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Exhibit 10.38

STANDARD COMMERCIAL LEASE

        This LEASE is made this 7th day of June, 2000 by and between MID-WEST
TERMINAL WAREHOUSE COMPANY, a Missouri corporation (hereinafter "LESSOR"), and
MUSICIAN'S FRIEND, INC. a Delaware corporation (hereinafter "LESSEE").

WITNESSETH:

        WHEREAS, LESSOR is the fee simple owner of certain real property located
in Kansas City, Jackson County, Missouri, legally described in Exhibit "A"
attached hereto and made a part hereof and commonly known and numbered as 1491
North Universal Avenue, Kansas City, Missouri 64120, together with the building
constructed thereon consisting of 141,180 square feet and the other improvements
located thereon and the appurtenances thereunto belonging (collectively the
"Premises"); and

        WHEREAS, LESSOR has agreed to lease the Premises to LESSEE and LESSEE
has agreed to lease the Premises from LESSOR on the terms stated herein.

        NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, LESSOR and LESSEE hereby covenant and agree as follows:

        1.    PREMISES:    LESSOR leases the Premises to LESSEE, and LESSEE
leases the Premises from LESSOR The Premises shall be used only for the receipt,
storage, shipment, repair, re-packaging, shipment, processing, and sale of
musical instruments, related equipment, accessories, and softgoods products, as
well as the retail sale of such goods and services incidental to the overall use
of the building, and for no other purpose, without LESSOR'S prior written
consent, which shall not be unreasonably withheld.

        2.    RENT:    LESSEE agrees to pay as base rent and additional charges
for the premises, $4.02 per square foot per year (base rent $3.27 per square
foot, additional charges $0.35 per square foot, and taxes $0.40 per square
foot)—(Five Hundred Sixty-Seven Thousand Five Hundred Forty-Three Dollars and
60/100 per year or Forty-Seven Thousand Two Hundred Ninety-Five Dollars and
30/100 per month).

        2.1.  In addition to the base rent LESSEE agrees to pay as additional
rent for Tenant Improvements $0.42 per square foot per year (Fifty-Nine Thousand
Two Hundred Ninety-Five Dollars and 60/100 per year or Four Thousand Nine
Hundred Forty-One Dollars and 30/100 per month). LESSOR shall provide Tenant
Improvements at LESSOR'S expense. (See Exhibit "C", attached hereto)

        2.2.  All rent payments are due and payable on the first day of each
calendar month, commencing on the second month, during the term of this Lease.
Any rent payments due received by LESSOR more than fifteen (15) days late, after
written notice, shall bear interest from the dates they are due until the dates
they are paid, at a rate of ten percent (10%) per annum.

        3.    TERM:    This Lease shall be for a primary term commencing on
July 1, 2000 and ending at midnight on June 30, 2007.

        3.1.  If LESSEE has the need to lease and operate a single complex in
excess of approximately 375,000 square feet and LESSOR is not able to provide a
building expansion then LESSEE shall have the option to cancel the existing
seven year Lease on the 141,180 square foot facility on June 30, 2003. Should
LESSEE exercise this option then LESSEE will reimburse LESSOR for the
unamortized portion of the Tenant Improvements and real estate commissions
required in the Lease, provided however that such amount shall not exceed
$389,800.00 (Three Hundred Eighty-Nine Thousand Eight Hundred Dollars and
no/100). No additional penalties shall apply should LESSEE decide to exercise
this option.

        4.    DELIVERY AND ACCEPTANCE OF PREMISES:    LESSOR represents,
warrants, and covenants, that the existing plumbing, electrical, HVAC system, if
any, exterior walls, foundation, roof, load bearing walls, and retaining walls
for the Premises are in good working order and comply with all City, State, and
Federal building requirements as of the date of this Lease. Further, LESSOR
warrants

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that the Premises are free of any "Hazardous Substance" as defined in
Section 11.3. LESSOR represents, warrants and covenants that the structural
integrity of the Premises is free from any patent and latent defects.

        5.    UTILITIES:    LESSEE agrees to furnish all utilities and pay all
electric, gas, water, fuel and sewer company charges, as well as all charges for
any additional services or other utilities used on or assessed against the
Premises.

        5.1.  LESSOR shall ensure that all utilities for the Premises and any
addition are separately metered from those provided other areas of the same
building not leased to LESSEE.

        6.    LICENSING AND FEES:    LESSEE shall obtain all necessary licensing
and registrations for the use and operation of the Premises, and shall pay when
due all license and registration fees.

