EXHIBIT 10.40

ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement (the "Agreement") is made as of March 20, 2001, by and among Guitar Center
Stores, Inc., a Delaware corporation, with a principal place of business located at 5155 Clareton Drive, Agoura Hills, California 91301
("Buyer"), and American Music Group, Ltd., a New York corporation, with a principal place of business located at 310 West Jefferson Street,
Syracuse, New York 13202, Eastern Musical Supply Co., Inc., a New York corporation, with a principal place of business located at 106 Gray Road, West Falmouth, Maine 04105, Lyons
Music, Inc., a New York corporation, with a principal place of business located at 130 E. St. Charles Road, Suite B, Carol Stream, Illinois 60188-2075, American Music, Inc.,
a Florida corporation, with a principal place of business located at 667 Florida Central Parkway, Longwood, Florida 32750, American Musical Instruments, Inc., a New York corporation, with a
principal place of business located at 2710 West Bell Road, Suite 1200, Phoenix, Arizona 85023, Giardinelli Band Instrument Co., Inc., a New York corporation, with a principal place of business
located at 7845 Maltage Drive, Liverpool, New York 13090, Central Music Supply, Inc., a New York corporation, with a principal place of business located at 310 West Jefferson Street, Syracuse,
New York 13202, and GBI, Inc., a New York corporation, with a principal place of business located at 7845 Maltage Drive, Liverpool, New York 13092 (each, a
"Seller" and, collectively, the "Sellers"), and the stockholders of Sellers each of whom is listed on
the signature pages hereto (each, a "Stockholder" and, collectively, the "Stockholders"), pursuant to
the following terms and conditions.

Recitals:

A. Sellers now own and wish to sell all of their assets, properties and rights to Buyer on the terms and subject to the conditions set forth herein below.

B.
Buyer wishes to purchase such assets from Sellers (the "Acquisition").

C.
Each of the Sellers and Buyer has approved the Acquisition.

Agreement:

NOW, THEREFORE, in consideration of the foregoing premises, the mutual covenants and agreements contained herein and other good and valuable consideration, the
adequacy of which is hereby acknowledged, Buyer, the Sellers and the Stockholders hereby agree as follows:

1.Definitions.

"Acquisition" shall have the meaning set forth in Recital B.

"Action" means any action, order, writ, injunction, judgment or decree outstanding or claim, suit, litigation, proceeding,
investigation or dispute.

"Adjustment Amount" shall have the meaning set forth in Section 2.7(c).

"Agreement" shall have the meaning set forth in the preamble.

"Ancillary Agreements" means the Noncompete Agreements.

"Assets" shall have the meaning set forth in Section 2.1.

"Assumed Liabilities" means (a) the Liabilities of the Sellers shown on the December 31, 2000 balance sheet included in
the Financial Statements, (b) the Liabilities of the Sellers incurred in the ordinary course of business of the Sellers consistent with past practice during the period commencing on
January 1, 2001 and ending on the Closing Date (other than Employee Plan Liabilities or any Breach); (c) the Liabilities set forth in Section 1(a) of the Seller Disclosure
Schedule, if any; and (d) the employment obligations identified in Section 6.9;provided, however, that in no event shall the Assumed
Liabilities include (x) any Taxes of any Seller arising from any event prior to or in connection

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with the Closing or (y) any obligations of any Seller or any Stockholder for the payment of brokerage, investment banking, legal, accounting and similar fees and expenses arising in connection
with the transactions contemplated by this Agreement.

"Auditor" shall have the meaning set forth in Section 2.7(b).

"Average Parent Common Stock Price" shall mean the average closing price of the Parent Common Stock on the Nasdaq National Market as
reported in the Wall Street Journal for the five Trading Days ending on the second Trading Day immediately prior to the Closing Date.

"Benefit Arrangement" means any employment, consulting, severance or other similar contract, arrangement or policy (written or oral)
and each plan, arrangement, program, agreement or commitment (written or oral) providing for insurance coverage (including, without limitation, any self-insured arrangements), workers'
compensation, disability benefits, supplemental unemployment benefits, vacation benefits, retirement benefits, life, health or accident benefits (including, without limitation, any
"voluntary employees' beneficiary association" as defined in Section 501(c)(9) of the Code providing for the same or other benefits) or for
deferred compensation, profit-sharing, bonuses, stock options, stock appreciation rights, stock purchases or other forms of incentive compensation or post-retirement insurance,
compensation or benefits which (a) is not a Welfare Plan, Pension Plan or Multiemployer Plan, (b) is entered into, maintained, contributed to or required to be contributed to, as the
case may be, by any Seller or any ERISA Affiliate or under which any Seller or any ERISA Affiliate may incur any liability, and (c) covers any employee or former employee of any Seller or any
ERISA Affiliate (with respect to their relationship with such any entity).

"Books and Records" means (a) all product, business and marketing plans, sales and promotional literature and artwork relating
to the business of any Seller or the Assets, (b) all books, records, lists, ledgers, financial data, files, reports, product and design manuals, plans, drawings, Tax Returns, technical manuals
and operating records of every kind relating to the business of any Seller or the Assets (including records and lists of customers, distributors, suppliers and personnel) and (c) all telephone
and fax numbers used in the business of any Seller, in each case whether maintained as hard copy or stored in computer memory and whether owned by any Seller or its affiliates.

"Breach" shall have the meaning set forth in Section 3.12.

"Business" shall have the meaning set forth in Section 2.1.

"Buyer" shall have the meaning set forth in the preamble.

"Buyer Disclosure Schedule" means the written disclosure schedule of Buyer delivered to the Seller Representative prior to the date
hereof, a copy of which is attached hereto.

"Buyer Indemnified Party" shall have the meaning set forth in Section 10.1.

"Cash" means cash and cash equivalents, including marketable securities and short-term investments, calculated in
accordance with GAAP applied on a consistent basis.

"Cash Consideration" shall mean an amount in cash equal to $14,408,032 (Fourteen Million Four Hundred Eight Thousand
Thirty-Two Dollars) minus the Adjustment Amount, if any.

"Cash Holdback" means an amount in cash equal to $2,075,000 (Two Million Seventy-Five Thousand Dollars).

"Claim" shall have the meaning set forth in Section 10.2.

"Claim Notice" shall have the meaning set forth in Section 10.2.

"Closing" shall have the meaning set forth in Section 2.4.

"Closing Date" shall have the meaning set forth in Section 2.4.

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"Code" means the Internal Revenue Code of 1986, as amended.

"Contracts" means all agreements, contracts, Leases (whether for real or personal property), purchase orders, undertakings, covenants
not to compete, employment agreements, confidentiality agreements, licenses, instruments, obligations and commitments to which any Seller is a party or by which any Seller or any of the Assets are
bound or affected, whether written or oral.

"Court Order" means any judgment, decision, consent decree, injunction, ruling or order of any foreign, federal, state or local court
or governmental agency, department or authority that is binding on any Person or its property under applicable law.

"Damages" shall mean any damage, claim, loss, cost, Tax, Liability or expense, including, without limitation, court costs and expenses
of investigation, reasonable attorney's fees and costs, diminution of value, response action, removal action or remedial action.

"Default" means (a) a breach of or default under any Contract or Lease, (b) the occurrence of an event that with or
without the passage of time or the giving of notice or both would constitute a breach of or default under any Contract or Lease or (c) the occurrence of an event that with or without the
passage of time or the giving of notice or both would give rise to a right of termination, renegotiation or acceleration, or the modification of the terms or conditions, under any Contract or Lease.

"Deferred Revenue Adjustment" shall have the meaning set forth in Section 2.7(d).

"Depreciated Inventory" means those items of Inventory which the Sellers, or any of them, have depreciated for accounting purposes such
that the book value of those items is zero or a nominal amount.

"Designated Employees" shall have the meaning set forth in Section 6.9(a).

"Determination Date" shall have the meaning set forth in Section 2.7(b).

"Employee Plans" means all Benefit Arrangements, Multiemployer Plans, Pension Plans and Welfare Plans.

"Employee Plan Liabilities" means any Liabilities under or with respect to any Employee Plans, without regard to whether such
Liabilities are Liabilities of such Employee Plans, any Seller or any ERISA Affiliate.

"Employees" means all officers and directors of any Seller and all other Persons employed by any Seller on a full or
part-time basis together with all persons retained as "independent contractors" as of the relevant date.

"Employment Agreement" means the Employment Agreement, by and between Buyer and David Fleming dated even herewith.

"Encumbrance" means any claim, lien, pledge, option, charge, easement, Tax assessment, Security Interest, deed of trust, mortgage,
right-of-way, encroachment, building or use restriction, conditional sales agreement, encumbrance or other right of third parties, whether voluntarily incurred or arising by
operation of law, and includes any agreement to give any of the foregoing in the future, and any contingent sale or other title retention agreement or Lease in the nature thereof.

"Environmental Condition" means the state of the environment, including natural resources
(e.g., flora and fauna), soil, surface water, ground water, any present or potential drinking water supply, subsurface strata or ambient air, relating
to or arising out of the use, handing, storage, treatment, recycling, generation, transportation, release, spilling, leaking, pumping, pouring, emptying, discharging, injecting, escaping, leaching,
disposal, dumping or threatened release of Hazardous Substances by any Seller or any of their respective predecessors of successors in interest, or by any of their respective

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agents, Representatives, employees or independent contractors when acting in such capacity on behalf of any Seller.

"Environmental Laws" means all applicable federal, state, district and local laws, all rules or regulations promulgated thereunder, and
all orders, consent orders, judgments, notices, permits or demand letters issued, promulgated or entered pursuant thereto, relating to pollution or protection of the environment (including, without
limitation, ambient air, surface water, ground water, land surface or subsurface strata), including, without limitation, (a) laws relating to emissions, discharges, releases or threatened
releases of pollutants, contaminants, chemicals, industrial materials, wastes or other substances into the environment and (b) laws relating to the identification, generation, manufacture,
processing, distribution, use, treatment, storage, disposal, recovery, transport or other handling of pollutants, contaminants, chemicals, industrial materials, wastes or other substances.
Environmental Laws shall include, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA"), the Toxic Substances Control Act, as amended, the Hazardous Materials Transportation Act, as amended, the Resource Conservation and Recovery
Act, as amended, the Clean Water Act, as amended, the Safe Drinking Water Act, as amended, the Clean Air Act, as amended, the Occupational Safety and Health Act, as amended, and all analogous laws
promulgated or issued by any state or other governmental authority.

"Environmental, Health and Safety Liability" means any cost, damages, expense, liability, obligation, or other responsibility arising
from or under Environmental Law or Occupational Safety and Health Law and consisting of or relating to: (a) any environmental, health, or safety matters or conditions (including
on-site or off-site contamination, occupational safety and health, and regulation of chemical substances
or products); (b) fines, penalties, judgments, awards, settlements, legal or administrative proceedings, damages, losses, claims, demands and response, investigative, remedial, or inspection
costs and expenses arising under Environmental Law or Occupational Safety and Health Law; (c) financial responsibility under Environmental Law or Occupational Safety and Health Law for cleanup
costs or corrective action, including any investigation, cleanup, removal, containment, or other remediation or response actions ("Cleanup") required by
applicable Environmental Law or Occupational Safety and Health Law (whether or not such Cleanup has been required or requested by any governmental body or any other Person) and for any natural
resource damages; or (d) any other compliance, corrective, investigative, or remedial measures required under Environmental Law or Occupational Safety and Health Law. The terms "removal,"
"remedial," and "response action," include the types of activities covered by CERCLA.

