Document:

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                                                                   EXHIBIT 10.38

                    INTERCREDITOR AND SUBORDINATION AGREEMENT

                  INTERCREDITOR AND SUBORDINATION AGREEMENT, dated as of
September 29, 2003 by and among CompUSA Inc., a Delaware corporation (the
"Subordinated Lender"; collectively, together with any other holders from time
to time of the Subordinated Obligations, the "Subordinated Lenders"), Good Guys
California, Inc., a California corporation (together with its successors and
assigns, the "Borrower"), Good Guys, Inc., a Delaware corporation, (together
with its successors and assigns, "Holdings") (Borrower, Holdings and the other
Credit Parties to the Senior Credit Agreement identified below may be referred
to herein collectively as the "Credit Parties" and individually as a "Credit
Party") and BANK OF AMERICA, N.A., a national banking association, as
administrative agent for the Lenders (the "Senior Lenders") from time to time
party to the Senior Credit Agreement (together with its successors and assigns,
the "Senior Agent").

                  The parties hereto hereby agree as follows:

                  1.       Definitions.

                  (a)      Unless otherwise defined herein, terms defined in the
Senior Credit Agreement and used herein shall have the meanings given to them in
the Senior Credit Agreement.

                  (b)      The following terms shall have the following
meanings:

                  "Agreement": this Intercreditor and Subordination Agreement,
as the same may be amended, supplemented or otherwise modified from time to
time.

                  "Blockage Notice": a written notice from the Senior Agent to
the Subordinated Lenders that (a) an Other Event of Default has occurred and is
continuing or (b) an Other Event of Default would occur if a scheduled interest
or principal payment were made under the Subordinated Note in accordance with
the terms thereof.

                  "Blockage Period": any period commencing on the date a
Blockage Notice is given and ending on the earlier to occur of: (a) the date
when (1) the Event of Default that was the basis for such notice has been cured
or waived or (2) the conditions shall have ceased to exist which would cause an
Event of Default to occur if a scheduled interest or principal payment were made
under the Subordinated Note in accordance with the terms thereof; and (b) 180
days after the date such Blockage Notice is given.

                  "Collateral": the collective reference to any and all property
from time to time subject to security interests to secure payment or performance
of the Senior Obligations or the Subordinated Obligations.

                  "Collateral Enforcement Action": shall mean any action by any
Subordinated Lender to (a) exercise or seek to exercise any rights or exercise
any remedies with respect to any Collateral, (b) institute any action or
proceeding with respect to such rights or remedies, including without
limitation, any action of foreclosure or (c) contest, protest or object to any
foreclosure proceeding, postpetition financing, use of

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cash collateral or action brought by the Senior Agent or any Senior Lender or to
any other exercise by the Senior Agent or any Senior Lender of any rights and
remedies under any Senior Loan Documents.

                  "Collection Action": shall mean (a) to demand, sue for, take
or receive from or on behalf of any Credit Party or any guarantor of the
Subordinated Obligations, by set-off or in any other manner, the whole or any
part of any moneys which may now or hereafter be owing by any Credit Party with
respect to the Subordinated Obligations, (b) to initiate or participate with
others in any suit, action or proceeding against any Credit Party to (i) enforce
payment of or to collect the whole or any part of the Subordinated Obligations
or (ii) commence judicial enforcement of any of the rights and remedies under
the Subordinated Loan Documents or applicable law with respect to the
Subordinated Obligations or the Subordinated Loan Documents, including
initiating, participating in or commencing a case or proceeding referred to in
the definition of Insolvency Event, (c) to accelerate any Subordinated
Obligations, or (d) to exercise any put option or to cause any Credit Party to
honor any redemption or mandatory prepayment obligation under any Subordinated
Loan Document.

                  "Insolvency Event": (a) any Credit Party or any of its
Subsidiaries commencing any case, proceeding or other action (1) under any
existing or future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization, conservatorship or relief of debtors,
seeking to have an order for relief entered with respect to it, or seeking to
adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment, winding-up, liquidation, dissolution, composition or other relief
with respect to it or its debts, or (2) seeking appointment of a receiver,
trustee, custodian, conservator or other similar official for it or for all or
any substantial part of its assets, or any Credit Party or any of its
Subsidiaries making a general assignment for the benefit of its creditors; or
(b) there being commenced against any Credit Party or any of its Subsidiaries
any case, proceeding or other action of a nature referred to in clause (a) above
which (1) results in the entry of an order for relief or any such adjudication
or appointment or (2) remains undismissed, undischarged or unbonded for a period
of 60 days; or (c) there being commenced against any Credit Party or any of its
Subsidiaries any case, proceeding or other action seeking issuance of a warrant
of attachment, execution, distraint or similar process against all or any
substantial part of its assets which results in the entry of an order for any
such relief which shall not have been vacated, discharged, or stayed or bonded
pending appeal within 60 days from the entry thereof; or (d) any Credit Party or
any of its Subsidiaries taking any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the acts set forth in clause
(a), (b) or (c) above; or (e) any Credit Party or any of its Subsidiaries
generally not paying, or being unable to pay, or admitting in writing its
inability to pay, its debts as they become due.

                  "Other Event of Default": any Event of Default (other than a
Payment Event of Default) under the Senior Credit Agreement or any of the Senior
Loan Documents or any event the occurrence of which entitles the Senior Agent or
Senior Lenders to accelerate the maturity of any of the Senior Obligations.

                  "Net Sale Proceeds": the sum of cash proceeds received from
any sale of all or any portion of the Collateral, net of all commissions and
other fees and all other out-of-pocket costs and expenses whatsoever incurred by
the Credit Parties, the Senior Lenders and/or the Senior Agent in connection
with such sale, including without limitation, legal fees and appraisal costs.

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                  "Payment Event of Default": any default in the payment of the
Senior Obligations (whether upon maturity, mandatory prepayment, acceleration or
otherwise) beyond any applicable grace period with respect thereto.

                  "Permitted Securities": securities of any Credit Party or
other Person, the payment of which is subordinated, at least to the extent and
substantially on the terms set forth in this Agreement, to the prior payment in
full of all then outstanding Senior Obligations and to any securities issued in
respect of any Senior Obligations under any plan of partial or complete
liquidation, reorganization, readjustment, arrangement, composition or
extension.

                  "Senior Credit Agreement": the Loan and Security Agreement
dated as of September 30, 1999, as amended by that certain First Amendment to
Loan and Security Agreement dated as of August 16, 2001, by those certain letter
amendments dated as of March 27, 2002, and May 15, 2002, and as further amended
by that certain Second Amendment to Loan and Security Agreement dated as of May
22, 2001, that certain Third Amendment to Loan and Security Agreement dated as
of July 2, 2002, and that certain Fourth Amendment to Loan and Security
Agreement dated as of July 8, 2003, among the Borrower, the other Credit
Parties, the Senior Lenders, General Electric Capital Corporation as
documentation agent, and the Senior Agent, as the same may be further amended,
modified or supplemented from time to time, including, without limitation,
amendments, modifications, supplements and restatements thereof giving effect to
increases in the Senior Loans (including increases in the Borrowing Base or
other measurements of availability of the Senior Loans), renewals, extensions,
refundings, deferrals, restructurings, replacements or refinancings of, or
additions to, the arrangements provided in such Credit Agreement (whether
provided by the original Senior Agent or a successor Senior Agent or other
Lenders).

                  "Senior Loans": the loans made by the Senior Lenders to the
Borrower pursuant to the Senior Credit Agreement.

                  "Senior Loan Documents": the collective reference to the
Senior Credit Agreement, the Senior Notes, the Senior Security Documents and all
other documents that from time to time evidence the Senior Obligations or secure
payment or performance thereof, as modified from time to time.

                  "Senior Notes": the promissory notes of the Borrower
outstanding from time to time under the Senior Credit Agreement.

                  "Senior Obligations": the collective reference to the unpaid
principal of and interest on the Senior Notes and all other obligations and
liabilities of the Credit Parties to the Senior Lenders or the Senior Agent of
whatever kind or nature pursuant to, under or in connection with the Senior Loan
Documents (including, without limitation, indemnity obligations with respect to
claims asserted or threatened by third parties, interest accruing at the then
applicable rate provided in the Senior Credit Agreement after the maturity of
the Senior Loans and interest accruing at the then applicable rate provided in
the Senior Credit Agreement after the filing of any petition in bankruptcy, or
the commencement of any insolvency, reorganization or like proceeding, relating
to the Borrower, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding), whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred, whether
arising under, out of, or in connection with, the Senior Credit Agreement, the
Senior Notes, this Agreement, the other Senior Loan

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Documents or any other document made, delivered or given by any Credit Party, in
each case whether on account of principal, interest, reimbursement obligations,
fees, indemnities, costs, expenses or otherwise (including, without limitation,
all fees and disbursements of counsel to the Senior Agent that are required to
be paid by Credit Parties pursuant to the terms of the Senior Credit Agreement
or this Agreement or any other Senior Loan Document).

