---

---

AMENDED AND RESTATED

LOAN AND SECURITY AGREEMENT

by and among

GUITAR CENTER, INC.,

and

GUITAR CENTER STORES, INC.,

and

MUSICIAN'S FRIEND, INC.

and

THE LENDERS THAT ARE SIGNATORIES HERETO

as the Lenders,

and

FOOTHILL CAPITAL CORPORATION

as Agent,

and

FLEET RETAIL FINANCE, INC.

as Documentation Agent

Dated as of April 16, 2001

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---

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17.9.a.i.1.1 TABLE OF CONTENTS

|1. |  | DEFINITIONS AND CONSTRUCTION   |  | 1                                                                     
|-- |  | ------------------------------ |  | ----------------------------------------------------------------------
|   |  | 1.1                            |  | Definitions                                                           
|   |  | 1.2                            |  | Accounting Terms                                                      
|   |  | 1.3                            |  | Code                                                                  
|   |  | 1.4                            |  | Construction                                                          
|   |  | 1.5                            |  | Schedules and Exhibits                                                
|2. |  | LOAN AND TERMS OF PAYMENT      |  | 22                                                                    
|   |  | 2.1                            |  | Revolver Advances                                                     
|   |  | 2.2                            |  | Reduction in Facility Amount and Commitments                          
|   |  | 2.3                            |  | Borrowing Procedures and Settlement                                   
|   |  | 2.4                            |  | Payments                                                              
|   |  | 2.5                            |  | Overadvances                                                          
|   |  | 2.6                            |  | Interest and Letter of Credit Fees Rates, Payments, and Calculations  
|   |  | 2.7                            |  | Cash Management                                                       
|   |  | 2.8                            |  | Crediting Payments                                                    
|   |  | 2.9                            |  | Designated Account                                                    
|   |  | 2.10                           |  | Maintenance of Loan Account; Statements of Obligations                
|   |  | 2.11                           |  | Fees                                                                  
|   |  | 2.12                           |  | Letters of Credit                                                     
|   |  | 2.13                           |  | LIBOR Option                                                          
|   |  | 2.14                           |  | Capital Requirements                                                  
|   |  | 2.15                           |  | Joint and Several Liability of the Obligors                           
|   |  | 2.16                           |  | Prior Loan Agreement                                                  
|3. |  | CONDITIONS; TERM OF AGREEMENT  |  | 41                                                                    
|   |  | 3.1                            |  | Conditions Precedent to the Initial Extension of Credit               
|   |  | 3.2                            |  | Conditions Subsequent to the Initial Extension of Credit              
|   |  | 3.3                            |  | Conditions Precedent to all Extensions of Credit                      
|   |  | 3.4                            |  | Term                                                                  
|   |  | 3.5                            |  | Effect of Termination                                                 
|   |  | 3.6                            |  | Early Termination by Borrowers                                        
|4. |  | CREATION OF SECURITY INTEREST  |  | 45                                                                    
|   |  | 4.1                            |  | Grant of Security Interest                                            
|   |  | 4.2                            |  | Negotiable Collateral                                                 
|   |  | 4.3                            |  | Collection of Accounts, General Intangibles, and Negotiable Collateral
|   |  | 4.4                            |  | Delivery of Additional Documentation Required                         
|   |  | 4.5                            |  | Power of Attorney                                                     
|   |  | 4.6                            |  | Right to Inspect                                                      
|   |  | 4.7                            |  | Control Agreements                                                    
|5. |  | REPRESENTATIONS AND WARRANTIES |  | 46                                                                    
|   |  | 5.1                            |  | No Encumbrances                                                       
|   |  | 5.2                            |  | Eligible Accounts                                                     
|   |  | 5.3                            |  | Eligible Inventory                                                    
|   |  | 5.4                            |  | Equipment                                                             
|   |  | 5.5                            |  | Location of Inventory and Equipment                                   
|   |  | 5.6                            |  | Inventory Records                                                     
|   |  | 5.7                            |  | Location of Chief Executive Office; FEIN                              

i

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|   |  | 5.8                   |  | Due Organization and Qualification; Subsidiaries |  | 47
|-- |  | --------------------- |  | ------------------------------------------------ |  | --
|   |  | 5.9                   |  | Due Authorization; No Conflict                   |  | 48
|   |  | 5.10                  |  | Litigation                                       |  | 48
|   |  | 5.11                  |  | No Material Adverse Change                       |  | 48
|   |  | 5.12                  |  | Fraudulent Transfer                              |  | 49
|   |  | 5.13                  |  | Employee Benefits                                |  | 49
|   |  | 5.14                  |  | Environmental Condition                          |  | 49
|   |  | 5.15                  |  | Brokerage Fees                                   |  | 49
|   |  | 5.16                  |  | Intentionally Omitted                            |  | 49
|   |  | 5.17                  |  | Intellectual Property                            |  | 49
|   |  | 5.18                  |  | Leases                                           |  | 49
|   |  | 5.19                  |  | DDAs                                             |  | 49
|   |  | 5.20                  |  | Offsite Storage Locations                        |  | 50
|   |  | 5.21                  |  | American Music Acquisition                       |  | 50
|6. |  | AFFIRMATIVE COVENANTS |  | 50                                              
|   |  | 6.1                   |  | Accounting System                                |  | 50
|   |  | 6.2                   |  | Collateral Reporting                             |  | 51
|   |  | 6.3                   |  | Financial Statements, Reports, Certificates      |  | 52
|   |  | 6.4                   |  | Guarantor Reports                                |  | 54
|   |  | 6.5                   |  | Return                                           |  | 54
|   |  | 6.6                   |  | Title to Equipment                               |  | 54
|   |  | 6.7                   |  | Maintenance of Equipment                         |  | 54
|   |  | 6.8                   |  | Taxes                                            |  | 54
|   |  | 6.9                   |  | Insurance                                        |  | 55
|   |  | 6.10                  |  | No Setoffs or Counterclaims                      |  | 56
|   |  | 6.11                  |  | Location of Inventory and Equipment              |  | 56
|   |  | 6.12                  |  | Compliance with Laws                             |  | 56
|   |  | 6.13                  |  | Employee Benefits                                |  | 56
|   |  | 6.14                  |  | Leases                                           |  | 57
|   |  | 6.15                  |  | [Intentionally Omitted]                          |  | 57
|   |  | 6.16                  |  | Projections                                      |  | 57
|   |  | 6.17                  |  | Corporate Existence, etc                         |  | 57
|   |  | 6.18                  |  | Disclosure Updates                               |  | 57
|   |  | 6.19                  |  | Mailing Lists                                    |  | 57
|   |  | 6.20                  |  | Inventory Cycle Counts                           |  | 57
|   |  | 6.21                  |  | Distribution Centers                             |  | 57
|   |  | 6.22                  |  | Permitted Acquisitions                           |  | 57
|   |  | 6.23                  |  | American Music Acquisition                       |  | 58
|   |  | 6.24                  |  | American Music Acquisition Documents             |  | 58
|7. |  | NEGATIVE COVENANTS    |  | 58                                              
|   |  | 7.1                   |  | Indebtedness                                     |  | 58
|   |  | 7.2                   |  | Liens                                            |  | 59
|   |  | 7.3                   |  | Restrictions on Fundamental Changes              |  | 59
|   |  | 7.4                   |  | Disposal of Assets                               |  | 59
|   |  | 7.5                   |  | Change Name                                      |  | 59
|   |  | 7.6                   |  | Guarantee                                        |  | 60
|   |  | 7.7                   |  | Nature of Business                               |  | 60
|   |  | 7.8                   |  | Prepayments and Amendments                       |  | 60
|   |  | 7.9                   |  | Change of Control                                |  | 60
|   |  | 7.10                  |  | Consignments                                     |  | 60

ii

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|    |  | 7.11                                       |  | Distributions                                                                      |  | 60
|--- |  | ------------------------------------------ |  | ---------------------------------------------------------------------------------- |  | --
|    |  | 7.12                                       |  | Accounting Methods                                                                 |  | 61
|    |  | 7.13                                       |  | Investments                                                                        |  | 61
|    |  | 7.14                                       |  | Transactions with Affiliates                                                       |  | 61
|    |  | 7.15                                       |  | Suspension                                                                         |  | 61
|    |  | 7.16                                       |  | [Intentionally Omitted]                                                            |  | 61
|    |  | 7.17                                       |  | Use of Proceeds                                                                    |  | 61
|    |  | 7.18                                       |  | Change in Location of Chief Executive Office; Inventory and Equipment with Bailees |  | 61
|    |  | 7.19                                       |  | No Prohibited Transactions Under ERISA                                             |  | 62
|    |  | 7.20                                       |  | Financial Covenants. Fail to maintain                                              |  | 62
|    |  | 7.21                                       |  | Credit Card Receipts                                                               |  | 63
|    |  | 7.22                                       |  | Capital Expenditures                                                               |  | 63
|    |  | 7.23                                       |  | Securities Accounts                                                                |  | 63
|8.  |  | EVENTS OF DEFAULT                          |  | 63                                                                                
|9.  |  | THE LENDER GROUP'S RIGHTS AND REMEDIES     |  | 65                                                                                
|    |  | 9.1                                        |  | Rights and Remedies                                                                |  | 65
|    |  | 9.2                                        |  | Remedies Cumulative                                                                |  | 67
|10. |  | TAXES AND EXPENSES                         |  | 67                                                                                
|11. |  | WAIVERS; INDEMNIFICATION                   |  | 68                                                                                
|    |  | 11.1                                       |  | Demand; Protest; etc                                                               |  | 68
|    |  | 11.2                                       |  | The Lender Group's Liability for Collateral                                        |  | 68
|    |  | 11.3                                       |  | Indemnification                                                                    |  | 68
|12. |  | NOTICES                                    |  | 69                                                                                
|13. |  | CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER |  | 69                                                                                
|14. |  | ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS |  | 70                                                                                
|    |  | 14.1                                       |  | Assignments and Participations                                                     |  | 70
|    |  | 14.2                                       |  | Successors                                                                         |  | 72
|15. |  | AMENDMENTS; WAIVERS                        |  | 72                                                                                
|    |  | 15.1                                       |  | Amendments and Waivers                                                             |  | 72
|    |  | 15.2                                       |  | No Waivers; Cumulative Remedies                                                    |  | 73
|16. |  | AGENT; THE LENDER GROUP                    |  | 73                                                                                
|    |  | 16.1                                       |  | Appointment and Authorization of Agent                                             |  | 73
|    |  | 16.2                                       |  | Delegation of Duties                                                               |  | 74
|    |  | 16.3                                       |  | Liability of Agent                                                                 |  | 74
|    |  | 16.4                                       |  | Reliance by Agent                                                                  |  | 74
|    |  | 16.5                                       |  | Notice of Default or Event of Default                                              |  | 75
|    |  | 16.6                                       |  | Credit Decision                                                                    |  | 75
|    |  | 16.7                                       |  | Costs and Expenses; Indemnification                                                |  | 75
|    |  | 16.8                                       |  | Agent in Individual Capacity                                                       |  | 76
|    |  | 16.9                                       |  | Successor Agent                                                                    |  | 76
|    |  | 16.10                                      |  | Lender in Individual Capacity                                                      |  | 77
|    |  | 16.11                                      |  | Withholding Tax                                                                    |  | 77
|    |  | 16.12                                      |  | Collateral Matters                                                                 |  | 78
|    |  | 16.13                                      |  | Restrictions on Actions by Lenders; Sharing of Payments                            |  | 79
|    |  | 16.14                                      |  | Agency for Perfection                                                              |  | 79

iii

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|    |  | 16.15              |  | Payments by Agent to the Lenders                                                                             |  | 79
|--- |  | ------------------ |  | ------------------------------------------------------------------------------------------------------------ |  | --
|    |  | 16.16              |  | Concerning the Collateral and Related Loan Documents                                                         |  | 79
|    |  | 16.17              |  | Field Audits and Examination Reports; Confidentiality; Disclaimers by Lenders; Other Reports and Information |  | 80
|    |  | 16.18              |  | Several Obligations; No Liability                                                                            |  | 81
|    |  | 16.19              |  | Legal Representation of Agent                                                                                |  | 81
|    |  | 16.20              |  | Documentation Agent                                                                                          |  | 81
|17. |  | GENERAL PROVISIONS |  | 81                                                                                                          
|    |  | 17.1               |  | Effectiveness                                                                                                |  | 81
|    |  | 17.2               |  | Section Headings                                                                                             |  | 81
|    |  | 17.3               |  | Interpretation                                                                                               |  | 81
|    |  | 17.4               |  | Severability of Provisions                                                                                   |  | 82
|    |  | 17.5               |  | Amendments in Writing                                                                                        |  | 82
|    |  | 17.6               |  | Counterparts; Telefacsimile Execution                                                                        |  | 82
|    |  | 17.7               |  | Revival and Reinstatement of Obligations                                                                     |  | 82
|    |  | 17.8               |  | Integration                                                                                                  |  | 82
|    |  | 17.9               |  | GCI as Agent for Borrowers                                                                                   |  | 82

iv

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Exhibits and Schedules

|Exhibit A-1     |  | Form of Assignment and Acceptance  
|--------------- |  | -----------------------------------
|Exhibit B-1     |  | Form of Borrowing Base Certificate 
|Exhibit C-2     |  | Form of Compliance Certificate     
|Exhibit L-1     |  | Form of LIBOR Notice               
|Schedule C-1    |  | Revolving Credit Commitments       
|Schedule E-1    |  | Warehouse Locations                
|Schedule E-2    |  | Retail Stores                      
|Schedule E-3    |  | Offsite Storage Locations          
|Schedule P-1    |  | Permitted Liens                    
|Schedule R-1    |  | Real Property Collateral           
|Schedule 2.7(a) |  | GCI Cash Management                
|Schedule 2.7(b) |  | GCS Cash Management                
|Schedule 2.7(c) |  | MFI Cash Management                
|Schedule 5.7    |  | Chief Executive Office; FEIN       
|Schedule 5.8    |  | Organization and Qualification     
|Schedule 5.10   |  | Litigation                         
|Schedule 5.19   |  | Demand Deposit Accounts            
|Schedule 6.11   |  | Location of Inventory and Equipment
|Schedule 7.1    |  | Permitted Indebtedness             

v

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AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT(this
"Agreement"), is entered into as of April 16, 2001, between and among, on the one hand, the lenders identified on the signature pages hereof
(such lenders, together with their respective successors and assigns, are referred to hereinafter each individually as a "Lender" and collectively as
the "Lenders"),FOOTHILL CAPITAL CORPORATION, a California corporation, as agent for the Lenders (in
such capacity, together with its successors, if any, "Agent"), andFLEET RETAIL FINANCE INC., a
Delaware corporation, formerly know as BankBoston Retail Finance Inc., as documentation agent for the Lenders (in such capacity, together with its successors, if any,
"Documentation Agent"), with a place of business at 40 Broad Street, 10th Floor, Boston, Massachusetts 02110, and, on the other hand, GUITAR CENTER, INC., a Delaware corporation ("GCI"),GUITAR CENTER
STORES, INC., a Delaware corporation ("GCS"), andMUSICIAN'S
FRIEND, INC., a Delaware corporation ("MFI")

RECITALS

WHEREAS, Lender Group, Documentation Agent, GCI and MFI are parties to that certain Loan and Security
Agreement, dated as of December 17, 1999 (the "Prior Loan Agreement");

WHEREAS, Borrowers have requested that Lender Group amend and restate the Prior Loan Agreement in its entirety to, among other things,
(a) provide for an increase in the Facility Amount to the Maximum Facility Amount, (b) permit the American Music Acquisition (as hereinafter defined) pursuant to the terms and conditions
of the American Music Acquisition Documents (as hereinafter defined), and (c) modify the documentation reflected in the Prior Loan Agreement to reflect the transfer to GCS by GCI of the
day-to-day operations of the retail store business;

WHEREAS, Borrowers hereby reaffirm, among other things (a) that the Obligations under the Prior Loan Agreement remain
outstanding, and (b) that each of Guarantor Security Agreement, Inventory Security Agreement, and Trademark Security Agreement, as well as the other Loan Documents, as amended on the date
hereof, entered into for the benefit of the Lender Group in connection with the Prior Loan Agreement, to the extent that such documents are not being amended and restated herewith, are incorporated
into this Agreement by reference herein, and shall remain in full force and effect and are deemed to be entered into for the benefit of Lender Group under this Agreement; and

WHEREAS, subject to the foregoing, Lender Group is willing to so amend and restate the Prior Loan Agreement in accordance with the
terms and conditions hereof; it being understood that no repayment of the outstanding amounts payable under the Prior Loan Agreement as of the Closing Date is being effected hereby but merely an
amendment and restatement in accordance with the terms hereof.

NOW, THEREFORE, in consideration of the above recitals, mutual premises and the agreements, provisions and covenants herein contained,
Lender Group and Borrowers hereby agree as follows:

1.  DEFINITIONS AND CONSTRUCTION.

1.1Definitions.As used in this Agreement, the following terms shall have the
following definitions:

"Account Debtor" means any Person who is or who may become obligated under, with respect to, or on account of, an Account, a General
Intangible, or Negotiable Collateral.

"Accounts" means all of a Borrower's currently existing and hereafter arising "accounts" (as that term is defined in the Code), and any
and all credit insurance, guaranties, or security therefor.

1

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"Acquired Indebtedness" means, with respect to any Permitted Acquisition, Indebtedness of a Person existing at the time such Person
becomes a Subsidiary or assumed in connection with the acquisition of assets from such Person, and not incurred in connection with, or in anticipation of, such Person becoming a Subsidiary or such
acquisition.

"Acquisition" means any purchase or other acquisition by a Borrower of the assets or Stock of any other Person, other than
(a) an Investment and (b) the purchase of Inventory or Equipment in the ordinary course of business.

"Administrative Borrower" has the meaning set forth inSection 17.9.

"Advances" has the meaning set forth inSection 2.1.

"Affiliate" means, as applied to any Person, any other Person who, directly or indirectly, controls, is controlled by, or is under
common control with, such Person. For purposes of this definition, "control" means the possession, directly or indirectly, of the power to direct the management and policies of a Person, whether
through the ownership of Stock, by contract, or otherwise.

"Agent" means Foothill Capital Corporation, a California corporation, solely in its capacity as agent for the Lenders, and shall
include any successor agent.

"Agent's Account" shall mean an account at a bank designated by Agent from time to time as the account into which Borrowers shall make
all payments to Agent for the benefit of the Lender Group, and into which the Lender Group shall make all payments to Agent, under this Agreement and the other Loan Documents. Initially, until Agent
notifies Administrative Borrower and the Lender Group to the contrary, the Agent Account shall be that certain deposit account bearing account number 323-266193 and maintained by Agent
with The Chase Manhattan Bank, N.A., 4 New York Plaza, 15th Floor, New York, New York 10004, ABA #021-000-021.

"Agent Advances" has the meaning set forth inSection 2.3(e)(i).

"Agent's Liens" has the meaning set forth inSection 4.1.

"Agent-Related Persons" means Agent together with its Affiliates, officers, directors, employees, counsel, and agents.

"Agreement" has the meaning set forth in the preamble hereto.

"American Music" means American Music Group, Ltd., a New York corporation.

"American Music Acquisition" means the acquisition by GCS of substantially all of the assets of American Music and certain of its
Affiliates pursuant to the terms and conditions of the American Music Acquisition Documents.