"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.

"ERISA Affiliate" means any entity which is (or at any relevant time was) a member of a "controlled group of corporations" with, under
"common control" with, or a member of an "affiliated service group" with, or otherwise required to be aggregated with, any Seller as set forth in Section 414(b), (c), (m) or
(o) of the Code.

"Exchange Act" means the Securities Exchange Act of 1934, as amended.

"Excluded Liabilities" shall have the meaning set forth in Section 2.2(b).

"Facilities" means all offices, stores, warehouses, administration buildings, manufacturing facilities, plants and all real property
and related facilities owned or leased by any Seller, all as identified or listed in Section 3.4(b) and Section 3.4(c) of the Seller Disclosure Schedule.

"Financial Statements" means the balance sheets of each Seller (or its predecessor, as the case may be) as of December 31, 2000
and the related statements of income, changes in stockholders' equity and cash flows, of each Seller for the year ended December 31, 2000, in each case which are provided to Buyer by Sellers.

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"Fixtures and Equipment" means all of the furniture, fixtures, furnishings, machinery, computer hardware and other tangible personal
property owned or leased by any Seller, wherever located.

"Funded Debt" shall have the meaning set forth in Section 3.8.

"GAAP" means United States generally accepted accounting principles.

"Hazardous Substances" means all pollutants, contaminants, chemicals, wastes and any other carcinogenic, ignitable, corrosive,
reactive, toxic or otherwise hazardous substances or materials (whether solids, liquids or gases) subject to regulation, control or remediation under Environmental Laws.

"Holdback Amount" shall mean an amount equal to $2,500,000 (Two Million Five Hundred Thousand Dollars) to be represented by the Cash
Holdback and the Shares Holdback.

"Holdback Notice" shall have the meaning set forth in Section 11.3.

"Holdback Period" shall mean the period commencing on the Closing Date and ending on the Determination Date.

"Indemnified Party" shall have the meaning set forth in Section 10.2.

"Indemnifying Party" shall have the meaning set forth in Section 10.2.

"Intangible Assets" means an asset, such as goodwill, Intellectual Property rights or similar assets, with no physical properties.

"Intellectual Property" means (a) all inventions (whether patentable or unpatentable and whether or not reduced to practice),
all improvements thereto and all patents, patent applications and patent disclosures, together with all reissuances, continuations, continuations-in-part, revisions, extensions
and reexaminations thereof, (b) all trademarks, service marks, trade dress, logos, trade names and corporate names, together with all translations, adaptations, derivations and combinations
thereof and including all goodwill associated therewith and all applications, registrations and renewals in connection therewith, (c) all copyrightable works, all copyrights and all
applications, registrations and renewals in connection therewith, (d) all mask works and all applications, registrations and renewals in connection therewith, (e) all trade secrets and
confidential business information (including ideas, research and development, know-how, formulas, compositions, manufacturing and production processes, techniques,
technical data, designs, drawings, specifications, customer and supplier lists, pricing and cost information and business and marketing plans and proposals), (f) all computer software
(including data and related documentation), (g) all other proprietary rights and (h) all copies and tangible embodiments thereof (in whatever form or medium).

"Inventory" means all merchandise owned and intended for resale, lease or rental.

"Investor" shall have the meaning set forth in Section 4.4(a).

"Lease" means a real property lease or a personal property lease, as applicable.

"Leased Property" shall have the meaning set forth in Section 3.4(c).

"Liability" means any direct or indirect liability, indebtedness, obligation, commitment, expense, claim, deficiency, guaranty or
endorsement of any type whatsoever, whether accrued or unaccrued, absolute or contingent, matured or unmatured, liquidated or unliquidated, known or unknown, asserted or unasserted, due or to become
due.

"LIFO Reserve" means that the inventory valuation reserve for the last-in first-out method as reflected in the
Books and Records of the Sellers.

"Low Estimate" shall have the meaning set forth in Section 2.7(c).

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"Material Adverse Effect" or "Material Adverse Change" or a similar phrase means, with
respect to any Person, (a) any material adverse effect on or change with respect to (i) the business, operations, assets (taken as a whole), Liabilities (taken as a whole), condition
(financial or otherwise), results of operations or prospects of such Person and its Subsidiaries, taken as a whole, or (ii) the right or ability of such Person to consummate any of the
transactions contemplated hereby or (b) any event or condition which, with the passage of time, the giving or receipt of notice or the occurrence or nonoccurrence of any other circumstance,
action or event, would reasonably be expected to constitute a "Material Adverse Effect" on or "Material Adverse Change" with respect to such Person.

"Multiemployer Plan" means any "multiemployer plan," as defined in Section 4001(a)(3) or 3(37) of ERISA, which (a) any
Seller or any ERISA Affiliate maintains, administers, contributes to or is required to contribute to, or, after September 25, 1980, maintained, administered, contributed to or was required to
contribute to, or under which any Seller or any ERISA Affiliate may incur any liability and (b) covers any employee or former employee of any Seller or any ERISA Affiliate (with respect to
their relationship with any such entity).

"Negative Spending Adjustment" shall have the meaning set forth in Section 2.8(b).

"Noncompete Agreement" shall have the meaning set forth in Section 2.5(a)(iii).

"Occupational Safety and Health Law" means any legal requirement designed to provide safe and healthful working conditions and to
reduce occupational safety and health hazards.

"Parent" shall mean Guitar Center, Inc., a Delaware corporation.

"Parent Common Stock" shall mean the common stock, par value $0.01 per share, of Parent.

"Parent Options" shall have the meaning set forth in Section 5.5(b).

"Parent SEC Reports" shall have the meaning set forth in Section 5.6.

"Party" shall mean any Person who is a party to this Agreement.

"PBGC" shall mean the Pension Benefit Guaranty Corporation.

"Pension Plan" means any "employee pension benefit plan" as defined in Section 3(2) of ERISA (other than a Multiemployer Plan)
which (a) any Seller or any ERISA Affiliate maintains, administers, contributes to or is required to contribute to, or, within the five (5) years prior to the Closing Date, maintained,
administered, contributed to or was required to contribute to, or under which any Seller or any ERISA Affiliate may incur any liability (including, without limitation, any contingent liability) and
(b) covers any employee or former employee of any Seller or any ERISA Affiliate (with respect to their relationship with any such entity).

"Permits" means all licenses, permits, franchises, approvals, authorizations, consents or orders of, or filings with, any governmental
authority, whether foreign, federal, state or local, necessary or desirable for the past, present or anticipated conduct or operation of the business of any Seller or ownership of the Assets.

"Permitted Encumbrances" means (a) statutory liens of landlords, liens of carriers, warehousepersons, mechanics and
materialpersons incurred in the ordinary course of business for sums (i) not yet due and payable or (ii) being contested in good faith if, in either case, an adequate reserve shall have
been made therefor in such Person's financial statements, (b) liens incurred or deposits made in connection with workers' compensation, unemployment insurance and other similar types of social
security programs or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, Leases, government contracts, performance and return of money bonds and similar
obligations, in each case in the ordinary course of business consistent with past practice, (c) easements, rights-of-way, restrictions and other similar charges or
encumbrances, in each case which do not

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interfere with the ordinary conduct of business by any Seller and do not materially detract from the value of the property upon which such encumbrance exists and (d) liens securing Taxes,
assessments and governmental charges not yet delinquent.

"Person" means an individual, partnership, limited liability company, corporation, association joint stock company, trust, joint
venture, unincorporated organization or governmental entity (or any department, agency or political subdivision thereof).

"Proprietary Rights" means any or all of, and all rights in, arising out of, or associated with, the following: (a) U.S. and
foreign patents and applications therefor and all reissues, divisions, renewals, extensions, provisionals, continuations and continuations-in-part thereof, (b) U.S. and
foreign trademarks, service marks, trade dress, logos, trade names and corporate names and the goodwill associated therewith and registrations and applications for registration thereof,
(c) U.S. and foreign copyrights and registrations and applications for registration thereof, (d) U.S. and foreign mask work rights and registrations and applications for registration
thereof, (e) trade secrets, ideas, formulas, compositions, inventions (whether patentable or unpatentable and whether or not reduced to practice), know-how, technical data, works of
authorship and confidential business information (including financial, marketing and business data, pricing and cost information, business and marketing plans and customer and supplier lists and
information), (f) all computer software, including all source code, object code, firmware, development tools, files, records and data, all media on which any of the foregoing is recorded, all
Web addresses, sites and domain names; (g) all databases and data collections and all rights therein throughout the world; (h) any similar, corresponding or equivalent rights to any of
the foregoing, (i) licenses granting any rights with respect to any of the foregoing and (j) all drawings, designs, renderings, specifications and other documentation embodying or
related to any of the foregoing.

"Purchase Consideration" shall mean the Cash Consideration and the Share Consideration.

"Regulations" means any laws, statutes, ordinances, regulations, rules, notice requirements, court decisions, agency guidelines, and
orders of any foreign, federal, state or local government and any other governmental department or agency, including without limitation energy, motor vehicle safety, public utility, zoning, building
and health codes, Environmental Laws, occupational safety and health and laws respecting employment practices, employee documentation, terms and conditions of employment and wages and hours.

"Related Party" means (i) any officer, director or stockholder of any Seller, and any officer, director, partner, manager
associate or relative of such officers, directors and stockholders, (ii) any Person in which any Seller or any stockholder of any Seller or any affiliate, associate or relative of any such
Person has any direct or indirect interest and (iii) any direct or indirect trustee or beneficiary of any stockholder of any Seller.

"Representative" means, with respect to any Person, any officer, director, principal, attorney, accountant, agent, employee, financing
source or other representative of such Person.

"SEC" means the Securities and Exchange Commission.

"Securities Act" means the Securities Act of 1933, as amended.

"Security Interest" means any mortgage, pledge, lien, Encumbrance, charge or other security interest, other than (a) mechanic's,
materialmen's and similar liens, (b) liens for Taxes not yet due, (c) purchase money liens and liens securing rental payments under capital lease arrangements and (d) other liens
arising in the ordinary course of business of Sellers and not incurred in connection with the borrowing of money.

"Seller" shall have the meaning set forth in the preamble.

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"Seller Disclosure Schedule" means the written disclosure schedule of Sellers delivered to Buyer prior to the date hereof, a copy of
which is attached hereto.

"Seller Indemnified Party" shall have the meaning set forth in Section 10.1.

"Seller Representative" shall mean Robert A. Scheiwiller.

"Selmer Contract" shall mean the Agreement, dated as of September 1, 1985, by and between The Selmer Company and Lyon's
Music, Inc.

"Share Consideration" means the number of shares of Parent Common Stock equal to $2,516,968 (Two Million Five Hundred Sixteen Thousand
Nine Hundred Sixty-Eight Dollars) divided by the Average Parent Common Stock Price.