                  "Senior Security Documents": the collective reference to all
documents and instruments, now existing or hereafter arising, which create or
purport to create a security interest in property to secure payment or
performance of the Senior Obligations.

                  "Subordinated Loan Documents: the collective reference to the
Subordinated Note and any other documents or instruments that from time to time
evidence the Subordinated Obligations or secure or support payment or
performance thereof.

                  "Subordinated Loan": the loans made by the Subordinated
Lenders pursuant to the Subordinated Loan Documents.

                  "Subordinated Note": the Unsecured Subordinated Convertible
Promissory Note, dated September 29, 2003, from the Borrower to Subordinated
Lender, in the original principal amount of $5,000,000.

                  "Subordinated Obligations": the collective reference to the
unpaid principal and interest on the Subordinated Note and all other obligations
and liabilities of any of the Credit Parties to the Subordinated Lenders
(including, without limitation, interest accruing at the then applicable rate
provided in the Subordinated Loan Documents after the maturity of the
Subordinated Loan and interest accruing at the then applicable rate provided in
the Subordinated Loan Documents after the filing of any petition in bankruptcy,
or the commencement of any insolvency, reorganization or like proceeding,
relating to the Borrower, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding), whether direct or
indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection with, the
Subordinated Loan Documents, the Subordinated Note, this Agreement, or any other
Subordinated Loan Document, in each case whether on account of principal,
interest, reimbursement obligations, fees, indemnities, costs, expenses or
otherwise (including, without limitation, all fees and disbursements of counsel
to the Subordinated Lenders that are required to be paid by any Credit Party
pursuant to the terms of this Agreement or any other Subordinated Loan
Document).

                  "Uniform Commercial Code": the Uniform Commercial Code as the
same may, from time to time, be enacted and in effect in the State of
California; provided, that to the extent that the Uniform Commercial Code is
used to define any term herein or in any Loan Document and such term is defined
differently in different Articles or Divisions of the Uniform Commercial Code,
the definition of such term contained in Article or Division 9 shall govern;
provided further, that in the event that, by reason of mandatory provisions of
law, any or all of the attachment, perfection or priority of, or remedies with
respect to, Senior Lenders' Lien on any Collateral is governed by the Uniform
Commercial Code as enacted and in effect in a jurisdiction other than the State
of California, the term "Uniform Commercial Code" shall mean the Uniform
Commercial Code as enacted and in effect in such other jurisdiction solely for
purposes of the provisions thereof relating to such attachment, perfection,
priority or remedies and for

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purposes of definitions related to such provisions.

                  (c)      The words "hereof," "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement, and
section and paragraph references are to this Agreement unless otherwise
specified.

                  (d)      The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.

                  2.       Subordination.

                  (a)      Each Credit Party and each of the Subordinated
Lenders agrees, for itself and each future holder of the Subordinated
Obligations, that the Subordinated Obligations are expressly "subordinate and
junior in right of payment" (as that phrase is defined in paragraph 2(b)) to all
Senior Obligations.

                  (b)      "Subordinate and junior in right of payment" means
that: (1) no part of the Subordinated Obligations shall have any claim to the
assets of any Credit Party on a parity with or prior to the claim of the Senior
Obligations; and (2) without the express prior written consent of the Senior
Agent, no Subordinated Lender will take, demand or receive from any Credit
Party, and no Credit Party will make, give or permit, directly or indirectly, by
set-off, redemption, purchase or in any other manner, any payment of (of
whatever kind or nature, whether in cash, property, securities (other than
Permitted Securities) or otherwise) the Subordinated Obligations, including,
without limitation, any letter of credit or similar credit support facility to
support payment of the Subordinated Obligations, unless and until the Senior
Obligations have been paid in full and the obligation of Senior Agent and Senior
Lenders to extend credit to Borrower under the Senior Loan Documents shall have
been irrevocably terminated; provided, however, that at any time, except during
a Blockage Period or when a Payment Event of Default has occurred and is
continuing, the Borrower may make, and the Subordinated Lenders may receive,
regularly scheduled payments (not prepayments) on account of interest on the
Subordinated Note in accordance with the terms thereof determined on a
non-accelerated basis (without giving effect to any default rate of interest
thereunder) and principal payments when due (but no sooner than September 29,
2005) upon the "Maturity Date" of the Subordinated Note (as such term is defined
in the Subordinated Note). Notwithstanding clause (2), the Subordinated Lender
shall be entitled to accept and receive payment in full of the Subordinated
Obligations as a result of the refinancing of the Subordinated Obligations if
(i) such refinancing does not shorten the maturity date, increase the interest
rate or fees payable, or increase the principal amount applicable to the
Subordinated Obligations and (ii) the provider of such refinancing debt subjects
such debt to the terms of this Intercreditor and Subordination Agreement.

                  (c)      Upon the termination of any Blockage Period or if any
Payment Event of Default has been cured or waived or shall have ceased to exist,
the Subordinated Lenders' right to receive payments as provided in clause
2(b)(2) shall be reinstated and, subject to the limitations of clause 2(b)(2),
the Borrower may resume making such payments to the Subordinated Lenders
including any payments that were deferred as a result thereof.

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                  (d)      The expressions "prior payment in full," "payment in
full," "paid in full" and any other similar terms or phrases when used herein
with respect to the Senior Obligations shall mean the payment in full, in
immediately available funds, of all of the Senior Obligations.

                  3.       Additional Provisions Concerning Subordination.

                  (a)      The Subordinated Lenders and each Credit Party agree
that upon the occurrence of any Insolvency Event:

                           (1)      all Senior Obligations shall be paid in full
before any payment or distribution of whatever kind or nature is made with
respect to the Subordinated Obligations; provided, however, that Subordinated
Lenders may receive and retain any distributions on account of Subordinated
Obligations to the extent such distributions consist solely of Permitted
Securities; and

                           (2)      any payment or distribution of assets of any
Credit Party, whether in cash, property or securities (other than Permitted
Securities), to which any Subordinated Lender would be entitled except for the
provisions hereof, shall be paid or delivered by such Credit Party, or any
receiver, trustee in bankruptcy, liquidating trustee, disbursing agent or other
Person making such payment or distribution, directly to the Senior Agent, to the
extent necessary to pay in full all Senior Obligations, before any payment or
distribution of any kind or nature shall be made to any Subordinated Lender.

                  (b)      Upon the occurrence of any "Insolvency Event":

                           (1)      each Subordinated Lender irrevocably
authorizes and empowers the Senior Agent (A) to demand, sue for, collect and
receive every payment or distribution on account of the Subordinated Obligations
payable or deliverable in connection with such event or proceeding and give
acquittance therefor, (B) to file claims and proofs of claim in any statutory or
non-statutory proceeding and (C) to take such other actions, in its own name as
Senior Agent, or in the name of the Subordinated Lenders or otherwise, as the
Senior Agent may deem necessary or advisable for the enforcement of the
provisions of this Agreement; provided, however, that the foregoing
authorization and empowerment imposes no obligation on the Senior Agent to take
any such action;

                           (2)      each Subordinated Lender shall take such
action, duly and promptly, as the Senior Agent may request from time to time (A)
to collect the Subordinated Obligations for the account of the Senior Agent and
(B) to file appropriate proofs of claim in respect of the Subordinated
Obligations; and

                           (3)      each Subordinated Lender shall execute and
deliver such powers of attorney, assignments or proofs of claim or other
instruments as the Senior Agent may request to enable the Senior Agent to
enforce any and all claims in respect of the Subordinated Obligations and to
collect and receive any and all payments and distributions which may be payable
or deliverable at any time upon or in respect of the Subordinated Obligations.

                  (c)      If any payment or distribution, whether consisting of
money, property or securities (other than Permitted Securities), shall be
collected or received by any Subordinated Lender in respect of

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the Subordinated Obligations or the Collateral, except payments permitted to be
made at the time of payment or pursuant to a refinancing as provided in
paragraph 2(b), such Subordinated Lender shall forthwith deliver the same to the
Senior Agent, in the form received, duly endorsed to the Senior Agent, if
required, to be applied to the payment or prepayment of the Senior Obligations
until the Senior Obligations are paid in full. Until so delivered, such payment
or distribution shall be held in trust by such Subordinated Lender as the
property of the Senior Agent, segregated from other funds and property held by
such Subordinated Lender.