        7.    TAXES:    The following provisions shall apply:

        7.1.  State and county real estate taxes for the Property during the
calendar year [2000] ("Base Year") are $0.40 per square foot or Fifty-Six
Thousand Four Hundred Seventy-Two Dollars and no/100 ($56,472.00), and city real
estate taxes for the Property during the Base Year are Zero Dollars ($0.00).
LESSEE agrees to pay as additional rent all amounts by which the real estate
taxes may exceed these amounts in future years during the term of this Lease. If
LESSOR receives a real estate tax bill for amounts exceeding the amounts stated
above, LESSOR shall forward a copy of the bill to LESSEE, together with a letter
stating the amount of the excess, and within thirty (30) days of bill's due
date, LESSEE shall pay the excess amount to LESSOR. LESSOR shall pass through to
LESSEE, prior to the date of such taxes, all future applicable tax abatements
due to Premises being located in an enterprise zone. LESSOR shall rebate to
LESSEE all amounts that real estate taxes are less than the above estimated
amounts, within thirty (30) days of LESSOR being notified of tax amounts.

        7.2.  LESSEE shall timely pay or cause to be paid when due all personal
property, sales, use and other taxes or assessments, general or special, now or
hereafter imposed by any federal, state, or local government on the Premises or
on the ownership, lease, sale, possession or use of the Premises, whether the
same are assessed against LESSOR or LESSEE. If any such tax is assessed against
LESSOR, LESSOR shall provide LESSEE with written notice of the assessment. Upon
reasonable demand, LESSEE shall provide LESSOR with proof of all required
payments.

        8.    INSURANCE:    The following provisions shall apply:

        8.1.  LESSOR shall obtain "All Risk" Property Insurance on the Property,
including fixtures and non-removable tenant improvements in such amount as
LESSOR deems sufficient. LESSEE shall cooperate with LESSOR so that the lowest
insurance rating can be obtained. If the insurance rates published by the
Insurance Service Office of the State of Missouri are increased as the result of
any activities or hazards introduced by LESSEE, then LESSEE shall pay the amount
by which the insurance premiums are increased because of such activities or
hazards.

        8.2.  The "All Risk" Property Insurance premiums on the Property during
the calendar year [2000] ("Base Year") will total Seven Thousand Fifty-Nine
Dollars and no/100 ($7,059.00). LESSEE agrees to pay as additional rent all
amounts by which the insurance premiums may exceed, for whatever reason, this
amount in future years during the term of this Lease. If LESSOR receives an
Insurance Premium Bill for an amount exceeding the amount stated above, LESSOR
shall forward a copy of the bill to LESSEE, together with a letter stating the
amount of the excess, and within thirty (30) days of the bill's due date, LESSEE
shall pay the applicable excess amount to LESSOR. LESSOR shall rebate to LESSEE
all amounts that are less than the above stated amounts within thirty (30) days
of receiving Insurance Premium Bill.

        8.3.  At its sole cost and expense, LESSEE shall purchase and maintain
commercial general liability insurance on the Premises, including a property
damage provision, insuring against liability for injury to persons or property
occurring on or about the Premises or arising out of the ownership, maintenance,
use or occupancy of the Premises. The insurance shall be in an amount not less
than One Million Dollars ($1,000,000.00) combined single limit per occurrence,
and a general policy aggregate of not less than Three Million Dollars
($3,000,000.00) if such aggregate applies to this policy.

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        8.4.  All policies of liability insurance obtained now or at any future
time by LESSEE, must insure the interest of LESSOR as Additional Insured under
the form of endorsement which makes the coverage thereunder primary insurance as
regards LESSOR, and non-contributory with any other insurance carried by LESSOR,
shall include a long form non-contributory clause naming LESSOR, as well as
LESSEE, as an insured. The policies shall also provide that LESSOR be given at
least thirty (30) days notice before any cancellation or material modification
of the policy.

        8.5.  Upon request, LESSEE shall furnish to LESSOR Certificates of
Insurance evidencing the insurance coverage required by these provisions, and
providing that LESSOR shall receive 30 days' notice of cancellation or material
change in coverage. Upon reasonable request, LESSEE shall furnish LESSOR with a
copy of the Premium Bill and evidence of payment. Upon request, LESSOR shall
furnish the LESSEE Certificates of Insurance, Premium Bill, and evidence of
payment. LESSEE shall receive thirty (30) days' notice of cancellation or
material change in coverage.

        8.6.  In the event of casualty damage to the Premises, LESSEE shall
promptly report the damage to LESSOR and LESSOR shall make whatever claim
against the insurance company LESSOR deems advisable. LESSEE shall cooperate in
connection with the claim. In the event of either damage to the Premises by
casualty or an assertion of liability, and if LESSEE is carrying the applicable
insurance policy, LESSEE shall promptly report the same to the applicable
insurance company and make a claim for insurance proceeds, delivering to LESSOR
a copy of the claim. Any insurance proceeds shall be applied to the rebuilding
or repair of the property, with any excess paid to LESSOR or disbursed as LESSOR
deems appropriate.

