Exhibit 10.33
GUITAR CENTER, INC.
EMPLOYEE ASSISTANCE LOAN PROGRAM AGREEMENT
Guitar Center, Inc. ("GUITAR CENTER" or the "COMPANY") has, under
authority granted by its Board of Directors, established an employee
assistance loan program (the "PROGRAM") to make loans to certain specified
employees for the purpose of assisting those employees in purchasing Guitar
Center common stock, par value $.01 per share ("COMMON STOCK"). The
undersigned ("PARTICIPANT"), in consideration for being permitted to draw a
loan from the Company, agrees to be bound by the terms of this Agreement and
the associated promissory note(s) also being executed and delivered to the
Company.
1. GENERAL. The Program was instituted to encourage greater
stock ownership by specified members of senior management by facilitating the
purchase of Guitar Center Common Stock. In accordance with this Agreement,
Guitar Center will extend, and Participant may borrow, funds up to the
maximum amount identified on the signature page hereof for the sole purpose
of purchasing Guitar Center Common Stock in unsolicited open market purchases
(each such draw, a "LOAN"). Such Loan(s) may be drawn solely for purchases
made in accordance with this Agreement from the date hereof through November
30, 1999, provided that on the date such purchase is made the Participant (i)
is an employee of Guitar Center or a majority-owned subsidiary and (ii) is
not in breach of this Agreement or any related promissory note.
2. ADMINISTRATION OF THE PROGRAM. The Board of Directors will,
in its discretion, establish rules and regulations appropriate for the proper
administration of the Program and will have full authority and power to
interpret and construe any provision of the Program. Decisions of the Board
of Directors are final, binding and conclusive on all persons who have an
interest in the Program. The Program will be administered by either (a) the
Board, (b) a committee or (c) a senior executive officer appointed by the
Board in its sole discretion (the "ADMINISTRATOR").
3. EVIDENCE OF PROGRAM LOANS. Each extension of a Loan under the
Program will be represented by a full recourse promissory note executed by
the Eligible Participant in the form attached hereto as Exhibit A (the
"PROMISSORY NOTE"). AS A FULL RECOURSE PROMISSORY NOTE, ALL PRINCIPAL,
INTEREST AND OTHER OBLIGATIONS DUE TO GUITAR CENTER UNDER THE PROMISSORY NOTE
AND THIS AGREEMENT WILL CONSTITUTE THE PERSONAL RESPONSIBILITY OF THE
PARTICIPANT AND MUST BE PAID REGARDLESS OF ANY APPRECIATION OR DEPRECIATION
IN THE COMMON STOCK PURCHASED WITH THE PROCEEDS FROM THE LOAN(S). Under the
terms of the Promissory Note, interest on the Loans will be paid annually,
with the principal paid in one lump sum on the fifth anniversary of the date
of the Promissory Note, unless accelerated as provided for in the Promissory
Note. The Promissory Note may also be prepaid in whole or in part at any
time, and, in the case of default, death, ceasing to be an employee of Guitar
Center or any majority-owned subsidiary, or the sale of Guitar Center, must
be repaid.
4. PROCEDURE FOR STOCK PURCHASES; SAFEKEEPING OF SHARE
CERTIFICATES. The sole use of proceeds from the Loans funded to Participant
under this Program shall be to purchase Common Stock in unsolicited, open
market transactions. All purchases of Common Stock under the Program must be
executed through a brokerage firm identified by the Company, and
disbursements of Loans will only be made directly to the designated broker
upon presentation to the Company of trade confirmations which comply with the
Program. Participant will be responsible for all transaction costs
including, without limitation, brokerage commissions. All shares of Common
Stock purchased by the Participant under the Program shall be held only in
certificated form. The certificates for the Shares will be issued and
initially held by Guitar Center for safekeeping. Upon the Participant's
written request, Guitar Center will deliver the certificates to the
Participant. Guitar Center will not rely on the certificates as collateral
for the Loan. Guitar Center may, in its discretion, place any appropriate
legend on such certificates to assure
compliance with this Program, the internal stock trading policies of Guitar
Center and all applicable securities laws.
5. VOLUNTARY AND DISCRETIONARY NATURE OF PROGRAM. The extension
of Loans under this Program is entirely discretionary, and the obligation of
Guitar Center to make additional Loans hereunder may be terminated by it, in
the sole discretion of the Administrator at any time. Nothing in the Program
is meant to limit or restrict the right of Guitar Center or any subsidiary of
Guitar Center to terminate the employment of Participant at any time, with or
without cause and with or without notice, or to change the compensation or
other terms and conditions of employment of a Participant at any time. The
Board of Directors may from time to time alter, amend, suspend or discontinue
this Program and make further rules for its administration.
6. INVESTMENT DECISION MADE SOLELY BY PARTICIPANT. The decision
to participate in the Program has been made solely by Participant who has and
will continue to make his or her own investment decision as to whether or not
taking out Loans to purchase Common Stock is prudent or advisable in the
personal circumstances of Participant. Participant is not relying on any
oral statement of any representative of Guitar Center to make its investment
decision.