                  (d)      Until the Senior Obligations are paid in full in
cash, the Subordinated Lenders shall not take any Collection Action or
Collateral Enforcement Action with respect to the Subordinated Obligations,
except for a Collection Action as permitted in the following sentence. Upon the
earlier to occur of (A) acceleration of the Senior Obligations or (B) the
passage of 180 days from the delivery of notice to Senior Agent that a default
has occurred with respect to the Subordinated Obligations and such default shall
not have been cured or waived within such period, the Subordinated Lenders may,
upon five days' prior written notice to Senior Agent, accelerate the
Subordinated Obligations or take any other Collection Action (but not a
Collateral Enforcement Action) which is not in contravention of the provisions
of this Agreement; provided, however, that if following the acceleration of the
Senior Debt as described in clause (A) above, such acceleration is rescinded,
then all Collection Actions taken by the Subordinated Lenders shall likewise be
rescinded if such Collection Action is based solely on clause (A) above.
Notwithstanding the foregoing, until the Senior Obligations are paid in full in
cash and all lending commitments under the Senior Credit Agreement have been
terminated, the Subordinated Lenders shall not (nor shall any agent on their
behalf), without the prior written consent of the Senior Agent and the Senior
Lenders, take any Collateral Enforcement Action.

                  4.       Rights in Collateral.

                  (a)      Notwithstanding anything to the contrary contained in
the Senior Credit Agreement, any Senior Security Document, any other Senior Loan
Document or any Subordinated Security Document or other Subordinated Loan
Document and irrespective of:

                           (1)      the time, order or method of attachment or
perfection of the security interests created by any Senior Security Document or
any Subordinated Security Document;

                           (2)      the time or order of filing or recording of
financing statements or other documents filed or recorded to perfect security
interests in any Collateral;

                           (3)      anything contained in any filing or
agreement to which the Senior Agent or any Subordinated Lender now or hereafter
may be a party; and

                           (4)      the rules for determining perfection or
priority under the Uniform Commercial Code or any other law governing the
relative priorities of secured creditors, any security interest in any
Collateral pursuant to any Senior Security Document has and shall have priority,
to the extent of any unpaid Senior Obligations, over any security interest in
such Collateral pursuant to any Subordinated Security Document.

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                  (b)      So long as the Senior Obligations have not been paid
in full and any Senior Security Document remains in effect, whether or not any
Insolvency Event has occurred,

                           (1)      no Subordinated Lender will take any
Collateral Enforcement Action; and

                           (2)      the Senior Agent and any Senior Lender shall
have the exclusive right to enforce rights and exercise remedies with respect to
the Collateral and Senior Agent shall not be required to marshal any Collateral.

                  (c)      In exercising rights and remedies with respect to the
Collateral, the Senior Agent and Senior Lenders may enforce the provisions of
the Senior Security Documents and exercise remedies thereunder and under any
other Senior Loan Documents, all in such order and in such manner as it or they
may determine in the exercise of its or their sole business judgment. Such
exercise and enforcement shall include, without limitation, the rights to sell
or otherwise dispose of Collateral, to incur expenses in connection with such
sale or disposition and to exercise all the rights and remedies of a secured
lender under the Uniform Commercial Code of any applicable jurisdiction. In
conducting any public or private sale under the Uniform Commercial Code, the
Senior Agent shall give the Subordinated Lenders such notice of such sale as may
be required by the applicable Uniform Commercial Code; provided, however, that
10 days' notice shall be deemed to be commercially reasonable notice.

                  (d)      Any money, property or securities realized upon the
sale, disposition or other realization by the Senior Agent upon all or any part
of the Collateral, shall be applied by the Senior Agent in the following order:

                           (1)      First, to the payment in full of all costs
and expenses (including, without limitation, attorneys' fees and disbursements)
paid or incurred by the Senior Agent or the Senior Lenders in connection with
such realization on the Collateral or the protection of their rights and
interests therein;

                           (2)      Second, to the payment in full of all Senior
Obligations in such order as the Senior Agent may elect in its sole discretion;

                           (3)      Third, to the payment in full of all
Subordinated Obligations then due and which are secured by such Collateral,
which shall be paid to Subordinated Lender, for itself and as agent for any
other Subordinated Lenders; and

                           (4)      Fourth, to pay to the Borrower, or its
representative or as a court of competent jurisdiction may direct, any surplus
then remaining.

                  (e)      The Senior Agent's rights with respect to the
Collateral include the right to release any or all of the Collateral from the
Lien under any Senior Security Document or Subordinated Security Document in
connection with any sale of all or any portion of the Collateral. The
Subordinated Lenders are hereby deemed to have consented to such sale(s) under
the Subordinated Loan Documents. Concurrently with the execution of this
Agreement, and from time to time thereafter, the Subordinated Lenders shall
deliver to the Senior Agent such duly executed and undated Uniform Commercial
Code and, as applicable, intellectual property terminations, satisfactions and
discharges of mortgages (the term

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"mortgage" being deemed to include mortgage deeds, deeds of trust and other
similar instruments creating a lien on real property), termination statements
and partial release statements (in blank as to the assets being released), as
the Senior Agent may request with respect to the Subordinated Lenders' liens on
the Credit Parties' assets. If the Senior Agent shall determine, in connection
with any sale of Collateral, that the termination, satisfaction, discharge or
partial release of the Lien on all or any portion of the Collateral under any
Subordinated Security Document in connection with such sale is necessary or
advisable, the Senior Agent may deliver to the applicable purchaser at such sale
(or, upon the request of such purchaser, file) such previously delivered
termination, satisfaction, discharge or partial release documents, which partial
release documents the Senior Agent is hereby authorized to complete (whether one
or more and from time to time)) by inserting the description of the assets to be
released. The Subordinated Lenders shall execute such other release,
satisfaction, discharge and termination documents and instruments and shall take
such further actions as the Senior Agent shall request. Each Subordinated Lender
hereby irrevocably constitutes and appoints the Senior Agent and any officer or
Senior Agent, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of such Subordinated Lender and in the name of such Subordinated Lender or
in the Senior Agent's own name, from time to time in the Senior Agent's
discretion, for the purpose of carrying out the terms of this paragraph, to take
any and all appropriate action and to execute any and all documents and
instruments which may be necessary or desirable to accomplish the purposes of
this paragraph, including, without limitation, any terminations of financing
statements, partial lien releases, mortgage satisfactions and discharges,
endorsements, assignments or other instruments of transfer, termination or
release, and, in addition, to take any and all other appropriate and
commercially reasonably action for the purpose of carrying out the terms of this
paragraph. Each Subordinated Lender hereby ratifies all that said attorneys
shall lawfully do or cause to be done pursuant to the power of attorney granted
in this paragraph. No person to whom this power of attorney is presented, as
authority for Senior Agent to take any action or actions contemplated hereby,
shall be required to inquire into or seek confirmation from any Subordinated
Lender as to the authority of Senior Agent to take any action described herein,
or as to the existence of or fulfillment of any condition to this power of
attorney, which is intended to grant to Senior Agent unconditionally the
authority to take and perform the actions contemplated herein. Each Subordinated
Lender irrevocably waives any right to commence any suit or action, in law or
equity, against any person or entity which acts in reliance upon or acknowledges
the authority granted under this power of attorney.

                  (f)      Notwithstanding anything contained herein, until all
Senior Obligations have been paid in full and the Senior Security Documents are
no longer are in effect, no Subordinated Lenders shall, without the prior
written consent of Senior Agent, permit to exist any security interest, charge,
encumbrance or other Lien on any Collateral or other property or assets of any
Credit Party to secure or provide for payment or performance of the Subordinated
Obligations, or exercise any right of set off or counterclaim which the
Subordinated Lenders may have with respect to any amounts payable or to be paid
by the Subordinated Lenders to any Credit Party.

                  5.       Consent of Subordinated Lenders.

                  (a)      Each Subordinated Lender consents that, without the
necessity of any reservation of rights against any Subordinated Lender, and
without notice to or further assent by any Subordinated Lender:

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                           (1)      any demand for payment of any Senior
Obligations made by the Senior Agent or any Senior Lender may be rescinded in
whole or in part by the Senior Agent or such Senior Lender, and any Senior
Obligation may be continued, and the Senior Obligations, or the liability of any
Credit Party or any other party upon or for any part thereof, or any collateral
security or guarantee therefor or right of offset with respect thereto, or any
obligation or liability of any Credit Party or any other party under the Senior
Credit Agreement or any other agreement, may, from time to time, in whole or in
part, be renewed, extended, modified, accelerated, compromised, waived,
surrendered, or released by the Senior Agent; and

                           (2)      the Senior Credit Agreement, the Senior
Notes and any other Senior Loan Document may be amended, modified, extended,
supplemented, restated, refinanced, refunded, restructured or terminated, in
whole or in part, as the Senior Agent and Senior Lenders may deem advisable from
time to time, and any collateral security at any time held by the Senior Agent
or any Senior Lender for the payment of any of the Senior Obligations may be
sold, exchanged, waived, surrendered or released; in each case all without
notice to or further assent by any Subordinated Lender, which will remain bound
under this Agreement, and all without impairing, abridging, releasing or
affecting the subordination provided for herein.