        9.    LIENS AND ENCUMBRANCES:    This Lease shall be subject and
subordinate to any present or future mortgages, deeds of trust, and other liens
or encumbrances executed or consented to by LESSOR, which do not materially
adversely affect LESSEE'S use of the Premises. The holder of any such mortgage,
deed of trust, lien or encumbrance may notify LESSEE in writing of its interest,
and in such event LESSEE shall send copies of all notices or communications
regarding this Lease to the holder of the mortgage, deed of trust, lien or
encumbrance. Such holder shall be entitled to take any action or exercise any
rights reserved to LESSOR under this Lease. LESSEE shall, within ten (10) days
after receipt of a request therefor, execute and deliver to LESSOR and the
holder of such a mortgage, deed of trust, lien or other encumbrance, an estoppel
certificate and/or agreement evidencing the subordination of this Lease as
described above, which estoppel certificate and/or agreement shall be in form
satisfactory to LESSOR and such holder. (see Exhibit "B", attached hereto)

        9.1.  LESSEE shall not encumber or permit the encumbrance of the
Premises or this leasehold estate by any mortgage, deed of trust, assignment,
security interest, lien or other charge, without LESSOR'S prior written consent,
which consent shall not be unreasonably withheld.

        9.2.  This Lease does not require LESSEE to improve the Premises or
construct any improvements or additions on the Premises. Any improvements or
additions to the Premises, which LESSEE might make or permit, are for the sole
use of LESSEE and will not benefit LESSORS reversion. LESSEE is not, and shall
not be deemed to be, the agent of LESSOR in contracting or arranging for any
improvements to the Premises or any construction on the Premises. Additional
provisions relating to alterations and improvements are contained in Section 13
of this Lease.

        9.3.  LESSEE shall promptly pay all bills for labor done or material or
equipment supplied for any construction or repair work done on the Premises.
Failure to promptly pay any such bills shall be a default under this Lease.
LESSEE shall defend and indemnify LESSOR from all liability, damages or expense
resulting from any mechanic's lien claims affecting the portion of the Premises
constructed or improved by LESSEE.

        10.    MAINTENANCE AND REPAIR:    LESSOR shall repair and maintain the
roof, exterior walls, structure, foundation of any structures of the Premises,
and parking areas and, driveways including the removal of snow and ice, as well
as, repairing cracks and potholes in parking areas, sidewalks and driveways.

        10.1.    LESSEE shall have the obligation of maintaining all portions of
the Premises which LESSOR is not specifically obligated to maintain under the
above section. LESSEE shall maintain and keep in good working order all
equipment, fixtures, and systems on the Premises, and shall perform routine
repair and maintenance on the same, including without limitation all heating and

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air conditioning systems and equipment. In addition and without limitation,
LESSEE shall use best efforts to protect water pipes; heating and air
conditioning equipment, plumbing, fixtures, appliances, and sprinkler systems
from becoming frozen and will ensure repair of same. LESSEE shall keep the
Premises and all approaches, sidewalks, parking areas, truck pads, and adjacent
alleys clean, sightly, and free of rubbish.

        10.2.    LESSEE shall be responsible for all window glass replacement,
for maintenance of light fixtures and lamps throughout the Premises, for repair
and routine maintenance of gas heaters, boilers, water pipes, plumbing apparatus
and fixtures, gutters, downspouts, and all other portions of or equipment upon
the Premises, including without limitation all mechanical systems which are a
part of the Premises. LESSEE shall replace any worn or outdated equipment with
new equipment of like quality and durability.

        10.3.    In particular, LESSEE shall maintain in good working condition
the water sprinkler monitoring system, which is a part of the Premises, pay the
monthly charge for such system, and promptly repair any damage, which may be
suffered by the system.

        11.    USE OF PREMISES:    LESSEE may use the Premises for any purpose
set forth in Section 1 of this Lease, which is not destructive of the Premises.
LESSEE shall not, however, commit or allow any waste, nuisance, or other such
act or omission to occur on the Premises, and shall not do any act or allow on
the Premises any condition which may disturb the quiet enjoyment of those
occupying surrounding properties, including without limitation any other tenants
or occupants in the Building or on the Premises. LESSEE shall advise LESSOR in
writing of any change in the nature of LESSEE'S use of the Premises.

        11.1.    LESSEE shall fully comply with all federal, state and local
laws and regulations applicable to air emissions, water pollution, hazardous
waste, hazardous materials, toxic materials, and underground storage tanks.
LESSEE shall secure all permits, licenses and approvals necessary for its
operations and shall remain in compliance with such permits. LESSEE shall notify
LESSOR within two (2) days if LESSEE learns of any allegation that LESSEE'S
operations are in violation of any requirement of any permit or any requirement
to have a permit.