"Shares Holdback" means the number of shares of Parent Common Stock equal to $425,000 (Four Hundred Twenty-Five Thousand
Dollars) divided by the Average Parent Common Stock Price, rounded down to the nearest whole share;provided, however, that if Buyer exercises its
option pursuant to the last sentence of Section 2.3, then "Shares Holdback" means an amount in cash equal to $425,000 (Four Hundred Twenty-Five Thousand Dollars).

"Stockholder" shall have the meaning set forth in the preamble.

"Stockholder Disclosure Schedule" means the written disclosure schedule of the Stockholders delivered to Buyer prior to the date
hereof, a copy of which is attached hereto.

"Subsidiary" means any corporation with respect to which a specified Person (or a Subsidiary thereof) owns a majority of the common
stock or has the power to vote or direct the vote of sufficient securities to elect a majority of the directors.

"Tax" means any federal, state, local or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including Taxes under Section 59A of the Code), customs duties, capital stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated or other tax of any kind
whatsoever, including any interest, penalty or addition thereto, whether disputed or not.

"Tax Return" means any report, return, document, declaration or other information or filing required to be supplied to any taxing
authority or jurisdiction (foreign or domestic) including information returns, and any documents with respect to or accompanying requests for the extension of time in which to file any such report,
return, document, declaration or other information.

"Third Party Claim" shall have the meaning set forth in Section 10.2.

"Trading Day" means any day on which the Nasdaq National Market is open and available for at least five hours for the trading of
securities.

"Unearned Accounts Receivable" means, as of a particular date, the aggregate amount to be recognized as revenue in future accounting
periods with respect to all "Rent-to-Purchase" contracts validly outstanding, such amount to be calculated on a nominal basis
(i.e., not reduced to present value). For comparison purposes, the amount of Unearned Accounts Receivable for the Business as of December 31,
2000 was $23,692,000 (Twenty-Three Million Six Hundred Ninety-Two Thousand Dollars).

"Welfare Plan" means any "employee welfare benefit plan" as defined in Section 3(1) of ERISA, which (a) any Seller or any
ERISA Affiliate maintains, administers, contributes to or is required to contribute to, or under which any Seller or any ERISA Affiliate may incur any liability and (b) covers any employee or
former employee of any Seller or any ERISA Affiliate (with respect to their relationship with any such entity).

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"Year End Financial Statements" shall have the meaning set forth in Section 2.7(a).

"Year End Unearned Accounts Receivable" shall have the meaning set forth in Section 2.7(a).

2.Purchase and Sale of Assets; Closing.

2.1Purchase of Assets.Upon the terms and subject to the conditions contained herein, Buyer hereby
agrees to purchase from each Seller, and each Seller hereby agrees to sell, transfer, convey and deliver to Purchaser at the Closing, any and all of such Seller's rights, title and interest in and to
all assets, properties and rights of such Seller or used in or useful in connection with such Seller's business of marketing, renting, selling, leasing or otherwise providing musical instruments, as
well as other products, parts, materials, supplies and services related to the marketing, rental, sale, lease or other distribution of musical instruments (the
"Business"), including, without limitation, all of such Seller's (a) real property, leaseholds and subleaseholds therein, improvements, fixtures
and fittings thereon and easements, rights-of-way and other appurtenants thereto (such as appurtenant rights in and to public streets), (b) tangible personal property
(such as machinery, equipment, inventories, manufactured and purchased parts, goods in process and finished goods, furniture, automobiles, trucks, tractors, trailers, tools, jigs and dies),
(c) Intellectual Property, licenses and sublicenses granted and obtained with respect thereto, and rights thereunder, remedies against infringements thereof and rights to protection of
interests therein under the laws of all jurisdictions, (d) leases, subleases and rights thereunder, (e) agreements, contracts, indentures, mortgages, instruments, Security Interests,
guaranties other similar arrangements and rights thereunder, (f) accounts, notes and other receivables, (g) securities (such as the capital stock in its Subsidiaries, if any),
(h) claims, deposits, prepayments, refunds, causes of action, choses in action, rights of recovery, rights of setoff and rights of recoupment (including any such item relating to the payment of
Taxes), (i) franchises, approvals, permits, licenses, orders, registrations, certificates, variances and similar rights obtained from governments and governmental agencies, (j) books,
records, ledgers, files, documents, correspondence, lists, customer information databases, studies, plans, samples, goodwill, plats, architectural plans, drawings and specifications, creative
materials, advertising and promotional materials, Web sites and domain names, studies, reports and other printed or written materials, (k) operating systems, servers, PCs and other computer
hardware, (l) Cash and (m) any and all goodwill related to the Business or any of the foregoing (collectively, the "Assets"); provided, however,
that the Assets shall not include (i) the corporate charter, qualifications to conduct business as a foreign corporation,
arrangements with registered agents relating to foreign qualifications, taxpayer and other identification numbers, seals, minute books, stock transfer books, blank stock certificates and other
documents relating to the organization, maintenance and existence of any Seller as a corporation, (ii) the rights of any Seller under this Agreement or (iii) the Selmer Contract.

2.2Liabilities of Sellers and the Stockholders.



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2.3Purchase Consideration.In consideration of the purchase of the Assets and each Seller's and each
Stockholder's covenants and agreements set forth in this Agreement, Buyer agrees (a) to pay to Sellers an aggregate amount of cash equal to the Cash Consideration, of which (i) an amount
equal to the Cash Consideration less the Cash Holdback shall be delivered on the Closing Date and (ii) the Cash Holdback shall become an element of the Holdback Amount and, upon the terms and
subject to the conditions specified in Section 11, be delivered promptly after the Determination Date and (b) to issue to Sellers the Share Consideration for distribution to the
Investor, of which (x) a number of shares of Parent Common Stock equal to the Share Consideration less the Shares Holdback will be delivered on the Closing Date and (y) the Shares
Holdback shall become an element of the Holdback Amount and, upon the terms and subject to the conditions specified in Section 11, be delivered promptly after the Determination Date.
Notwithstanding the foregoing, Buyer shall have the right, in its sole discretion, to pay to Sellers, in lieu of issuing the Share Consideration pursuant to clause (b) of the immediately
preceding sentence, an aggregate amount of cash equal to $2,516,968 (Two Million Five Hundred Sixteen Thousand Nine Hundred Sixty-Eight Dollars), of which $2,091,968 (Two Million
Ninety-One Thousand Nine Hundred Sixty-Eight Dollars) shall be delivered on the Closing Date and $425,000 (Four Hundred Twenty-Five Thousand Dollars) shall constitute the
Shares Holdback and, upon the terms and subject to the conditions specified in Section 11, delivered promptly after the Determination Date. The Parties agree that all Shares of Parent Common
Stock acquired by the Investor pursuant to this Agreement (including, without limitation, any shares of Parent Common Stock constituting a portion of the Shares Holdback), shall be deemed to have been
acquired by the Investor on the Closing Date for purposes of Rule 144(d)(3)(iii) under the Securities Act.

2.4Closing.The closing of the Acquisition (the
"Closing") shall be held at 9:00 a.m., local time, on the second business day following the satisfaction or waiver of all conditions to the
obligations of the parties to consummate the transactions contemplated hereby (other than conditions with respect to actions the respective parties shall take at the Closing) (the
"Closing Date") at the offices of Latham & Watkins located at 633 West Fifth Street, Los Angeles, California 90071, unless the parties otherwise
agree. The Assets will be transferred to Buyer at the Closing on the Closing Date, and each of the Sellers and each of the Stockholders will do all things that are deemed necessary by Buyer for the
valid transfer of the Assets.

2.5Closing Obligations.



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2.6Allocation.The Parties agree to allocate the Purchase Consideration (and all other capitalizable
costs) among the Assets and the Noncompete Agreements for all purposes (including financial accounting and Tax purposes) in accordance with the allocation schedule attached hereto as Exhibit 2.6.The Parties will file all Tax Returns in a manner consistent with such allocation. The Cash Consideration and the Share
Consideration shall be distributed among the Sellers and the Stockholders as set forth onExhibit 2.6. Execution of this Agreement by the Sellers
and the Stockholders represents their express agreement to such allocation.

2.7Deferred Revenue Adjustment.



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In
the event of such a negative Adjustment Amount, then upon final determination of Year End Unearned Accounts Receivable in accordance with Section 2.7(b), the Cash Holdback
and the Shares Holdback otherwise payable or issuable, as the case may be, by Buyer pursuant to Section 11 shall be reduced on apro ratabasis
by an aggregate amount equal to the absolute value of the Adjustment Amount. In the event that the Holdback Amount has been reduced to compensate any Buyer Indemnified Party for any Damages as a
result of any inaccuracy or breach of any representation, warranty, covenant or agreement of any Seller or any Stockholder pursuant to the provisions of Section 11 such that the Adjustment
Amount exceeds the Holdback Amount, any such unpaid Adjustment Amount shall be promptly remitted to Buyer by the Sellers and the Stockholders in cash.

2.8Operation of Assets; Negative Spending Adjustment.



3.Representations and Warranties of the Sellers and the Stockholders.As an inducement of Buyer to enter into this
Agreement, each Seller and each Stockholder hereby makes, jointly and severally, as of the date hereof and as of the Closing Date, the following representations and warranties to Buyer, except as
otherwise set forth in the Seller Disclosure Schedule;provided, however, that the representations and warranties set forth in Sections 3.6, 3.14(a),
3.14(b) and 3.21(l) are made without regard to any disclosure made in the Seller Disclosure Schedule. The sections of the Seller Disclosure Schedule are numbered to correspond to the various
subsections of this Section 3 setting forth certain exceptions to the representations and warranties contained in this Section 3 and certain other information called for by this
Agreement. Unless otherwise specified, no disclosure made in any particular section of the Seller Disclosure Schedule shall be deemed made in any other section of the Seller Disclosure Schedule unless
expressly made therein (by cross-reference or otherwise) or the Seller Disclosure Schedule otherwise expressly and completely discloses the specific exception.

3.1Organization and Good Standing.



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3.2Authorization.Each Seller has all necessary corporate or other power and authority to enter into
this Agreement and the Ancillary Agreements to which it is a party and has taken all corporate or other action necessary to consummate the transactions contemplated hereby and thereby and to perform
its obligations hereunder and thereunder. This Agreement has been duly executed and delivered by each Seller, and this Agreement is, and upon execution and delivery thereof each Ancillary Agreement
will be, a valid and binding obligation of each Seller, enforceable against each Seller in accordance with its terms, except that enforceability may be limited by the effect of (a) bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights of creditors or (b) general principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity).

3.3Bank Accounts.Section 3.3 of the Seller Disclosure Schedule contains a list of all bank
accounts and safe deposit boxes of each Seller and the persons authorized to draw thereon or having access thereto.

3.4Real Property.