                  (b)      Each Subordinated Lender waives any and all notice of
the creation, renewal, extension or accrual of any of the Senior Obligations and
notice of or proof of reliance by the Senior Agent upon this Agreement. The
Senior Obligations, and any of them, shall be deemed conclusively to have been
created, contracted or incurred in reliance upon this Agreement, and all
dealings between any Credit Party, on one hand, and the Senior Agent or any
Senior Lender, on the other hand, shall be deemed to have been consummated in
reliance upon this Agreement. Each Subordinated Lender acknowledges and agrees
that the Senior Lenders and the Senior Agent have relied upon the subordination
provided for herein in entering into the Senior Credit Agreement and in making
funds available to the Borrower thereunder. Each Subordinated Lender waives
notice of or proof of reliance on this Agreement and protest, demand for payment
and notice of default.

                  6.       Negative Covenants of the Subordinated Lenders. So
long as any of the Senior Obligations shall remain outstanding or the obligation
of Senior Agent or any Senior Lender to extend credit to Borrower remains in
effect, no Subordinated Lender shall, without the prior written consent of the
Senior Agent:

                  (a)      sell, assign, or otherwise transfer, in whole or in
part, the Subordinated Obligations or any interest therein to any other Person
(a "Transferee") or create, incur or suffer to exist any security interest,
lien, charge or other encumbrance whatsoever upon the Subordinated Obligations
in favor of any Transferee unless (1) such action is made expressly subject to
this Agreement and (2) the Transferee expressly acknowledges to the Senior
Agent, by a writing in form and substance reasonably satisfactory to the Senior
Agent, the subordination provided for herein and agrees to be bound by all of
the terms hereof; or

                                       10
<PAGE>

                  (b)      permit any of the Subordinated Loan Documents to be
amended, modified or otherwise supplemented (including by way of changes to
definitions) in any manner which would have the effect of (A) increasing the
maximum principal amount of the Subordinated Obligations or rate of interest on
any of the Subordinated Obligations or fees payable in respect thereof, (B)
changing or adding or tightening any event of default or any covenant with
respect to the Subordinated Obligations, (C) changing any redemption or
prepayment provisions of the Subordinated Obligations, (D) altering the
subordination provisions with respect to the Subordinated Obligations,
including, without limitation, subordinating the Subordinated Obligations to any
other debt, (E) shortening the dates upon which payments of principal or
interest are due on any of the Subordinated Obligations, or (F) changing or
amending any other term of the Subordinated Loan Documents if such change or
amendment would increase the obligations of any Credit Party or confer
additional rights on the Subordinated Lenders or any other holder of the
Subordinated Obligations in a manner adverse (in the reasonable judgment of the
Senior Agent) to the Senior Agent or the Senior Lenders, and the parties hereto
agree that any such amendment shall be null and void ab initio and without legal
force and effect.

                  7.       Senior Obligations Unconditional. All rights and
interests of the Senior Agent hereunder, and all agreements and obligations of
the Subordinated Lenders and the Credit Parties hereunder, shall remain in full
force and effect irrespective of:

                  (a)      any lack of validity or enforceability of any Senior
Security Documents or any other Senior Loan Documents;

                  (b)      subject to paragraph 5(a), any change in the time,
manner or place of payment of, or in any other term of, all or any of the Senior
Obligations, or any amendment or waiver or other modification, whether by course
of conduct or otherwise, of the terms of the Senior Credit Agreement or any
other Senior Security Document;

                  (c)      subject to paragraph 5(a), any exchange, release or
non-perfection of any security interest in any Collateral, or any release,
amendment, waiver or other modification, whether in writing or by course of
conduct or otherwise, of all or any of the Senior Obligations or any guarantee
thereof; or

                  (d)      any other circumstances which otherwise might
constitute a defense available to, or a discharge of, any Credit Party in
respect of the Senior Obligations, or of any Subordinated Lender or any Credit
Party in respect of this Agreement.

                  8.       Representations and Warranties. Each Subordinated
Lender represents and warrants to the Senior Agent that:

                  (a)      its Subordinated Note (1) have been issued to it for
good and valuable consideration, (2) are owned by such Subordinated Lender free
and clear of any security interests, liens, charges or encumbrances whatsoever
arising from, through or under such Subordinated Lender, other than the interest
of the Senior Agent under this Agreement, (3) are payable solely and exclusively
to such Subordinated Lender and to no other Person and are payable without
deduction for any defense, offset or counterclaim, and (4) constitute the only
evidence of the obligations evidenced thereby;

                                       11
<PAGE>

                  (b)      such Subordinated Lender has the corporate power and
authority and the legal right to execute and deliver and to perform its
obligations under this Agreement and has taken all necessary corporate action to
authorize its execution, delivery and performance of this Agreement;

                  (c)      this Agreement constitutes a legal, valid and binding
obligation of such Subordinated Lender;

                  (d)      the execution, delivery and performance of this
Agreement will not violate any provision of any requirement of law or
contractual obligation of such Subordinated Lender and will not result in the
creation or imposition of any Lien on any of the properties or revenues of such
Subordinated Lender pursuant to any requirement of law affecting or any
contractual obligation of such Subordinated Lender, except the interest of the
Senior Agent under this Agreement; and

                  (e)      no consent or authorization of, filing with, or other
act by or in respect of, any arbitrator or Governmental Authority and no consent
of any other Person (including, without limitation, any stockholder or creditor
of such Subordinated Lender), is required in connection with the execution,
delivery, performance, validity or enforceability of this Agreement, except for
any such consent, authorization, filing or other act that has been obtained or
made.

                  9.       Representation by Senior Agent. The Senior Lenders
and the Senior Agent have not made and do not hereby or otherwise make to the
Subordinated Lenders, any representations or warranties, express, or implied
other than the following: (a) the Senior Agent has the corporate power and
authority and the legal right to execute and deliver and to perform its
obligations under this Agreement and has taken all necessary corporate action to
authorize its execution, delivery and performance of this Agreement; and (b)
this Agreement constitutes a legal, valid and binding obligation of the Senior
Agent. Neither the Senior Lenders nor the Senior Agent assume any liability to
any Subordinated Lender with respect to: (a) the financial or other condition of
obligors under any instruments of guarantee with respect to the Senior
Obligations, (b) the enforceability, validity, value or collectibility of the
Senior Obligations or the Subordinated Obligations, any collateral therefor, or
any guarantee or security which may have been granted in connection with any of
the Senior Obligations or the Subordinated Obligations or (c) any Credit Party's
title or right to transfer any collateral or security.

                  10.      Waiver of Claims. To the maximum extent permitted by
law, each Subordinated Lender waives any claim it might have against the Senior
Agent with respect to, or arising out of, any action or failure to act or any
error of judgment, negligence, or mistake or oversight whatsoever on the part of
the Senior Agent or any Senior Lenders or their respective directors, officers,
employees or agents with respect to any exercise of rights or remedies under the
Senior Loan Documents or any transaction relating to the Collateral. Neither the
Senior Agent nor any Senior Lender, nor any of their respective directors,
officers, employees or agents shall be liable for failure to demand, collect or
realize upon any of the Collateral or for any delay in doing so or shall be
under any obligation to sell or otherwise dispose of any Collateral upon the
request of any Credit Party or any Subordinated Lender or any other Person or to
take any other action whatsoever with regard to the Collateral or any part
thereof.