        11.2.    LESSEE shall not allow on the Premises any leakage, spillage or
release of any hazardous substance, hazardous waste, petroleum, or toxic
material as those terms are defined by federal or state law or regulation. If
such a release should occur, LESSEE shall notify LESSOR of such fact within two
(2) days. Furthermore, in such event, LESSEE shall promptly remove and clean up
any such leakage, spillage or release, at its own cost, and LESSEE shall
accomplish such removal and clean-up in strict compliance with all applicable
laws, codes and regulations. LESSEE shall notify LESSOR within two (2) days if
LESSEE receives notice of intent to sue, notice of violation, citation, warning
or similar notification arising out of operations on the Premises. LESSEE shall
notify LESSOR within two (2) days if LESSEE learns of any federal, state, or
local agency investigation or inquiry concerning the Premises or LESSEE'S
operations.

        11.3.    LESSEE shall not use all or any part of the Premises for the
purpose of refining, producing, storing, handling, transferring, processing, or
transporting any pollutants or contaminates or any Hazardous Substances or
petroleum products in any manner which would result in a release or threatened
release which could require response under applicable Environmental Regulations,
nor shall LESSEE permit or suffer any other party to use all or any part of the
Premises for any purpose forbidden herein. As used herein, the term "Hazardous
Substances" shall mean ureaformaldehyde, polychlorinated biphenyls, asbestos,
asbestos-containing materials, radioactive materials or wastes, petroleum
products, or any other waste material or other substance which would subject the
LESSOR as owner of the Property to any response costs, damages, penalties or
liabilities under any applicable Environmental Regulations. The term
"Environmental Regulations" as used herein means any federal, state or local
laws, statutes, codes, ordinances, regulations, requirements or rules relating
to any environmental matters, including the removal, handling, and disposal of
hazardous or toxic waste materials.

        11.4.    LESSEE shall defend and indemnify LESSOR from and against, any
and all claims, assertions, demands, judgments, penalties, fines, liabilities,
costs, damages and expenses, including court costs and attorney's fees and
expenses incurred by LESSOR, at any time, in any claim or action against or
involving LESSEE or LESSOR resulting from (i) any breach of the covenants of

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LESSEE contained herein, (ii) any act or failure to act by LESSEE, its employees
and assigns which results in a violation of or liability under any of the
Environmental Regulations, or (iii) from the discovery of any Hazardous
Substance in, upon, or over or emanating from the Premises as a result of acts
or failures to act by LESSEE, its agents, employees and assigns. It is the
intent of LESSOR and LESSEE that LESSOR shall have no liability or
responsibility for damage or injury to human health, the environment or natural
resources caused by, for abatement and/or clean-up of, or otherwise with respect
to Hazardous Substances not caused by LESSOR.

        12.    PUBLIC REQUIREMENTS:    LESSEE shall comply with all laws,
orders, regulations, ordinances and other public requirements at any time
affecting the Premises or the use of the Premises.

        13.    ALTERATIONS:    At its sole expense, LESSEE may, but is not
required to, make improvements, alterations or additions to the Premises. Any
alterations shall be of good worlananship and material and shall not reduce the
size or strength of the then existing improvements or of any load bearing wall
or structural support. Any improvements, alterations, additions or fixtures
placed on the Premises, whether or not permanently affixed to the Premises,
other than trade fixtures, shall become a part of the realty, shall belong to
LESSOR, and shall remain on and be surrendered with the Premises at the
termination of this Lease, unless otherwise specifically agreed to in writing
between LESSOR and LESSEE. No improvements, alterations or additions to the
Premises, other than trade fixtures, shall be removed without LESSOR'S prior
written consent, which consent shall not unreasonably be withheld. LESSEE shall
repair all damage caused by any removal of any trade or other fixtures or
additions. Notwithstanding the foregoing or anything else to the contrary,
LESSEE shall not be permitted to place any underground storage tanks on or under
the Premises.

        14.    ASSIGNMENT OR SUBLEASE:    LESSEE shall not assign this Lease,
sublease the Premises, or allow anyone else to use or occupy any part of the
Premises, without LESSOR'S prior written consent, which consent shall not
unreasonably be withheld. LESSOR may assign this Lease to any subsequent
purchaser of the Premises, and upon such assignment shall be released from all
rights and obligations under this Lease arising thereafter such date of
assignment, provided LESSOR uses best efforts to obtain a subordination and
non-disturbance agreement similar in term to the attached Exhibit "B".

        15.    INSPECTION:    LESSOR and its agents may enter the Premises
during normal business hours to examine the same and do anything required of
LESSOR by this Lease, so long as LESSOR does not materially interfere with
LESSEE'S business. During the last 120 days of the Lease term, LESSOR may
display a "For Rent" sign on the Premises, and show the Premises to prospective
tenants during normal business hours.

        16.    LESSEE'S PERSONALTY:    LESSOR shall not be liable for any loss
or damage to any of LESSEE'S merchandise, personality or other property on or
about the Premises, or for any lost profits of or consequential damage to
LESSEE, regardless of the cause of the loss or damage, unless such loss or
damage resulted from negligence or willful misconduct by LESSOR or LESSOR'S
representatives or agents. LESSEE shall be responsible for any taxes or
assessments made against LESSEE'S personal property, and shall defend and
indemnify LESSOR against the same.