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With
respect to each Lease listed in Section 3.4(c) of the Seller Disclosure Schedule, (i) there has been no Default under any such Lease by any Seller or, to any
Seller's knowledge, by any other Person, (ii) the execution, delivery and performance of this Agreement and the Noncompete Agreements and the consummation of the transactions contemplated
hereby and thereby (including, without limitation, assignment of the Lease to Buyer) will not cause (with or without notice and with or without the passage of time) a Default under any such Lease,
(iii) to each Seller's knowledge, such Lease is a valid and binding obligation of the lessor, is in full force and effect with respect to and is enforceable by the applicable Seller in
accordance with its terms, (iv) no action has been taken by any Seller, and to each Seller's knowledge no event has occurred which, with notice or lapse of time or both, would permit
termination, modification or acceleration by a party thereto other than any Seller without such Seller's consent under any such Lease, (v) no Person has repudiated any term thereof or
threatened to any Seller to terminate, cancel or not renew any such Lease and (vi) no Seller has assigned, transferred, conveyed, mortgaged or encumbered any interest therein or in any Leased
Property subject thereto (or any portion thereof).

3.5Personal Property.



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With
respect to each Lease listed in Section 3.5(c) of the Seller Disclosure Schedule, (i) there has been no Default under such Lease by any Seller, or, to any Seller's
knowledge, by any other Person, (ii) the execution, delivery and performance of this Agreement and the Noncompete Agreements and the consummation of the transactions contemplated hereby and
thereby will not cause (with or without notice and with or without the passage of time) a Default under any such Lease, (iii) to each Seller's knowledge, such Lease is a valid and binding
obligation of the lessor, is in full force and effect and is enforceable by the applicable Seller in accordance with its terms, (iv) no action has been taken by any Seller and, to each Seller's
knowledge, no event has occurred which, with notice or lapse of time or both, would permit termination, modification or acceleration by a party thereto other than by such Seller without the applicable
Seller's consent under any such Lease, (v) no Person has repudiated any term thereof or threatened to terminate, cancel or not renew any such Lease and (vi) no Seller has assigned,
transferred, conveyed, mortgaged or encumbered any interest therein or in any leased personal property subject thereto (or any portion thereof).

3.6Environmental Matters.Notwithstanding any disclosure made in the Seller Disclosure Schedule, each
Seller is, and at all times has been, in full compliance with, and has not been and is not in violation of or liable under, any Environmental Law. Notwithstanding any disclosure made in the Seller
Disclosure Schedule, no Seller has any basis to expect, nor has any other Person for whose conduct any Seller is or may be held to be responsible received, any actual or threatened order, notice, or
other communication from (i) any Person or private citizen acting in the public interest or (ii) the current or prior owner or operator of any Facility, of any actual or potential
violation or failure to comply with any Environmental Law, or of any actual or threatened obligation to undertake or bear the cost of any Environmental, Health and Safety Liability with respect to any
of the Facilities or any other properties or assets (whether real, personal or mixed) in which any Seller has had an interest. Notwithstanding any disclosure made in the Seller Disclosure Schedule, no
underground tank or other underground storage receptacle for Hazardous Substances is currently located on any Facility, and there have been no releases of any Hazardous Substances from any such
underground tank or related piping and there have been no releases of Hazardous Substances in quantities exceeding the reportable quantities as defined under federal or state law on, upon or into any
Facility other than those authorized by Environmental Laws. In addition and notwithstanding any disclosure made in the Seller Disclosure Schedule, to the knowledge of each Seller, there have been no
such releases by predecessors of any Seller and no releases in quantities exceeding the reportable quantities as defined under federal or state law on, upon or into any real property in the immediate
vicinity of any of the Facilities other than those authorized by Environmental Laws which, through soil or ground water contamination, may have come to be located on the properties of any Seller.
Notwithstanding any disclosure made in the Seller Disclosure Schedule, no Seller is party, whether as a direct signatory or as successor, assign or third-party beneficiary, or otherwise bound, to any
Lease or any Contract under which any Seller is obligated by or entitled to the benefits of, directly or indirectly, any representation, warranty, indemnification, covenant, restriction or other
undertaking concerning any Environmental Condition. Notwithstanding any disclosure made in the Seller Disclosure Schedule, no Seller has released any other Person from any claim under any
Environmental Law or waived any rights concerning any Environmental Condition.

3.7Contracts.



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Complete
and accurate copies of all of the Contracts listed in Section 3.7(a) of the Seller Disclosure Schedule, including all amendments and supplements thereto, have been
made available to Buyer.



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3.8No Conflict or Violation; Consents.None of the execution, delivery or performance of this
Agreement or any Ancillary Agreement, the consummation of the transactions contemplated hereby or thereby, nor compliance by any Seller with any of the provisions hereof or thereof, will
(a) violate or conflict with any provision of any Seller's governing documents, (b) violate, conflict with, or result in a breach of or constitute a Default (with or without notice or
the passage of time) under, or result in the termination of, or accelerate the performance required by, or result in a right to terminate, accelerate, modify or cancel under, or require a notice
under, or result in the creation of any Encumbrance upon any of its respective assets under, any Contract, Lease, sublease, license, sublicense, franchise, permit, indenture, agreement or mortgage for
borrowed money, instrument of indebtedness, security interest or other arrangement to which any Seller is a party or by which any Seller is bound or to which the Assets or any portion thereof are
subject, (c) violate any applicable Regulation or Court Order or (d) impose any Encumbrance on any Assets or the business of any Seller. Except as set forth in Section 3.8 of the
Seller Disclosure Schedule, no notices to, declaration, filing or registration with, approvals or consents of, or assignments by, any Persons (including any federal, state or local governmental or
administrative authorities) are necessary to be made or obtained by any Seller in connection with the execution, delivery or performance of this Agreement or any Ancillary Agreement or the
consummation of the transactions contemplated hereby or thereby. As of the date hereof, the Assumed Liabilities do not, and as of the Closing will not, include any indebtedness for borrowed money
(including, without limitation, any capital Lease) or outstanding letter of credit or similar obligation except as set forth in Section 3.8 of the Seller Disclosure Schedule (the
"Funded Debt"). Except as set forth in Section 3.8 of the Seller Disclosure Schedule, each such obligation may be prepaid at any time upon tender
of the outstanding principal amount and accrued but unpaid interest without payment of any premium, pre-payment fee or similar charge or expense.

3.9Permits.Section 3.9 of the Seller Disclosure Schedule sets forth a complete list of all
Permits, all of which are as of the date hereof, and will be as of the Closing Date, in full force and effect. Each Seller and its predecessors have, and at all times have had, all Permits required
under any applicable Regulation in the operation of its business or in its ownership of the Assets, and owns or possesses such Permits free and clear of all Encumbrances other than Permitted
Encumbrances. No Seller is in Default, nor, to each Seller's knowledge, has any Seller received any notice of any claim of Default, with respect to any such Permit. Except as otherwise governed by
law, all such Permits are renewable
by their terms or in the ordinary course of business without the need to comply with any special qualification procedures or to pay any amounts other than routine filing fees and, except as set forth
in Section 3.9 of the Seller Disclosure Schedule, will not be adversely affected by the completion of the transactions contemplated by this Agreement.

3.10Financial Statements; Books and Records.



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3.11Absence of Certain Changes or Events.Except as set forth in Section 3.11 of the Seller
Disclosure Schedule, since December 31, 2000 there has not been any:



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3.12Liabilities.No Seller has any Liabilities or obligations (absolute, accrued, contingent or
otherwise) except (i) Liabilities which are reflected and properly reserved against in the Financial Statements, (ii) Liabilities incurred in the ordinary course of business consistent
with past practice since

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the date of the Financial Statements and (iii) Liabilities arising under the Contracts set forth in Section 3.7(a) of the Seller Disclosure Schedule or otherwise expressly identified in
Section 3.12 of the Seller Disclosure Schedule. None of the Liabilities described in this Section 3.12 relates to any breach of Contract, breach of warranty, tort, infringement or
violation of law or arose out of any Action (collectively, a "Breach").

3.13Litigation.There is no Action pending or, to each Seller's knowledge, threatened or anticipated
(a) against, relating to or affecting any Seller, any of the Assets or any of their respective Employees as such, (b) which seeks to enjoin or obtain damages in respect of the
transactions contemplated hereby or (c) with respect to which there is a reasonable likelihood of a determination which would prevent any
Seller from consummating the transactions contemplated hereby. None of the Actions, if adversely determined against any Seller, its directors or officers, or any other Person could reasonably be
expected to result in a loss to such Seller, individually or in the aggregate, in excess of $10,000. To each Seller's knowledge, there is no basis for any Action, which if adversely determined against
any Seller, its directors or officers, or any other Person could reasonably be expected to result in a loss to such Seller, individually or in the aggregate, in excess of $10,000. There are presently
no outstanding judgments, decrees or orders of any court or any governmental or administrative agency against or affecting any Seller or its business or any of the Assets. Section 3.13 of the
Seller Disclosure Schedule contains a complete and accurate description of all Actions since any Seller's organization to which any Seller or any predecessor has been a party or which relate to any of
the Assets or Employees of any Seller, or any such Actions which were settled prior to the institution of formal proceedings, with the exception of Actions in which the sole involvement of the
Sellers, or any of them, is as plaintiff and in the ordinary course of business in which the amount in controversy is less than or equal to $10,000 in the aggregate.

3.14Labor Matters.



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3.15Employees' Proprietary Rights.No Seller is aware that any of its Employees is obligated under any
contract (including licenses, covenants or commitments of any nature) or other agreement, or subject to any judgment, decree or order of any court or administrative agency, that would interfere with
the use of such Employee's efforts to promote the interests of any Seller or that would conflict with such Seller's business as conducted. Neither the execution nor delivery of this Agreement and the
Ancillary Agreements, nor the carrying on of each Seller's business by such Seller's Employees, nor the conduct of any Seller's business as conducted, will, to the best of each Seller's knowledge,
conflict with or result in a breach of the terms, conditions or provisions of, or constitute a default under, any contract, covenant or instrument under which any of such Employees is now obligated.
No Seller believes it is or will be necessary to utilize any Proprietary Rights of any of its Employees (or people it currently intends to hire) created prior to their employment by such Seller.

3.16Employee Benefit Plans.Section 3.16 of the Seller Disclosure Schedule contains a complete
list of Employee Plans. True and complete copies of each of the following documents have been delivered by Sellers to Buyer: (i) each Employee Plan (and, if applicable, related trust
agreements, annuity contracts or other funding instruments) and all amendments thereto, all summary plan descriptions, summary of material modifications (as defined in ERISA) and all written
interpretations and descriptions thereof which any Seller generally has distributed to participants therein, the number of and a general description of the level of employees covered by each Benefit
Arrangement and a complete description of any Employee Plan which is not in writing, (ii) for the three (3) most recent plan years, Annual Reports on Form 5500 Series required to
be filed with any governmental agency for each Welfare Plan, (iii) a description of complete age, salary, service and related data as of the last day of the last plan year for each Seller's
employees and former employees, and (iv) a description setting forth the amount of any liability of each Seller as of the Closing Date for payments more than thirty (30) calendar days
past due with respect to any Welfare Plan.



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3.17Transactions with Related Parties.Except for (x) employment agreements and other
compensation arrangements disclosed in Section 3.17 of the Seller Disclosure Schedule and (y) their respective equity interests in any Seller, no Related Party has (a) borrowed or
loaned money or other property to any Seller which has not been repaid or returned, (b) any contractual relationship or other claims, express or implied, of any kind whatsoever against any
Seller or (c) any interest in any property (including, without limitation, any Proprietary Rights) used by any Seller.