"American Music Acquisition Documents" means, individually and collectively, the Asset Purchase Agreement, dated as of March 20,
2001, by and among GCS, American Music, 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

2

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Maltage Drive, Liverpool, New York 13090 (each a "Seller" and, collectively, the "Sellers"), and the
stockholders of Sellers each of whom is listed on the signature pages thereto (the "Asset Purchase Agreement"), and all other material agreements,
documents and instruments to be executed or delivered in connection therewith.

"American Music Division" means that certain division of Guitar Center Stores, Inc. which will continue the Business (as such
term is defined in the Asset Purchase Agreement) of American Music and certain of its Affiliates.

"Applicable Base Rate Margin" means, as of any date of determination, the following margin based upon the applicable Leverage Ratio; provided, that for the period from
the Closing Date through the date Agent receives the first certified calculation of the Leverage Ratio delivered by
Borrowers pursuant toSection 6.3(b)(iv)establishing that a different Applicable Base Rate Margin applies, the Applicable Base Rate
Margin shall be 0.25 percentage points,

|Leverage Ratio                    |  | Applicable Base Rate Margin
|--------------------------------- |  | ---------------------------
|less than 2.25:1.0                |  | 0.25 percentage points     
|equal to or greater than 2.25:1.0 |  | 0.50 percentage points     

The
Applicable Base Rate Margin shall be based upon GCI's Leverage Ratio which will be calculated quarterly as at the end of each fiscal quarter of GCI based upon the 4 immediately
preceding fiscal quarters, including the fiscal quarter then ended. The applicable margin shall be redetermined quarterly on the date Agent receives the certified calculation of the Leverage Ratio
pursuant toSection 6.3(b)(iv)hereof.

"Applicable LIBOR Rate Margin" means, as of any date of determination, the following margin based upon the applicable Leverage Ratio; provided, that for the period from
the Closing Date through the date Agent receives the first certified calculation of the Leverage Ratio delivered by
Borrowers pursuant toSection 6.3(b)(iv)establishing that a different Applicable LIBOR Rate Margin applies, the Applicable LIBOR Rate
Margin shall be 1.375 percentage points,

|Leverage Ratio                     |  | Applicable LIBOR Rate Margin                 
|---------------------------------- |  | ---------------------------------------------
|less than 2.25:1.0                 |  | 1.375 percentage points                      
|equal to or greater than 2.25:1.0, |  | 1.50 percentage points but less than 4.00:1.0
|equal to or greater than 4.00:1.0, |  | 1.75 percentage points but less than 4.50:1.0
|equal to or greater than 4.50:1.0  |  | 2.00 percentage points                       

The
Applicable LIBOR Rate Margin shall be based upon GCI's Leverage Ratio which will be calculated quarterly as at the end of each fiscal quarter of GCI based upon the 4 immediately
preceding fiscal quarters, including the quarter then ended. The applicable margin shall be redetermined quarterly on the date Agent receives the certified calculation of the Leverage Ratio pursuant
toSection 6.3(b)(iv)hereof. Anything to the contrary contained herein notwithstanding, any LIBOR Rate Advance that is outstanding on the
day on which the Applicable LIBOR Rate Margin changes, shall, until the end of the Interest Period relating to such LIBOR Rate Advance, continue to bear interest at the Applicable LIBOR Rate Margin
that was in effect on the date such LIBOR Rate Advance initially was made.

"Applicable Prepayment Premium" means, as of any date of determination, an amount equal to (a) during the period of time from
and after the date of the execution and delivery of this Agreement up to the date that is the first anniversary of the Closing Date, 0.50%timesthe
Maximum Facility Amount, (b) during the period of time from and including the date that is the first anniversary of the Closing Date up to the date that is the second anniversary of the Closing
Date, 0.375%timesthe Maximum Facility Amount, and (c) during the period of time from and including the date that is the

3

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second anniversary of the Closing Date up to the Maturity Date, 0.25%timesthe Maximum Facility Amount.

"Assignee" has the meaning set forth inSection 14.1.

"Assignment and Acceptance" means an Assignment and Acceptance in the form of Exhibit A-1attached hereto.

"Authorized Person" means any officer or other employee of Administrative Borrower.

"Availability" means, as of any date of determination, determined at the close of business on such date, if such date is a Business
Day, and determined at the close of business on the immediately preceding Business Day, if such date of determination is not a Business Day, the amount that Borrowers are entitled to borrow as
Advances underSection 2.1(after giving effect to all then outstanding Obligations and all sublimits and Reserves applicable hereunder).

"Bankruptcy Code" means the United States Bankruptcy Code, as amended, and any successor statute.

"Base LIBOR Rate" means the rate per annum, determined by Agent (rounded upwards, if necessary, to the next 1/16%) at
which Dollar deposits are offered to Wells Fargo in the London interbank market on or about 11:00 a.m. (California time) 2 Business Days prior to the commencement of the applicable Interest
Period, for a term and in amounts comparable to the Interest Period and amount of the LIBOR Rate Advance requested by Borrowers in accordance with this Agreement.

"Base Rate" means, the rate of interest publicly announced by Wells Fargo as its "prime rate", with the understanding that the "prime
rate" is one of Wells Fargo's base rates (not necessarily the lowest of such rates) and serves as the basis upon which effective rates of interest are calculated for those loans making reference
thereto.

"Base Rate Advance" means each portion of an Advance bearing interest at a rate determined by reference to the Base Rate.

"Benefit Plan" means a "defined benefit plan" (as defined inSection 3(35)of
ERISA) for which any Borrower or any Subsidiary or ERISA Affiliate of such Borrower has been an "employer" (as defined in Section 3(5) of ERISA) within the past six years.

"Board of Directors" means the Board of Directors of GCI or any committee thereof duly authorized to act on behalf of the Board of
Directors.

"Books" means all of any Borrower's books and records (including all of its records indicating, summarizing, or evidencing its assets
(including the Collateral) or liabilities, all of its information relating to its business operations or financial condition, and all of its computer programs, disks, files, printouts, runs, or other
computer prepared information).

"Borrowers" means GCI, GCS and MFI, individually and collectively, jointly and severally, and each of them is referred to as a
"Borrower."

"Borrowing" means a borrowing hereunder consisting of Advances made on the same day by the Lenders, or Agent on behalf thereof, to
Administrative Borrower, or by Swing Lender in the case of a Swing Loan, or by Agent in the case of an Agent Advance.

"Borrowing Base" has the meaning set forth inSection 2.1.

"Borrowing Base Certificate" means a certificate in the form of Exhibit B-1.

"Business" means the business of marketing, renting, selling, leasing or otherwise providing musical instruments or related services,
as well as other products, parts, materials, supplies and services relating

4

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to the marketing, rental, sale, lease or other distribution of musical instruments or related services heretofore conducted by Sellers.

"Business Day" means any day that is not a Saturday, Sunday, or other day on which national banks are authorized or required to close.

"Capital Lease" means a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP.

"Capital Stock" of any Person means any and all shares, interests, participations, or other equivalents (however designated) of, or
rights, warrants, or options to purchase, corporate stock or any other equity interest (however designated) of or in such Person.

"Capitalized Lease Obligation" means any Indebtedness represented by obligations under Capital Lease.

"Cash Equivalents" means and refers to: (a) marketable direct obligations issued or unconditionally guaranteed by the United
States Government or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within one (1) year from the date of acquisition thereof;
(b) marketable direct obligations issued by any state of the United States of America or any political subdivision of any such state or any public agency or instrumentality thereof maturing
within one (1) year from the date of acquisition thereof and, at the time of acquisition, having the highest rating obtainable from either S&P or Moody's; (c) commercial paper maturing
no more than one (1) year from the date of acquisition thereof and, at the time of acquisition, having a rating of A-2 or P-2, or better, from S&P or Moody's;
(d) certificates of deposit or bankers' acceptances maturing within one (1) year from the date of acquisition thereof either (i) issued by any bank organized under the laws of the
United States of America or any state thereof or the District of Columbia which bank has a rating of A or A2, or better, from S&P or Moody's, or (ii) certificates of deposit less than or equal
to One Hundred Thousand Dollars ($100,000) in the aggregate issued by any other bank insured by the Federal Deposit Insurance Corporation.

"Change of Control" means and refers to the occurrence of one or more of the following events: (a) any Person, other than
Permitted Holders, or related group for purposes of Section 13(d) of the Exchange Act (a "Group"), together with any Affiliates thereof, shall become the beneficial owner (within the meaning of
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of GCI representing at least thirty percent (30%) of the Voting Stock of GCI, (b) GCI shall hold
directly less than 100% of the issued and outstanding Stock of GCS, (c) GCI shall hold directly less than 100% of the issued and outstanding Stock of MFI (d) GCI shall hold directly less
than 100% of the issued and outstanding Stock of each Guarantor other than MCI, or (e) a majority of the members of the Board of Directors shall not constitute Continuing Directors. For
purposes of this definition, "Board of Directors" does not include any committee thereof.

"Closing Date" means the date of the making of the initial Advance (or other extension of credit) hereunder.

"Code" means the California Uniform Commercial Code, as in effect from time to time.

"Collateral" means all of each Borrower's right, title, and interest in and to each of the following:



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The
foregoing notwithstanding, the "Collateral" shall not include any (i) General Intangibles that are now or hereafter held by a Borrower as licensee or otherwise, solely in the event and to
the extent that: (a) as the proximate result of the grant, assignment, transfer, or conveyance of a security interest, such Borrower's rights in or with respect to such item of General
Intangibles would be forfeited or would become void, voidable, terminable, or revocable, or if such Borrower would be deemed to have breached, violated, or defaulted the underlying license or other
agreement that governs such item of General Intangibles pursuant to the restrictions in the underlying license or other agreement that governs such item of General Intangibles; (b) any such
restriction shall be effective and enforceable under applicable law, including Section 9318(4) of the Code; and (c) any such forfeiture, voidness, voidability, terminability,
revocability, breach, violation, or default cannot be remedied by such Borrower using its best efforts (but without any obligation to make any material expenditures of money
or to commence legal proceedings);provided, however, that the grant, assignment, transfer, and conveyance of security interest hereunder shall extend
to, and the term "Collateral" shall include, (1) any and all proceeds of such item of General Intangibles to the extent that the assignment or encumbering of such proceeds is not so restricted,
and (2) upon any such licensor or other applicable party's consent with respect to any such otherwise excluded item of General Intangibles being obtained, thereafter such item of General
Intangibles as well as any proceeds thereof that might theretofore have been excluded from such grant, assignment, transfer, and conveyance of a security interest and the term "Collateral;"
(ii) Equipment, acquired with Permitted Purchase Money Indebtedness, that is subject to a Purchase Money Lien that is a Permitted Lien, and the holder of such Purchase Money Lien has prohibited
a Borrower from granting any other Lien in such Equipment as a condition to Borrower obtaining or maintaining the Permitted Money Indebtedness, and the Borrower has not otherwise obtained a waiver of
such condition; (iii) MCI's equity interest in Musician.com, to the extent that the grant, assignment, transfer, or conveyance of a security interest in such equity interests or foreclosure
thereof is prohibited by the Musician.com Agreements; and (iv) Equipment, acquired with Indebtedness permitted pursuant toSection 7.1(h),
that is subject of a Lien that is a Permitted Lien, and the holder of such Lien has prohibited the applicable Borrower from granting any other Lien in such Equipment as a condition to such Borrower
obtaining or maintaining such Indebtedness, and the Borrower has not otherwise obtained a waiver of such condition.

"Collateral Access Agreement" means a landlord waiver, bailee letter, or acknowledgement agreement of any lessor, warehouseman,
processor, consignee, or other Person in possession of, having a Lien upon, or having rights or interests in the Equipment or Inventory, in each case, in form and substance reasonably satisfactory to
Agent.

"Collections" meansallcash, checks, notes, instruments, and other items of payment
(including insurance proceeds, proceeds of cash sales, rental proceeds, and tax refunds) of Borrowers.

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"Commitment" means, with respect to each Lender, its Revolving Credit Commitment, and, with respect to all Lenders, their Revolving
Credit Commitments, in each case as such Dollar amounts are set forth beside such Lender's name under the applicable heading on Schedule C-1attached hereto or on the signature page of the
Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions ofSection 14.1.

"Compliance Certificate" means a certificate substantially in the form of Exhibit C-2delivered by the chief financial officer of Administrative Borrower to Agent.

"Concentration Account Banks" means, collectively, the GCI Concentration Account Bank and the MFI Concentration Account Bank.

"Concentration Accounts" means, collectively, the GCI Concentration Account and the MFI Concentration Account.

"Continuing Director" means and refers to (a) any member of the Board of Directors who was a director of GCI on the Closing
Date, and (b) any person who becomes a member of the Board of Directors after the Closing Date if such person was appointed or nominated for election to the Board of Directors by a majority of
the Continuing Directors (including any such Continuing Director previously appointed pursuant to this clause (b)), but excluding any such person originally proposed for election in opposition
to the Board of Directors in office at the Closing Date in an actual or threatened election contest relating to the election of the directors of GCI (as such terms are used in
Rule 14a-11 under the Exchange Act) and whose initial assumption of office resulted from such contest or the settlement thereof.

"Control Agreement" means a control agreement, in form and substance reasonably satisfactory to Agent, between the applicable Obligor,
Agent, and the applicable securities intermediary with respect to the applicable Securities Account and related Investment Property.

"Credit Card Agreements" means those certain agreements between Agent and the credit card clearinghouses and processors of a Borrower
acceptable to Agent in the exercise of its Permitted Discretion, pursuant to which such credit card clearinghouses or processors agree to transfer on a daily basis all credit card receipts of such
Borrower, or other amounts payable by such clearinghouses or processors, into the Concentration Account.

"Cycle Count Manual" means that certain procedures manual of the Borrowers titled "Guitar Center Count Guide", which sets forth the
policies and procedures utilized by Borrowers in the conduct of their inventory cycle counts.

"Daily Balance" means, with respect to each day during the term of this Agreement, the amount of an Obligation owed at the end of such
day.

"DDA" means any checking or other demand deposit account maintained by Borrowers.

"Default" means an event, condition, or default that, with the giving of notice, the passage of time, or both, would be an Event of
Default.

"Defaulting Lender" means any Lender that fails to make any Advance that it is required to make hereunder on any Funding Date and that
has not cured such failure by making such Advance within 1 Business Day after written demand upon it by Agent to do so.

"Defaulting Lenders Rate" means the Base Rate for the first 3 days from and after the date the relevant payment is due and,
thereafter, at that interest rate then applicable to the relevant Loan.

"Designated Account" means account number 4629 103789 of GCS maintained with the Designated Account Bank, or such other deposit account
of GCS (located within the United States) that has been designated as such, in writing, by Administrative Borrower to Agent.

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"Designated Account Bank" means Wells Fargo, whose office is located at Warner Ranch Commercial Banking Office, 6001 Topanga Canyon
Boulevard, Suite 205, Woodland Hills, California 91367, and whose ABA number is 121 000 248.

"Dilution" means, as of any date of determination, a percentage, based upon the experience of the Borrowers for such immediately prior
3 month period, that is the result of dividing the Dollar amount of (a) bad debt write-downs, discounts, advertising allowances, returns, credits, or other dilutive items with respect to
Eligible Accounts, by (b) Borrowers' Collections with respect to Eligible Accounts (excluding extraordinary items)plusthe Dollar amount of
clause (a).

"Dilution Reserve" means, as of any date of determination, an amount sufficient to reduce the advance rate against Eligible Accounts by
one percentage point for each percentage point by which Dilution is in excess of percentage amount as is determined by Agent from time to time in its Permitted Discretion.

"Documentation Agent" means FRF, solely in its capacity as documentation agent for the Lenders, and shall include any successor
documentation agent.

"Documentation Agent-Related Persons" means Documentation Agent and any successor syndication and arrangement agent together with their
respective Affiliates, and the officers, directors, employees, counsel, agents, and attorneys-in-fact of such Persons and their Affiliates.

"Dollars" or "$" means United States dollars.

"EBITDA" means, with respect to any period, the consolidated net income of GCI and its Subsidiaries for such period (a) plus all
interest expense, income tax expense, depreciation and amortization (including amortization of any goodwill or other intangibles) for such period, (b) minus gains attributable to any fixed
asset sales in such period, (c)plusthe transaction and conversion costs related to the acquisition of MFI,
(d)plusan amount equal to the cumulative effect of the accounting change for the pre-opening costs of GCI as required by GAAP,
(e)plusorminusany other non-cash charges or extraordinary expenses or income
which may have been subtracted or added in calculating consolidated net income for such period, and (f) plus, if the American Music Acquisition closes (i) for the period ending
June 30, 2001, $3,000,000, (ii) for the period ending September 30, 2001, $2,000,000, and (iii) for the period ending December 31, 2002, $1,000,000.

"Eligible Accounts" means, from and after the Receivables Activation Date, those rights to payment against credit card clearinghouses
or, processors subject to Credit Card Agreements acceptable to Agent, in the exercise of its Permitted Discretion, created by a Borrower in the ordinary course of its business, that arise out of such
Borrower's sale of goods or rendition of services, that comply with each and all of the representations and warranties respecting Eligible Accounts made by Borrowers in the Loan Documents, and that
are not excluded as ineligible by virtue of the one or more of the criteria for Eligible Accounts established by Agent from time to time in its Permitted Discretion as a result of its field audit or
other due diligence efforts. Any goods giving rise to Eligible Accounts have been delivered to the customer, or to the customer's agent for immediate shipment to and unconditional acceptance by the
customer. Eligible Account shall not include the following unless an exception to any of the following has been consented to in writing by Agent:



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"Eligible Inventory" means Inventory consisting of first quality new, and merchantable used and vintage, finished goods held for sale
in the ordinary course of a Borrower's business, that complies with each and all of the representations and warranties respecting Eligible Inventory made by Borrowers in the Loan Documents, and that
are not excluded as ineligible by virtue of the one or more of the criteria set forth below. In determining the amount to be so included, Inventory shall be valued at the lower of cost or market on a
basis consistent with Borrowers' historical accounting practices. An item of Inventory shall not be included in Eligible Inventory if:



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For
clarity, goods on consignment under rent-to-purchase programs or satellite arrangements with third parties for rent-to-purchase programs for musical
instruments shall not be classified as "Eligible Inventory."

"Eligible Transferee" means (a) any one or more of: Bank of America, N.A., FleetBoston, N.A., Union Bank of California, The CIT
Group, La Salle Bank, N.A., Sanwa Bank of California, and GECC, or any Affiliate thereof, (b) any Affiliate (other than individuals) of a pre-existing Lender, (c) so long as
no Event of Default has occurred and is continuing, any other Person approved by Agent and Administrative Borrower (such approval by Administrative Borrower not to be unreasonably withheld,
conditioned or delayed), and (d) during the continuation of an Event of Default, any other Person approved by Agent.

"Equipment" means all of Borrowers' present and hereafter acquired machinery, machine tools, motors, equipment, furniture, furnishings,
fixtures, vehicles (including motor vehicles and trailers), tools, parts, goods (other than consumer goods, farm products, or Inventory), wherever located, including all attachments, accessories,
accessions, replacements, substitutions, additions, and improvements to any of the foregoing.

"ERISA" means the Employee Retirement Income Security Act of 1974, as amended, and any successor statute thereto.