                                       12
<PAGE>

                  11.      Provisions Applicable After Bankruptcy. The
provisions of this Agreement shall continue in full force and effect
notwithstanding the occurrence of any Insolvency Event. To the extent that any
Subordinated Lender has or acquires any rights under Section 362, 363 or 364 of
the Bankruptcy Code with respect to the Collateral, such Subordinated Lender
hereby agrees not to assert such rights without the prior written consent of the
Senior Agent; provided that, if requested by the Senior Agent, such Subordinated
Lender shall seek to exercise such rights in the manner requested by the Senior
Agent, including the rights in payments in respect of such rights. Without
limiting the generality of the foregoing sentence, to the extent that Senior
Agent or Senior Lenders consent to any Credit Party's use of cash collateral
under Section 363 of the Bankruptcy Code or Senior Agent or any Senior Lender
agrees to provide financing to Borrower under Section 364 of the Bankruptcy
Code, each Subordinated Lender hereby agrees not to impede, object to (on
grounds of lack of adequate protection, or otherwise), or otherwise interfere
with such use of cash collateral or financing. Each Subordinated Lender
specifically agrees that the Senior Agent and the Senior Lenders may consent to
any Credit Party's use of cash collateral or provide financing to any Credit
Party on such terms and conditions and in such amounts as the Senior Agent and
the Senior Lenders, in their sole discretion, may decide and that, in connection
with such cash collateral usage or such financing, any Credit Party (or a
trustee appointed for the estate of such Credit Party) may grant to the Senior
Agent and/or Senior Lenders liens and security interests upon all or any part of
the assets of the Borrower or other Credit Party, which liens and security
interests: (i) shall secure payments of all Senior Obligations (whether such
Senior Obligations arose prior to the filing of the bankruptcy petition or
thereafter); and (ii) shall be superior in priority to the liens on and security
interests in the assets of Borrower or other Credit Party held by the
Subordinated Lenders. Each Subordinated Lender (both in its capacity as a
Subordinated Lender and in its capacity (if any) as a party which may be
obligated to any Credit Party or any Credit Party's Affiliates with respect to
contracts which are part of the Senior Agent's or any Senior Lender's
Collateral) agrees not to initiate or prosecute or encourage any other Person to
initiate or prosecute any claim, action, objection or other proceeding (A)
challenging the enforceability of the claim of Senior Agent or any Senior
Lender, (B) challenging the enforceability of any liens or security interests in
any assets securing the Senior Obligations, or (C) asserting any claims which
any Credit Party may hold with respect to Senior Agent or any Senior Lender. All
allocations of payments among the Senior Agent, Senior Lenders and the
Subordinated Lender shall, subject to any court order, continue to be made after
the filing of a petition under the United States Bankruptcy Code, as amended
(the "Bankruptcy Code"), or any similar proceeding, on the same basis that the
payments were to be allocated prior to the date of such filing. Each
Subordinated Lender agrees that it will not object to or oppose a sale or other
disposition of any assets securing the Senior Obligations (or any portion
thereof) free and clear of its security interests, liens or other claims under
Section 363 of the Bankruptcy Code or any other provision of the Bankruptcy Code
if the Senior Agent or Senior Lenders have consented to such sale or disposition
of such assets. Each Subordinated Lender agrees not to assert any right it may
have to "adequate protection" of its interest in the Collateral in any
bankruptcy proceeding and agrees that it will not seek to have the automatic
stay lifted with respect to such security, without the prior written consent of
the Senior Agent and Senior Lenders. Each Subordinated Lender waives any claim
it may now or hereafter have against the Senior Agent or any Senior Lender
arising out of the election of Senior Agent or any Senior Lender, in any case
instituted under the Bankruptcy Code, of the application of Section 1111(b)(2)
of the Bankruptcy Code, and/or out of any cash collateral arrangement, or
financing arrangement, or out of any grant of a security interest, under Section
363 or 364 of the Bankruptcy Code, with or by any Credit Party, as debtor in
possession (or with or by any trustee for any Credit Party). Each Subordinated
Lender agrees that it will not, in its capacity as a secured creditor: (a)
propose, vote to

                                       13
<PAGE>

accept, or otherwise support confirmation of, a plan of reorganization opposed
by the Senior Agent or Senior Lenders, or (b) vote to reject, object to
confirmation of, or otherwise oppose confirmation of, a plan of reorganization
supported by the Senior Agent. The subordination and other provisions of this
Agreement shall be enforceable under Section 510(a) of the Bankruptcy Code.

                  12.      Further Assurances. The Subordinated Lenders and the
Borrower, at Borrower's expense and at any time from time to time, upon the
written request of the Senior Agent, will promptly and duly execute and deliver
such further instruments and documents and take such further actions as the
Senior Agent reasonably may request for the purposes of obtaining or preserving
the full benefits of this Agreement and of the rights and powers herein granted.

                  13.      Expenses.

                  (a)      Each Credit Party will pay or reimburse the Senior
Agent and the Senior Lenders and the Subordinated Lenders, upon demand, for all
of their respective costs and expenses in connection with the enforcement or
preservation of any rights under this Agreement, including, without limitation,
fees and disbursements of counsel to the Senior Agent, Senior Lenders and
Subordinated Lenders.

                  (b)      Each Credit Party will pay, indemnify, and hold the
Senior Agent and the Senior Lenders and the Subordinated Lenders harmless from
and against any and all other liabilities, obligations, losses, damages,
penalties, actions (whether sounding in contract, tort or on any other ground),
judgments, suits, costs, expenses and disbursements of any kind or nature
whatsoever with respect to the execution, delivery, enforcement, performance and
administration of, or in any other way arising out of or relating to this
Agreement or any action taken or omitted to be taken by the Senior Agent, any
Senior Lender or Subordinated Lender with respect to any of the foregoing.

                  14.      Provisions Define Relative Rights. This Agreement is
intended solely for the purpose of defining the relative rights of the Senior
Agent on the one hand and the Subordinated Lenders on the other, and no other
Person shall have any right, benefit or other interest under this Agreement.
Except as expressly set forth in this Agreement, nothing herein shall: (a)
impair, as between any Credit Party and the Senior Lenders and any Credit Party
and any Subordinated Lender, the obligation of such Credit Party, which is
absolute and unconditional, to pay principal of, interest on and all other
portions of the Senior Obligations, on the one hand, and the Subordinated
Obligations and all other obligations of such Credit Party, if any, to any
Subordinated Lender, on the other hand, in each case in accordance with their
respective terms; or (b) affect the relative rights of the Senior Lenders or
Subordinated Lenders with respect to any other creditors of any Credit Party.

                  15.      Subrogation. Subject to the indefeasible payment in
full of all Senior Obligations and the termination of all commitments to lend by
the Senior Lenders under the Senior Credit Agreement, the Subordinated Lenders
shall be subrogated to the rights of the Senior Lenders to receive payments or
distributions of assets of any Credit Party applicable to the Senior Obligations
until the principal of, and interest and premium, if any, on, and all other
amounts payable in respect of the Subordinated Obligations shall be paid in
full. For purposes of such subrogation, no payment or distribution to the Senior
Lenders under the provisions hereof to which the Subordinated Lenders would have
been entitled but for the provisions of this Agreement, and no payment pursuant
to the provisions of this Agreement to the Senior

                                       14
<PAGE>

Lenders by the Subordinated Lenders, as among any Credit Party and its creditors
other than the Senior Lenders, shall be deemed to be a payment by such Credit
Party to or on account of the Senior Obligations.

                  16.      Legend. Each Subordinated Lender and each Credit
Party will cause each of the Subordinated Note and each Subordinated Security
Document to bear upon its face a legend referring to this Agreement and
indicating that such documents are subordinated as provided herein, all in form
and substance satisfactory to the Senior Agent.

                  17.      Powers Coupled With An Interest. All powers,
authorizations and agencies contained in this Agreement are coupled with an
interest and are irrevocable until the Senior Obligations are paid in full and
the obligation of the Senior Lenders to extend credit under the Senior Loan
Documents is irrevocably terminated.

                  18.      Notices. All notices, requests and demands to or upon
the Senior Agent or any Credit Party or any Subordinated Lender to be effective
shall be in writing (or by telex, fax or similar electronic transfer confirmed
in writing) and shall be deemed to have been duly given or made (1) when
delivered by hand or (2) if given by mail, when deposited in the mails by
certified mail, return receipt requested, or (3) if by telex, fax or similar
electronic transfer, when sent and receipt has been confirmed, addressed as
follows:

                  If to the Senior Agent:

                           Bank of America, N.A.
                           55 S. Lake Avenue, Suite 900
                           Pasadena, CA 91101
                           Attn: John McNamara
                           Telecopy Number: 616-397-1273

                           with copies to:

                           General Electric Capital Corporation
                           Corporate Financial Services
                           800 Connecticut Avenue, 2 North
                           Norwalk, Connecticut 06854
                           Attention: Account Manager (Good Guys)
                           Telecopy No.: (203) 852-3670

                           and

                           Winston & Strawn LLP
                           101 California Street, Suite 3900
                           San Francisco, California 94111
                           Attention: Hill Blackett, III, Esq.
                           Telecopy No.: 415-591-1400

                           and

                                       15
<PAGE>

                           General Electric Capital Corporation
                           201 High Ridge Road
                           Stamford, Connecticut 06927-5100
                           Attention: Corporate Counsel
                           Telecopy No.: 203-316-7889

                  If to the Subordinated Lenders:

                           Grupo Sansborns, S.A. de C.V.
                           c/o Grupo Finan Inbursa
                           Paseo de Las Palmas 736
                           Mexico Col. Lomas de Chapultepec
                           Attention: Eduardo Valdes Acra
                           Javier Cervantes
                           Telecopy No.: 011-525-520-5326

                  With copies to:

                           Willkie Farr & Gallagher LLP
                           787 Seventh Avenue
                           Attention: Thomas. M. Cerabino, Esq.
                           New York, NY 10019-6099
                           Tel: (212) 728-8000
                           Telecopy No.: (212) 728-8111

                  If to the Borrower:

                           Good Guys California, Inc.
                           1600 Harbor Bay Parkway
                           Alameda, California 94502
                           Attention: Chief Financial Officer
                           Telecopy No.: 510-747-6290

                  With copies to:

                           Howard, Rice Nemerovski, Canady, Falk & Rabkin,
                                  A Professional Corporation
                           Three Embarcadero Center, 7th Floor
                           San Francisco, California 94111-4065
                           Attention: Richard W. Canady, Esq.
                           Telecopy No.: 415-217-5910

                                       16
<PAGE>

                  The Senior Agent, the Credit Parties and any Subordinated
Lender may change their respective addresses and transmission numbers for
notices by notice in the manner provided in this paragraph.