3.18Compliance with Law.Each Seller and its predecessors have conducted the business of such Seller
in compliance with all applicable Regulations and Court Orders. No Seller has received any notice to the effect that, or has otherwise been advised that, such Seller or any predecessor is not in
compliance with any such Regulations or Court Orders, and no Seller nor any predecessor has any reason to anticipate that any existing circumstances are likely to result in a violation of any of the
foregoing.

3.19Intellectual Property.



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3.20Assets Necessary to Continue to Conduct Business.The Assets constitute all of the assets,
properties and rights used in, necessary or useful in connection with the conduct of the Business, and upon consummation of the transactions contemplated by this Agreement Buyer will obtain the
resources necessary to conduct the Business as previously conducted by Sellers. The Business is conducted solely through the Sellers. No interest in any asset, property or right used in, necessary or
useful in connection with the conduct of the Business is held, directly or indirectly, by any Person other than the
Sellers. None of the Assets constitute securities, including, without limitation, any capital stock of any Subsidiary of any Seller.

3.21Tax Matters.



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3.22Insurance.Section 3.22 of the Seller Disclosure Schedule contains a complete and accurate
list of all policies or binders of insurance (showing as to each policy or binder the carrier, policy number, coverage limits, expiration dates, annual premiums, a general description of the type of
coverage provided and any pending claims thereunder) of which any Seller is the owner, insured or beneficiary. All of such policies are sufficient for (i) compliance with all Regulations and
all of the Contracts, (ii) covering all reasonably foreseeable damage to and liabilities or contingencies relating to the applicable Seller's conduct of its business and (iii) providing
replacement cost insurance coverage for all of the Assets, Fixtures and Equipment and all leasehold improvements. No Seller is in Default under any of such policies or binders, nor failed to give any
notice or to present any material claim under any such policy or binder in a due and timely fashion. There are no facts known to any Seller upon which an insurer might be justified in reducing or
denying coverage or increasing premiums on existing policies or binders. There are no outstanding unpaid claims under any such policies or binders. Such policies and binders are in full force and
effect on the date hereof and shall be kept in full force and effect by each Seller through the Closing Date.

3.23Accounts Receivable.The accounts and notes receivable reflected in the Financial Statements, and
all accounts or notes receivable arising since the date thereof, represent bona fide claims against debtors for sales, services performed or other charges arising on or before the date of recording
thereof, and all the goods delivered and services performed which gave rise to said accounts were delivered or performed in accordance with the applicable orders, Contracts or customer requirements.

3.24Inventory.The value at which the Inventory is shown on the Financial Statements has been
determined in accordance with the normal valuation policy of the Sellers, consistently applied and in accordance with GAAP. The Inventory and the specific items acquired or manufactured subsequent to
the date of the Financial Statements consists only of items of quality and quantity commercially usable and saleable in the ordinary course of business, except for any items of obsolete material or
material below standard quality, all of which have been written down to net realizable market value, or for which adequate reserves have been provided in the Financial Statements, and the present
quantity of

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all Inventory is reasonable in the present circumstances of the Business. Section 3.24 of the Seller Disclosure Schedule contains a complete and accurate list of all Inventory as of the date of
the Financial Statements and the addresses at which such Inventory is located.

3.25Purchase Commitments and Outstanding Bids.As of the date of this Agreement, the aggregate of all
Contracts for the purchase of products or services by all Sellers, other than in the ordinary course of business, does not exceed $20,000. No outstanding purchase or outstanding lease commitment of
any Seller presently is in excess of the normal, ordinary and usual requirements of the business of such Seller or was made at any price in excess of the now current market price or contains terms and
conditions more onerous than those usual and customary in such Seller's business. There are outstanding no pending obligations to lease real property other than to those identified in
Section 3.4(c) of the Seller Disclosure Schedule.

3.26Customers and Suppliers.



3.27Brokers; Transactions Costs.No Seller has entered into or will enter into any contract,
agreement, arrangement or understanding with any Person which has or will result in the obligation of Buyer or any Seller to pay any finder's fee, brokerage commission, legal, accounting or similar
payment in connection with the transactions contemplated hereby.

3.28No Other Agreements to Sell the Assets.No Seller nor any Stockholder has any legal obligation,
absolute or contingent, to any other Person to sell the Assets or any portion thereof or to sell any capital stock of any Seller or to effect any merger, consolidation or other reorganization of any
Seller or to enter into any agreement with respect thereto, except pursuant to this Agreement.

3.29Foreign Corrupt Practices Act.No Seller nor any predecessor, nor to each Seller's knowledge, any
agent, employee or other Person associated with or acting on behalf of any Seller or any predecessor has, directly or indirectly, used any corporate funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity, made any unlawful payment to foreign or domestic government officials or employees or to foreign or domestic political parties
or campaigns from corporate funds, violated any provision of the Foreign Corrupt Practices Act of 1977, as amended, or made any bribe, rebate, payoff, influence payment, kickback or other similar
unlawful payment.

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3.30Financial Projections; Operating Plan.Each Seller has made available to Buyer certain financial
projections with respect to the such Seller's business which projections were prepared for internal use only. No Seller makes any representation or warranty regarding the accuracy of such projections
or as to whether such projections will be achieved, except that each Seller represents and warrants that such projections were prepared in good faith, represent management's present operating plan and
are based on assumptions believed by it to be reasonable as of the date of this Agreement.

3.31Approvals.Section 3.31 of the Seller Disclosure Schedule contains a list of all material
approvals or consents relating to the Business conducted by each Seller which are required to be given to or obtained by any Seller from any Person in connection with the consummation of the
transactions contemplated by this Agreement.

3.32Material Misstatements or Omissions.No representations or warranties by any Seller in this
Agreement or in any document, written information, exhibit, statement, certificate or schedule heretofore or hereinafter furnished by any Seller or any of its Representatives to Buyer or any of its
Representatives pursuant hereto, or in connection with the transactions contemplated by this Agreement contains or will contain any untrue statement of a material fact, or omits or will omit to state
any material fact necessary to make the statements or facts contained therein not misleading.

4.Additional Representations and Warranties of the Stockholders.As an inducement of Buyer to enter into this Agreement
and in addition to the representations and warranties of the Stockholders set forth in Section 3 above, each Stockholder hereby makes, severally and not jointly, as of the date hereof and as of
the Closing Date, the following representations and warranties to Buyer, except as otherwise set forth in the Stockholder Disclosure Schedule, provided that the representations and warranties made in
Section 4.4 shall be deemed made solely by the Investor. The sections of the Stockholder Disclosure Schedule are numbered to correspond to the various subsections of this Section 4
setting forth certain exceptions to the representations and warranties contained in this Section 4 and certain other information called for by this Agreement. Unless otherwise specified, no
disclosure made in any particular section of the Stockholder Disclosure Schedule shall be deemed made in any other section of the Stockholder Disclosure Schedule unless expressly made therein (by
cross-reference or otherwise) or the Stockholder Disclosure Schedule otherwise expressly and completely discloses the specific exception.

4.1Authorization.Such Stockholder has all necessary power and authority to enter into this Agreement
and the Ancillary Agreements to which it is a party and has taken all action necessary to consummate the transactions contemplated hereby and thereby and to perform its obligations hereunder and
thereunder. This Agreement has been duly executed and delivered by such Stockholder, and this Agreement is, and upon the execution and delivery thereof each Ancillary Agreement will be, a valid and
binding obligation of such Stockholder, enforceable against such Stockholder in accordance with its
terms, except that enforceability may be limited by the effect of (a) bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights of creditors
or (b) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity).

4.2No Conflict or Violation; Consents.None of the execution, delivery or performance of this
Agreement or any Ancillary Agreement to which such Stockholder is a party, the consummation of the transactions contemplated hereby or thereby, nor compliance by such Stockholder with any of the
provisions hereof or thereof, will violate, conflict with, or result in a breach of or constitute a Default (with or without notice or the passage of time) under, or result in the termination of, or
accelerate the performance required by, or result in a right to terminate, accelerate, modify or cancel under, or require a notice under, or result in the creation of any Encumbrance upon any of its
respective assets under, any contract, lease, sublease, license, sublicense, franchise, permit, indenture, agreement or mortgage for borrowed money, instrument of indebtedness, security interest or
other arrangement to

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which such Stockholder is a party or by which such Stockholder is bound or to which any of its assets are subject. Except as set forth in Section 4.2 of the Stockholder Disclosure Schedule, no
notices to, declaration, filing or registration with, approvals or consents of, or assignments by, any Persons (including any federal, state or local governmental or administrative authorities) are
necessary to be made or obtained by such Stockholder in connection with the execution, delivery or performance of this Agreement or any Ancillary Agreement to which such Stockholder is a party or the
consummation of the transactions contemplated hereby or thereby.

4.3Brokers; Transaction Costs.No Stockholder has entered into nor will any Stockholder enter into any
contract, agreement, arrangement or understanding with any Person which has or will result in the obligation of Buyer or any Seller to pay any finder's fee, brokerage commission, legal, accounting, or
similar payment in connection with the transactions contemplated hereby.

4.4Securities Laws Representations.



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4.5Material Misstatements or Omissions.No representations or warranties by such Stockholder in this
Agreement or in any document, written information, exhibit, statement, certificate or schedule heretofore or hereinafter furnished by such Stockholder or any of its Representatives to Buyer or any of
its Representatives pursuant hereto, or in connection with the transactions contemplated by this Agreement contains or will contain any untrue statement of a material fact, or omits or will omit to
state any material fact necessary to make the statements or facts contained therein not misleading.

5.Buyer's Representations and Warranties.As an inducement of each Seller and each Stockholder to enter into this
Agreement, Buyer hereby makes, as of the date hereof and as of the Closing Date, the following representations and warranties to each Seller and to each Stockholder, except as otherwise set forth in
the Buyer Disclosure Schedule, provided that the representations and warranties contained in Section 5.5 and Section 5.6 shall be made solely to the Investor. The sections of the Buyer
Disclosure Schedule are numbered to correspond to the various subsections of this Section 5 setting forth certain exceptions to the representations and warranties contained in this
Section 5 and certain other information called for by this Agreement. Unless otherwise specified, no disclosure made in any particular section of the Buyer Disclosure Schedule shall be deemed
made in any other section of the Buyer Disclosure Schedule unless expressly made therein (by cross-reference or otherwise) or the Buyer Disclosure Schedule otherwise expressly and completely discloses
the specific exception

5.1Organization.Buyer is a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware, with full corporate power and authority to conduct its business as presently being conducted.

5.2Authorization.Buyer has all necessary corporate power and authority to enter into this Agreement
and the Ancillary Agreements and has taken all corporate action necessary to consummate the transactions contemplated hereby and thereby and to perform its obligations hereunder and thereunder. This
Agreement has been duly executed and delivered by Buyer, and this Agreement is, and upon execution and delivery thereof each Ancillary Agreement will be, a valid and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms, except that enforceability may be limited by the effect of (a) bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights of creditors or (b) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity).