"ERISA Affiliate" means (a) any corporation subject to ERISA whose employees are treated as employed by the same employer as the
employees of a Borrower under IRC Section 414(b), (b) any trade or business subject to ERISA whose employees are treated as employed by the same employer as the employees of a Borrower
under IRC Section 414(c), (c) solely for purposes of Section 302 of ERISA and Section 412 of the IRC, any organization subject to ERISA that is a member of an affiliated
service group of which a Borrower is a member under IRC Section 414(m), or (d) solely for purposes of Section 302 of ERISA and Section 412 of the IRC, any party subject to
ERISA that is a party to an arrangement with a Borrower and whose employees are aggregated with the employees of a Borrower under IRC Section 414(o).

"ERISA Event" with respect to any Person means (a) the occurrence of a reportable event, within the meaning of
Section 4043 of ERISA, with respect to any Plan of such Person or any of its ERISA Affiliates unless the 30-day notice requirement with respect to such event has been waived by the
PBGC; (b) the provision by the administrator of any Plan of such Person or any of its ERISA Affiliates of a notice of intent to terminate such Plan, pursuant to Section 4041(a)(2) of
ERISA (including any such notice with respect to a plan amendment referred to in Section 4041(e) of ERISA); (c) the cessation of operations at a facility of such Person or any of its
ERISA Affiliates in the circumstances described in Section 4062(e) of ERISA; (d) the withdrawal by such Person or any of its ERISA Affiliates from a Multiple Employer Plan during a plan
year for which it was a substantial employer, as defined in Section 4001(a)(2) of ERISA; (e) the failure by such Person or any of its ERISA Affiliates to make a payment to a Plan which
failure would result in the imposition of a Lien under Section 302(f)(1) of ERISA; (f) the adoption of an amendment to a Plan of such Person or any of its ERISA Affiliates requiring the
provision of security to such Plan, pursuant to Section 307 of ERISA; or

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(g) the institution by the PBGC of proceedings to terminate any Plan of such Person or any of its ERISA Affiliates, pursuant to Section 4042 of ERISA, or the occurrence of any event or
condition described in Section 4042 of ERISA that could constitute grounds for the termination of, or the appointment of a trustee to administer, such Plan.

"Event of Default" has the meaning set forth inSection 8.

"Excess Availability" means the amount, as of the date any determination thereof is to be made, equal to Availability plusBorrowers' cash and Borrowers' Cash
Equivalents,minusthe aggregate amount, if any, of all trade
payables of Borrowers aged in excess of Borrowers' historical levels with respect thereto and all book overdrafts in excess of Borrowers' historical practices with respect thereto, in each case as
determined by Agent in its Permitted Discretion.

"Exchange Act" means the Securities Exchange Act of 1934, as amended, and any successor statute.

"Facility Amount" means, as of the date of any determination thereof, the maximum amount of Advances that then may be outstanding
subject to the limitations, deductions, reserves and other
conditions set forth inSection 2.1, which amount (i) shall be subject to decrease in accordance with Section 2.2, (ii) shall at no
time be less than $75,000,000, and (iii) shall at no time exceed the Maximum Facility Amount.

"Family Member" means, with respect to any individual, any other individual having a relationship by blood (to the second degree of
consanguinity), marriage, or adoption to such individual.

"Family Trusts" means, with respect to any individual, trusts or other estate planning vehicles established for the benefit of Family
Members of such individual and in respect of which such individual serves as trustee or in a similar capacity.

"Fee Letter" shall mean that certain letter agreement, dated as of the Prior Closing Date, between the Borrowers and Agent, for the
sole and separate account of Agent, setting forth certain fees payable to Agent, as amended as of the date hereof by the Omnibus Amendment.

"Fee Split Letter" shall mean that certain letter agreement, dated as of the Prior Closing Date, between Foothill, in its individual
capacity, and FRF, in its individual capacity, setting forth the allocation to FRF of certain fees payable by Borrowers to Agent pursuant to the Fee Letter, as amended as of the date hereof by the
Omnibus Amendment.

"FEIN" means Federal Employer Identification Number.

"Foothill" means Foothill Capital Corporation, a California corporation.

"FRF" means Fleet Retail Finance, Inc., a Delaware corporation, predecessor by name change to BankBoston Retail
Finance, Inc..

"Funded Debt" means and refers to all consolidated Indebtedness of GCI or its Subsidiaries that matures one (1) year or more
from the date of issuance, or that is renewable or extendable, at the sole option of GCI or its Subsidiaries, as applicable, by its terms to a date that is one (1) year or more from the date of
issuance thereof, or that, under a revolving credit or similar agreement, obligates the lender to extend credit over a period of one (1) year or more from the date of issuance other than
Indebtedness permitted underSection 7.1(h).

"Funding Date" means the date on which a Borrowing occurs.

"Funding Losses" has the meaning set forth inSection 2.13(b)(ii).

"GAAP" means generally accepted accounting principles as in effect from time to time in the United States, consistently applied.

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"GCI" has the meaning set forth in the preamble to this Agreement.

"GCI Concentration Account" has the meaning set forth inSection 2.7(a).

"GCI Concentration Account Bank" has the meaning set forth inSection 2.7(a).

"GCS" has the meaning set forth in the preamble to this Agreement.

"GCS Collection Account" has the meaning set forth inSection 2.7(b).

"GCS Collection Account Bank" has the meaning set forth inSection 2.7(b).

"General Intangibles" means all of Borrowers' present and future general intangibles and other personal property (including contract
rights, rights to payment against credit card clearinghouses and processors, rights arising under common law, statutes, or regulations, choses or things in action, goodwill, patents, trade names,
trademarks, servicemarks, copyrights, blueprints, drawings, purchase orders, customer lists, monies due or recoverable from pension funds, route lists, rights to payment and other rights under any
royalty or licensing agreements, infringement claims, computer programs, information contained on computer disks or tapes, literature, reports, catalogs, money, deposit accounts, insurance premium
rebates, tax refunds, and tax refund claims), other than goods, Accounts, Investment Property, and Negotiable Collateral.

"Governing Documents" means, with respect to any Person, the certificate or articles of incorporation, by-laws, or other
organizational documents of such Person.

"Governmental Authority" shall mean any federal, state, local, or other governmental or administrative body, instrumentality,
department, or agency or any court, tribunal, administrative hearing body, arbitration panel, commission, or other similar governmental or administrative dispute-resolving panel or body.

"Guarantor" means, individually and collectively, any one or more of MCI, for so long as the Borrowers hold 50% or more of the issued
and outstanding Stock of MCI, and each other Subsidiary of the Borrowers, other than MFI and GCS.

"Guarantor Security Agreement" means that certain Security Agreement, dated as of the Prior Closing Date, made by MCI in favor of
Agent, for the benefit of the Lender Group, as amended as of the date hereof by the Omnibus Amendment.

"Guaranty" means that certain General Continuing Guaranty, dated as of the Prior Closing Date, made by MCI in favor of Agent, for the
benefit of the Lender Group, as amended as of the date hereof by the Omnibus Amendment.

"Hazardous Materials" means (a) substances that are defined or listed in, or otherwise classified pursuant to, any applicable
laws or regulations as "hazardous substances," "hazardous materials," "hazardous wastes," "toxic substances," or any other formulation intended to define, list, or classify substances by reason of
deleterious properties such as ignitability, corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP toxicity", (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other wastes associated with the exploration, development, or production of crude oil, natural gas, or geothermal resources,
(c) any flammable substances or explosives or any radioactive materials, and (d) asbestos in any form or electrical equipment that contains any oil or dielectric fluid containing levels
of polychlorinated biphenyls in excess of 50 parts per million.

"Indebtedness" means, with respect to any Person, without duplication, (a) all obligations for borrowed money, (b) all
obligations evidenced by bonds, debentures, notes, or other similar instruments and all reimbursement or other obligations in respect of letters of credit, bankers acceptances, interest rate swaps, or
other financial products, (c) all obligations under Capital Leases, (d) all obligations or

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liabilities of others secured by a Lien on any property or asset of such Person, irrespective of whether such obligation or liability is assumed, and (e) any obligation of such Person
guaranteeing or intended to guarantee (whether guaranteed, endorsed, co-made, discounted, or sold with recourse to such Person) any obligation of any other Person.

"Indemnified Liabilities" has the meaning set forth inSection 11.3.

"Indemnified Person" has the meaning set forth inSection 11.3.

"Insolvency Proceeding" means any proceeding commenced by or against any Person under any provision of the Bankruptcy Code or under any
other bankruptcy or insolvency law, assignments for the benefit of creditors, formal or informal moratoria, compositions, extensions generally with a significant number of such Person's creditors, or
proceedings seeking reorganization, arrangement, or other similar relief.

"Intangible Assets" means, with respect to any Person, that portion of the book value of all of such Person's assets that would be
treated as intangibles under GAAP.

"Interest Period" means, with respect to each LIBOR Rate Advance, a period commencing on the date of the making of such LIBOR Rate
Advance and ending 1, 2, 3 or 6 months thereafter;provided,however, that (a) if any
Interest Period would end on a day that is not a Business Day, such Interest Period shall be extended (subject to clauses (c)-(e) below) to the next succeeding Business Day, (b) interest shall
accrue from and including the first day of each Interest Period to, but excluding, the day on which any Interest Period expires, (c) any Interest Period that would end on a day that is not a
Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business
Day, (d) with respect to an Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at
the end of such Interest Period), the Interest Period shall end on the last Business Day of the calendar month that is 1, 2, 3, or 6 months after the date on which the Interest Period began, as
applicable, and (e) Borrowers may not elect an Interest Period which will end after the Maturity Date.

"Inventory" means all present and future inventory in which any Borrower has any interest, including goods held for sale or lease or to
be furnished under a contract of service and all of Borrowers' present and future raw materials, work in process, finished goods, and packing and shipping materials, wherever located.

"Inventory Reappraisal" means an appraisal of the liquidation value of Borrowers' Inventory (the methodology and implementation of such
appraisal to be satisfactory to Agent in its Permitted Discretion), conducted by an appraisal or auctioneer firm acceptable to Agent.

"Inventory Security Agreement" means that certain Security Agreement, dated as of the Prior Closing Date, between the Borrowers, as
debtors, and Agent, as secured party, as amended by the Omnibus Amendment.

"Investment" means, with respect to any Person, any investment by such Person in any other Person (including Affiliates) in the form of
loans, guarantees, advances, or capital contributions (excluding (a) commission, travel, and similar advances to officers and employees of such Person made in the ordinary course of business,
and (b) bona fide accounts receivable arising from the sale of goods or services in the ordinary course of business consistent with past practice), purchases or other acquisitions for
consideration of Indebtedness or Stock, and any other items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP.

"Investment Property" means "investment property" as that term is defined in of the Code, whether now owned or hereafter acquired.

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"IRC" means the Internal Revenue Code of 1986, as amended, and any successor statute.

"L/C" has the meaning set forth inSection 2.12(a).

"L/C Undertaking" has the meaning set forth inSection 2.12(a).

"Lender" and "Lenders" have the respective meanings set forth in the preamble to this
Agreement, and shall include any other Person made a party to this Agreement in accordance with the provisions ofSection 14.1hereof.

"Lender Group" means, individually and collectively, each of the Lenders, and Agent.

"Lender Group Expenses" means all (a) costs or expenses (including taxes, and insurance premiums) required to be paid by
Borrowers under any of the Loan Documents that are paid or incurred by the Lender Group, (b) reasonable fees or charges paid or incurred by the Lender Group in connection with the Lender
Group's transactions with Borrowers, including, fees or charges for photocopying, notarization, couriers and messengers, telecommunication, public record searches (including tax lien, litigation, and
UCC searches and including searches with the patent and trademark office, the copyright office, or the department of motor vehicles), filing, recording, publication, appraisal (including Collateral
appraisals in accordance with the provisions of this Agreement), and real estate title policies and endorsements, (c) costs and expenses incurred by Agent in the disbursement of funds to
Borrowers (by wire transfer or otherwise), (d) charges paid or incurred by Agent resulting from the dishonor of checks, (e) reasonable costs and expenses paid or incurred by the Lender
Group to correct any default or enforce any provision of the Loan Documents, or in gaining possession of, maintaining, handling, preserving, storing, shipping, selling, preparing for sale, or
advertising to sell the Collateral, or any portion thereof, irrespective of whether a sale is consummated, (f) reasonable costs and expenses paid or incurred by the Lender Group in examining
the Books, (g) reasonable costs and expenses of third party claims or any other suit paid or incurred by the Lender Group in enforcing or defending the Loan Documents or in connection with the
transactions contemplated by the Loan Documents or the Lender Group's relationship with Borrowers or any guarantor under the Loan Documents, (h) Agent's reasonable fees and expenses (including
reasonable attorneys fees) incurred in advising, structuring, drafting, reviewing, administering, amending, terminating, enforcing (including reasonable attorneys fees and expenses incurred in
connection with a "workout," a "restructuring," or an Insolvency Proceeding concerning any Borrower or any guarantor of the Obligations), defending, or concerning the Loan Documents, irrespective of
whether suit is brought, and (i) each of the Lenders' reasonable fees and expenses (including reasonable attorneys fees) incurred in terminating, enforcing (including reasonable attorneys fees
and expenses incurred in connection with a "workout," a "restructuring," or an
Insolvency Proceeding concerning any Borrower), or defending the Loan Documents, irrespective of whether suit is brought.

"Lender-Related Person" means, with respect to any Lender, such Lender, together with such Lender's Affiliates, and the officers,
directors, employees, counsel, and agents of such Lender.

"Letter of Credit" means an L/C or an L/C Undertaking, as the context requires.

"Letter of Credit Usage" means, as of any date of determination, the aggregate undrawn amount of all outstanding Letters of Credit.

"Leverage Ratio" means and refers to, for the period to be determined, the ratio of (a) the aggregate amount of Funded Debt as
of the last day of such period, to (b) consolidated EBITDA for such period.

"LIBOR Deadline" has the meaning set forth inSection 2.13(b)(ii).

"LIBOR Notice" means a written notice in the form ofExhibit L-1attached hereto.

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"LIBOR Rate" means, for each Interest Period for each LIBOR Rate Advance, the rate per annum determined by Agent (rounded upwards, if
necessary, to the next 1/16%) determined by dividing (a) the Base LIBOR Rate for such Interest Period, by (b) 100% minus the Reserve Percentage. The LIBOR Rate shall be
adjusted on and as of the effective day of any change in the Reserve Percentage.

"LIBOR Rate Advance" means each portion of an Advance bearing interest at a rate determined by reference to the LIBOR Rate.

"Lien" means any interest in property securing an obligation owed to, or a claim by, any Person other than the owner of the property,
whether such interest shall be based on the common law, statute, or contract, whether such interest shall be recorded or perfected, and whether such interest shall be contingent upon the occurrence of
some future event or events or the existence of some future circumstance or circumstances, including the lien or security interest arising from a mortgage, deed of trust, encumbrance, pledge,
hypothecation, assignment, deposit arrangement, security agreement, conditional sale or trust receipt, or from a lease, consignment, or bailment for security purposes and
also including reservations, exceptions, encroachments, easements, rights-of-way, covenants, conditions, restrictions, leases, and other title exceptions and encumbrances
affecting Real Property.

"Loan Account" has the meaning set forth inSection 2.10.

"Loan Documents" means this Agreement, the Disbursement Letter, the Letters of Credit, the Suretyship Agreement, the Guaranty, the
Guarantor Security Agreement, the tri-party blocked account agreements governing the GCS Collection Accounts, the GCI Concentration Account and the MFI Concentration Account, the
Collateral Access Agreements, any Control Agreement, the Mortgages, the Stock Pledge Agreement, the Trademark Security Agreement, the Inventory Security Agreement, the Fee Letter, the Omnibus
Amendment, and any other agreement entered into, now or in the future, by any Obligor and the Lender Group in connection with this Agreement.

"Material Adverse Change" means (a) a material adverse change in the business, operations, results of operations, assets,
liabilities or condition (financial or otherwise) of GCI and its Subsidiaries taken as a whole, (b) the material impairment of any Borrower's ability to perform its obligations under the Loan
Documents to which it is a party or of the Lender Group's ability to enforce the Obligations or realize upon the Collateral, or (c) a material impairment of the priority of the Agent's Liens
with respect to the Collateral as a result of an action or failure to act on the part of any Borrower.

"Maturity Date" has the meaning set forth inSection 3.4.

"Maximum Facility Amount" means $150,000,000.

"MCI" means Musician's Choice, Inc., a Delaware corporation.

"MFI" has the meaning set forth in the preamble to this Agreement.

"MFI Concentration Account" has the meaning set forth inSection 2.7(c).

"MFI Concentration Account Bank" has the meaning set forth inSection 2.7(c).

"Mortgage" means, individually and collectively, one or more mortgages, deeds of trust, or deeds to secure debt, executed and delivered
by an Obligor in favor of Agent, for the benefit of the Lender
Group, the form and substance of which shall be satisfactory to Agent, in Agent's Permitted Discretion, that encumber Real Property Collateral and the related improvements thereto.

"Multiemployer Plan" of any Person means a multiemployer plan, as defined in Section 4001(a)(3) of ERISA, to which such Person
or any of its ERISA Affiliates is making or accruing an obligation to make contributions, or has within any of the preceding five plan years made or accrued an obligation to make contributions.

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"Multiple Employer Plan" of any Person means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that
(a) is maintained for employees of such Person or any of its ERISA Affiliates and at least one Person other than such Person and its ERISA Affiliates or (b) was so maintained and in
respect of which such Person or any of its then current ERISA Affiliates could have liability under Section 4064 or 4069 of ERISA in the event such plan has been or were to be terminated.

"Musician.com Agreements" means (a) that certain Stockholders Agreement, dated as of August 11, 2000, by and among
Musician.com Internet Network, Musician's Choice, Inc., MusicianFirst, LLC and the other persons listed on the signatory pages thereto, and (b) the other agreements and documents related
to MCI's investment in Musician.com.

"Negotiable Collateral" means all of Borrowers' now owned and hereafter acquired letters of credit, notes, drafts, instruments,
security certificates, documents (as defined in the Code), and chattel paper.

"Net Cash Proceeds" means, (a) the gross cash proceeds received by any Borrower in respect of a Permitted Disposition of Real
Property Collateral, less (b) the sum of (i) the amount, if any, of all taxes (other than income taxes) payable by such Borrower in connection with such Permitted Disposition and such
Borrower's good faith best estimate of the amount of all income taxes payable in connection with such Permitted Disposition, (ii) (A) the amount of any reasonable reserve established in
accordance with GAAP against any liabilities associated with the Real Property Collateral sold and leased back and retained by any Borrower provided that the amount of any subsequent reduction of such
reserve (other than in connection with a payment in respect of any such liability) shall be deemed to be Net Cash Proceeds of such Permitted Disposition occurring on the date of such reduction, and
(B) the amount applied to repay any Indebtedness to the extent such Indebtedness is required by its terms to be repaid as a result of such Permitted Disposition, and (iii) reasonable and
customary fees, commissions, and expenses and other costs paid by such Borrower in connection with such Permitted Disposition (other than those payable to any Affiliate thereof), in each case only to
the extent not already deducted in arriving at the amount referred to inclause (a).

"Net Liquidation Percentage" means the percentage of book value estimated to be recoverable in an orderly liquidation of Borrowers'
Inventory, such percentage to be as determined by a qualified appraisal company selected by Agent.