                  19.      Default Notices. The Subordinated Lenders shall
provide the Senior Agent with written notice of any event of default with
respect to, or acceleration of, all or any part of the Subordinated Obligations
concurrently with the sending thereof to any Credit Party and promptly shall
notify the Senior Agent in the event a default which is the subject of such a
notice is cured or waived.

                  20.      Counterparts. This Agreement may be executed by one
or more of the parties on any number of separate counterparts, and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument. A set of the counterparts of this Agreement signed by all the
parties shall be lodged with the Senior Agent.

                  21.      Severability. Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

                  22.      Integration. This Agreement represents the agreement
of the Senior Agent and the Subordinated Lenders with respect to the subject
matter hereof and there are no promises or representations by the Senior Agent
or any Subordinated Lender relative to the subject matter hereof not reflected
herein.

                  23.      Amendments in Writing; No Waiver: Cumulative
Remedies.

                  (a)      None of the terms or provisions of this Agreement may
be waived, amended, supplemented or otherwise modified except by a written
instrument executed by the Senior Agent, each Credit Party and each Subordinated
Lender; provided that any provision of this Agreement may be waived by the
Senior Agent in a letter or agreement executed by the Senior Agent or by telex
or facsimile transmission from the Senior Agent.

                  (b)      No failure to exercise, nor any delay in exercising,
on the part of the Senior Agent or any Senior Lender, any right, power or
privilege hereunder shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.

                  (c)      The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not exclusive of any
other rights or remedies provided by law.

                  24.      Section Headings. The section headings used in this
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.

                                       17
<PAGE>

                  25.      Successors and Assigns.

                  (a)      This Agreement shall be binding upon and shall inure
to the benefit of the Senior Agent, each Senior Lender, each Subordinated
Lender, each Credit Party and each of their respective heirs, administrators,
executors, successors and assigns.

                  (b)      Upon a successor Senior Agent becoming the Senior
Agent under the Senior Loan Documents or upon another lender (a "Refinancing
Lender") refinancing all, or with the prior written consent of the then existing
Senior Agent and Senior Lenders, any portion, of the Senior Obligations, such
successor Senior Agent or Refinancing Lender shall automatically be entitled to
all the rights and powers of the Senior Agent and the Senior Lenders hereunder
without the need for any further action on the part of any party hereto. In
further confirmation of the foregoing, each Subordinated Lender agrees that it
will, at the request of Senior Agent or any Senior Lender, enter into an
agreement, in the form of this Agreement, mutatis mutandis, to subordinate the
Subordinated Obligations and any security interests or liens it now or hereafter
has in or upon the Collateral, to the same extent as provided herein, to the
party refinancing all or a portion of the Senior Obligations.

                  26.      Invalidated Payments. To the extent that the Senior
Agent receives payments on, or proceeds of Collateral for, the Senior
Obligations which are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to any Credit Party, a
trustee, receiver or any other party under any bankruptcy law, state or federal
law, common law, or equitable cause, then to the extent of such payment or
proceeds received, the Senior Obligations, or part thereof, intended to be
satisfied shall be revived and continue in full force and effect as if such
payments or proceeds had not been received by the Senior Agent.

                  27.      Specific Performance. The Senior Agent is hereby
authorized to demand specific performance of this Agreement at any time when any
Subordinated Lender shall have failed to comply with any of the provisions of
this Agreement applicable to such Subordinated Lender whether or not the Credit
Parties shall have complied with any of the provisions hereof applicable to any
Credit Party, and the Subordinated Lender hereby irrevocably waives any defense
based on the adequacy of a remedy at law which might be asserted as a bar to
such remedy of specific performance.

                  28.      GOVERNING LAW: CONSENT TO JURISDICTION AND VENUE.
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE LOAN DOCUMENTS, IN ALL
RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS
AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE, AND ANY APPLICABLE
LAWS OF THE UNITED STATES OF AMERICA. EACH OF THE CREDIT PARTIES, THE
SUBORDINATED LENDERS AND THE SENIOR AGENT HEREBY CONSENTS AND AGREES THAT THE
STATE OR FEDERAL COURTS LOCATED IN california SHALL HAVE EXCLUSIVE JURISDICTION
TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES AMONG THE CREDIT PARTIES, THE
SUBORDINATED LENDERS AND THE SENIOR AGENT PERTAINING TO THIS AGREEMENT OR TO ANY
MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE SENIOR LOAN
DOCUMENTS,

                                       18
<PAGE>

PROVIDED, THAT THE PARTIES HERETO ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS
MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF CALIFORNIA AND, PROVIDED,
FURTHER THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE
THE SENIOR AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER
JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE SENIOR
OBLIGATIONS, OR TO ENFORCE A JUDGEMENT OR OTHER COURT ORDER IN FAVOR OF THE
SENIOR AGENT. EACH OF THE CREDIT PARTIES AND THE SUBORDINATED LENDERS EXPRESSLY
SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT
COMMENCED IN ANY SUCH COURT, AND EACH OF THE CREDIT PARTIES AND THE SUBORDINATED
LENDERS HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF
PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS. EACH OF THE
CREDIT PARTIES AND THE SUBORDINATED LENDERS HEREBY WAIVES PERSONAL SERVICE OF
THE SUMMONS, COMPLAINTS AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO IT AT THE ADDRESS SET FORTH IN THE
SENIOR CREDIT AGREEMENT OR BENEATH ITS SIGNATURE LINE BELOW, AS THE CASE MAY BE,
AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF ANY
CREDIT PARTY'S OR ANY SUBORDINATED LENDER'S ACTUAL RECEIPT THEREOF OR THREE (3)
DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID.

                  29.      MUTUAL WAIVER OF JURY TRIAL. THE PARTIES HERETO WAIVE
ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE
ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN THE
PARTIES ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY
OF THE SENIOR LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.

                  30.      Termination. Subject to the provisions of paragraphs
25(b) and 26, this Agreement shall terminate upon the indefeasible payment in
full of the Senior Obligations and the termination of all commitments to lend by
the Senior Lenders on a revolving basis under the Senior Credit Agreement.

                  31.      No Strict Construction. The parties hereto have
participated jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties hereto and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement.

                  32.      Conversion. Nothing in this Agreement shall prevent
the Subordinated Lender from exercising at any time its rights under the
Subordinated Note to convert outstanding principal and accrued interest (or any
portion thereof) on the Subordinated Note into shares of common stock of
Holdings.

                                       19
<PAGE>

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

BANK OF AMERICA, N.A.,
as Senior Agent

By  /s/ Kevin R. Kelly
    ------------------------------------
    Kevin R. Kelly
    Senior Vice President

GOOD GUYS CALIFORNIA, INC.

By: /s/  David A. Carter
    ------------------------------------
    David A. Carter
    Chief Financial Officer

GOOD GUYS, INC.

By: /s/  David A. Carter
    ------------------------------------
    David A. Carter
    Chief Financial Officer

COMPUSA INC.

By: /s/ Javier Larraza
    ------------------------------------
    Javier Larraza
    Executive Vice President/ Chief
     Financial Officer

APPROVED BY:

GENERAL ELECTRIC CAPITAL CORPORATION
as Documentation Agent and a Lender

By: /s/ Craig J. Winslow
    ------------------------------------
    Craig J. Winslow
    Duly Authorized Signatory

                                       20
<PAGE>

                                 ACKNOWLEDGMENT

STATE OF

COUNTY OF       ss.:

         On _________ before me, the undersigned, personally appeared _________
_____________________________________________________________________________
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual(s) whose name(s) is (are) subscribed to the within instrument
and acknowledged to me that he/she/they executed the same in his/her/their
capacity(ies), and that by his/her/their signature(s) on the instrument, the
individual(s), or the person on behalf of which the individual(s) acted,
executed the instrument, and that such individual made such appearance before
the undersigned in

(insert city or political subdivision and state or county or other place
acknowledgment taken).

                      _________________________________________________________
                      (signature and office of individual taking acknowledgment)

                                       21EXHIBIT NO. 4.01

                                  NANNACO, INC.

                        2003 STOCK OPTION AND GRANT PLAN

NANNACO, INC., a Texas corporation, (the "Company"), hereby adopts this 2003
Non-Qualified Stock Option Plan (the "Plan") this 29th day of September, 2003,
under which Incentive Stock Options, Non-Qualified Stock Options, Restricted
Stock Awards, and Common Stock in Lieu of Cash Compensation Awards ("Awards") of
the Company may be granted from time to time to employees and consultants of the
Company or its subsidiaries, if any. In addition, at the discretion of the board
of directors, awards may from time to time be granted under this Plan to other
individuals who contribute to the success of the Company or its subsidiaries, if
any, and are not employees of the Company, all on the terms and conditions set
forth herein.