7. COMPLIANCE WITH COMPANY TRADING POLICIES REQUIRED.
Participant acknowledges that Guitar Center has established policies which
restrict the times that employees, including Participant, may trade in the
Common Stock, and Participant acknowledges that he or she is familiar with
such policies and has and will continue to comply with the policies. Nothing
in this Program shall act to relieve any person from the application of such
policies, any requirement of the federal securities laws (E.G., compliance
with Section 16(a) reporting, trading limitation of shares held by
affiliates, prohibition on trading when in possession of material inside
information as provided in Rule 10b-5) or any other applicable policy of
Guitar Center or legal requirement.
8. ASSIGNABILITY. The rights to receive the Loans and purchase
the Common Stock under this Program are not transferable or assignable by the
Participant.
9. FEDERAL INCOME TAX CONSEQUENCES. Guitar Center makes no
representations regarding the federal income tax consequences of being a
Participant in the Program. Participant acknowledges that he or she has been
directed by Guitar Center to seek independent professional assistance
regarding the legal and tax consequences of entering into this agreement and
participating in the Program including, for example, the tax treatment of any
gain or loss on sale of the Common Stock or whether or not interest payments
to the Company will be deductible.
10. ERISA DOES NOT APPLY; PLAN NOT TAX QUALIFIED. The Program is
not subject to the provisions of the Employee Retirement Income Security Act
of 1974, as amended (commonly referred to as "ERISA"), and is not a qualified
program under Section 401(a) of the Internal Revenue Code of 1986, as amended
or any other federal income tax provision which might provide favorable tax
treatment.
11. MISCELLANEOUS.
(a) ENTIRE AGREEMENT. This agreement and the other documents
referred to herein constitutes the complete and exclusive statement of the
agreement between Guitar Center and the Participant with respect to the
subject matter herein set forth and supersedes all prior agreements by and
between the parties.
(b) AMENDMENTS. This agreement may not be amended, altered or
terminated except in writing executed by or on behalf of each party.
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(c) INUREMENT. Except as otherwise set forth above, this
agreement shall be binding upon the parties hereto and their respective
heirs, executors, administrators, legal representatives, successors and
permitted assigns.
(d) LANGUAGE. The language used in this Agreement shall be
deemed to be language chosen by the parties thereto to express their mutual
intent and no rule of strict construction against any party shall apply to
any term or condition thereof
(e) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
(f) ARBITRATION. Any controversy or claim arising out of or
relating to this agreement, or the breach thereof, shall be settled by
binding arbitration in accordance with the commercial rules of the American
Arbitration Association by a single arbitrator in a location to be agreed
to by the parties, and judgment upon the award rendered by the arbitrator
may be entered in any court having jurisdiction thereof and shall not be
appealable.
(g) COMPLIANCE WITH LAW. It is the intention of the parties
that this agreement comply with all applicable laws, including all
applicable laws relating to the maximum rate of permissible interest. In
the event it shall be finally determined that any provision of this
agreement is illegal or unenforceable, it is the express intention of the
parties that the agreement then be reformed to the minimum extent necessary
to cause the subject provision to then constitute a legal and enforceable
agreement of the parties.
(h) COUNTERPARTS: This Agreement may be executed in
counterparts, each of which shall constitute an original but all of which
taken together shall constitute but one agreement.
(Signature Page Follows)
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IN WITNESS WHEREOF, the parties have executed this Employee
Assistance Loan Program Agreement as of the date set forth on this signature
page.
GUITAR CENTER, INC. Effective Date:__________, 1999
By:
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(Signature of Participant)
Name of Participant:
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Tax Identification or
Social Security Number
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Address for Notice
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Facsimile Number
Maximum Loan Amount: $
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$ 49,031.50
AGOURA HILLS, CALIFORNIA September 15, 1999
FULL RECOURSE PROMISSORY NOTE
FOR VALUE RECEIVED, the undersigned, XXXXX XXXX ("DEBTOR"),
promises to pay to the order of GUITAR CENTER, INC., a Delaware corporation,
or its order ("GUITAR CENTER" or "PAYEE"), the principal sum of Forty-nine
Thousand Thirty-one Dollars and Fifty Cents ($49,031.50) together with
interest from the date hereof on the balance of principal remaining from time
to time unpaid at a per annum interest rate equal to the lower of (a) the
prime rate as established from time to time by Xxxxx Fargo Bank, N.A. or (b)
the highest interest rate which may be charged under applicable law, computed
upon the actual number of days elapsed, such principal to be payable in one
lump sum on the fifth anniversary of the date hereof unless accelerated as
hereinafter provided. Interest on the principal remaining from time to time
unpaid shall be paid annually on each anniversary date of this Note and at
maturity, whether by acceleration or otherwise. All payments of principal
and interest shall be paid in lawful money of the United States of America
and shall be made at the offices of Guitar Center, Inc. at 0000 Xxxxxxxx
Xxxxx, Xxxxxx Xxxxx, Xxxxxxxxxx 00000, or at such other place as the Payee or
holder hereof may, from time to time, designate in writing. This Note shall
bear interest after default at a rate of interest equal to the lower of (x)
the highest interest rate which may be charged under applicable law or (y)
fifteen percent (15%) per annum, such default interest to be payable on
demand. This Note is issued in accordance with a related Employee Assistance
Loan Program Agreement (as such agreement may be amended from time to time,
the "LOAN AGREEMENT") between Debtor and Guitar Center, and is expressly
subject to all of the terms and conditions of the Loan Agreement which are
hereby expressly incorporated by reference herein. Any interested party may
obtain a copy of the Loan Agreement from the Corporate Secretary of Guitar
Center at its principal corporate offices.