"Obligations" means all loans, Advances, debts, principal, interest (including any interest that, but for the provisions of the
Bankruptcy Code, would have accrued), contingent reimbursement obligations with respect to Letters of Credit, premiums, liabilities (including all amounts charged to Borrowers' Loan Account pursuant
hereto), obligations, fees, charges, costs, or Lender Group Expenses (including any fees or expenses that, but for the provisions of the Bankruptcy Code, would have accrued), lease payments,
guaranties, covenants, and duties owing by any Borrower to the Lender Group of any kind and description pursuant to or evidenced by the Loan Documents (and irrespective of whether for the payment of
money), whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, and including all interest not paid when due and all Lender Group Expenses that a
Borrower is required to pay or reimburse by the Loan Documents, by law, or otherwise.

"Obligors" means, collectively, jointly and severally, Borrowers and the Guarantor, and
"Obligor" means any one of them.

"Offsite Storage Location" is defined in clause (b) of the definition of "Eligible Inventory."

"Omnibus Amendment" means that certain Omnibus Amendment, dated as of the date hereof, among the Obligors and Agent effecting certain
amendments to certain of the Loan Documents to reflect the capitalization of GCS and GCS becoming a Borrower hereunder.

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"Originating Lender" has the meaning set forth inSection 14.1(e).

"Overadvance" has the meaning set forth inSection 2.5.

"Participant" has the meaning set forth inSection 14.1(e).

"Permitted Acquisition" means (i) the American Music Acquisition; and (ii) an Acquisition of all or substantially all of
the assets or Stock of another Person made by a Borrower so long as (a) no Default or Event of Default shall have occurred and be continuing or would result from the consummation of the
proposed Acquisition, (b) the assets being acquired, or the Person whose Stock is being acquired,
are useful in or engaged in, as applicable, the Business, (c) the aggregate consideration (but excluding consideration paid or payable in the common Stock of GCI or other Stock of GCI that does
not require any cash payment until after the second anniversary of the Maturity Date) paid or payable for Permitted Acquisitions during any fiscal year, after giving effect to the proposed
Acquisition, shall not exceed $7,500,000, (d) the aggregate consideration (but excluding consideration paid or payable in the common Stock of GCI or other Stock of GCI that does not require any
cash payment until after the second anniversary of the Maturity Date) paid or payable for all Permitted Acquisitions, after giving effect to the proposed Acquisition, shall not exceed $20,000,000, and
(e) such Borrower, as applicable, shall have complied withSection 6.22. Without limiting whether or not an Acquisition shall constitute a
Permitted Acquisition, in the event that Borrowers request of Agent that the Inventory and Accounts being acquired through a Permitted Acquisition be included in the Borrowing Base as Eligible
Accounts or Eligible Inventory, as the case may be, Agent shall have completed its audit, appraisal, and standard due diligence review with respect to the assets or Person that is to be the subject of
the proposed Permitted Acquisition and the results thereof shall be satisfactory to Agent in the exercise of its Permitted Discretion before such Inventory or Accounts shall be included in the
Borrowing Base.

"Permitted Discretion", with respect to any determination by a member of the Lender Group, means a determination made in good faith and
in the exercise of reasonable (from the perspective of a secured asset-based lender) business judgment.

"Permitted Dispositions" means (a) sales, exchanges, trade-ins, or other dispositions of Equipment that is
significantly worn, damaged, or obsolete in the ordinary course of a Borrower's business, (b) sales of Inventory to buyers in the ordinary course of a Borrower's business, (c) the use or
transfer of money, or Cash Equivalents by an Obligor to a Borrower or otherwise in a manner that is not prohibited by the terms of this Agreement or the other Loan Documents, (d) the licensing
by an Obligor, on a non-exclusive basis, of patents, trademarks, copyrights, and other intellectual property rights in the ordinary course of such Obligor's business, (e) provided
that no Event of Default has occurred and is continuing or would result therefrom, including an Event of Default resulting from a Change of Control, the sale, transfer, or other disposition by GCI of
the Stock or assets of MCI, (f) provided that no Event of Default has occurred and is continuing or would result therefrom, the sale, license, lease, exchange, transfer, or other dispositions
of any parcel or parcels of Real Property owned in fee by GCI (including goods that are fixtures and Equipment associated with the property in an amount not to exceed $50,000) as of the Closing Date
and not comprising Real Property Collateral, (g) provided that no Event of Default has occurred and is continuing or would result therefrom, the sale and lease-back of the retail
store #110 owned in fee by GCI and located in Hollywood, California, as more specifically described onSchedule R-1, providedthat GCI receives a
minimum of $3,000,000 in Net Cash Proceeds from such sale and lease-back, (h) provided that no Event of
Default has occurred and is continuing or would result therefrom, the sale or sale and lease-back of distribution center owned in fee by MFI and located in Medford, Oregon, as more
specifically described onSchedule R-1,providedthat MFI receives a minimum of
$1,700,000 in Net Cash Proceeds from such sale and lease-back, and (i) provided that no Event of Default has occurred and is continuing or would result therefrom, including an Event
of Default resulting from a Change of Control, the sale, license, lease,

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exchange, transfer, or other dispositions of any other tangible personal property of the Obligors that do not exceed, on a book value basis, $500,000 in the aggregate is any fiscal year.

"Permitted Holders" means the individuals referenced in the Permitted Holders Side Letter and their Family Members, and their Family
Trusts.

"Permitted Holders Side Letter" means that certain side letter, dated as of the Prior Closing Date, between Borrowers and Agent.

"Permitted Investments" means (a) Investments in Cash Equivalents, (b) loans and advances to officers and employees of
the Obligors in the ordinary course of business, other than as provided for in clause (c), in an aggregate amount at any one time outstanding not to exceed $500,000, (c) loans and
advances to officers and employees of the Obligors in the ordinary course of business to facilitate the purchase by such officers or employees of the Stock of GCI and the repayment of any such loans
or advances is secured by a first priority Lien on the Stock purchased thereby, in an aggregate amount outstanding at any one time not to exceed $1,000,000, (d) Investments in negotiable
instruments for collection, (e) advances made in connection with purchases of goods or services in the ordinary course of business, (f) Permitted Acquisitions, (g) Investments by
the Borrowers in MCI not to exceed $10,000,000 outstanding at any one time, (h) Investments by a Borrower in any other Borrower, and (i) other Investments in an aggregate amount not to
exceed $250,000 outstanding at any one time.

"Permitted Liens" means (a) Liens held by Agent for the benefit of the Lender Group, (b) Liens for unpaid taxes that
either (i) are not yet overdue or (ii) do not constitute an Event of Default hereunder and are the subject of Permitted Protests, (c) Liens set forth on Schedule P-1, (d) the
interests of lessors under operating leases, (e) Purchase Money Liens, but only if such Lien
shall at all times be confined solely to the fixed assets the purchase price of which was financed through the incurrence of the Purchase Money Indebtedness secured by such Lien, or the interests of
lessors under Capital Leases to the extent that such interests secure Permitted Purchase Money Indebtedness and so long as the Lien attaches only to the asset purchased or acquired and the proceeds
thereof, (f) Liens arising by operation of law in favor of warehousemen, landlords, carriers, mechanics, materialmen, laborers, or suppliers, incurred in the ordinary course of business of
Obligors and not in connection with the borrowing of money, and which Liens either (i) are for sums not yet overdue, or (ii) are the subject of Permitted Protests, (g) Liens
arising from deposits made in connection with obtaining worker's compensation or other unemployment insurance, (h) Liens or deposits to secure performance of bids, tenders, or leases incurred
in the ordinary course of business of Obligors and not in connection with the borrowing of money, (i) Liens arising by reason of security for surety or appeal bonds in the ordinary course of
business of Obligors, (j) Liens resulting from any judgment or award that is not an Event of Default hereunder, (k) Liens with respect to Real Property Collateral that exist as of the
Closing Date, (l) with respect to any Real Property, easements, rights of way, or zoning that do not materially interfere with or impair the use or operation of the Real Property by Borrowers,
(m) Liens arising in connection with any Acquired Indebtedness, (n) Liens to secure Indebtedness permitted pursuant to Section 7.1(h), and (o) Liens arising in connection with MCI's
ownership of Musician.com.

"Permitted Protest" means the right of Borrowers to protest any Lien (other than any such Lien that secures the Obligations), tax
(other than payroll taxes or taxes that are the subject of a United States federal tax lien), or rental payment, provided that (a) a reserve with respect to such obligation is established on
the Books in such amount as is required under GAAP, (b) any such protest is instituted and diligently prosecuted by Borrowers in good faith, and (c) Agent, in the exercise of its
Permitted
Discretion, is satisfied that, while any such protest is pending, there will be no impairment of the enforceability, validity, or priority of any of the Liens of Agent on behalf of the Lender Group in
and to the Collateral.

"Permitted Purchase Money Indebtedness" means, as of any date of determination, (i) Purchase Money Indebtedness incurred after
the Closing Date in an aggregate amount outstanding at any one

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time not to exceed $10,000,000, or (ii) Purchase Money Indebtedness incurred on or before the Closing Date and as set forth on Schedule 7.1.

"Person" means natural persons, corporations, limited liability companies, limited partnerships, general partnerships, limited
liability partnerships, joint ventures, trusts, land trusts, business trusts, or other organizations, irrespective of whether they are legal entities, and governments and agencies and political
subdivisions thereof.

"Personal Property Collateral" means all Collateral other than such of the Real Property Collateral.

"Physical Count" means a physical count of Borrowers' Inventory (the methodology and implementation of such physical count to be
satisfactory to Agent in its Permitted Discretion), conducted by an appraisal, accounting, auction, or other professional firm acceptable to Agent.

"Plan" means a Single Employer Plan or a Multiple Employer Plan.

"Prior Closing Date" means December 17, 1999.

"Prior Loan Agreement" has the meaning set forth in the recitals to this Agreement.

"Projections" means GCI's forecasted consolidated (a) balance sheets, (b) profit and loss statements, (c) cash
flow statements, and (d) capitalization statements, all prepared on a consistent basis with GCI's historical financial statements, together with appropriate supporting details and a statement
of underlying assumptions.

"Pro Rata Share" means the percentage obtained by dividing (i) such Lender's Revolving Credit Commitment, by (ii) the
aggregate amount of all Lenders' Revolving Credit Commitments.

"Public Offering" means an underwritten public offering of the common Stock of any Person.

"Purchase Money Indebtedness" means Indebtedness (other than the Obligations, but including Capitalized Lease Obligations), incurred at
the time of, or within 20 days after, the acquisition of any fixed assets for the purpose of financing all or any part of the acquisition cost thereof.

"Purchase Money Lien" means a Lien upon fixed assets that secures Purchase Money Indebtedness.

"Real Property" means any estates or interests in real property now owned or hereafter acquired by an Obligor, and the improvements
related thereto.

"Real Property Collateral" means (i) the retail store #110 owned in fee by GCI and located in Hollywood, California, and
(ii) the distribution center owned in fee by MFI and located in Medford, Oregon, in each case more specifically described on Schedule R-1, and any Real Property hereafter acquired in fee by an
Obligor.

"Receivables Due Diligence Date" means that date as of which Agent has completed, to its satisfaction in its Permitted Discretion, its
field audit of Borrowers' Accounts, including historic dilution, cyclical patterns, and such other matters affecting credit quality and collectability as Agent shall determine.

"Receivables Activation Date" means that date, on or after the Receivables Due Diligence Date, designated by written notice from the
Administrative Borrower to the Agent as the date from and after which the Borrowers elect to include Eligible Accounts in the Borrowing Base, which written notice is to be received by Agent no less
than 15 days prior to the designated Receivables Activation Date.

"Required Availability" means, (i) as of any date of determination from the Closing Date through July 31, 2001, Excess
Availability in an amount no less than the lesser of (A) 15% of the Facility Amount in effect on such date of determination, and (B) $15,000,000, (ii) as of any date of
determination from August 1, 2001 through August 31, 2001, Excess Availability in an amount no less than the lesser of (A) 15% of the Facility Amount in effect on such date of
determination, and

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(B) $16,000,000, (iii) as of any date of determination from September 1, 2001 through September 30, 2001, Excess Availability in an amount no less than the lesser of
(A) 15% of the Facility Amount in effect on such date of determination, and (B) $17,000,000, (iv) as of any date of determination from October 1, 2001 through
October 31, 2001, Excess Availability in an amount no less than the lesser of (A) 15% of the Facility Amount in effect on such date of determination, and (B) $18,000,000,
(v) as of any date of determination from November 1, 2001 through November 30, 2001, Excess Availability in an amount no less than the lesser of (A) 15% of the Facility
Amount in effect on such date of determination, and (B) $19,000,000, and (vi) as of any date of determination on and after December 1, 2001, Excess Availability in an amount no
less than the lesser of (A) 15% of the Facility Amount in effect on such date of determination, and (B) $20,000,000.

"Required Lenders" means, at any time, Lenders whose Pro Rata Shares aggregate 51% of the Commitments, or if the Commitments have been
terminated irrevocably, 51% of the Obligations then outstanding.

"Reserve Percentage" means, on any day, that percentage prescribed by the Board of Governors of the Federal Reserve System (or any
successor Governmental Authority) for determining the reserve requirements (including any basic, supplemental, marginal, or emergency reserves) that is in effect on such date with respect to deposits
of Dollars in a non-United States or an international banking office of a bank used to fund a LIBOR Rate Advance.

"Retail Store" is defined in clause (b) of the definition of "Eligible Inventory."

"Revolving Credit Commitment" means, for each Lender, the Dollar amount of the obligation of such Lender to make Advances (in an
aggregate amount at any one time outstanding), as such amount is set forth opposite the name of such Lender under the caption Revolving Credit Commitment on Schedule C-1(as such amount shall be
increased or decreased pursuant to Section 2.2).

"Revolver Usage" means, as of any date of determination, the sum of (a) the aggregate amount of Advances outstanding, plus(b) the amount of the Letter of
Credit Usage.

"Risk Participation Liability" means, as to each Letter of Credit, all reimbursement obligations of Borrowers to the issuer of an L/C
or to the issuer of a letter of credit with respect to the transaction for which an L/C Undertaking was executed and delivered (to the extent such reimbursement obligations are subject to such L/C
Undertaking), consisting of (a) the amount available to be drawn or which may become available to be drawn under the Letter of Credit, (b) all amounts which that been paid and made
available by the issuing bank to the extent not reimbursed by Borrowers, whether by the making of an Advance or otherwise, and (c) all accrued and unpaid interest, fees, and expenses payable
with respect thereto.

"SEC" means the United States Securities and Exchange Commission and any successor thereto.

"Securities Account" means a "securities account" as that term is defined in Section 8-501 of the Code.

"Seller" and "Sellers" are defined in the definition of American Music Acquisition
Documents.

"Senior Indenture" means the Indenture, dated as of July 2, 1996, between Guitar Center Management Company, Inc., a
California corporation (predecessor in interest by merger to GCI), as issuer, and U.S. Trust Company of California, N.A., as trustee, pursuant to which the Senior Notes were issued, as modified,
amended or replaced from time to time in a manner permitted by this Agreement.

"Senior Indenture Indebtedness" means the Senior Notes and any other Indebtedness of any Obligor under the Senior Indenture, together
with any refinancings thereof permitted by the terms ofSection 7.8(c).

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"Senior Note Documents" means the collective reference to the Senior Notes, the Senior Indenture and each agreement, instrument and
document delivered in connection therewith or relating thereto, as modified, amended, or replaced from time to time in a manner permitted by this Agreement.

"Senior Notes" means the 11% Senior Notes due 2006 of GCI issued and outstanding pursuant to the Senior Indenture, as modified, amended
or replaced from time to time in a manner permitted by this Agreement.

"Settlement" has the meaning set forth inSection 2.3(f)(i).

"Settlement Date" has the meaning set forth inSection 2.3(f)(i).

"Single Employer Plan" of any Person means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that
(a) is maintained for employees of such Person or any of its ERISA Affiliates and no Person other than such Person and its ERISA Affiliates or (b) was so maintained and in respect of
which such Person or any of its then current ERISA Affiliates could have liability under Section 4069 of ERISA in the event such plan has been or were to be terminated.

"Slow Moving Inventory" means goods (i) that have been included in Borrowers' Inventory for in excess of 120 days, or
(ii) classified as slow moving on Borrowers' books and records if not otherwise included in clause (i).

"Solvent" means, with respect to any Person on a particular date, that such Person is not insolvent (as such term is defined in the
Uniform Fraudulent Transfer Act).

"Specified State" means any State which provides for a statutory lien of distraint in favor of a lessor of real property that is prior
to the Liens of Agent hereunder.

"Stock" means all shares, options, warrants, interests, participations, or other equivalents (regardless of how designated) of or in a
Person, whether voting or nonvoting, including common stock, preferred stock, or any other "equity security" (as such term is defined in Rule 3a11-1 of the General Rules and
Regulations promulgated by the SEC under the Exchange Act).

"Stock Pledge Agreement" means that certain Stock Pledge Agreement executed and delivered by GCI to Agent, and dated as of the Prior
Closing Date, as amended by the Omnibus Amendment.

"Subordinated Indebtedness" means any Indebtedness of a Borrower that is subordinated to the Obligations of the Borrowers under the
Loan Documents on, and that otherwise contains, terms and conditions acceptable to Agent in the exercise of its Permitted Discretion.

"Subsidiary" of a Person means a corporation, partnership, limited liability company, or other entity in which that Person directly or
indirectly owns or controls the shares of Stock having ordinary voting power to elect a majority of the board of directors (or appoint other comparable managers) of such corporation, partnership,
limited liability company, or other entity.

"Suretyship Agreement" means that certain Suretyship Agreement, dated as of the Prior Closing Date, as amended by the Omnibus
Amendment.

"Swing Lender" means any Lender appointed by the Agent in writing, and which appointment has been accepted by such Lender in writing,
as the "Swing Lender".

"Swing Loan" has the meaning set forth inSection 2.3(d)(i).

"Tangible Net Worth" means, as of any date of determination, the result of (a) GCI's total stockholder's equity, minus(b) all Intangible Assets of GCI on
a consolidated basis.

"Trademark Security Agreement" means that certain Trademark Security Agreement made by GCI for the benefit of the Lender Group, dated
as of the Prior Closing Date, as amended by the Omnibus Amendment.

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"Veneman" means Veneman Music Company, a Maryland corporation.

"Voidable Transfer" has the meaning set forth inSection 17.7.

"Voting Stock" means, with respect to any Person, Capital Stock of any class or classes if the holders of such Capital Stock are
ordinarily, in the absence of contingencies, entitled to vote for the election of the directors (or other persons performing similar functions) of such Person even if the right to so vote has been
suspended by the happening of such a contingency.

"Wells Fargo" means Wells Fargo Bank, National Association, a national banking association.

"Withdrawal Liability" has the meaning specified in Part I of Subtitle E of Title IV of ERISA.

1.2Accounting Terms.All accounting terms not specifically defined herein
shall be construed in accordance with GAAP. When used herein, the term "financial statements" shall include the notes and schedules thereto. Whenever the term "Borrower" is used in respect of a
financial covenant or a related definition, it shall be understood to mean GCI on a consolidated basis unless the context clearly requires otherwise. All calculations made for the purposes of
determining compliance with this Agreement shall (except as otherwise expressly provided herein) be made by application of GAAP applied on a basis consistent with the most recent annual or quarterly
financial statements delivered pursuant hereto (or, prior to the delivery of the first financial statements hereunder, consistent with the financial statements as at December 31, 2000); provided however, that if Administrative Borrower or Agent shall object to determining such compliance or such basis due to any change in GAAP or the
rules promulgated with respect thereto, then such calculations shall be made on a basis consistent with the most recent financial statements delivered by GCI hereunder as to which no such objection
shall have been made.