        17.    EMINENT DOMAIN:    If any substantial part of the Premises
(affecting LESSEE'S operations) is taken under the power of eminent domain,
conveyed in lieu of condemnation, or acquired for any public or quasi-public
use, this Lease may be terminated by either party. The parties shall make their
individual claims for the award, which shall be distributed according to law.

        18.    DAMAGE BY CASUALTY:    If a substantial part of the Premises is
so damaged by fire or other casualty that the Premises are totally untenantable,
LESSOR may at its sole option terminate this Lease. If the Lease is so
cancelled, rent shall be paid only to the date of cancellation and LESSEE shall
be given a reasonable amount of time to surrender the Premises to LESSOR.

        18.1.    If LESSOR does not elect to terminate this Lease in case of
total untenantability, this Lease shall continue in full force and effect and
LESSOR shall restore the Premises to at least their previous condition within a
reasonable time. For that purpose, LESSOR and its agents and contractors may
enter the Premises. Rent shall abate during the period of untenantability.

        18.2.    If the Premises are so damaged by fire or other casualty that
tenantability is only partially disturbed, LESSOR shall restore the same to at
least their previous condition within a

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reasonable time. For that purpose, LESSOR and its agents may enter the Premises,
and rent shall abate in proportion and in duration equal to the partial
untenantability of the Premises. No claims shall be made by or allowed to LESSEE
by reason of any inconvenience or annoyance arising from the repair work.

        18.3.    In the event the Premises suffer any casualty damage, LESSEE
shall within ten (10) days remove any debris or rubbish, remove its personal
property from the damaged Premises, and clean the damaged Premises to facilitate
repair or restoring operations.

        19.    DEFAULT BY LESSOR:    LESSEE shall give LESSOR written notice of
any default by LESSOR. If (a) the default is not cured within thirty (30) days
after LESSOR receives the written notice, or (b) LESSOR does not within that
thirty (30) day time period take actions, which if continued with reasonable
diligence, will cure the default, then LESSEE at its election may declare this
Lease terminated after an additional period of thirty (30) days. If this Lease
is rightfully terminated in accordance with this section, rent shall be paid
only to the end of the second thirty (30) day period, or cure such default at
LESSOR'S cost.

        20.    DEFAULT BY LESSEE:    The following provisions shall govern
default by the LESSEE:

        20.1.    LESSEE will be in default under this Lease upon the happening
of any one or more of the following events:

        20.1.1.    Failure of LESSEE to make any rent payment, and after five
(5) days of receipt of written notice, when due or fully and timely perform any
obligation contained in this Lease.

        20.1.2.    Any warranty, representation or statement made or furnished
to LESSOR by or on behalf of LESSEE for the purpose of inducing the execution of
this Lease or any other agreement between the parties proves to have been false
in any material respect when made or furnished.

        20.1.3.    LESSEE is dissolved or its existence terminated; LESSEE
becomes insolvent, its business fails, or a receiver is appointed for any of
LESSEE'S property; or LESSEE makes an assignment for the benefit of its
creditors or is the subject of any voluntary or involuntary bankruptcy or
insolvency proceeding.

        20.1.4.    Any of the occurrences set forth in Section 20.1.3. of this
Lease above occurs with respect to any guarantor or surety of LESSEE'S
obligations.

        20.1.5.    LESSEE'S leasehold interest in the Premises are attached or
taken under any court order or writ of execution.

        20.2.    If LESSEE defaults, LESSOR may enforce its rights by an action
for rent and possession, unlawful detainer, or other legal remedy. LESSEE agrees
that, notwithstanding LESSOR'S possession of the Premises, LESSEE shall remain
liable for and shall pay LESSOR an amount equal to the entire rent payable to
the end of the thenapplicable term of this Lease. This amount will become due
and be payable monthly. In addition, LESSEE shall be liable for and shall pay to
LESSOR any loss or deficiency sustained by LESSOR because of LESSEE'S default.

        20.3.    Notwithstanding LESSOR'S re-entry and possession of the
Premises, LESSOR, upon LESSEE'S default, shall have the right, without notice to
LESSEE, and without terminating this Lease, to make alterations and repairs for
the purpose of reletting the Premises. LESSOR may relet or attempt to relet the
Premises or any part of the Premises for the remainder of the then-applicable
Lease term or for any longer or shorter period as opportunity may offer, to such
persons and at such rent as may be obtained. In case the Premises are relet,
LESSEE shall pay the difference between the amount of rent payable during the
remainder of the term and the net rent actually received by LESSOR during the
term after deducting all expenses for repairs, alterations, recovering
possession and reletting the same, which difference shall accrue and be payable
monthly.