This Note is subject to the following additional provisions:
1. ACCELERATION. The entire principal amount then remaining
unpaid hereunder together with all accrued interest hereon must be paid in
full prior to maturity as follows: (a) ten (10) days after Debtor's ceasing
to be an employee of Guitar Center or a majority-owned subsidiary of Guitar
Center; (b) contemporaneous with the closing of any transaction involving the
sale of a majority interest in Guitar Center to a third party, whether by
tender offer, merger, or other similar transaction; (c) sixty (60) days after
the death of the Debtor; or (d) in accordance with Section 3.
2. VOLUNTARY PREPAYMENT. This Note may be prepaid in whole or in
part at any time and from time to time, without penalty or premium. Any such
prepayment will be applied first to accrued but unpaid interest and then to
principal.
3. DEFAULT. Upon the occurrence of any one or more of the
following events, the entire principal amount then remaining unpaid hereunder
together with all accrued interest hereon shall at once become due and
payable without further notice to Debtor:
(a) Any default in the payment of principal or any installment
of interest under this Note when due and payable, and the continuance
thereof for a period of five (5) days after written notice to Debtor
of such default;
(b) Any default by Debtor in any of its obligations provided in
the Loan Agreement (other than a payment default as provided for in
clause (a), above), and the continuance thereof for a period of ten
(10) days after written notice to Debtor of such default; or
(c) The insolvency of Debtor, the inability of Debtor to pay his
debts as they mature, an assignment by Debtor for the benefit of
creditors, or the filing of a petition in bankruptcy or the
commencement of any proceedings under any bankruptcy, insolvency or
similar laws relating to the relief
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of debtors by or against Debtor and, if filed against Debtor, such
petition or proceeding remains undismissed for a period of sixty (60)
days.
4. COSTS OF ENFORCEMENT AND COLLECTION. Debtor agrees to pay,
upon the demand of Payee therefor, any and all reasonable costs, fees and
expenses (including reasonable attorney's fees, costs and expenses) incurred
in enforcing any of Payee's rights hereunder. To the extent not paid within
fifteen days of presentment of the related invoice(s), such costs, fees and
expenses shall be added to the principal amount of this Note and thereby
become part of Debtor's obligations hereunder. Debtor's liability for all
reasonable expenses and fees hereunder also extends to the collection of any
judgment, which results from Payee's enforcement of its rights and remedies
hereunder.
5. FULL RECOURSE PERSONAL OBLIGATION. DEBTOR ACKNOWLEDGES THAT
THIS NOTE IS THE PERSONAL, FULL RECOURSE OBLIGATION OF DEBTOR AND THAT ALL
PRINCIPAL, INTEREST AND OTHER OBLIGATIONS DUE TO GUITAR CENTER HEREUNDER ARE
THE PERSONAL RESPONSIBILITY OF DEBTOR AND MUST BE PAID REGARDLESS OF ANY
APPRECIATION OR DEPRECIATION IN THE STOCK PURCHASED WITH THE PROCEEDS HEREOF
IN ACCORDANCE WITH THE LOAN AGREEMENT.
6. MISCELLANEOUS. No modification, waiver, estoppel, amendment
or discharge of this Note will be valid unless the same is in writing and
signed by the party against which the enforcement of such modification,
waiver, estoppel, amendment or discharge is sought.
Any notices and demands required or permitted under this Note to
be given to the undersigned shall be in writing and shall be delivered either
in person, by facsimile or by United States registered or certified mail,
return receipt requested, postage prepaid, addressed to the Debtor at the
address or facsimile number set forth below his signature. Notices and
demands given in the manner aforesaid will be deemed sufficiently given or
served for all purposes under this Note at the time such notice or demand is
faxed or mailed, as applicable.
No delay or omission by the Payee or any transferee or legal
holder in exercising any right or power hereunder will impair such right or
power or be construed to be a waiver of any default of the Debtor hereunder.
This Note is submitted by Debtor to Payee at Payee's principal
place of business and is deemed to have been made thereat. This Note is
governed by, and construed in accordance with, the laws of the State of New
York, and is binding on Debtor, his heirs, personal representatives and
assigns, and inures to the benefit of Payee and its successors and assigns.
Debtor hereby waives presentment for payment, notice of dishonor,
protest, notice of presentment and notice of protest.
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(Signature of Debtor) Tax Identification or
Social Security Number
Name of Debtor:
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Address for Notice
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Facsimile Number
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