SECTION 1.

                    GENERAL PURPOSE OF THE PLAN; DEFINITIONS

The Plan is intended to aid the Company in maintaining and developing a
management team, attracting qualified officers and employees capable of
assisting in the future success of the

<PAGE>
Company, and rewarding those individuals who have contributed to the success of
the Company. It is designed to aid the Company in retaining the services of
executives and employees and in attracting new personnel when needed for future
operations and growth and to provide such personnel with an incentive to remain
employees of the Company, to use their best efforts to promote the success of
the Company's business, and to provide them with an opportunity to obtain or
increase a proprietary interest in the Company. It is also designed to permit
the Company to reward those individuals who are not employees of the Company but
who are perceived by management as having contributed to the success of the
Company or who are important to the continued business and operations of the
Company. The above aims will be effectuated through the granting awards, subject
to the terms and conditions of this Plan.

The following terms shall be defined as set forth below:

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

"Administrator" is defined in Section 2(a).

"Award" or "Awards," except where referring to a particular category of grant
under the Plan, shall include Incentive Stock Options, Non-Qualified Stock
Options, Restricted Stock Awards, and Common Stock in Lieu of Cash Compensation
Awards.

"Board" means the Board of Directors of the Company as constituted from time to
time.

"Change of Control" is defined in Section 13.

"Code" means the Internal Revenue Code of 1986, as amended from time to time,
and any successor Code, and related rules, regulations and interpretations.

"Committee" means the Committee of the Board referred to in Section 2.

"Common Stock in Lieu of Cash Compensation Award" means Awards granted pursuant
to Section 7.

"Company" means Nannaco, Inc., a Texas corporation, and any successor thereto.

"Effective Date" means the date on which the Plan is initially approved by the
Board of Directors as set forth in Section 14.

"Fair Market Value" on any given date means the last sale price at which Stock
is traded on such date or, if no Stock is traded on such date, the next
preceding date on which Stock was traded, as reported by Nasdaq Bulletin Board
or, if applicable, the principal stock exchange or, if applicable, any other
national stock exchange on which the Stock is traded or admitted to trading.

<PAGE>
"Incentive Stock Option" means any Stock Option that is intended to qualify as
and is designated in writing in the related Option Award agreement as intending
to constitute an "incentive stock option" as defined in Section 422 of the Code.

"Independent Director" means a member of the Board who is not also an employee
of the Company or any Subsidiary.

"Non-Qualified Stock Option" means any Stock Option that is not an Incentive
Stock Option.

"Restricted Stock Award" means Awards granted pursuant to Section 6.

"Stock" means the Common Stock, no par value, of the Company, subject to
adjustments pursuant to Section 3.

"Stock Option" means any option to purchase shares of Stock granted pursuant to
Section 5.

"Subsidiary" means any corporation or other entity (other than the Company) in
any unbroken chain of corporations or other entities beginning with the Company
if each of the corporations or entities (other than the last corporation or
entity in the unbroken chain) owns stock or other interests possessing 50% or
more of the economic interest or the total combined voting power of all classes
of stock or other interests in one of the other corporations or entities in the
chain.

SECTION 2.

            ADMINISTRATION OF PLAN; ADMINISTRATOR AUTHORITY TO SELECT
                        PARTICIPANTS AND DETERMINE AWARDS

(a) COMMITTEE. The Plan shall be administered by either the Board or a committee
of not fewer than two (2) Independent Directors (in either case, the
"Administrator"). Each member of the Committee shall be a "non-employee
director" within the meaning of Rule 16b-3(b)(3)(i) promulgated under the Act,
or any successor definition under said rule. From and after the date the Company
becomes subject to Section 162(m) of the Code with respect to compensation
earned under this Plan, each member of the Committee shall also be an "outside
director" within the meaning of Section 162(m) of the Code and the regulations
promulgated thereunder. The interpretation and construction of the terms of the
Plan by the Board or a duly authorized committee shall be final and binding on
all participants in the Plan absent a showing of demonstrable error. No member
of the Board or duly authorized committee shall be liable for any action taken
or determination made in good faith with respect to the Plan.

<PAGE>
(b) POWERS OF ADMINISTRATOR. The Administrator shall have the power and
authority to grant Awards consistent with the terms of the Plan, including the
power and authority:

(i) to select the individuals to whom Awards may from time to time be granted;

(ii) to determine the time or times of grant, and the extent, if any, of
Incentive Stock Options, Non-Qualified Stock Options, Restricted Stock Awards,
and Common Stock in Lieu of Cash Compensation Awards or any combination of the
foregoing, granted to any one or more participants;

(iii) to determine the number of shares of Stock to be covered by any Award;

(iv) to determine and modify from time to time the terms and conditions,
including restrictions, not inconsistent with the terms of the Plan, of any
Award, which terms and conditions may differ among individual Awards and
participants, and to approve the form of written instruments evidencing the
Awards;

(v) to accelerate at any time the exercisability or vesting of all or any
portion of any Award;

(vi) subject to the provisions of Section 5(a)(iii), to extend at any time the
post-termination period in which Stock Options may be exercised;

(vii) to determine at any time whether, to what extent, and under what
circumstances Stock and other amounts payable with respect to an Award shall be
deferred either automatically or at the election of the participant and whether
and to what extent the Company shall pay or credit amounts constituting deemed
interest (at rates determined by the Administrator) or dividends or deemed
dividends on such deferrals; and

(viii) at any time to adopt, alter and repeal such rules, guidelines and
practices for administration of the Plan and for its own acts and proceedings as
it shall deem advisable; to interpret the terms and provisions of the Plan and
any Award (including related written instruments); to make all determinations it
deems advisable for the administration of the Plan; to decide all disputes
arising in connection with the Plan; and to otherwise supervise the
administration of the Plan.

All decisions and interpretations of the Administrator shall be made in the
Administrator's sole and absolute discretion and shall be final and binding on
all persons, including the Company and Plan participants.

(c) DELEGATION OF AUTHORITY TO GRANT AWARDS. The Administrator may delegate to
the Chief Executive Officer and/or the President of the Company (provided that
such officer is a member of the Board of Directors) all or part of the
Administrator's authority and duties with respect to Awards, including the
granting thereof, to individuals who are not subject to the reporting and other
provisions of Section 16 of the Act or "covered employees" within the meaning of
Section 162(m) of the Code, PROVIDED, however, that the number of shares of
Stock underlying Awards made by the Chief Executive Officer and/or the President
shall not

<PAGE>
exceed, in the aggregate, twenty-five percent (25%) of the number of shares of
Stock available for issuance under the Plan.

SECTION 3.

                  STOCK ISSUABLE UNDER THE PLAN; TERM OF PLAN;
                  RECAPITALIZATIONS; MERGERS; SUBSTITUTE AWARDS

(a) STOCK ISSUABLE. The maximum number of shares of Stock reserved and available
for issuance under the Plan initially shall be 5,000,000 shares of Stock. In
addition, (a) the number of shares of Stock reserved and available for issuance
under the Plan will be increased each year after 2003 by a number of shares of
Stock not to exceed 300,000 shares, (b) as Awards consisting of Stock Options
are exercised, the shares of Stock underlying such previously outstanding
portion of the Award shall be added back to the Shares available for issuance
under the Plan; however, this amount shall not exceed 100,000 shares of Stock in
any given year, and (c) if any portion of an Award is forfeited, cancelled, or
reacquired by the Company, satisfied without the issuance of Stock or otherwise
terminated, the shares of Stock underlying such portion of the Award shall be
added back to the shares of Stock available for issuance under the Plan. Subject
to such overall limitation, shares of Stock may be issued up to such maximum
number pursuant to any type or types of Award; PROVIDED, however, that an
individual recipient can receive Stock Options with respect to no more than
625,000 shares of Stock during any one calendar year. The shares available for
issuance under the Plan may be authorized but unissued shares of Stock or shares
of Stock reacquired by the Company.

(b) TERM OF PLAN. No Awards shall be made after January 1, 2012. Notwithstanding
the foregoing, Stock Options granted hereunder may, except as otherwise
expressly provided herein, be exercisable for up to ten years after the date of
grant.