        20.4.    No actions taken by LESSOR after LESSEE'S default shall be
construed as indicating a termination of this Lease unless LESSOR so elects in
writing.

        20.5.    At LESSOR'S election, after the applicable notice, LESSOR may
cure any default of LESSEE by expending money, contracting for the making of
repairs, purchasing insurance, or by

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any other actions. If LESSOR takes any such actions, LESSEE will promptly, upon
demand, reimburse LESSOR for all of LESSOR'S expenses. All such expenses shall
bear interest from the dates they are due until the dates they are paid, at a
rate of 10 percent (10%) per annum.

        20.6.    LESSOR shall be entitled to recover from LESSEE all of LESSOR'S
expenses in exercising any of its rights under this Lease, including without
limitation LESSOR'S reasonable attorney's fees.

        20.7.    All of LESSOR'S remedies are cumulative, and may be exercised.
successively or concurrently, at LESSOR'S election.

        21.    WAIVERS:    Any waiver, consent or approval on the part of LESSOR
or LESSEE must be in writing, and shall be effective only to the extent
specifically set forth in the writing. No delay or omission by LESSOR or LESSEE
in the exercise of any right or remedy with respect to any one occasion shall
impair LESSOR'S or LESSEE'S ability to exercise the right or remedy in the same
or on another occasion.

        22.    NOTICES:    All notices or other communications shall be in
writing signed by the sender, and shall either be (a) personally delivered or
(b) mailed by certified mail, at or to the following addresses:

LESSOR:   Mid-West Terminal Warehouse Company
1700 N. Universal Avenue
Kansas City, Missouri 64120
Attention: Mr. C. Rodney LaMothe, President
LESSEE:
 
Musician's Friend, Inc.
931 Chevy Way
Medford, Oregon 97504
Attention: Mr. Jon White

        22.1.    Either party may change the address by written notice to the
other. Notices shall be effective when received (if personally delivered) or
three days after deposited in the United States Mail (if mailed by certified
mail).

        23.    RETURN OF PREMISES:    At the termination of this Lease, LESSEE
agrees to deliver to LESSOR the Premises and all mechanical systems and all
LESSOR owned equipment and fixtures thereon, in good working order and
condition, subject to normal wear and tear.

        23.1.    Should LESSEE fail to vacate the Premises at the termination of
this Lease, LESSEE shall pay for each day of the holdover period one-hundred and
ten percent (110%) of the then-applicable rent. All the terms and provisions of
this Lease shall continue to apply. LESSEE will be a tenant at will during the
holdover period. Nothing in this section shall be a waiver of or preclude the
exercise of LESSOR'S remedies for LESSEE'S default. Should LESSEE'S holdover
prevent LESSOR from fulfilling the terms of another lease, LESSEE shall defend
and indemnify LESSOR from all direct and consequential damages for which LESSOR
may be liable, or which LESSOR may suffer, as a result thereof.

        24.    QUIET ENJOYMENT:    Neither LESSOR nor LESSOR'S successors or
assigns will disturb LESSEE in its quiet enjoyment of the Premises.

        25.    SIGNS:    LESSEE shall not place any signs or advertisements on
the Premises without the written consent of LESSOR, which consent shall not be
unreasonably withheld. Within 120 days prior to the termination of any Lease
term, LESSOR may display signs advertising the rental of the Premises.

        26.    INDEMNITY:    LESSEE and LESSOR shall indemnify, defend and hold
harmless each other from and against any and all damage, expense, claim,
liability or loss, including reasonable attorneys' fees, arising out of or in
any way connected to any condition, occurrence or event occurring on the
Premises or arising out of any use of the Premises during the term of this
Lease. This duty to indemnify and defend shall include but shall not be limited
to damages, costs, liability, loss and expense including professional
consultant, engineering or attorneys' fees incurred in responding to federal,
state, or local laws, strict liability, or common law.

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        27.    WAIVER OF SUBROGATION:    LESSOR and LESSEE each respectively
waive all rights of recovery against the other and the other's agents,
employees, permitted licensees and assignees, for any loss or damage to property
or injury to or death of persons, to the extent the same is covered or
indemnified by proceeds of any insurance, or for which reimbursement is
otherwise received. This agreement, however, shall apply only so long as the
parties' respective insurance companies expressly concur in this agreement and
waive all subrogation rights. Each party shall have a continuing obligation to
notify the other party if these waivers are not granted. Nothing in this section
shall impose any greater liability upon the LESSOR than would have existed in
the absence of this section.

        28.    ATTORNMENT:    Subject to the right of non-disturbance and
acknowledgement of the terms and conditions of the Lease by such purchaser,
LESSEE agrees to and does attorn to any successor to LESSOR'S interest in all or
any part of the Premises, including without limitation any purchaser at any
foreclosure sale of all or any part of the Premises.