5.3No Conflict or Violation; Consents.Except as set forth in Section 5.3 of the Buyer
Disclosure Schedule, none of the execution, delivery or performance of this Agreement or any Ancillary Agreement, the consummation of the transactions contemplated hereby or thereby, nor compliance by

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Buyer with any of the provisions hereof or thereof, will (a) violate or conflict with any provision of Buyer's governing documents, (b) violate, conflict with, or result in a breach of
or constitute a Default (with or without notice or the passage of time) under, or result in the termination of, or accelerate the
performance required by, or result in a right to terminate, accelerate, modify or cancel under, or require a notice under, or result in the creation of any Encumbrance upon any of its respective
assets under, any contract, lease, sublease, license, sublicense, franchise, permit, indenture, agreement or mortgage for borrowed money, instrument of indebtedness, security interest or other
arrangement to which Buyer is a party or by which Buyer is bound or to which the assets of Buyer are subject, (c) violate any applicable Regulation or Court Order or (d) impose any
Encumbrance on the business of Buyer. Except as set forth in Section 5.3 of the Buyer Disclosure Schedule, no notices to, declaration, filing or registration with, approvals or consents of, or
assignments by, any Persons (including any federal, state or local governmental or administrative authorities) are necessary to be made or obtained by Buyer in connection with the execution, delivery
or performance of this Agreement or any Ancillary Agreement or the consummation of the transactions contemplated hereby or thereby.

5.4Brokers; Transactions Costs.Buyer has not entered into and will not enter into any contract,
agreement, arrangement or understanding with any Person which has or will result in the obligation of any Seller to pay any finder's fee, brokerage commission, legal, accounting or similar payment in
connection with the transactions contemplated hereby.

5.5Capitalization of Parent.



5.6SEC Reports; Financial Statements.Buyer has made available to the Investor a true and complete
copy of each report, schedule, registration statement and definitive proxy statement filed by Parent with the SEC (as such documents have since the time of their filing been amended, the
"Parent SEC Reports"), which are all the documents (other than preliminary material) that Parent was required to file with the SEC since
December 31, 2000. As of their respective dates, the Parent SEC Reports complied in all material respects with the requirements of the Securities Act or the Exchange Act, as the case may be,
and the rules and regulations of the SEC thereunder applicable to such Parent SEC Reports or such other forms, reports or other documents, and none of the Parent SEC Reports contained any untrue
statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which

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they were made, not misleading. The financial statements of Parent included in the Parent SEC Reports complied as of their respective dates of filing with the SEC as to form in all material respects
with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with GAAP applied on a consistent basis during
the periods involved (except as may be indicated in the notes thereto or, in the case of the unaudited statements, as permitted by Form 10-Q of the SEC) and fairly present (subject,
in the case of the unaudited statements, to normal, recurring audit adjustments, which were not individually or in the aggregate material) in all material respects the consolidated financial position
of Parent and its Subsidiaries as at the dates thereof and the results of its operations and cash flows for the periods then ended.

6.Covenants.

6.1General.Each of the Parties will use all reasonable commercial efforts to take all action and to
do all things necessary, proper or advisable in order to consummate and make effective the transactions contemplated by this Agreement (including the satisfaction, but not waiver, of closing
conditions). Each Seller and each Stockholder agrees that at any time and from time to time it will execute and deliver to Buyer such further instruments or documents and take such further actions as
may be required to give effect to the transactions contemplated by this Agreement.

6.2Notices and Consents.Each Seller and each Stockholder will give any notices to third parties, and
will use its reasonable best efforts to obtain any third party consents, that the Buyer may request in connection with the consummation of the transactions contemplated by this Agreement. Each of the
Parties will give any notices to, make any filings with and use its reasonable best efforts to obtain any authorizations, consents and approvals of governments and governmental agencies required in
connection with the consummation of the transactions contemplated by this Agreement.

6.3Access and Investigation.Each Seller will, and will cause its Representatives to,
(a) afford Buyer and its Representatives full access to such Seller's personnel, premises, properties (including subsurface testing if deemed appropriate), contracts, Books and Records and
other documents and data, (b) furnish
Buyer and its Representatives with copies of all such contracts, Books and Records and other existing documents and data as Buyer may request and (c) furnish Buyer and its Representatives with
such additional financial, operating and other data and information as Buyer may request.

6.4Operation and Preservation of Business of Sellers.During the period between the date of this
Agreement and the Closing, no Seller shall engage in any practice, take any action or enter into any transaction outside the ordinary course of business of such Seller. Without limiting the generality
of the foregoing, during the period between the date of this Agreement and the Closing no Seller shall (a) declare, set aside or pay any dividend or make any distribution with respect to its
capital stock or redeem, purchase or otherwise acquire any of its capital stock or revise the compensation of any Stockholder or Related Party, (b) pay any amount to any third party with
respect to any Liability or obligation (including any costs and expenses such Seller has incurred or may incur in connection with this Agreement and the transactions contemplated hereby) or otherwise
engage in any practice, take any action or enter into any transaction of the sort described in Section 3.8 or Section 3.11 above, (c) do any other action which would
(i) cause any representation or warranty of any Seller or any Stockholder in this Agreement to become untrue or (ii) that is not in the ordinary course of business consistent with past
practice or (d) directly or indirectly take, agree to take or otherwise permit to occur any of the actions described in clauses 6.4(a) through (c). During the period between the date of this
Agreement and the Closing, each Seller will keep its business and properties intact, including its present operations, physical facilities, working conditions and relationships with lessors,
licensors, suppliers, customers and employees.

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6.5Required Approvals and Provision of Financial Data.As promptly as practicable after the date of
this Agreement, each Seller will make all filings required by any Regulation to be made by it in order to consummate the transactions contemplated by this Agreement. Each Seller will
(a) cooperate with Buyer with respect to all filings that Buyer elects to make or is required by any Regulation to make in connection with the transactions contemplated by this Agreement, and
(b) cooperate with Buyer in obtaining all required consents.

6.6Notification.Each Seller and each Stockholder shall promptly notify Buyer in writing if it becomes
aware of (a) any fact or condition that causes or constitutes a breach of any representation or warranty of any Seller or any Stockholder contained in this Agreement or (b) the
occurrence after the date of this Agreement of any fact or condition that would cause or constitute a breach of any such representation or warranty had such representation or warranty been made as of
the time of occurrence or discovery of such fact or condition. No disclosure by any Party pursuant to this Section 6.6, however, shall be deemed to amend or supplement its respective Disclosure
Schedule or to prevent or cure any misrepresentation, breach of warranty or breach of covenant.

6.7No Negotiation.During the period between the date of this Agreement and the Closing, no Seller nor
any Stockholder shall, directly or indirectly, sell, transfer, pledge, hypothecate, encumber or otherwise dispose or surrender possession of, the Assets or any portion thereof or any interest therein,
except in
the ordinary course of business consistent with past practice. Until such time, if any, as this Agreement is terminated pursuant to Section 9, neither any Seller or nor any Stockholder will,
directly or indirectly, solicit, initiate or encourage any inquiries or proposals from, discuss or negotiate with, provide any non-public information to, or consider the merits of any
inquiries or proposals from, any Person (other than Buyer) relating to any transaction involving the sale of the Assets or any portion thereof or any capital stock of any Seller, or any merger,
consolidation, business combination or similar transaction involving any Seller, and each Seller and each Stockholder shall immediately notify Buyer in writing of any such inquiries or proposals.

6.8Accrued Salaries and Lease Payments.Prior to the Closing, each Seller shall pay all accrued and
unpaid salaries, accrued and unpaid lease payments and all other accrued and unpaid amounts due and owing from such Seller.

6.9Employee Matters.



6.10Consent to Assignment of Lease.Notwithstanding the provisions contained in any Lease, in the
event that Buyer desires to assign any Lease to a third party each Seller and each Stockholder

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agrees, and shall cause each of its affiliates, not to arbitrarily or unreasonably withhold any consent required to effect such assignment.

7.Buyer's Conditions to Closing.Buyer's obligation to purchase the Assets and to take the other actions required to be
taken by Buyer at the Closing is subject to the satisfaction, at or prior to the Closing, of each of the following conditions (any of which may be waived by Buyer, in whole or in part, in Buyer's sole
discretion):

7.1Accuracy of Representations of Sellers and Stockholders.All of the representations and warranties
of each Seller and each Stockholder contained in this Agreement shall have been accurate as of the date of this Agreement and shall be accurate as of the Closing Date as if made on the Closing Date.

7.2Performance of Sellers and Stockholders.



7.3Additional Conditions.



7.4No Proceedings.There shall not be existing or threatened any Action or other proceeding
(a) involving any challenge to, or seeking damages or other relief in connection with, any of the transactions contemplated by this Agreement, or (b) that may have the effect of
preventing, delaying, making illegal or otherwise interfering with any of the transactions contemplated by this Agreement.

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7.5No Claim Regarding Asset Ownership or Sale Proceeds.There shall not have been made or threatened
by any Person any claim asserting that any Seller is not, or the Sellers collectively are not, (a) the rightful owner(s) of, or have an ownership interest in, the Assets, or (b) entitled
to all or any portion of the Purchase Consideration.

7.6No Prohibition.Neither the consummation nor the performance of any of the transactions
contemplated by this Agreement or any Ancillary Agreement will, directly or indirectly (with or without notice or lapse of time), contravene, or conflict with, or result in a material violation of, or
cause Buyer or any Person affiliated with Buyer to suffer any Material Adverse Change under, (a) any applicable Regulation or Court Order or (b) any Regulation or Court Order that has
been published, introduced, or otherwise proposed by or before any governmental agency.

7.7Approval of Documentation.The form and substance of all certificates, instruments, opinions and
other documents delivered to Buyer under this Agreement shall be reasonably satisfactory to Buyer and
its counsel, and Buyer shall have received copies of such documents and instruments as Buyer and its counsel may request in connection with the transactions contemplated by this Agreement.

7.8Force Majeure.All or any material part of the Assets shall not have been materially and adversely
affected in any way by any act of God, fire, flood, war, legislation (proposed or enacted) or other event or occurrence, whether or not covered by insurance.

7.9Release of Liens, Claims, etc.Prior to the Closing, Buyer shall have received releases, in form
and substance satisfactory to Buyer, of all Encumbrances against the Assets, and Buyer shall be satisfied that, as a result, the Sellers have good and marketable title to the Assets, free and clear of
any Encumbrances.

7.10No Material Adverse Change.There shall not have occurred any Material Adverse Change with respect
the Assets or the Sellers.

8.Sellers' Conditions to Closing.Sellers' obligation to sell the Assets and to take the other actions required to be
taken by Sellers at the Closing is subject to the satisfaction, at or prior to the Closing, of each of the following conditions (any of which may be waived by Sellers, in whole or in part in Sellers'
sole discretion):

8.1Accuracy of Representations of Buyer.All of the representations and warranties of Buyer contained
in this Agreement shall have been accurate as of the date of this Agreement and shall be accurate as of the Closing Date as if made on the Closing Date.

8.2Performance of Buyer.



8.3Consents.Each of the consents identified in Section 5.3 of the Buyer Disclosure Schedule
shall have been obtained.