1.3Code.Any terms used in this Agreement that are defined in the Code shall
be construed and defined as set forth in the Code unless otherwise defined herein.

1.4Construction.Unless the context of this Agreement or any other Loan
Document clearly requires otherwise, references to the plural include the singular, references to the singular include the plural, the term "including" is not limiting, and the term "or" has, except
where otherwise indicated, the inclusive meaning represented by the phrase "and/or." The words "hereof," "herein," "hereby," "hereunder," and similar terms in this Agreement or any other Loan Document
refer to this Agreement or such other Loan Document, as the case may be, as a whole and not to any particular provision of this Agreement or such other Loan Document, as the case may be. Section,
subsection, clause, schedule, and exhibit references herein are to this Agreement unless otherwise specified. Any reference in this Agreement or in the Loan Documents to this Agreement or any of the
Loan Documents shall include all alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements, thereto and thereof, as applicable.

1.5Schedules and Exhibits.All of the schedules and exhibits attached to this
Agreement shall be deemed incorporated herein by reference.

2.  LOAN AND TERMS OF PAYMENT.

2.1Revolver Advances.



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2.2Reduction in Facility Amount and Commitments.Provided that no Event of
Default has occurred and is continuing, and, provided further, that after giving effect to any such reduction, the Maximum Facility Amount shall not be less than $75,000,000, Borrowers shall have the
right to elect from time to time to permanently reduce the Maximum Facility Amount in an amount not to exceed the sum of (i) the difference between the Maximum Facility Amount and the Facility
Amount then in effect, and (ii) the unfunded portion of the Revolving Credit Commitments of all Lenders, with a corresponding permanent reduction in the Revolving Credit Commitments of the
Lenders. Administrative Borrower shall give Agent not less than 15 Business Days prior written notice designating the date (which shall be a Business Day) as of which such reduction is to be effective
and the amount of the proposed reduction. Such reduction shall be effective on the date specified in Administrative Borrower's notice given in compliance hereunder, and shall be in a minimum amount of
$10,000,000, and integral multiples of $5,000,000 in excess thereof. Any reduction of the Maximum Facility Amount pursuant to thisSection 2.2(b)shall be without premium or penalty, with the exception that from and after Borrowers' election to permanently reduce the Maximum Facility Amount and the Lenders' Revolving Credit Commitments pursuant
to thisSection 2.2(b), Borrowers shall no longer have the right to request any further increase in the Maximum Facility Amount pursuant to Section 2.2
(a).Any reduction of the Lenders' Revolving Credit Commitments pursuant to this Section 2.2(b)shall reduce the Revolving Credit Commitment of each Lender by the amount of
its Pro Rata Share of the incremental reduction in
the Facility Amount andSchedule C-1shall automatically be amended to reflect such reduction.

2.3Borrowing Procedures and Settlements



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2.4Payments.



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2.5Overadvances.Subject to Section 2.3(i), if, at any time or for any reason, the amount of Obligations owed by Borrowers to the Lender Group pursuant to Sections 2.1, 2.12, or 2.13is greater than either the Dollar or percentage
limitations set forth inSections 2.1, 2.12, or
2.13, (an "Overadvance"), Borrowers immediately shall pay to Agent, in cash, the amount of such excess, which amount shall be
used by Agent to reduce the Obligations in accordance with the priority set forth inSection 2.4(b). In addition, each Borrower hereby promises
to pay the Obligations (including principal, interest, fees, costs, and expenses) in Dollars in full to the Lender Group as and when due and payable under the terms of this Agreement and the other
Loan Documents.

2.6Interest and Letter of Credit Fees: Rates, Payments, and Calculations.



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2.7Cash Management.



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2.8Crediting Payments.The receipt of any payment by Agent (whether from
transfers to Agent by the Concentration Account Banks or otherwise) shall not be considered a payment on account unless such payment item is a wire transfer of immediately available federal funds made
to the Agent Account or unless and until such payment item is honored when presented for payment. Should any payment item not be honored when presented for payment, then Borrowers shall be deemed not
to have made such payment and interest shall be calculated accordingly. Anything to the contrary contained herein notwithstanding, any payment item shall be deemed received by Lender only if it is
received into the Agent Account on a Business Day on or before 11:00 a.m. (California time). If any Collection item is received into the Agent Account on or after 11:00 a.m. (California
time) on a

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Business Day, it shall be deemed to have been received by Agent as of the opening of business on the immediately following Business Day.

2.9Designated Account.Agent is authorized to make the Advances, and issue the
Letters of Credit under this Agreement based upon telephonic or other instructions received from anyone purporting to be an Authorized Person, or without instructions if pursuant to Section 2.6(d).
Administrative Borrower agrees to establish and maintain the Designated Account with the Designated Account Bank for the purpose
of receiving the proceeds of the Advances requested by Borrowers and made by Agent or the Lenders hereunder. Unless otherwise agreed by Agent and Borrowers, any Advance, Agent Advance, or Swing Loan
requested by Borrowers and made by Agent or the Lenders hereunder shall be made to the Designated Account.

2.10Maintenance of Loan Account; Statements of Obligations.Agent shall
maintain an account on its books in the name of Borrowers (the "Loan Account") on which Borrowers will be charged with all Advances made by Agent or the
Lenders to Borrowers or for Borrowers' account, including, accrued interest, Lender Group Expenses, and any other payment Obligations of Borrowers. In accordance with Section 2.8, the Loan Account
will be credited with all payments received by Agent from Borrowers or for Borrowers' account, including all
amounts received in the Agent Account from any the Concentration Accounts. Agent shall render statements regarding the Loan Account to Administrative Borrower, including principal, interest, fees, and
including an itemization of all charges and expenses constituting Lender Group Expenses owing, and such statements shall be conclusively presumed to be correct and accurate and constitute an account
stated between each Borrower and the Lender Group unless, within 60 days after receipt thereof by Administrative Borrower, Administrative Borrower shall deliver to Agent written objection
thereto describing the error or errors contained in any such statements.

2.11Fees.Borrowers shall pay to Agent the following fees, which fees shall be
non-refundable when paid (irrespective of whether this Agreement is terminated thereafter):



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2.12Letters of Credit.



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2.13LIBOR Option.



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37

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2.14Capital Requirements.If after the date hereof any Lender determines that
(i) the adoption of or change in any law, rule, regulation or guideline regarding capital requirements for banks or bank holding companies, or any change in the interpretation or application
thereof by any Governmental Authority charged with the administration thereof, or (ii) compliance by such Lender or its parent bank holding company with any guideline, request or directive of
any such entity regarding capital adequacy (whether or not having the force of law), the effect of reducing the return on such Lender's or such holding company's capital as a consequence of such
Lender's Commitment to make Advances hereunder or its obligations in respect of any Letter of Credit to a level below that which such Lender or such holding company could have achieved but for such
adoption, change or compliance (taking into consideration such Lender's or such holding company's then existing policies with respect to capital adequacy and assuming the full utilization of such
entity's capital) by any amount deemed by such Lender to be material, than such Lender may, by written notice given to Agent and Administrative Borrower, require Borrowers to pay, on demand, an amount
equal to such Lender's additional costs incurred during the ninety (90) days preceding the date on which such notice is given and during each fiscal quarter thereafter; provided,however, that in the event that payments to any Lender are required to be made hereunder as a
result of such additional costs, Borrowers shall be entitled to substitute for such Lender any other bank or financial institution reasonably acceptable to the Agent and the Required Lenders. Each
such Lender shall state in the notice required by thisSection 2.14, in reasonable detail, the cause and amount of such additional cost. Within
30 days after receipt of such notice, Borrowers may, at their option, elect to terminate that portion of the Revolving Credit Commitment that is held by such Lender.

2.15Joint and Several Liability of the Obligors.



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2.16Prior Loan Agreement.Anything herein to the contrary notwithstanding, it
is the express intent of the parties hereto to preserve the outstanding nature of all loans and other financial accommodations made or issued under the Prior Loan Agreement and outstanding prior to
the Closing Date. To that end, all such outstanding loans or other financial accommodations shall be converted on the Closing Date to the loans or other financial accommodations made or issued
hereunder, and shall not be deemed to have been repaid or cancelled and reloaned or reissued, but rather, at all times, continuously to have remained outstanding, and all repayment obligations of the
Obligors under or related to the Prior Loan Agreement, whether evidenced by notes or otherwise, shall be deemed restated by the promise of the Obligors to pay the Obligations hereunder.

3.  CONDITIONS; TERM OF AGREEMENT.

3.1Conditions Precedent to the Initial Extension of Credit.The obligation of
the Lender Group (or any member thereof) to make the initial Advance (or otherwise to extend any credit provided for hereunder), is subject to the fulfillment, to the reasonable satisfaction of Agent,
of each of conditions precedent set forth below:



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3.2Conditions Subsequent to the Initial Extension of Credit.The obligations
of the Lender Group (or any member thereof) to continue to make Advances or to issue Letters of Credit is subject to the fulfillment, on or before the date applicable thereto, of each of the
conditions subsequent set forth below (the failure by Borrowers to so perform or cause to be performed constituting an Event of Default):



3.3Conditions Precedent to all Extensions of Credit.The obligation of the
Lender Group (or any member thereof) to make all Advances, Swing Loans, or to issue Letters of Credit (and to make any other extensions of credit provided for hereunder) shall be subject to the
following conditions precedent:

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The
foregoing conditions precedent are not conditions to each Lender (i) participating in or reimbursing Agent for such Lenders' Pro Rata Share of any drawings under Letters of
Credit as provided herein, or (ii) participating in or reimbursing Swing Lender or the Agent for such Lenders' Pro Rata Share of any Swing Loan or Agent Advance as provided herein.

3.4Term.This Agreement shall become effective upon the execution and delivery
hereof by Borrowers and the Lender Group and shall continue in full force and effect for a term ending on December 16, 2004 (the "Maturity
Date"). The foregoing notwithstanding, the Lender Group shall have the right to terminate its obligations under this Agreement immediately and without notice upon the
occurrence and during the continuation of an Event of Default.

3.5Effect of Termination.On the date of termination of this Agreement, all
Obligations (including contingent reimbursement obligations of Borrowers with respect to any outstanding Letters of Credit) immediately shall become due and payable without notice or demand. No
termination of this Agreement, however, shall relieve or discharge Borrowers of Borrowers' duties, Obligations, or covenants hereunder, continuing security interests in the Collateral, for the benefit
of the Lender Group, shall remain in effect until all Obligations have been fully and finally discharged and the Lender Group's obligations to provide additional credit hereunder have been terminated.
Upon termination of this Agreement and after all Obligations (other than contingent indemnification obligations) have been fully and finally discharged and the Lender Group's obligations to provide
additional credit under the Loan Documents have been terminated irrevocably, Agent will, at Borrowers' sole expense, execute and deliver any Uniform Commercial Code termination statements, lien
releases, mortgage releases, re-assignments of trademarks, discharges of security interests, and other similar discharge or release documents (and, if applicable, in recordable form) as
are reasonably necessary to release, as of record, the security interests, financing statements, and all other notices of security interests and liens previously filed by Agent for the benefit of the
Lender Group with respect to the Obligations.

3.6Early Termination by Borrowers.Borrowers have the option, at any time upon
90 days prior written notice by Administrative Borrower to Agent, to terminate this Agreement by paying to Agent, for the benefit of the Lender Group, in cash, the Obligations (including either
(i) providing cash collateral to be held by Agent for the benefit of those Lenders with a Revolving Credit Commitment in an amount equal to 105% of the then extant Letter of Credit Usage, or
(ii) causing the original Letters of Credit to be returned to the Agent), in full, together with the Applicable Prepayment Premium (for the ratable benefit of the Lenders with a Revolving
Credit Commitment based upon their Pro Rata Share of the Revolving Credit Commitment). If Administrative Borrower has sent a notice of termination pursuant to the provisions of this Section, then the
Commitments shall terminate and Borrowers shall be obligated to repay the Obligations (including either (i) providing cash collateral to be held by Agent for the benefit of those Lenders with a
Revolving Credit Commitment in an amount

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equal to 105% of the then extant Letter of Credit Usage, or (ii) causing the original Letters of Credit to be returned to the Agent), in full, together with the Applicable Prepayment Premium,
on the date set forth as the date of termination of this Agreement in such notice. In the event of the termination of this Agreement and repayment of the Obligations at any time prior to the Maturity
Date, for any other reason, including (a) termination upon the election of the Required Lenders to terminate after the occurrence of an Event of Default, (b) foreclosure and sale of
Collateral, (c) sale of the Collateral in any Insolvency Proceeding, or (iv) restructure, reorganization or compromise of the Obligations by the confirmation of a plan of reorganization,
or any other plan of compromise, restructure, or arrangement in any Insolvency Proceeding, then, in view of the impracticability and extreme difficulty of ascertaining the actual amount of damages to
the Lender Group or profits lost by the Lender Group as a result of
such early termination, and by mutual agreement of the parties as to a reasonable estimation and calculation of the lost profits or damages of the Lender Group, Borrowers shall pay the Applicable
Prepayment Premium to Agent (for the ratable benefit of the Lenders with a Revolving Credit Commitment based upon their Pro Rata Share of the Revolving Credit Commitment), measured as of the date of
such termination.

4.  CREATION OF SECURITY INTEREST.

4.1Grant of Security Interest.Each Borrower hereby grants to Agent, for the
benefit of the Lender Group a continuing security interest in all currently existing and hereafter acquired or arising Personal Property Collateral in order to secure prompt repayment of any and all
Obligations and in order to secure prompt performance by Borrowers of each of their covenants and duties under the Loan Documents ("Agent's Liens"). The
Agent's Liens in and to the Personal Property Collateral shall attach to all Personal Property Collateral without further act on the part of the Lender Group or Borrowers. Anything contained in this
Agreement or any other Loan Document to the contrary notwithstanding, except for Permitted Dispositions, no Borrower has authority, express or implied, to dispose of any item or portion of the
Collateral.

4.2Negotiable Collateral.In the event that any Collateral, including
proceeds, is evidenced by or consists of Negotiable Collateral, and if and to the extent that perfection of priority of Agent's security interest is dependent on possession, each Borrower, immediately
upon the request of Agent, shall endorse and deliver physical possession of such Negotiable Collateral to Agent.

4.3Collection of Accounts, General Intangibles, and Negotiable Collateral.At
any time after the occurrence and during the continuation of an Event of Default, Agent or Agent's designee may (a) notify customers or Account Debtors of Borrowers that the Accounts, General
Intangibles, or Negotiable Collateral have been assigned to Agent for the benefit of the Lender Group or that Agent for the benefit of the Lender Group or that Agent for the benefit of the Lender
Group has a security interest therein, or (b) collect the Accounts, General Intangibles, and Negotiable Collateral directly and charge the collection costs and expenses to the Loan Account.
Each Borrower agrees that it will hold in trust for the Lender Group, as the Lender Group's trustee, any Collections that it receives and promptly will deliver said Collections to Agent in their
original form as received by Borrowers.

4.4Delivery of Additional Documentation Required.At any time upon the
reasonable request of Agent, each Borrower shall execute and deliver to Agent, all financing statements, fixture filings, security agreements, Control Agreements, pledges, assignments, endorsements of
certificates of title, and all other documents that Agent reasonably may request, in form and substance reasonably satisfactory to Agent, to perfect and continue perfected Agent's Liens in the
Collateral (whether now owned or hereafter arising or acquired), and in order to fully consummate all of the transactions contemplated hereby and under the other the Loan Documents.

4.5Power of Attorney.Each Borrower hereby irrevocably makes, constitutes, and
appoints Agent (and any of Agent's officers, employees, or agents designated by Agent) as such Borrower's true and

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lawful attorney, with power to (a) if such Borrower refuses to, or fails timely to execute and deliver any of the documents described in Section 4.4, sign the name of such Borrower on any of
the documents described in Section 4.4, (b) at any time that an Event of Default has occurred and is continuing, sign such Borrower's name on any invoice or bill of
lading relating to any Account, drafts against Account Debtors, and notices to Account Debtors, (c) send requests for verification of Accounts, providedthat if no Event of Default is continuing,
Agent shall send out such requests no more often that 2 times during any 12 month period,
(d) endorse such Borrower's name on any Collection item that may come into the Lender Group's possession and deposit into Agent's Account, (e) at any time that an Event of Default has
occurred and is continuing, notify the post office authorities to change the address for delivery of such Borrower's mail to an address designated by Agent, to receive and open all mail addressed to
such Borrower, and to retain all mail relating to the Collateral and forward all other mail to such Borrower, (f) at any time that an Event of Default has occurred and is continuing, make,
settle, and adjust all claims under such Borrower's policies of insurance and make all determinations and decisions with respect to such policies of insurance, and (g) at any time that an Event
of Default has occurred and is continuing, settle and adjust disputes and claims respecting the Accounts directly with Account Debtors, for amounts and upon terms that Agent determines to be
reasonable, and Agent may cause to be executed and delivered any documents and releases that Agent determines, in the exercise of its Permitted Discretion, to be necessary. The appointment of Agent as
each Borrower's attorney, and each and every one of its rights and powers, being coupled with an interest, is irrevocable until all of the Obligations have been fully and finally repaid and performed
and the Lender Group's obligations to extend credit hereunder are terminated.

4.6Right to Inspect.Agent and each Lender (through any of their respective
officers, employees, or agents) shall have the right, from time to time hereafter to inspect the Books and to check, test, and appraise the Collateral in order to verify each Borrower's financial
condition or the amount, quality, value, condition of, or any other matter relating to, the Collateral, provided that prior to the occurrence and continuance of an Event of Default, such inspections,
checks, tests, and appraisals shall occur only during a Borrower's normal business hours upon at least one Business Day's prior notice. Without in any way limiting the foregoing, each Borrower will,
upon the request of Agent and the Required Lenders, (i) during any period when no Event of Default has occurred and is continuing, participate in a meeting of the Agent and Lenders once during
each calendar year to be held at GCI' corporate offices (or such other location as may be agreed upon between Agent and Administrative Borrower) at such time as may be agreed to by Administrative
Borrower and Agent, and (ii) following the occurrence and during the continuance of an Event of Default, participate in meetings of the Agent and Lenders at such frequency as the Agent shall
request in the exercise of its Permitted Discretion to be held at GCI' corporate offices (or such other location as may be agreed upon between Agent and Administrative Borrower) at such time as may be
agreed to by Administrative Borrower and Agent.

4.7Control Agreements.Each Obligor agrees that it will not transfer assets
out of any Securities Accounts other than as permitted underSection 7.24and, if to another securities intermediary, unless each of such
Obligor, Agent, and the substitute securities intermediary have entered into a Control Agreement. No arrangement contemplated hereby or by any Control Agreement in respect of any Securities
Accounts or other investment property shall be modified by an Obligor without the prior written consent of Agent. Upon the occurrence and during the continuance of a Default or Event of Default, Agent
may notify any securities intermediary to liquidate or transfer the applicable Securities Account or any related investment property maintained or held thereby and remit the proceeds thereof to the
Agent Account.