        29.    BANKRUPTCY:    The following covenants are a part of this
agreement:

        29.1.    The parties agree that this Lease has been entered into partly
because of LESSOR'S judgment that LESSEE will be particularly able to perform
the Lease covenants. LESSEE has substantial duties of performance under this
Lease, apart from its mere financial obligations.

        29.2.    In the event any proceedings in bankruptcy are brought against
LESSEE or affect LESSEE, and should an assumption of this Lease be attempted by
the trustee or other party in violation of the above agreement, LESSOR will not
have adequate assurance of performance, within the meaning of Section 365 of the
Bankruptcy Code of 1978, as amended, unless the trustee or other party can
demonstrate that itself or a substitute lessee will have the particular capacity
to fulfill the non-monetary covenants of this Lease. LESSOR will not have
adequate assurance of performance unless and until (a) LESSOR is allowed access
to adequate financial and other information about the proposed lessee, including
without limitation references from prior lessors, to satisfy itself that the
trustee, other party or proposed lessee is fully able to assume the financial
and personal covenants of LESSEE in this Lease, in full accordance with its
terms, and (b) sufficient bonds or letters of credit are posted by the trustee,
other party or proposed lessee to guarantee performance of the Lease
obligations. The parties further agree that the definition of the term "adequate
assurance" as set forth in Section 365(b) (3) of the Bankruptcy Code of 1978, as
amended, shall apply to any determination of adequate assurance in connection
with this Lease.

        29.3.    In the event any proceedings in bankruptcy are brought against
LESSEE or affect LESSEE, the trustee or other party shall not be permitted to
use, sell or lease any of the Premises, whether or not in the ordinary course of
business, without providing adequate protection to LESSOR. The parties agree
that the language in Section 361 of the Bankruptcy Code of 1978, as amended,
shall be the exclusive definition of the tern "adequate protection" in
connection with any use, sale or lease of the Premises. The cash payment
referred to in that section shall mean the full payments required under this
Lease, plus payment representing the value of LESSOR'S lost ability to use or
lease the Premises; and the then "indubitable equivalent" as used in that
section shall mean protection afforded by either grants of administrative
expense priority, grants to LESSOR of ownership interests in a continuing
business surviving the bankruptcy, or grants to LESSOR of protected securities
issued by a continuing business surviving the bankruptcy, which completely
compensate LESSOR for the loss of the present value (computed at the then market
rate of interest for commercial loans) of LESSOR'S ability to use or lease the
Premises.

        29.4.    The parties agree that because of the extreme financial
importance to LESSOR of this transaction, LESSOR will be irreparably harmed by
any stay of its collection efforts or the exercise of its remedies under this
Lease.

        30.    SUCCESSORS AND ASSIGNS:    This Lease shall inure to the benefit
of and be binding upon the heirs, estates, executors, administrators, receivers,
custodians, successors and (in the case of LESSEE, permitted) assigns of the
respective parties.

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        31.    LIGHT:    This Lease does not grant any rights to light, view or
air over adjacent properties. Any diminution of elimination of light, view or
air by any structure, which may be erected on property adjacent to the Premises,
shall not be a breach of, and shall not affect the rights and obligations of,
the parties under this Lease.

        32.    RIGHT OF FIRST REFUSAL:    LESSEE shall have the right of first
opportunity (the "Opportunity") to lease any space (the "First Opportunity
Premises"), which becomes available at the Building on the terms set forth in
this paragraph. In the event that any of the First Opportunity Premises becomes
available, LESSOR shall notify LESSEE of such fact by a notice (the "Opportunity
Notice") given in a manner provided herein for the given notices, which
Opportunity Notice shall contain the basic terms and conditions upon which
LESSOR is willing to lease the particular First Opportunity Premises to LESSEE
including rental rates and other material terms and conditions thereof. Upon
LESSEE'S receipt of the Opportunity Notice, LESSEE shall have five (5) business
days (time being of the essence in all respects with respect thereto) to notify
LESSOR in writing of LESSEE'S election to lease the particular First Opportunity
Premises to LESSEE on the terms and conditions contained herein and in the
Opportunity Notice. If LESSEE shall fail to so notify LESSOR of LESSEE'S
election to so lease within the time period provided above, then LESSOR shall be
free to lease the particular First Opportunity Premises on such terms and
conditions as LESSOR may obtain, except that LESSOR shall offer the First
Opportunity Premises again to LESSEE if LESSOR intends to enter into a lease
with a third party at effective rents (taking into account all rental
concessions) five percent (5%) or more lower than those offered the LESSEE.

        33.    OPTION TO EXTEND:    Prior to the expiration of the primary lease
term, or after the initial seven year lease expires with extensions due to
facility expansion as outlined in item 35 of this Lease; tenant may extend this
Lease term a period of five years. The lease rate for the option period on the
initial 141,180 square foot facility shall be $4.95 per square foot per year
(base rent $3.73 per square foot per year, additional charges $0.40 per square
foot per year, taxes $0.40 per square foot per year, and tenant improvements
$0.42 per square foot per year). The annual lease rate for the option period on
any then existing expansion to the initial facility shall be base rate for the
expanded portion of the building plus fifteen percent (15%) increase. All other
terms and conditions of this Lease shall apply to option period.

