Parent or the Company, as the case may be (whether by merger, consolidation or issuance of the Parent's capital stock), or (ii) all or substantially all of the Parent's or the Company's assets determined on a consolidated basis, or (iii) 60% or more of all of the Parent's or the Company's common stock, on a fully diluted basis.

        (l)    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 Parent's common stock, on a fully-diluted basis.

        (m)  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,

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(C) any Affiliate of such partnership, and (D) with respect to any individual identi