5.  REPRESENTATIONS AND WARRANTIES.

In order to induce the Lender Group to enter into this Agreement, GCI and each of its Subsidiaries (with the exception of Veneman), as applicable, makes the
following representations and

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warranties to the Lender Group which shall be true, correct, and complete, in all material respects, as of the date hereof, and shall be true, correct, and complete in all material respects as of the
Closing Date, and at and as of the date of the making of each Advance (or other extension of credit) made thereafter, as though made on and as of the date of such Advance (or other extension of
credit) (except to the extent that such representations and warranties relate solely to an earlier date) and such representations and warranties shall survive the execution and delivery of this
Agreement:

5.1No Encumbrances.Each Borrower has good and indefeasible title to the
Collateral, free and clear of Liens except for Permitted Liens.

5.2Eligible Accounts.(a) The Eligible Accounts are bona fide existing
payment obligations of Account Debtors created by the sale and delivery of Inventory or the rendition of services to Borrowers' customers in the ordinary course of Borrowers' business, owed to a
Borrower without defenses, disputes, offsets, counterclaims, or rights of return or cancellation. As to each Eligible Account, such Eligible Account is in compliance with the criteria for eligibility
set forth under the definition of "Eligible Accounts" inSection 1.1.

5.3Eligible Inventory.All Eligible Inventory is of good and merchantable
quality, free from defects. As to each item of Eligible Inventory, such Inventory is in compliance with the criteria for eligibility set forth under the definition of "Eligible Inventory" in Section 1.1.

5.4Equipment.All of the Equipment is used or held for use in the Obligors'
business and substantially all of such Equipment is fit for such purposes.

5.5Location of Inventory and Equipment.The Inventory and Equipment are not
stored with a bailee, warehouseman, or similar party and are located only at the locations identified onSchedule 6.11permitted by Section 6.11.

5.6Inventory Records.Each Obligor keeps correct and accurate records, with
the exception of insignificant errors, itemizing and describing the type, quality, and quantity of the Inventory and its cost therefor.

5.7Location of Chief Executive Office; FEIN.The chief executive office of the
Obligors is located at the address indicated inSchedule 5.7and each Obligor's FEIN is identified in Schedule 5.7.

5.8Due Organization and Qualification; Subsidiaries.



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5.9Due Authorization; No Conflict.



5.10Litigation.Other than those matters disclosed on Schedule 5.10,
there are no actions, suits, or proceedings pending or, to the best knowledge of the Obligors, threatened against an Obligor, or
any of its Subsidiaries, as applicable, except for matters arising after the Closing Date that, if decided
adversely to an Obligor, or any of its Subsidiaries, as applicable, would not reasonably be expected to cause in a Material Adverse Change.

5.11No Material Adverse Change.All financial statements relating to Borrowers
or any guarantor of the Obligations that have been delivered by GCI to the Lender Group have been prepared in accordance with GAAP (except, in the case of unaudited financial statements, for the lack
of footnotes

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and being subject to year-end audit adjustments) and fairly present Borrowers' (or such guarantor's, as applicable) financial condition as of the date thereof and results of operations for
the period then ended. There has not been a Material Adverse Change with respect to any Borrower (or such guarantor, as applicable) since the date of the latest financial statements submitted to the
Lender Group on or before the Closing Date.

5.12Fraudulent Transfer.



5.13Employee Benefits.(a) no ERISA Event has occurred or is reasonably
expected to occur with respect to any Plan of an Obligor or any of its ERISA Affiliates; (b) no Obligor nor any of its ERISA Affiliates has incurred or is reasonably expected to incur any
Withdrawal Liability to any Multiemployer Plan; and (c) no Obligor nor any of its ERISA Affiliates has been notified by the sponsor of a Multiemployer Plan of an Obligor or any of its ERISA
Affiliates that such Multiemployer Plan is in reorganization or has been terminated, within the meaning of Title IV of ERISA, and no such Multiemployer Plan is reasonably expected to be in
reorganization or to be terminated, within the meaning of Title IV of ERISA, and any such event, either individually or in the aggregate could reasonably be expected to result in a liability of the
Obligors and their Subsidiaries in excess of $250,000. As of the Closing Date, none of Obligors, any of their Subsidiaries, nor any of their ERISA Affiliates maintains or contributes to any Benefit
Plan.

5.14Environmental Condition.None of Obligors' properties or assets has ever
been used to produce, treat, release, or transport, any Hazardous Materials. None of Obligors' properties or assets has ever been designated or identified in any manner pursuant to any environmental
protection statute as a Hazardous Materials disposal site, or a candidate for closure pursuant to any environmental protection statute. No Lien arising under any environmental protection statute has
attached to any revenues or to
any real or personal property owned or operated by an Obligor. No Obligor has received a summons, citation, notice, or directive from the Environmental Protection Agency or any other federal or state
governmental agency concerning any action or omission by such Obligor resulting in the releasing or disposing of Hazardous Materials into the environment.

5.15Brokerage Fees.No Obligor has utilized the services of any broker or
finder in connection with Borrowers' obtaining financing from the Lender Group under this Agreement and no brokerage commission or finders fee is payable in connection herewith.

5.16Intentionally Omitted.

5.17Intellectual Property.Each Obligor owns, or holds licenses in, all
trademarks, trade names, copyrights, patents, patent rights, and licenses that are necessary to the conduct of its business as currently conducted.

5.18Leases.Each Obligor enjoys peaceful and undisturbed possession under all
leases material to the business of such Obligor and to which it is a party or under which it is operating. All of such leases are valid and subsisting and no material default by such Obligor exists
under any of them.

5.19DDAs.Set forth on Schedule 5.19are all of Obligors' current DDAs,
including, with respect to each depository (i) the name and address of that depository;
and (ii) the account number(s) of the account(s) maintained with such depository.

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5.20Offsite Storage Locations.With respect to each Offsite Storage Location,
(i) no more than $500,000 in Inventory is stored at each such location and no more than $1,500,000 in the aggregate is stored at all Offsite Storage Locations, and (ii) GCI has complete
and unrestricted access to each such location and the Inventory located thereat.

5.21American Music Acquisition.As of the date of the closing of the American
Music Acquisition (the "American Music Acquisition Closing Date"):



6.  AFFIRMATIVE COVENANTS.

Each Borrower covenants and agrees that, so long as any credit hereunder shall be available and until full and final payment of the Obligations (other than
contingent indemnification obligations), each Obligor or its Subsidiaries, as applicable, shall do all of the following:

6.1Accounting System.Maintain a system of accounting that enables Borrowers
to produce financial statements in accordance with GAAP and maintain records pertaining to the Collateral that contain information as from time to time reasonably may be requested by Agent. Each
Borrower also shall keep an inventory reporting system that shows all additions, sales, claims, returns, and allowances with respect to the Inventory.

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6.2Collateral Reporting.Provide Agent with the following documents at the
following times in form reasonably satisfactory to Agent:



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6.3Financial Statements, Reports, Certificates.Deliver to Agent, with copies
to each Lender:



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Each
Borrower agrees to deliver financial statements prepared on a consolidated basis and that no Obligor will have a fiscal year different from that of GCI.

6.4Guarantor Reports.Cause each Guarantor of any of the Obligations to
deliver its annual financial statements at the time when GCI provides its audited financial statements to Agent and, upon the request of Agent following and during the continuation of an Event of
Default, copies of all federal income tax returns as soon as the same are available and in any event no later than 30 days after the same are required to be filed by law.

6.5Return.Cause returns and allowances, if any, as between a Borrower and its
Account Debtors to be on the same basis and in accordance with the usual customary practices of such Borrower, as they exist at the time of the execution and delivery of this Agreement. If, at a time
when an Event of Default has occurred and is continuing, any Account Debtor returns any Inventory to a Borrower that exceeds $100,000 for any particular sale transaction, such Borrower promptly shall
determine the reason for such return and, if Agent consents (which consent shall not be unreasonably withheld), issue a credit memorandum (with a copy to be sent to Agent) in the appropriate amount to
such Account Debtor.

6.6Title to Equipment.Upon Agent's request in the exercise of its Permitted
Discretion, immediately deliver to Agent, properly endorsed, any and all certificates or documents of title to any items of Equipment which, individually, have a value in excess of $100,000, or in the
aggregate have a value in excess of $750,000.

6.7Maintenance of Equipment.Maintain the Equipment in good operating
condition and repair (ordinary wear and tear excepted), and to the extent necessary to the continued operations of an Obligor make all necessary replacements thereto so that the value and operating
efficiency thereof shall at all times be maintained and preserved. Other than those items of Equipment that constitute fixtures on the Closing Date or Equipment with an aggregate book value to
Borrowers in an amount not to exceed $1,000,000 during any fiscal year, no Borrower shall permit any item of Equipment to become a fixture to real estate or an accession to other property, other than
Real Property Collateral, and such Equipment shall at all times remain personal property unless a part of Real Property Collateral.

6.8Taxes.Cause all assessments and taxes, whether real, personal, or
otherwise, due or payable by, or imposed, levied, or assessed against any Obligor or any of its property to be paid in full, before delinquency or before the expiration of any extension period, except
to the extent that the validity of such assessment or tax shall be the subject of a Permitted Protest. The Obligors will make timely payment or deposit of all tax payments and withholding taxes
required of it by applicable laws, including those laws concerning F.I.C.A., F.U.T.A., state disability, and local, state, and federal income taxes, and will, upon request, furnish Agent with proof
satisfactory to Agent indicating that each Obligor has made such payments or deposits. Upon the request of Agent in the exercise of its Permitted Discretion, Administrative Borrower shall deliver
satisfactory evidence of payment of applicable excise taxes in each jurisdictions in which (a) such Obligor conducts business or is required to pay any such excise tax, or (b) where such
Obligor's failure to pay any such applicable excise tax would result in a Lien on the properties or assets of such Obligor, in each case, where such Obligor's failure to pay any such applicable excise
tax would constitute a Material Adverse Change.

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6.9Insurance.



Name

AmountMr. Marty Albertson

$
3,500,000Mr. Larry Thomas

$
5,000,000




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6.10No Setoffs or Counterclaims.Make payments hereunder and under the other
Loan Documents by or on behalf of the Obligors without setoff or counterclaim and free and clear of, and without deduction or withholding for or on account of, any federal, state, or local taxes.

6.11Location of Inventory and Equipment.Keep the Inventory and Equipment only
at the locations identified onSchedule 6.11; provided, however, that Borrowers may amend Schedule 6.11so long as such amendment occurs by
written notice to Agent not less than 30 days prior to the date on which the Inventory
or Equipment is moved to such new location, so long as such new location is within the continental United States, and so long as, not less than 30 days prior to the effectiveness of such
amendment, Borrowers provide any financing statements or fixture filings necessary to perfect and continue perfected the Agent's Liens on such assets and, if requested by Agent in the exercise of its
Permitted Discretion, also provides to Agent a Collateral Access Agreement.

6.12Compliance with Laws.Comply with the requirements of all applicable laws,
rules, regulations, and orders of any governmental authority, including the Fair Labor Standards Act and the Americans With Disabilities Act, other than laws, rules, regulations, and orders the
non-compliance with which, individually or in the aggregate, would not result in and would reasonably not be expected to result in a Material Adverse Change.

6.13Employee Benefits.



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6.14Leases.Pay when due (after giving effect to all cure periods under such
leases) all rents and other amounts payable under any leases to which any Borrower is a party or by which a Borrower's properties and assets are bound, unless such payments are the subject of a
Permitted Protest or where the failure to make such payment would have only ade minimiseffect on the business, operations, results of operations,
assets, liabilities or condition (financial or otherwise) of the Borrowers taken as a whole. To the extent that any Borrower fails timely to make payment of such rents and other amounts payable when
due under its leases, Agent shall be entitled, in its discretion, to reserve an amount equal to such unpaid amounts against the Borrowing Base.

6.15[Intentionally Omitted].

6.16Projections.Not later than 30 days prior to the end of each fiscal
year of GCI, deliver to Agent Projections of GCI, in form and substance (including as to scope and underlying assumptions) satisfactory to Agent in its Permitted Discretion, for the forthcoming fiscal
year, month by month, certified by the chief financial officer of Administrative Borrower as being such officer's good faith best estimate of the financial performance of the Obligors during the
period covered thereby.

6.17Corporate Existence, etc.Except as otherwise permitted hereunder, at all
time preserve and keep in full force and effect each Obligor's valid corporate existence and good standing and any rights and franchises material to such Obligor's businesses.

6.18Disclosure Updates.Promptly and in no event later than 5 Business Days
after obtaining knowledge thereof, (i) notify Agent if any written information, exhibit, or report furnished to the Lender Group contained any untrue statement of a material fact or omitted to
state any material fact necessary to make the statements contained therein not misleading in light of the circumstances in which made, and (ii) correct any defect or error that may be
discovered therein or in any Loan Document or in the execution, acknowledgement, filing, or recordation thereof.

6.19Mailing Lists.Add Agent as an addressee on all mailing lists maintained
by or for the Obligors.

6.20Inventory Cycle Counts.Perform Inventory cycle counts in the manner and
at the times described in GCS's Cycle Count Manual as in effect on the Closing Date.

6.21Distribution Centers.From and after the Closing Date, Inventory located
at the Medford, Oregon and Knoxville, Tennessee distribution centers of MFI shall be used solely to support direct response sales fulfillment,provided,
however, Borrowers may from time to time transfer Inventory from MFI to GCS in order to correct overstock situations and to use repackaged, slow moving, or discontinued items
for promotional purposes or as GCS may otherwise reasonably deem appropriate.

6.22Permitted Acquisitions.In connection with any Permitted Acquisition
involving the acquisition of the Stock of another Person by any Borrower, Borrowers shall execute and deliver to Agent such amendments, modifications, or supplements to the Loan Documents as Agent may
request in the exercise of its Permitted Discretion, including an amendment to the Stock Pledge Agreement to pledge all of the issued and outstanding Stock of such acquired Person thereunder together
with the delivery of certificates (if any) representing such shares of Stock with attached stock powers endorsed in blank, and shall cause the Person that is the subject of the Permitted Acquisition
to execute and deliver to Agent all appropriate joinder documents to make it an Obligor party to the Loan Documents and appropriate UCC-1 financing statements, fixture filings, Collateral
Access Agreements, mortgages or deeds of trust, and any other documents, instruments, or Agreements that Agent may request in the exercise of its Permitted Discretion.

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6.23American Music Acquisition.



6.24American Music Acquisition Documents.

After
the American Music Acquisition Date, no Borrower shall, without the prior written consent of Agent, directly or indirectly, amend, modify, cancel or terminate, or permit the
amendment, modification, cancellation or termination of any American Music Acquisition Document if the effect thereof would or reasonably could be expected to result in a Material Adverse Change.

7.  NEGATIVE COVENANTS.

GCI and each Borrower covenants and agrees that, so long as any credit hereunder shall be available and until full and final payment of the Obligations (other
than contingent indemnification obligations), no Obligor nor any of its Subsidiaries will do any of the following:

7.1Indebtedness.Create, incur, assume, permit, guarantee, or otherwise become
or remain, directly or indirectly, liable with respect to any Indebtedness, except:



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7.2Liens.Create, incur, assume, or permit to exist, directly or indirectly,
any Lien on or with respect to any of its property or assets, of any kind, whether now owned or hereafter acquired, or any income or profits therefrom, except for Permitted Liens (including Liens that
are replacements of Permitted Liens to the extent that the original Indebtedness is refinanced underSection 7.1(l)and so long as the
replacement Liens only encumber those assets or property that secured the original Indebtedness).

7.3Restrictions on Fundamental Changes.



provided, however, that nothing contained in thisSection 7.3shall be construed to restrict or
limit (i) any offering, issuance, or sale by GCI, in one or more transactions, public or private, of its common Stock or other Stock that does not require any cash payment until after the
second anniversary of the Maturity Date (including any concomitant increase in the number of authorized shares of Stock of GCI or in the authorized share capital of GCI), so long as such offerings,
issuances, and sales are made in compliance with all applicable laws and regulations and would not, individually or collectively, result in a Change of Control, (ii) Permitted Acquisitions,
(iii) the merger or consolidation of a wholly owned Solvent Subsidiary into another wholly owned Solvent Subsidiary or a wholly owned Solvent Subsidiary
with and into a Borrower, (iv) Permitted Dispositions, (v) the merger or consolidation of MCI with any other Person provided that such merger or consolidation would not result in a
Change of Control, or (vi) Permitted Investments.

7.4Disposal of Assets.Sell, lease, assign, transfer, or otherwise dispose of
any of Obligors' properties or assets, other than pursuant to Permitted Dispositions.

7.5Change Name.Change any Obligor's name, FEIN, corporate structure (within
the meaning ofSection 9402(7)of the Code), or identity, or add any new fictitious name, except that any Obligor may do so upon at least
30 days prior written notice to Agent of such change and so long as, at the time of such written notification, Administrative Borrower provides any financing statements or fixture

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filings necessary to perfect and continue perfected Agent's or any other member of the Lender Group's security interests in the Collateral.

7.6Guarantee.Guarantee or otherwise become in any way liable with respect to
the obligations of any third Person (other than a Borrower) except by endorsement of instruments or items of payment for deposit to the account of an Obligor or which are transmitted or turned over to
Agent or guarantees of the Obligations or trade guarantees made in the ordinary course of business in an aggregate contingent amount not to exceed $250,000 outstanding at any one time.

7.7Nature of Business.Make any change in the principal nature of a Obligor's
business to include activities other than the Business.

7.8Prepayments and Amendments.



7.9Change of Control.Cause, permit, or suffer, directly or indirectly, any
Change of Control without the prior written consent of Agent and the Required Lenders.

7.10Consignments.Consign any Inventory or sell any Inventory on bill and
hold, sale or return, sale on approval, or other conditional terms of sale (except for (a) Borrowers' customary return policy applicable to the return of inventory purchased by Borrowers'
retail customers in the ordinary course of Borrowers' business and (b) rent-to-purchase programs and satellite arrangements with third parties for
rent-to-purchase programs for musical instruments, both in the ordinary course of business), or have possession of any property on consignment to an Obligor.

7.11Distributions.Make any distribution or declare or pay any dividends (in
cash or other property, other than Stock) on, or purchase, acquire, redeem, or retire any of any Obligor's Stock, of

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any class, whether now or hereafter outstanding;provided, however, that the foregoing shall not restrict the ability of:



7.12Accounting Methods.Modify or change its method of accounting (other than as may be required to
conform to GAAP) or enter into, modify, or terminate any agreement currently existing, or at any time hereafter entered into with any third party accounting firm or service bureau for the preparation
or storage of Obligors' accounting records without said accounting firm or service bureau agreeing to provide Agent information regarding the Collateral or the Obligors' financial condition.

7.13Investments.Except for Permitted Investments, directly or indirectly
make, acquire, or incur any liabilities (including contingent obligations) for or in connection with any Investment;provided, however, that no Obligor
shall have Permitted Investments consisting of Investment Property or Cash Equivalents (other than in the GCS Collection Accounts, the Concentration Accounts, or the Designated Account) in excess of
$100,000 outstanding at any one time without the prior written consent of Agent, which consent may be conditioned, at Agent's election, on such Obligor entering into Control Agreements or similar
arrangements governing such Permitted Investments, as Agent shall determine in its Permitted Discretion, to perfect (and further establish) Agent's Liens in such Permitted Investments.