8.4No Proceedings.There shall not be existing or threatened any Action or other proceeding
(a) involving any challenge to, or seeking damages or other relief in connection with, any of the transactions contemplated by this Agreement, or (b) that may have the effect of
preventing, delaying, making illegal or otherwise interfering with any of the transactions contemplated by this Agreement.

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8.5No Prohibition.Neither the consummation nor the performance of any of the transactions
contemplated by this Agreement or any Ancillary Agreement will, directly or indirectly (with or without notice or lapse of time), materially contravene, or conflict with, or result in a material
violation of, or cause any Seller or any Stockholder or any Person affiliated with any Seller or any Stockholder to suffer any Material Adverse Change under, (a) any applicable Regulation or
Court Order or (b) any Regulation or Court Order that has been published, introduced, or otherwise proposed by or before any governmental agency.

8.6Approval of Documentation.The form and substance of all certificates, instruments, opinions and
other documents delivered to Sellers and the Stockholders under this Agreement shall be reasonably satisfactory to such Sellers and Stockholders and their respective counsel, and the Sellers and the
Stockholders shall have received copies of such documents and instruments as they and their respective counsel may request in connection with the transactions contemplated by this Agreement.

9.Termination.

9.1Termination Rights.This Agreement may be terminated at any time prior to the Closing by:



9.2Effect of Termination.In the event of termination of this Agreement, each Party will redeliver all
documents, work papers and other material of any other Party relating to the transactions contemplated hereby, whether so obtained before or after the execution hereof, to the Party furnishing the
same or, in the alternative, destroy such materials and, upon request, confirm such destruction in writing. Whether or not the Closing takes place, the Stockholders waive, and will cause the Sellers
to waive, any cause of action, right or claim arising out of the access of Buyer or its Representatives to

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any trade secrets or other confidential information of the Seller, except for the intentional competitive misuse by Buyer of such trade secrets or confidential information.

10.Indemnity; Remedies.

10.1Indemnification.Each Seller and each Stockholder agree, jointly and severally, to fully defend,
indemnify and hold Buyer, Parent and each of their respective officers, directors, employees and affiliates (each, a "Buyer Indemnified Party") harmless
from and against any and all Damages as a result of (a) the Excluded Liabilities or (b) any inaccuracy or breach of any representation, warranty, covenant or agreement of any Seller
contained herein or in any Ancillary Agreement or instrument delivered by any Seller pursuant hereto or thereto. Each Seller agrees, jointly and severally, and each Stockholder agrees, severally and
not jointly, to fully defend, indemnify and hold the Buyer Indemnified Parties harmless from and against any and all Damages as a result of any inaccuracy or breach of any representation, warranty,
covenants or agreement of such Stockholder contained herein or in any Ancillary Agreement or instrument delivered by such Stockholder pursuant hereto or thereto. Buyer agrees to fully defend,
indemnify and hold each Seller and each Stockholder and their respective officers, directors, employees and affiliates (each, a "Seller Indemnified
Party") harmless from and against any and all Damages as a result of (a) the Assumed Liabilities or (b) any inaccuracy or breach of any representation, warranty,
covenant or agreement of Buyer contained herein or in any Ancillary Agreement or instrument delivered by Buyer pursuant hereto or thereto. The right to indemnification,
payment of Damages or other remedy based on such representations, warranties, covenants and agreements will not be affected by any investigation conducted with respect to, or any knowledge acquired
(or capable of being acquired) at any time, whether before or after the execution and delivery of this Agreement or the Closing Date, with respect to the accuracy or in accuracy of or compliance with,
any such representation, warranty, covenant or agreement.

10.2Procedures for Claims.If a claim for Damages (a
"Claim") is to be made by a person entitled to indemnification hereunder, the person claiming such indemnification (the
"Indemnified Party") shall give written notice (a "Claim Notice") to the indemnifying person (the
"Indemnifying Party") reasonably promptly after the Indemnified Party becomes aware of any fact, condition or event which may give rise to Damages for
which indemnification may be sought under this Section 10,providedthat if the Indemnified Party is a Seller Indemnified Party, such Claim
Notice shall only be valid if it is delivered by the Seller Representative, andprovided furtherthat if the Indemnified Party is a Buyer Indemnified
Party, such Claim Notice shall be valid if it is delivered to the Seller Representative. The failure of any Indemnified Party to give timely notice hereunder shall not affect rights to indemnification
hereunder, except and only to the extent that, the Indemnifying Party demonstrates actual material damage caused by such failure, and then only to the extent thereof. In the case of a Claim involving
the assertion of a claim by a third party (whether pursuant to a lawsuit, other legal action or otherwise, a "Third-Party Claim"), if the Indemnifying
Party shall acknowledge in writing to the Indemnified Party that the Indemnifying Party shall be obligated to indemnify the Indemnified Party under the terms of its indemnity hereunder in connection
with such Third-Party Claim, then (A) the Indemnifying Party shall be entitled and, if it so elects, shall be obligated at its own cost, risk and expense, (1) to take control of the
defense and investigation of such Third-Party Claim and (2) to pursue the defense thereof in good faith by appropriate actions or proceedings promptly taken or instituted and diligently
pursued, including, without limitation, to employ and engage attorneys of its own choice reasonably acceptable to the Indemnified Party to handle and defend the same, and (B) the Indemnifying
Party shall be entitled (but not obligated), if it so elects, to compromise or settle such claim, which compromise or settlement shall be made only with the written consent of the Indemnified Party,
such consent not to be unreasonably withheld. In the event the Indemnifying Party elects to assume control of the defense and investigation of such lawsuit or other legal action in accordance with
this Section 10.2, the Indemnified Party may, at its own cost and expense, participate in the investigation, trial and defense of such Third-Party Claim, providedthat if the named persons to a

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lawsuit or other legal action include both the Indemnifying Party and the Indemnified Party and the Indemnified Party has been advised by counsel that there may be one or more legal defenses available
to such Indemnified Party that are different from or additional to those available to the Indemnifying Party, the Indemnified Party shall be entitled, at the Indemnifying Party's cost, risk and
expense, to retain one firm of separate counsel of its own choosing. If the Indemnifying Party fails to assume the defense of such Third-Party Claim in accordance with this Section 10.2 within
ten (10) calendar days after receipt of the Claim Notice, the Indemnified Party against which such Third-Party Claim has been asserted shall (upon delivering notice to such effect to the
Indemnifying Party) have the right to undertake, at the Indemnifying Party's cost, risk and expense, the defense, compromise and settlement of such Third-Party Claim on behalf of and for the account
of the Indemnifying Party;providedthat such Third-Party Claim shall not be compromised or settled without the written consent of the Indemnifying
Party, which consent shall not be unreasonably withheld. In the event the Indemnifying Party assumes the defense of the claim, the Indemnifying Party shall keep the Indemnified Party reasonably
informed of the progress of any such defense, compromise or settlement, and in the event
the Indemnified Party assumes the defense of the claim, the Indemnified Party shall keep the Indemnifying Party reasonably informed of the progress of any such defense, compromise or settlement. The
Indemnifying Party shall be liable for any settlement of any Third-Party Claim effected pursuant to and in accordance with this Section 10.2 and for any final judgment (subject to any right of
appeal), and the Indemnifying Party agrees to indemnify and hold harmless each Indemnified Party from and against any and all Damages by reason of such settlement or judgment.

10.3Remedies.Buyer, each Seller and each Stockholder acknowledge and agree that the other parties
hereto would be irreparably damaged in the event any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. Accordingly, each of the
Parties hereto agrees that he, she or it each shall be entitled to an injunction or injunctions to prevent breaches of any of the provisions of this Agreement to enforce specifically this Agreement in
any action instituted in any court of the United States or any state having competent jurisdiction as provided for in this Agreement, in addition to any other remedy to which such Party may be
entitled, at law or in equity.

11.Holdback Amount.

11.1Compensation of Buyer Indemnified Parties.The Holdback Amount shall be available (a) to
offset any Adjustment Amount pursuant to Section 2.7 and/or (b) to compensate any Buyer Indemnified Party for any Damages (whether or not involving a Third Party Claim), incurred or
sustained by such Buyer Indemnified Party as a result of (i) the Excluded Liabilities or (ii) any inaccuracy or breach of any representation, warranty, covenant or agreement of any
Seller or any Stockholder contained herein or in any instrument delivered by any Seller or any Stockholder pursuant to this Agreement as provided for in Section 10. The Parties agree that
(i) any reduction in the Holdback Amount otherwise payable to Sellers shall be applied against the Cash Holdback and the Shares Holdback on apro
ratabasis and (ii) the value of each share of Parent Common Stock constituting a portion of the Shares Holdback shall, for all purposes, be equal to the Average Parent
Common Stock Price. Buyer, each Seller and each Stockholder each acknowledge that any such Damages would relate to unresolved contingencies existing on the Closing Date, which if resolved on the
Closing Date would have led to a reduction in the Purchase Consideration.

11.2Satisfaction of Claims.Buyer shall have the right to reduce the amount of the Holdback Amount to
be delivered by Buyer to Sellers after the Closing Date by an amount that is necessary in the reasonable judgment of Buyer to satisfy any pending unpaid (a) Adjustment Amount or
(b) claim for indemnification pursuant to Section 10, which claims have been or are specified in written notice to the Seller Representative prior to such date that the Holdback Amount
was otherwise due to be remitted by Buyer. Promptly after the later of (x) the Determination Date and (y) the date on which all

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such claims, if any, have been resolved, Buyer shall deliver to Sellers the remaining portion of any Holdback Amount, if any, not required to satisfy such claims.

11.3Procedures.Upon receipt by the Seller Representative, at any time on or before the last day of
the Holdback Period, of written notice from Buyer (a "Holdback Notice") (i) stating that a Buyer Indemnified Party has paid or properly accrued
or reasonably anticipates that it will have to pay or accrue Damages as a result of (a) the Excluded Liabilities or (b) any inaccuracy or breach of any representation, warranty, covenant
or agreement of any Seller or any Stockholder contained herein or in any instrument delivered pursuant to this Agreement, as the case may be and (ii) specifying in reasonable detail the
individual items of Damages included in the amount so stated, the date each such item was paid or properly accrued, or the basis for such anticipated liability, the Seller Representative shall have
thirty (30) days to review and, if it disagrees with any matter set forth in the Holdback Notice, object in writing to such Holdback Notice. In case the Seller Representative shall not object
in writing to any claim or claims made in any Holdback Notice within such 30-day period, the Sellers and the Stockholders shall be deemed to have agreed to the Holdback Notice and to the
reduction of the Holdback Amount as set forth therein. Delivery of a Holdback Notice shall not foreclose or limit any other remedy available to a Buyer Indemnified Party under this Agreement, at law
or in equity.

11.4Resolution of Disputes.In case the Seller Representative shall object in writing to any claim or
claims made in any Holdback Notice within the 30-day period provided for in Section 11.3, the Seller Representative and Buyer shall attempt in good faith to agree upon the rights of
the respective Parties with respect to each of such claims. If the Seller Representative and Buyer should so agree, such agreement shall be set forth in writing and signed by both parties. If no such
agreement can be reached after good faith negotiation, either Buyer or the Seller Representative may pursue all remedies available to it under the provisions of this Agreement, at law or in equity.