        34.    TENANT IMPROVEMENT COST AMORTIZATION:    The additional lease
rate for tenant improvements shall remain $0.42 per square foot on the initial
141,180 square feet or Fifty-Nine Thousand Two Hundred Ninety-Five Dollars and
no/100 per year ($59,295.00) until the end of the tenth year of this Lease.
After ten years this additional rent shall terminate.

        35.    EXPANSION FACILITY:    At any time within 24 months from the
occupancy date of July 1, 2000 on the existing 141,180 square foot building,
LESSEE may request, and LESSOR shall construct an expansion contiguous to the
existing building, providing up to 375,000 square feet (the "Expansion
Facility"). The LESSOR'S required expansion option shall be no less than an
110,000 square foot expansion and up to 233,820 square feet. After LESSEE'S
notice to LESSOR requesting expansion, LESSOR shall have a maximum of three
hundred sixty-five (365) days to complete the Expansion Facility.

        35.1.    The Expansion Facility shall be at least to the same shell
construction standards as the existing 141,180 square foot facility including,
but not limited to, lighting, electrical, insulation, etc. No tenant
improvements are included.

        35.2.    The lease rate for the Expansion Facility shall be calculated
to account for both building construction cost increases and financing cost
increases as follows:

        35.2.1.    Exhibit "D" attached shows the $33.43 per square foot total
building cost and the 7.25 percent (71/4%) interest rate applied to the 141,180
square foot building under this Lease and used in LESSOR'S mortgage agreement
with ING Investment Management, Inc.

        35.2.2.    The lease rate adjustment for any building expansion under
this Lease will be predicated on any increase or decrease in the $33.43 per
square foot total building cost and

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the 7.25 percent (71/4%) interest rate used to determine the $3.62 per square
foot lease rate for the 141,180 square feet Premises (base lease rate $3.27 per
square foot per year and additional charges $0.35 per square foot per year).

        35.2.3.    The base year tax for the Expansion Facility shall be $0.40
cents per square foot. LESSEE shall pay all tax increases, over $0.40 per square
foot per year, during the lease term.

        35.2.4.    Each one percent (1%) increase or decrease in the Expansion
Facility cost as used by ING Investment Management, Inc. will, respectively,
increase or decrease the $3.62 per square foot lease rate by 3.6 cents ($0.036)
per square foot or any prorated portion thereof.

        35.2.5.    Each one percent (1%) increase or decrease in the interest
rate of 7.25 percent (71/4%) as used by ING Investment Management, Inc. will
increase or decrease the $3.62 per square foot Expansion Facility lease cost by
33 cents ($0.33) per square foot or any prorated portion thereof.

        35.3.    The initial lease extension period term and rate on the
existing 141,180 square foot building, due to the building expansion, shall
remain $4.44 per square foot per year (base rent and additional charges $4.02
per square foot per year and Tenant Improvements $0.42 per square foot per
year).

        35.4.    The lease term for the Expansion Facility and the existing
141,180 square foot Premises will be for five (5) years firm commencing when the
LESSEE takes occupancy of Expansion Facility. However the lease term for the
Expansion Facility and the existing 141, 180 square foot Premises shall not
expire prior to June 30, 2007.

        35.5.    All other terms and conditions of the Expansion Facility shall
be covered and incorporated under this existing Lease Agreement

        36.    AMENDMENTS:    This Lease contains the entire agreement of the
parties. No amendments may be made to this Lease except by an agreement in
writing executed by all the parties.

        37.    MISCELLANEOUS:    The following provisions are additional terms
of this Lease:

        37.1.    The captions of the sections of this Lease are inserted for
convenience only and shall not be used in the interpretation or construction of
any provisions of this Lease.

        37.2.    If any provision of this Lease is held invalid or
unenforceable, the holding shall affect only the provision in question and that
provision in other circumstances, and all other provisions of this Lease, shall
remain in full force and effect.

        37.3.    The rule that the terms of an agreement are strictly construed
against the drafting party shall have no application to the construction of
interpretation of this Lease.

        Intending to be fully bound, the parties have executed this Lease the
day and year first above written.

MID-WEST TERMINAL WAREHOUSE COMPANY,
a Missouri Corporation  
 
 
 
  By:   /s/  C. RODNEY LAMOTHE      

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C. Rodney LaMothe, President           LESSOR  
 
 
 
  MUSICIAN'S FRIEND, INC.,
a Delaware Corporation  
 
 
 
  By:           /s/  ROBERT V. EASTMAN      

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Robert V. Eastman, Chief Executive Officer           LESSEE  

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