7.14Transactions with Affiliates.Except as otherwise permitted by this
Agreement and except for management, accounting, or other business services to be provided by GCI to the other Obligors and the license of intellectual property rights by GCI to the other Obligors,
directly or indirectly enter into or permit to exist any material transaction with any Affiliate of any Obligor except for transactions that are in the ordinary course of such Obligor's business, upon
fair and reasonable terms, that are fully disclosed to Agent, and that are no less favorable to such Obligor than would be obtained in an arm's length transaction with a non-Affiliate.

7.15Suspension.Suspend or go out of a substantial portion of its business.

7.16[Intentionally Omitted].

7.17Use of Proceeds.Use the proceeds of the Advances for any purpose other
than (a) on the Closing Date, (i) to repay in full the outstanding principal, accrued interest, and accrued fees and expenses owing to Existing Lender, and (ii) to pay
transactional fees, costs, and expenses incurred in connection with this Agreement, and (b) thereafter, consistent with the terms and conditions hereof, for its lawful and permitted corporate
purposes including the financing of working capital, store expansion via development or purchase, and capital expenditures.

7.18Change in Location of Chief Executive Office; Inventory and Equipment with
Bailees.Relocate its chief executive office to a new location without providing 30 days prior written notification thereof to Agent and so long as,
within 10 days prior to such relocation, Administrative Borrower provides any financing statements or fixture filings necessary to perfect and continue perfected the Agent's Liens and also
provides to Agent a Collateral Access Agreement with respect to such new location. The Inventory and
Equipment shall not at any time now or hereafter be stored with a bailee, warehouseman, or similar party without Agent's prior written consent. Agent hereby acknowledges that the Borrowers have given
proper notice of their move of their chief executive office to Westlake Village, California as indicated in the Schedules to this Agreement.

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7.19No Prohibited Transactions Under ERISA.Directly or indirectly:



which,
individually or in the aggregate with all other events under clauses (a) through (h), results in or reasonably would be expected to result in a claim against or liability of Borrowers,
any of their Subsidiaries or any ERISA Affiliate in excess of $250,000.

7.20Financial Covenants.Fail to maintain:



Period Ending

Minimum Tangible Net Worth03/31/01

$
81,000,00006/30/01

$
79,700,00009/30/01

$
83,400,00012/31/01

$
93,100,00003/31/02

$
97,400,00006/30/02

$
101,700,00009/30/02

$
106,300,00012/31/02

$
118,500,00003/31/03 and each fiscal quarter thereafter

$
119,000,000




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7.21Credit Card Receipts.Amend, modify, supplement or restate the Credit Card
Agreements in any material respect without the prior written consent of Agent, which shall not be unreasonably withheld.

7.22Capital Expenditures.Make consolidated capital expenditures (other than
Permitted Acquisitions) in any fiscal year in excess of the amount set forth in the following table for the applicable period (the "Maximum Consolidated Capital Expenditures
Amount");providedthat the Maximum Consolidated Capital Expenditures Amount for any fiscal year as set forth below shall be
increased by an amount equal to that portion, if any, of the Maximum Consolidated Expenditures Amount set forth for the previous fiscal year that was not utilized for actual capital expenditures
during such fiscal year:

Applicable Period

Maximum Consolidated Capital
Expenditures AmountFiscal Year 2001

$
30,300,000Fiscal Year 2002

$
32,900,000Fiscal Year 2003

$
36,800,000Fiscal Year 2004

$
38,700,000


7.23Securities Accounts.No Obligor shall establish or maintain any Securities
Account unless Agent shall have received a Control Agreement, duly executed and in full force and effect, in respect of such Securities Account. Each Obligor agrees that it will not transfer assets
out of any Securities Accounts;provided, however, that, so long as no Event of Default has occurred and is continuing or would result therefrom, such
Obligor may use such assets to the extent permitted by this Agreement.

7.24American Music Division.

From
and after the effective date of the American Music Acquisition, GCS shall not (i) integrate the operations of the American Music Division with and into the operations of
GCS that were conducted prior to the American Music Acquisition or (ii) commingle the assets acquired pursuant to the
American Music Acquisition with any other assets of GCS (or with the assets of any of the other Obligors) unless GCS provides Agent with 60 days written notice prior to the effectiveness of any
such integration or commingling of GCS' intent to integrate operations or commingle assets. Upon any such notice, Agent shall have the right pursuant to Section 2.1(b)(vi)to establish
reserves with respect to such integration or commingling in such amounts as Agent in its Permitted
Discretion shall deem necessary or appropriate.

8.  EVENTS OF DEFAULT.

Any one or more of the following events shall constitute an event of default (each, an "Event of Default")
under this Agreement:



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9.  THE LENDER GROUP'S RIGHTS AND REMEDIES.

9.1Rights and Remedies.Upon the occurrence, and during the continuation, of
an Event of Default, the Required Lenders (at their election but without notice of their election and without

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demand) may, except to the extent otherwise expressly provided or required below, authorize and instruct Agent to do any one or more of the following on behalf of the Lender Group (and Agent, acting
upon the instructions of the Required Lenders, shall do the same on behalf of the Lender Group), all of which are authorized by Borrowers:



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9.2Remedies Cumulative.The rights and remedies of the Lender Group under this
Agreement, the other Loan Documents, and all other agreements shall be cumulative. The Lender Group shall have all other rights and remedies not inconsistent herewith as provided under the Code, by
law, or in equity. No
exercise by the Lender Group of one right or remedy shall be deemed an election, and no waiver by the Lender Group of any Event of Default shall be deemed a continuing waiver. No delay by the Lender
Group shall constitute a waiver, election, or acquiescence by it.

10. TAXES AND EXPENSES.

If any Obligor fails to pay any monies (whether taxes, assessments, insurance premiums, or, in the case of leased properties or assets, rents or other amounts
payable under such leases) due to third Persons, or fails to make any deposits or furnish any required proof of payment or deposit, all as required under the terms of this Agreement, then, to the
extent that Agent determines that such failure by such Obligor would reasonably be expected to result in a Material Adverse Change, in its discretion and without prior notice to the Obligors, Agent
may do any or all of the following: (a) make payment of the same or any part thereof; (b) set up such reserves in Borrowers' Loan Account as Agent deems necessary, in its Permitted
Discretion, to protect the Lender Group from the exposure created by such failure; or (c) obtain and maintain insurance policies of the type described in Section 6.9and take any action with
respect to such policies as Agent deems prudent, in its Permitted Discretion. Any such

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amounts paid by Agent shall constitute Lender Group Expenses. Any such payments made by Agent shall not constitute an agreement by the Lender Group to make similar payments in the future or a waiver
by the Lender Group of any Event of Default under this Agreement. Agent need not inquire as to, or contest the validity of, any such expense, tax, or Lien and the receipt of the usual official notice
for the payment thereof shall be conclusive evidence that the same was validly due and owing.

11. WAIVERS; INDEMNIFICATION.

11.1Demand; Protest; etc.Except as set forth in this Agreement and the other
Loan Documents, each Borrower waives demand, protest, notice of protest, notice of default or dishonor, notice of payment and nonpayment, nonpayment at maturity, release, compromise, settlement,
extension, or renewal of accounts, documents, instruments, chattel paper, and guarantees relating to the Obligations or the Collateral at any time held by the Lender Group on which such Borrower may
in any way be liable.

11.2The Lender Group's Liability for Collateral.Each Borrower hereby agrees
that: (a) so long as the Lender Group complies with its obligations, if any, under Section 9207 of the Code and as otherwise required by law, the Lender Group shall not in any way or
manner be liable or responsible for: (i) the safekeeping of the Collateral; (ii) any loss or damage thereto occurring or arising in any manner or fashion from any cause other than as a
result of the gross negligence or willful misconduct of Agent, any other member of the Lender Group, or any Lender-Related Persons; (iii) any diminution in the value thereof; or (iv) any
act or default of any carrier, warehouseman, bailee, forwarding agency, or
other third party; and (b) all risk of loss, damage, or destruction of the Collateral shall be borne by the Obligors.

11.3Indemnification.Each Obligor shall pay, indemnify, defend, and hold the
Agent-Related Persons, the Lender-Related Persons with respect to each Lender, each Participant, and each of their respective officers, directors, employees, counsel, agents, and
attorneys-in-fact (each, an "Indemnified Person") harmless (to the fullest extent permitted by law) from and against any and all
claims, demands, suits, actions, investigations, proceedings, and damages, and all reasonable attorneys fees and disbursements and other costs and expenses actually incurred in connection therewith
(as and when they are incurred and irrespective of whether suit is brought), at any time asserted against, imposed upon, or incurred by any of them in connection with or as a result of or related to
the execution, delivery, enforcement, performance, and administration of this Agreement and any other Loan Documents or the transactions contemplated herein, and with respect to any investigation,
litigation, or proceeding related to this Agreement, any other Loan Document, or the use of the proceeds of the credit provided hereunder (irrespective of whether any Indemnified Person is a party
thereto), or any act, omission, event or circumstance in any manner related thereto (all the foregoing, collectively, the "Indemnified Liabilities").
The Obligors shall have no obligation to any Indemnified Person under thisSection 11.3with respect to any Indemnified Liability that a court of
competent jurisdiction finally determines to have resulted from the gross negligence or willful misconduct of such Indemnified Person. This provision shall survive the termination of this Agreement
and the repayment of the Obligations. If any Indemnified Person makes any payment to any other Indemnified Person with respect to an Indemnified Liability for which the Obligors were required to
indemnify the Indemnified Person receiving such payment, the Indemnified Person making such payment is entitled to be indemnified and reimbursed by the Obligors with respect thereto.

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12. NOTICES.

Unless otherwise provided in this Agreement, all notices or demands by any party relating to this Agreement or any other Loan Document shall be in writing and
(except for financial statements and other informational documents which may be sent by first-class mail, postage prepaid) shall be personally delivered or sent by registered or certified mail
(postage prepaid, return receipt requested), overnight courier, or telefacsimile to the Administrative Borrower or the Agent, as the case may be, at its address set forth below:

If to Administrative Obligor or to an Obligor:

GUITAR CENTER, INC.5795 Lindero Canyon Road
Westlake Village, California 91326
Attn: Chief Financial Officer
Fax No. 818.735.4923with copies to:

LATHAM & WATKINS135 Commonwealth Drive
Menlo Park, California 94025
Attn: Anthony J. Richmond, Esq.
Fax No. 650.463.2600to Agent:

FOOTHILL CAPITAL CORPORATION2450 Colorado Avenue
Suite 3000 West
Santa Monica, California 90404
Attn: Business Finance Division Manager
Fax No. 310.453.3345with copies to:

BROBECK, PHLEGER & HARRISON LLP550 South Hope Street
Los Angeles, California 90071
Attn: John Francis Hilson, Esq.
Fax No. 213.745.3345


The
parties hereto may change the address at which they are to receive notices hereunder, by notice in writing in the foregoing manner given to all other parties. All notices or demands sent in
accordance with thisSection 12, other than notices by the Lender Group in connection with Sections 9504 or 9505 of the Code, shall be deemed
received on the earlier of the date of actual receipt or 3 days after the deposit thereof in the mail. Each Borrower acknowledges and agrees that notices sent by the Lender Group in connection
with Sections 9504 or 9505 of the Code shall be deemed sent when deposited in the mail or personally delivered, or, where permitted by law, transmitted telefacsimile or other similar method set forth
above.

13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.

THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH OTHER LOAN
DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED
HERETO OR THERETO SHALL BE

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DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.

THE
PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND FEDERAL
COURTS LOCATED IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA,PROVIDED,HOWEVER, THAT ANY SUIT
SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE REQUIRED LENDERS' OPTION, IN THE COURTS OF ANY JURISDICTION WHERE THE REQUIRED LENDERS ELECT TO BRING SUCH ACTION OR
WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH BORROWER AND EACH MEMBER OF THE LENDER GROUP WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE
DOCTRINE OFFORUM NON CONVENIENSOR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THISSECTION
13.

EACH
BORROWER AND EACH MEMBER OF THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN
DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH BORROWER AND EACH MEMBER OF
THE LENDER GROUP REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.

14.1Assignments and Participations.



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14.2Successors.This Agreement shall bind and inure to the benefit of the
respective successors and assigns of each of the parties;provided,however, no Borrower may assign this
Agreement or any rights or duties hereunder without the Lenders' prior written consent and any prohibited assignment shall be absolutely voidab initio.
No consent to assignment by the Lenders shall release Borrowers from their Obligations prior to the date of such assignment. A Lender may assign this Agreement and the other Loan Documents and its
rights and duties hereunder and thereunder pursuant toSection 14.1hereof and, except as expressly required pursuant to Section 14.1hereof, no
consent or approval by any Borrower is required in connection with any such assignment.

15. AMENDMENTS; WAIVERS.

15.1Amendments and Waivers.No amendment or waiver of any provision of this
Agreement or any other Loan Document, and no consent with respect to any departure by any Borrower therefrom, shall be effective unless the same shall be in writing and signed by the Required Lenders
(or by Agent at the written request of the Required Lenders) and Borrowers and then any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which
given;provided,however,
that no such waiver, amendment, or consent shall, unless in writing and signed by all the Lenders and Borrowers and acknowledged by Agent, do any of the following:



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and,
provided further, however, that no amendment, waiver or consent shall, unless in writing and signed by Agent, affect the rights or duties of Agent under this Agreement or any other Loan Document.
The foregoing notwithstanding, any amendment, modification, waiver, consent, termination, or release of or with respect to any provision of this Agreement or any other Loan Document that relates only
to the relationship of the Lender Group among themselves, and that does not affect the rights or obligations of Borrowers, shall not require consent by or the agreement of Borrowers.

15.2No Waivers; Cumulative Remedies.No failure by Agent or any Lender to
exercise any right, remedy, or option under this Agreement, any other Loan Document, or any present or future supplement hereto or thereto, or in any other agreement between or among any Borrower and
Agent or any Lender, or delay by Agent or any Lender in exercising the same, will operate as a waiver thereof. No waiver by Agent or any Lender will be effective unless it is in writing, and then only
to the extent specifically stated. No waiver by Agent or the Lenders on any occasion shall affect or diminish Agent's and each Lender's rights thereafter to require strict performance by Borrowers of
any provision of this Agreement. Agent's and each Lender's rights under this Agreement and the other Loan Documents will be cumulative and not exclusive of any other right or remedy which Agent or any
Lender may have.

16. AGENT; THE LENDER GROUP.

16.1Appointment and Authorization of Agent.Each Lender hereby designates and
appoints Foothill as its agent under this Agreement and the other Loan Documents and each Lender hereby irrevocably authorizes Agent to take such action on its behalf under the provisions of this
Agreement and each other Loan Document and to exercise such powers and perform such duties as are expressly delegated to Agent by the terms of this Agreement or any other Loan Document, together with
such powers as are reasonably incidental thereto. Agent agrees to act as such on the express conditions contained in thisSection 16. The
provisions of thisSection 16are solely for the benefit of Agent, and the Lenders and Borrowers shall have no rights as a third party
beneficiary of any of the provisions contained herein;provided,however, that certain of the provisions
ofSection 16.10,16.11and16.17(d)hereof also
shall be for the benefit of Borrowers. Any provision to the contrary contained elsewhere in this Agreement or in any other Loan Document notwithstanding, Agent shall not have any duties or
responsibilities, except those expressly set forth herein, nor shall Agent have or be deemed to have any fiduciary relationship with each other or any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against Agent; it being expressly understood and agreed that the
use of

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the word "Agent" is for convenience only, that Foothill is merely the representatives of the Lenders, and has only the contractual duties set forth herein. Except as expressly otherwise provided in
this Agreement, Agent shall have and may use its sole discretion with respect to exercising or refraining from exercising any discretionary rights or taking or refraining from taking any actions which
Agent is expressly entitled to take or assert under or pursuant to this Agreement and the other Loan Documents. Without limiting the generality of the foregoing, or of any other provision of the Loan
Documents that provides rights or powers to Agent, Lenders agree that Agent shall have the right to exercise the following powers as long as this Agreement remains in effect: (a) maintain, in
accordance with its customary business practices, ledgers and records reflecting the status of the Advances, the Collateral, the Collections, and related matters; (b) execute or file any and
all financing or similar statements or notices, amendments, renewals, supplements, documents, instruments, proofs of claim, notices and other written agreements with respect to the Loan Documents;
(c) make Advances, for itself or on behalf of Lenders as provided in the Loan Documents; (d) exclusively receive, apply, and distribute the Collections as provided in the Loan Documents;
(e) open and maintain such bank accounts and lock boxes as Agent deems necessary and appropriate in accordance with the Loan Documents for the foregoing purposes with respect to the Collateral
and the Collections; (f) perform, exercise, and enforce any and all other rights and remedies of the Lender Group with respect to Borrowers, the Obligations, the Collateral, the Collections, or
otherwise related to any of same as provided in the Loan Documents; and (g) incur and pay such Lender Group Expenses as Agent may deem necessary or appropriate for the performance and
fulfillment of its functions and powers pursuant to the Loan Documents.

16.2Delegation of Duties.Except as otherwise provided in this section, Agent
may execute any of its duties under this Agreement or any other Loan Document by or through agents, employees or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. Agent shall not be responsible for the negligence or misconduct of any agent or attorney-in-fact that it selects as long as
such selection was made in compliance with this section and without gross negligence or willful misconduct.

16.3Liability of Agent.None of the Agent-Related Persons shall (i) be
liable for any action taken or omitted to be taken by any of them under or in connection with this Agreement or any other Loan Document or the transactions contemplated hereby (except for its own
gross negligence or willful misconduct), or (ii) be responsible in any manner to any of the Lenders for any recital, statement, representation or warranty made by Borrowers or any Subsidiary or
Affiliate of Borrowers, or any officer or director thereof, contained in this Agreement or in any other Loan Document, or in any certificate, report, statement or other document referred to or
provided for in, or received by Agent under or in connection with, this Agreement or any other Loan Document, or the validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of any Borrower or any other party to any Loan Document to perform its obligations hereunder or thereunder. No Agent-Related Person shall be
under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or
to inspect the Books or properties of Borrowers or the books or records or properties of any of Borrowers' Subsidiaries or Affiliates.

16.4Reliance by Agent.Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone message, statement or other document or conversation
believed by it to be genuine and correct and to have been signed, sent, or made by the proper Person or Persons, and upon advice and statements of
legal counsel (including counsel to any Borrower or counsel to any Lender), independent accountants and other experts selected by Agent. Agent shall be fully justified in failing or refusing to take
any action under this Agreement or any other Loan Document unless Agent shall first receive such advice or concurrence of the Lenders as it deems appropriate and until such instructions are

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received, Agent shall act, or refrain from acting, as it deems advisable. If Agent so requests, it shall first be indemnified to its reasonable satisfaction by Lenders against any and all liability
and expense that may be incurred by it by reason of taking or continuing to take any such action. Agent shall in all cases be fully protected in acting, or in refraining from acting, under this
Agreement or any other Loan Document in accordance with a request or consent of the Lenders and such request and any action taken or failure to act pursuant thereto shall be binding upon all of the
Lenders.