12.Seller Representative; Power of Attorney.

12.1Seller Representative.The Seller Representative is appointed as agent and
attorney-in-fact for each Seller and each Stockholder, to give and receive notices and communications, to object to Buyer's calculation of Year End Unearned Accounts
Receivable, to consent to an increase in sales, general and administrative expenses proposed by Buyer pursuant to Section 2.8, to object to any matter set forth in any Claim Notice or Holdback
Notice, to agree to, negotiate, enter into settlements and compromises of, and commence or pursue legal action and comply with orders of courts and awards of arbitrators with respect to such claims,
and to take all actions necessary or appropriate in the judgment of the Seller Representative for the accomplishment of the foregoing. Such agency may be changed by the Sellers and the Stockholders
from time to time upon not less than thirty (30) days prior written notice to Buyer;provided, however, that the Seller Representative may not be
removed unless holders of at least a two-thirds interest in the Holdback Amount agree to such removal and to the identity of the substituted Seller Representative. Any vacancy in the
position of Seller Representative may be filled by approval of the holders of a majority in interest of the Holdback Amount. No bond shall be required of the Seller Representative, and the Seller
Representative shall not receive compensation for his services. Notices or communications to or from the Seller Representative shall constitute notice to or from each of the Sellers and each of the
Stockholders.

12.2Exculpation.The Seller Representative shall not be liable for any act done or omitted hereunder
as Seller Representative while acting in good faith and in the exercise of reasonable judgment.

12.3Actions of the Seller Representative.A decision, act, consent or instruction of the Seller
Representative shall constitute a decision for all of the Sellers and the Stockholders and shall be final, binding and conclusive upon each of such Sellers and Stockholders. Buyer may rely exclusively
upon any such decision, act, consent or instruction of the Seller Representative as being the decision, act, consent or instruction of every such Seller. Buyer is hereby relieved from any liability to
any person for

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any acts done by them in accordance with such decision, act, consent or instruction of the Seller Representative.

13.General Provisions.

13.1Applicable Law.The execution, performance and interpretation of this Agreement shall be governed
by, and construed and enforced in accordance with, the internal laws of the State of California, without regard to that State's choice of law rules.

13.2Notices.All notices required or permitted to be given under this Agreement shall be in writing,
and will be deemed given on the date of receipt if delivered in person, or on the date of mailing if mailed by overnight courier or registered or certified mail, postage prepaid, return receipt
requested, to the applicable Party at its address indicated in the preamble or the signatures pages, as the case may be, to this Agreement. Any Party may change its address for purposes of this
Agreement by giving fifteen (15) days' prior written notice of such change of address to the other Party in the manner described in this Section 13.2.

13.3Binding Effect; Assignment.No Seller nor any Stockholder shall assign any of its or his rights,
or delegate any of its or his obligations under this Agreement to any third party without the prior written consent of Buyer. This Agreement is binding upon, and shall inure solely to the benefit of,
the parties hereto and their respective heirs, personal representatives, successors and permitted assigns. This Agreement is not intended to benefit, and shall not be construed as benefiting, any
third party, and no third party shall have standing to enforce any provision of this Agreement.

13.4Modification.No purported modification, amendment or waiver of any term of this Agreement shall
be effective unless it is in writing, subsequent to this Agreement and signed by all parties hereto.

13.5Expenses.Buyer, each Seller and each Stockholder shall each pay its or his own respective legal,
accounting, advisory and other fees, and other out-of-pocket expenses incurred in connection with the
transactions contemplated herein and will not look to any other Party for any contribution toward such expenses.

13.6Counterparts.This Agreement may be executed in one or more counterparts, each of which shall be
deemed to be an original and all of which together shall constitute one and the same agreement. Facsimile copies shall also be deemed originals.

13.7Severability.Buyer, each Seller and each Stockholder agree that the provisions of this Agreement
are severable and separate and that the unenforceability of any specific provision or part of any provision shall not affect the validity of any other provision or term of this Agreement.

13.8Entire Agreement.This Agreement, together with the Ancillary Agreements, constitutes the entire
agreement of Buyer, each Seller and each Stockholder with respect to the subject matter hereof and supersedes any and all prior and contemporaneous understandings or agreements, whether oral or
written, concerning such subject matter, including, without limitation, the letter of intent dated as of October 6, 2000. Each Party acknowledges that it enters into this Agreement without
relying on any statement by the other Party which is not specifically set forth in this Agreement.

13.9Interpretation of Agreement.



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13.10Set-Off.Buyer is hereby authorized at any time after the giving of prior written
notice to the Seller Representative, and from time to time, to set-off and apply any and all amounts owing by Buyer to any Seller or any Stockholder under this Agreement, any agreement
entered into in connection herewith or otherwise against any and all of the obligations of Sellers and the Stockholders to Buyer (whether matured or unmatured) now or hereafter existing under this
Agreement, any agreement entered into in connection herewith or otherwise. The rights of Buyer under this Section 13.10 are in addition to the other rights and remedies (including, without
limitation, other rights of set-off) which Buyer may have.

13.11Public Announcements.Any public announcement or similar publicity with respect to the this
Agreement or the transactions contemplated hereby will be issued, if at all, at such time and in such manner as Buyer and the Seller Representative mutually determine. Unless consented to by Buyer and
the Seller Representative in advance or required by Regulation applicable to Buyer (including, without limitation, its obligations pursuant to the Exchange Act and the rules of Nasdaq), this Agreement
shall be strictly confidential and may not be disclosed to any Person. Sellers, the Stockholders and Buyer will consult with each other concerning the means by which the employees, customers and
suppliers of, and others having dealings with, Sellers will be informed of the transactions contemplated by this Agreement, and Buyer shall have the right to be present for any such communication.

13.12Waiver of Jury Trial.EACH SIGNATORY TO THIS AGREEMENT HEREBY IRREVOCABLY
WAIVES ITS RESPECTIVE RIGHT TO A JURY TRIAL OF ANY PERMITTED CLAIM OR CAUSE OF ACTION ARISING OUT OF THIS AGREEMENT, THE ANCILLARY AGREEMENTS ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY, OR ANY
DEALINGS BETWEEN ANY OF THE SIGNATORIES HERETO RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.The scope of this waiver is
intended to be all encompassing of any and all disputes that may be filed in any court and that relate the subject matter of this Agreement or any of the transactions contemplated hereby, including,
without limitation, contract claims, tort claims, and all other common law and statutory claims. This waiver is irrevocable, meaning that it may not be modified either orally or in writing, and this
waiver shall apply to any subsequent amendments, supplements or other modifications to this Agreement, any of the transactions
contemplated hereby or to any other document or agreement relating to the transactions contemplated hereby.

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13.13Attorney Fees.If any Party to this Agreement brings an action to enforce its rights under this
Agreement in accordance with the provisions hereof, the prevailing Party shall be entitled to recover its actual out-of-pocket costs and expenses, including without limitation
attorneys' fees and court costs reasonably incurred in connection with such action, including any appeal of such action.

13.14Service of Process; Consent to Jurisdiction.EACH OF THE PARTIES HERETO
IRREVOCABLY CONSENTS TO THE SERVICE OF ANY PROCESS, PLEADING, NOTICES OR OTHER PAPERS BY THE MAILING OF COPIES THEREOF BY REGISTERED, CERTIFIED OR FIRST CLASS MAIL, POSTAGE PREPAID, TO SUCH PARTY AT
SUCH PARTY'S ADDRESS SET FORTH HEREIN, OR BY ANY OTHER METHOD PROVIDED OR PERMITTED UNDER CALIFORNIA LAW.

EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY (I) AGREES THAT ANY SUCH SUIT, ACTION OR OTHER LEGAL PROCEEDING ARISING OUT OF THIS AGREEMENT MAY BE
BROUGHT IN THE UNITED STATES DISTRICT COURT IN THE CENTRAL DISTRICT OF THE STATE OF CALIFORNIA OR, IF SUCH COURT DOES NOT HAVE JURISDICTION OR WILL NOT ACCEPT JURISDICTION, IN ANY COURT OF GENERAL
JURISDICTION IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA; (II) CONSENTS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING; AND (III) WAIVES ANY OBJECTION
WHICH SUCH PARTY MAY HAVE OT THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY SUCH COURT.

(Signature Pages Follow)

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IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the date first written above.

| |  | BUYER:
GUITAR CENTER STORES, INC.          
| |  | -------------------------------------------
| |  | By:                                        
| |  | Name: Bruce Ross
Title: President          
| |  | SELLERS:
AMERICAN MUSIC GROUP, LTD.        
| |  | By:                                        
| |  | Name: Robert A. Schweiller
Title: President
| |  | EASTERN MUSIC SUPPLY CO., INC.             
| |  | By:                                        
| |  | Name: Robert A. Schweiller
Title: President
| |  | LYONS MUSIC, INC.                          
| |  | By:                                        
| |  | Name: Robert A. Schweiller
Title: President

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| |  | AMERICAN MUSIC, INC.                       
| |  | -------------------------------------------
| |  | By:                                        
| |  | Name: Robert A. Schweiller
Title: President
| |  | AMERICAN MUSICAL INSTRUMENTS, INC.         
| |  | By:                                        
| |  | Name: Robert A. Schweiller
Title: President
| |  | GIARDINELLI BAND INSTRUMENT CO., INC.      
| |  | By:                                        
| |  | Name: Robert A. Schweiller
Title: President
| |  | CENTRAL MUSIC SUPPLY, INC.                 
| |  | By:                                        
| |  | Name: Robert A. Schweiller
Title: President
| |  | GBI, INC.                                  
| |  | By:                                        
| |  | Name: Robert A. Schweiller
Title: President

| | STOCKHOLDERS:                                                                                        
| | -----------------------------------------------------------------------------------------------------
| | /s/ROBERT A. SCHWEILLERName: Robert A. Scheiwiller
Address: 105 Spinnaker Lane
Jupiter, Florida 33477

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| | /s/DAVID FLEMINGName: David Fleming
Address: 200 Summerhaven Drive
East Syracuse, New York 13057              
| | --------------------------------------------------------------------------------------------------------------
| | /s/DAN SCHMIDName: Dan Schmid
Address: 6 Old Country Lane
Fairport, New York 14450                            
| | /s/DANIEL FLEISCHMANName: Daniel Fleischman
Address: 156 South Street
Auburn, New York 13021                  
| | /s/THOMAS RINALDIName: Thomas Rinaldi
Address: 10 Stone Ridge Lane
Greenfield, Massachusetts 01301            
| | /s/GREG SCHEIWILLERName: Greg Scheiwiller
Address: 6288 Garrett Street
Jupiter, Florida 33458                 
| | /s/ROBERT T. SCHEIWILLERName: Robert T. Scheiwiller
Address: 888 East Washington Street
Orlando, Florida 32801
| | /s/JEFF SCHEIWILLERName: Jeff Scheiwiller
Address: 8483 Dunham Road
Baldwinsville, New York 13027             
| | /s/CAROL CHARETTEName: Carol Charette
Address: 7896 Rose Court Drive
Cicero, New York 13039                   

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