16.5Notice of Default or Event of Default.Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default, except with respect to defaults in the payment of principal, interest, fees, and expenses required to be paid to Agent for the
account of the Lenders, except with respect to Events of Default of which Agent has actual knowledge, unless Agent shall have received written notice from a Lender or Borrowers referring to this
Agreement, describing such Default or Event of Default, and stating that such notice is a "notice of default." Agent promptly will notify the Lenders of its receipt of any such notice or of any Event
of Default of which Agent has actual knowledge. If any Lender obtains actual knowledge of any Event of Default, such Lender promptly shall notify the other Lenders and Agent of such Event of Default.
Each Lender shall be solely responsible for giving any notices to its Participants, if any. Subject toSection 16.4, Agent shall take such action
with respect to such Default or Event of Default as may be requested by the Required Lenders in accordance withSection 9; provided, however,
that unless and until Agent has received any such request, Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable.

16.6Credit Decision.Each Lender acknowledges that none of the Agent-Related
Persons has made any representation or warranty to it, and that no act by Agent hereinafter taken, including any review of the affairs of Borrowers and their Subsidiaries or Affiliates, shall be
deemed to constitute any representation or warranty by any Agent-Related Person to any Lender. Each Lender represents to Agent that it has, independently and without reliance upon any Agent-Related
Person and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other
condition and creditworthiness of Borrowers and any other Person (other than the Lender Group) party to a Loan Document, and all applicable bank regulatory laws relating to the transactions
contemplated hereby, and made its own decision to enter into this Agreement and to extend credit to Borrowers. Each Lender also represents that it will, independently and without reliance upon any
Agent-Related Person and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking
action under this Agreement and the other Loan Documents, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and
other condition and creditworthiness of Borrowers and any other Person (other than the Lender Group) party to a Loan Document. Except for notices, reports and other documents expressly herein required
to be furnished to the Lenders by Agent, Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, prospects, operations,
property, financial and
other condition or creditworthiness of Borrowers and any other Person party to a Loan Document that may come into the possession of any of the Agent-Related Persons.

16.7Costs and Expenses; Indemnification.Agent may incur and pay Lender Group
Expenses to the extent Agent reasonably deems necessary or appropriate for the performance and fulfillment of its functions, powers, and obligations pursuant to the Loan Documents, including without
limiting the generality of the foregoing, court costs, reasonable attorneys fees and expenses, costs of collection by outside collection agencies and auctioneer fees and costs of security guards or
insurance premiums paid to maintain the Collateral, whether or not Borrowers are obligated to reimburse Agent or Lenders for such expenses pursuant to the Loan Agreement or otherwise. Agent is
authorized and directed to deduct and retain sufficient amounts from Collections to reimburse Agent for such out-of-pocket costs

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and expenses prior to the distribution of any amounts to Lenders. In the event Agent is not reimbursed for such costs and expenses from Collections, each Lender hereby agrees that it is and shall be
obligated to pay to or reimburse Agent for the amount of such Lender's Pro Rata Share thereof. Whether or not the transactions contemplated hereby are consummated, the Lenders shall indemnify upon
demand the Agent-Related Persons (to the extent not reimbursed by or on behalf of Borrowers and without limiting the obligation of Borrowers to do so), according to their Pro Rata Shares, from and
against any and all Indemnified Liabilities; provided, however, that no Lender shall be liable for the payment to any Agent-Related Person of any portion of such Indemnified Liabilities resulting
solely from such Person's gross negligence or willful misconduct. Without limitation of the foregoing, each Lender shall reimburse Agent upon demand for such Lender's ratable share of any costs or
out-of-pocket expenses (including attorneys fees and expenses) incurred by Agent in connection with the preparation, execution, delivery, administration, modification,
amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, any other Loan Document, or
any document contemplated by or referred to herein, to the extent that Agent is not reimbursed for such expenses by or on behalf of Borrowers. The undertaking in this section shall survive the payment
of all Obligations hereunder and the resignation or replacement of Agent.

16.8Agent in Individual Capacity.Foothill and its Affiliates may make loans
to, issue letters of credit for the account of, accept deposits from, acquire equity interests in and generally engage in any kind of banking, trust, financial advisory, underwriting or other business
with any Borrower and its Subsidiaries and Affiliates and any other Person (other than the Lender Group) party to any Loan Documents as though Foothill were not Agent hereunder, and, in each case,
without notice to or consent of the Lenders. The Lenders acknowledge that, pursuant to such activities, Foothill or its Affiliates may receive information regarding a Borrower or its Affiliates and
any other Person (other than the Lender Group) party to any Loan Documents that is subject to confidentiality obligations in favor of such Borrower or such other Person and that prohibit the
disclosure of such information to the Lenders, and the Lenders acknowledge that, in such circumstances (and in the absence of a waiver of such confidentiality obligations, which waiver Agent will use
its reasonable best efforts to obtain), Agent shall not be under any obligation to provide such information to them. The terms "Lender" and "Lenders" include Foothill in its individual capacity.

16.9Successor Agent.Agent may resign as Agent upon 45 days notice to
the Lenders. If Agent resigns under this Agreement, the Required Lenders shall appoint a successor Agent for the Lenders. If no successor Agent is appointed prior to the effective date of the
resignation of Agent, Agent may appoint, after consulting with the Lenders, a successor Agent. If Agent has materially breached or failed to perform any material provision of this Agreement or of
applicable law, the Required Lenders may agree in writing to remove and replace Agent with a successor Agent from among the Lenders. In any such event, upon the acceptance of its appointment as
successor Agent hereunder, such successor Agent shall succeed to all the rights, powers and duties of the retiring Agent and the term "Agent" shall mean such successor Agent and the retiring Agent's
appointment, powers and duties as Agent shall be terminated. After any retiring Agent's resignation hereunder as Agent, the provisions of this Section 16shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this Agreement. If no
successor Agent has accepted appointment as Agent by the date which is 45 days following a retiring Agent's notice of resignation, the retiring Agent's resignation shall nevertheless thereupon
become effective and the Lenders shall perform all of the duties of Agent hereunder until such time, if any, as the Lenders appoint a successor Agent as provided for above.

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16.10Lender in Individual Capacity.Any Lender and its respective Affiliates
may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in and generally engage in any kind of banking, trust, financial advisory, underwriting or
other business with each Borrower and its Subsidiaries and Affiliates and any other Person (other than the Lender Group) party to any Loan Documents as though such Lender were not the agent of Agent
hereunder without notice to or consent of the Lenders. The Lenders acknowledge that, pursuant to such activities, such Lender and its respective Affiliates may receive information regarding Borrowers
or their Affiliates and any other Person (other than the Lender Group) party to any Loan Documents that is subject to confidentiality obligations set forth in Section 16.17(d)in favor of Borrowers
or such other Person and that prohibit the disclosure of such information to the Lenders, and the Lenders
acknowledge that, in such circumstances (and in the absence of a waiver of such confidentiality obligations, which waiver such Lender will use its reasonable best efforts to obtain), such Lender not
shall be under any obligation to provide such information to them. With respect to the Swing Loans and Agent Advances, Swing Lender shall have the same rights and powers under this Agreement as any
other Lender and may exercise the same as though it were not the sub-agent of the Agent.

16.11Withholding Tax.



Such
Lender agrees promptly to notify Agent and Administrative Borrower of any change in circumstances which would modify or render invalid any claimed exemption or reduction.



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16.12Collateral Matters.



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16.13Restrictions on Actions by Lenders; Sharing of Payments.



16.14Agency for Perfection.Agent and each Lender hereby appoints each other
Lender as agent for the purpose of perfecting the Agent's Liens in assets which, in accordance with Article 9 of the UCC can be perfected only by possession. Should any Lender obtain possession
of any such Collateral, such Lender shall notify Agent thereof, and, promptly upon Agent's request therefor shall deliver such Collateral to Agent or in accordance with Agent's instructions.

16.15Payments by Agent to the Lenders.All payments to be made by Agent to the
Lenders shall be made by bank wire transfer or internal transfer of immediately available funds pursuant to such wire transfer instructions as each party may designate for itself by written notice to
Agent. Concurrently with each such payment, Agent shall identify whether such payment (or any portion thereof) represents principal, premium or interest on Advances or otherwise.

16.16Concerning the Collateral and Related Loan Documents.Each member of the
Lender Group authorizes and directs Agent to enter into this Agreement and the other Loan Documents relating to the Collateral, for the benefit of the Lender Group. Each member of the Lender Group
agrees that any action taken by Agent or all Lenders, as applicable, in accordance with the terms of this Agreement or the other Loan Documents relating to the Collateral and the exercise by Agent or
all Lenders, as applicable, of their respective powers set forth therein or herein, together with such other powers that are reasonably incidental thereto, shall be binding upon all of the Lenders.

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16.17Field Audits and Examination Reports; Confidentiality; Disclaimers by Lenders; Other Reports and
Information.

By
signing this Agreement, Agent (with respect to clause (d) below only) and each Lender:



In
addition to the foregoing: (x) Any Lender may from time to time request of Agent in writing that Agent provide to such Lender a copy of any report or document provided by Borrowers to Agent
that has not been contemporaneously provided by Borrowers to such Lender, and, upon receipt of such request, Agent shall provide a copy of same to such Lender promptly upon receipt thereof from
Borrowers; (y) To the extent that Agent is entitled, under any provision of the Loan Documents, to request additional reports or information from Borrowers, any Lender may, from time to time,

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reasonably request Agent to exercise such right as specified in such Lender's notice to Agent, whereupon Agent promptly shall request of Administrative Borrower the additional reports or information
specified by such Lender, and, upon receipt thereof from Administrative Borrower, Agent promptly shall provide a copy of same to such Lender; and (z) Any time that Agent renders to Borrowers a
statement regarding the Loan Account, Agent shall send a copy of such statement to each Lender.

16.18Several Obligations; No Liability.Notwithstanding that certain of the
Loan Documents now or hereafter may have been or will be executed only by or in favor of Agent in its capacity as such, and not by or in favor of the Lenders, any and all obligations on the part of
Agent (if any) to make any credit available hereunder shall constitute the several (and not joint) obligations of the respective Lenders on a ratable basis, according to their respective Commitments,
to make an amount of such credit not to exceed, in principal amount, at any one time outstanding, the amount of their respective Commitments. Nothing contained herein shall confer upon any Lender any
interest in, or subject any Lender to any liability for, or in respect of, the business, assets, profits, losses, or liabilities of any other Lender. Each Lender shall be solely responsible for
notifying its Participants of any matters relating to the Loan Documents to the extent any such notice may be required, and no Lender shall have any obligation, duty, or liability to any Participant
of any other Lender. Except as provided inSection 16.7, no member of the Lender Group shall have any liability for the acts or any other member
of the Lender Group. No Lender shall be responsible to Borrowers or any other Person for any failure by any other Lender to fulfill its obligations to make credit available hereunder, nor to advance
for such other Lender or on its behalf in connection with its Commitment, nor to take any other action on its behalf hereunder or in connection with the financing contemplated herein.

16.19Legal Representation of Agent.In connection with the negotiation,
drafting, and execution of this Agreement and the other Loan Documents, or in connection with future legal representation relating to loan administration, amendments, modifications, waivers, or
enforcement of remedies, Brobeck, Phleger & Harrison LLP ("Brobeck") only has represented and only shall represent Foothill in its capacity as
Agent and as a Lender. Each other Lender hereby acknowledges that Brobeck does not represent any other Lender in connection with any such matters.

16.20Documentation Agent.

Notwithstanding
the provisions of this Agreement or any of the other Loan Documents, FRF (in its capacity as Documentation Agent as opposed to its capacity as a Lender) shall have no
powers, rights, duties, responsibilities, or liabilities with respect to this Agreement and the other Loan Documents nor shall FRF have or be deemed to have any fiduciary relationship with any Lender.

17. GENERAL PROVISIONS.

17.1Effectiveness.This Agreement shall be binding and deemed effective when
executed by each Borrower and each member of the Lender Group whose signature is provided for on the signature pages hereof.

17.2Section Headings.Headings and numbers have been set forth herein for
convenience only. Unless the contrary is compelled by the context, everything contained in each section applies equally to this entire Agreement.

17.3Interpretation.Neither this Agreement nor any uncertainty or ambiguity
herein shall be construed or resolved against the Lender Group or Borrowers, whether under any rule of construction or otherwise. On the contrary, this Agreement has been reviewed by all parties and
shall be construed and interpreted according to the ordinary meaning of the words used so as to fairly accomplish the purposes and intentions of all parties hereto.

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17.4Severability of Provisions.Each provision of this Agreement shall be
severable from every other provision of this Agreement for the purpose of determining the legal enforceability of any specific provision.

17.5Amendments in Writing.Except as set forth in Section 15.1, this
Agreement can only be amended by a writing signed by Agent, the Required Lenders, and each Borrower.

17.6Counterparts; Telefacsimile Execution.This Agreement may be executed in
any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together,
shall constitute but one and the same Agreement. Delivery of an executed counterpart of this Agreement by telefacsimile shall be equally as effective as delivery of an original executed counterpart of
this Agreement. Any party delivering an executed counterpart of this Agreement by telefacsimile also shall deliver an original executed counterpart of this Agreement but the failure to deliver an
original executed counterpart shall not affect the validity, enforceability, and binding effect of this Agreement. The foregoing shall apply to each other Loan Document mutatis mutandis.

17.7Revival and Reinstatement of Obligations.If the incurrence or payment of
the Obligations by Borrowers or any guarantor of the Obligations or the transfer by either or both of such parties to the Lender Group of any property of either or both of such parties should for any
reason subsequently be declared to be void or voidable under any state or federal law relating to creditors' rights, including provisions of the Bankruptcy Code relating to fraudulent conveyances,
preferences, and other voidable or recoverable payments of money or transfers of property (collectively, a "Voidable Transfer"), and if the Lender Group
is required to repay or restore, in whole or in part, any such Voidable Transfer, or elects to do so upon the reasonable advice of its counsel, then, as to any such Voidable Transfer, or the amount
thereof that the Lender Group is required or elects to repay or restore, and as to all reasonable costs, expenses, and attorneys fees of the Lender Group related thereto, the liability of Borrowers or
such guarantor automatically shall be revived, reinstated, and restored and shall exist as though such Voidable Transfer had never been made.

17.8Integration.This Agreement, together with the other Loan Documents,
reflects the entire understanding of the parties with respect to the transactions contemplated hereby and shall not be contradicted or qualified by any other agreement, oral or written, before the
date hereof.

17.9GCI as Agent for Borrowers.Each Borrower hereby irrevocably appoints GCI
as the borrowing agent and attorney-in-fact for such Borrower (the "Administrative Borrower") which appointment shall remain in
full force and effect unless and until Agent shall have received prior written notice signed by each Borrower that such appointment has been revoked and that another Borrower has been appointed
Administrative Borrower. Each Borrower hereby irrevocably appoints and authorizes the Administrative Borrower (i) to provide Agent with all notices with respect to Advances and Letters of
Credit obtained for the benefit of any Borrower and all other notices and instructions under this Agreement and (ii) to take such action as the Administrative Borrower deems appropriate on its
behalf to obtain Advances and Letters of Credit and to exercise such other powers as are reasonably incidental thereto to carry out the purposes of this Agreement. It is understood that the handling
of the Loan Account and Collateral of Borrowers in a combined fashion, as more fully set forth herein, is done solely as an accommodation to Borrowers in order to utilize the collective borrowing
powers of Borrowers in the most efficient and economical manner and at their request, and that Lender Group shall not incur liability to any Borrower as a result hereof. Each Obligor expects to derive
benefit, directly or indirectly, from the handling of the Loan Account and the Collateral in a combined fashion since the successful operation of each Borrower is dependent on the continued successful
performance of the integrated group. To induce Lender Group to do so, and in consideration thereof, each Obligor hereby jointly and severally agrees to indemnify Lender Group and hold Lender Group
harmless against any and all liability, expense, loss or claim of damage or injury, made against

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Lender Group by any Borrower or by any third party whosoever, arising from or incurred by reason of (a) the handling of the Loan Account and Collateral of Borrowers as herein provided,
(b) Lender Group's relying on any instructions of the Administrative Borrower, or (c) any other action taken by Lender Group hereunder or under the other Loan Documents, except that
Borrowers will have no liability to the relevant Agent-Related Person or Lender-Related Person under thisSection 17.9with respect to any
liability that has been finally determined by a court of competent jurisdiction to have resulted solely from the gross negligence or willful misconduct of such Agent-Related Person or Lender-Related
Person, as the case may be.

[Signature
page to follow.]

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IN WITNESS WHEREOF,the parties hereto have caused this Agreement to be executed and delivered as of the date first above written.

| |  | GUITAR CENTER, INC.,a Delaware corporation       
| |  | -------------------------------------------------
| |  | By:                                              
| |  |                                                  
| |  | Title:                                           
| |  |                                                  
| |  | GUITAR CENTER STORES, INC.,a Delaware corporation
| |  | By:                                              
| |  |                                                  
| |  | Title                                            
| |  |                                                  
| |  | MUSICIAN'S FRIEND, INC.,a Delaware corporation   
| |  | By:                                              
| |  |                                                  
| |  | Title:                                           
| |  |                                                  
| |  | [signature page continues]                       

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| |  | FOOTHILL CAPITAL CORPORATION,a California corporation, as Agent and as a Lender                                                                                                        
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | By:                                                                                                                                                                                    
| |  |                                                                                                                                                                                        
| |  | Name:                                                                                                                                                                                  
| |  | Title:                                                                                                                                                                                 
| |  | Wiring Instructions:
The Chase Manhattan Bank
New York, NY
ABA# 021000021
Credit: Foothill Capital Corporation
Account No. 323-266193
Reference: For the benefit of Guitar Center, Inc.
| |  | [signature page continues]                                                                                                                                                             

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| |  | FLEET RETAIL FINANCE INC,a Delaware corporation, formerly know as BankBoston Retail Finance Inc., as Documentation Agent and as a Lender                                                                 
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | By:                                                                                                                                                                                                      
| |  |                                                                                                                                                                                                          
| |  | Name:                                                                                                                                                                                                    
| |  | Title:                                                                                                                                                                                                   
| |  | Wiring Instructions:
Fleet Retail Finance Inc.
40 Broad Street, 10th Fl.
Boston, MA 02109
ABA# 011000138
Account No. 53039952
Account Name: BankBoston Retail Finance
Reference: Guitar Center Settlement
| |  | [signature page continues]                                                                                                                                                                               

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| |  | BANK OF AMERICA, N.A.,as a Lender                                                                                                                                                          
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | By:                                                                                                                                                                                        
| |  |                                                                                                                                                                                            
| |  | Name:                                                                                                                                                                                      
| |  | Title:                                                                                                                                                                                     
| |  | Wiring Instructions:
Bank of America, N.A.
555 California Street
San Francisco, CA 94104
ABA# 121000358
Credit Account No. 12575-03561
Credit Account Name: Bank of America Business Credit
| |  | Reference: Guitar Center                                                                                                                                                                   
| |  | [signature page continues]                                                                                                                                                                 

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| |  | UNION BANK OF CALIFORNIA, N.A.,as a Lender                                                                                                                                                                                                    
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | By:                                                                                                                                                                                                                                           
| |  |                                                                                                                                                                                                                                               
| |  | Name:                                                                                                                                                                                                                                         
| |  | Title:                                                                                                                                                                                                                                        
| |  | Wiring Instructions:
Union Bank of California, N.A.
1980 Saturn Street
Monterey Park, California 81754-7417
ABA# 122000496
Office: Commercial Finance Division
Credit To: RC# 95300
Wire Transfer Clearing A/C#196431
Reference: Guitar Center

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