(c) RECAPITALIZATIONS. Subject to the provisions of Section 12, if, through or
as a result of any merger, consolidation, sale of all or substantially all of
the assets of the Company, reorganization, recapitalization, reclassification,
stock dividend, stock split, reverse stock split or other similar transaction,
the outstanding shares of Stock are increased or decreased or are exchanged for
a different number or kind of shares or other securities of the Company, or
additional shares or new or different shares or other securities of the Company
or other non-cash assets are distributed with respect to such shares of Stock or
other securities, the Administrator may make an appropriate or proportionate
adjustment in (i) the maximum number of shares reserved for issuance under the
Plan, (ii) the number of Stock Options that can be granted to any one individual
participant, (iii) the number and kind of shares or other securities subject to
any then outstanding Awards under the Plan, and (iv) the price for each share
subject to any then outstanding Stock Options under the Plan, without changing
the aggregate exercise price (i.e., the exercise price multiplied by the total
number of Stock Options) as to which such Stock Options remain exercisable. The
adjustment by the Administrator shall be final, binding and conclusive. No
fractional shares of Stock shall be issued under the Plan resulting from any
such adjustment, but the Administrator in its discretion may make a cash payment
in lieu of fractional shares.

<PAGE>
(d) SUBSTITUTE AWARDS. The Administrator may grant Awards under the Plan in
substitution for stock and stock based awards held by employees of another
corporation who become employees of the Company or a Subsidiary as the result of
a merger or consolidation of the employing corporation with the Company or a
Subsidiary or the acquisition by the Company or a Subsidiary of property or
stock of the employing corporation. The Administrator may direct that the
substitute awards be granted on such terms and conditions as the Administrator
considers appropriate in the circumstances.

SECTION 4.

                                   ELIGIBILITY

Awards under the Plan may be granted to employees, including officers, and
directors of the Company or its subsidiaries, as may be existing from time to
time, and to other individuals who are not employees of the Company, but
performed bona fide services to the Company, as may be deemed in the best
interest of the Company by the Board or a duly authorized committee. These
individuals may be referred to as consultants or key persons.  Such services to
the Company or a subsidiary shall not be in connection with the offer or sale of
securities in a capital-raising transaction. Such Awards shall be in the
amounts, and shall have the rights and be subject to the restrictions, as may be
determined by the Board or a duly authorized committee, all as may be within the
general provisions of this Plan.

SECTION 5.

                                  STOCK OPTIONS

Any Stock Option granted under the Plan shall be in such form as the
Administrator may from time to time approve. Stock Options granted under the
Plan may be either Incentive Stock Options or Non-Qualified Stock Options.
Incentive Stock Options may be granted only to employees of the Company or any
Subsidiary that is a "subsidiary corporation" within the meaning of Section
424(f) of the Code. To the extent that any Option does not qualify as an
Incentive Stock Option, it shall be deemed a Non-Qualified Stock Option.

(a) STOCK OPTIONS GRANTED TO ELIGIBLE PERSON. The Administrator in its
discretion may grant Stock Options to those persons eligible to receive Optons
under this plan. Stock Options granted pursuant to this Section 5(a) shall be
subject to the following terms and conditions and shall contain such additional
terms and conditions, not inconsistent with the terms of the Plan, as the
Administrator shall deem desirable. If the Administrator so determines, Stock
Options may be granted in lieu of cash compensation at the participant's
election, subject to such terms and conditions as the Administrator may
establish, as well as in addition to other compensation.

(i) EXERCISE PRICE. The exercise price per share for the Stock covered by a
Stock Option granted pursuant to this Section 5(a) shall be determined by the
Administrator at the time of grant.

<PAGE>
(ii) OPTION TERM. The term of each Stock Option shall be fixed by the
Administrator, but no Incentive Stock Option shall be exercisable more than ten
years after the date the option is granted. If an employee owns or is deemed to
own (by reason of the attribution rules of Section 424(d) of the Code) more than
10% of the combined voting power of all classes of stock of the Company or any
parent or subsidiary corporation and an Incentive Stock Option is granted to
such employee, the term of such option shall be no more than five years from the
date of grant. The term of the Option, once it is granted, may be reduced only
as provided for in this Plan and under the written provisions of the Option.  In
no event may an Option be exercised after the expiration of its term.

(iii) EXERCISABILITY; RIGHTS OF A STOCKHOLDER. Stock Options shall become
exercisable at such time or times, whether or not in installments, as shall be
determined by the Administrator at or after the grant date; PROVIDED, however,
that (A) Stock Options granted in lieu of compensation shall be exercisable in
full as of the grant date unless the Administrator otherwise provides in the
Award agreement, and (B) all Stock Options must be exercised within three (3)
years of the date they become exercisable or they shall automatically expire,
and PROVIDED FURTHER that (1) no holder of a Stock Option may exercise any Stock
Options during any period in which such person is in breach of any
noncompetition agreement or covenant such person has with the Company as
determined by the Administrator, and (2) if any such holder fails to cure any
such breach within thirty (30) days of written notice thereof, all Stock Options
held by such person shall thereupon be forfeited. The Administrator may at any
time accelerate the exercisability of all or any portion of any Stock Option. An
optionee shall have the rights of a stockholder only as to shares acquired upon
the exercise of a Stock Option and not as to unexercised Stock Options.

(iv) METHOD OF EXERCISE. Stock Options may be exercised in whole or in part, by
giving written notice of exercise to the Company, specifying the number of
shares to be purchased. Payment of the purchase price may be made by one or more
of the following methods to the extent provided in the Option Award agreement:

(A) In cash, by certified or bank check or other instrument acceptable to the
Administrator;

(B) In the form of shares of Stock that are not then subject to restrictions
under any Company plan and that have been beneficially owned by the optionee for
at least six months, if permitted by the Administrator in its discretion. Such
surrendered shares shall be valued at Fair Market Value on the exercise date;

(C) By the optionee delivering to the Company a properly executed exercise
notice together with irrevocable instructions to a broker to promptly deliver to
the Company cash or a check payable and acceptable to the Company to pay the
purchase price; provided that in the event the optionee chooses to pay the
purchase price as so provided, the optionee and the broker shall comply with
such procedures and enter into such agreements of indemnity and other agreements
as the Administrator shall prescribe as a condition of such payment procedure;
or

(D) By the optionee delivering to the Company a promissory note if the
Administrator has expressly authorized the loan of funds to the optionee for the
purpose of enabling or assisting the

<PAGE>
optionee to effect the exercise of his Stock Option; PROVIDED that any such
promissory note shall bear interest at market rates if the promissory note
exceeds sixty (60) days. Payment instruments will be received subject to
collection.

The delivery of certificates representing the shares of Stock to be purchased
pursuant to the exercise of a Stock Option will be contingent upon receipt from
the optionee (or a purchaser acting in his stead in accordance with the
provisions of the Stock Option) by the Company of the full purchase price for
such shares and the fulfillment of any other requirements contained in the Stock
Option or applicable provisions of laws.

(v) ANNUAL LIMIT ON INCENTIVE STOCK OPTIONS. To the extent required for
"incentive stock option" treatment under Section 422 of the Code, the aggregate
Fair Market Value (determined as of the time of grant) of the shares of Stock
with respect to which Incentive Stock Options granted under this Plan and any
other plan of the Company or its parent and subsidiary corporations become
exercisable for the first time by an optionee during any calendar year shall not
exceed $100,000. To the extent that any Stock Option exceeds this limit, it
shall constitute a Non-Qualified Stock Option.

(c) NON-TRANSFERABILITY OF OPTIONS. Except as otherwise set forth in the
following sentence, no Stock Option shall be transferable by the optionee other
than by will or by the laws of descent and distribution and all Stock Options
shall be exercisable, during the optionee's lifetime, only by the optionee.
Notwithstanding the foregoing, an optionee may transfer, without consideration
for the transfer, his Non-Qualified Stock Options to members of his family, to
trusts for the benefit of such family members, or to partnerships in which such
family members are the only partners, PROVIDED that the transferee agrees in
writing with the Company to be bound by all of the terms and conditions of this
Plan and the applicable option agreement.

(d) TERMINATION. Except as may otherwise be provided by the Administrator either
in the Award agreement, or subject to Section 15 below, in writing after the
Award agreement is issued, an optionee's rights in all Stock Options shall
automatically terminate sixty (60) days following optionee's termination of
employment (or cessation of business relationship) with the Company and its
Subsidiaries for any reason.

SECTION 6.

                             RESTRICTED STOCK AWARDS

(a) NATURE OF RESTRICTED STOCK AWARDS. A Restricted Stock Award is an Award
entitling the recipient to acquire, at par value or such other higher purchase
price determined by the Administrator, shares of Stock subject to such
restrictions and conditions as the Administrator may determine at the time of
grant ("Restricted Stock"). Conditions may be based on continuing employment (or
other business relationship) and/or achievement of pre-established performance
goals and objectives. The grant of a Restricted Stock Award is contingent on the
participant executing the Restricted Stock Award agreement. The terms and
conditions of each such agreement shall be determined by the Administrator, and
such terms and conditions may differ among individual Awards and participants.

<PAGE>
(b) RIGHTS AS A STOCKHOLDER. Upon execution of the Restricted Stock Award
agreement and paying any applicable purchase price, a participant shall have the
rights of a stockholder with respect to the voting of the Restricted Stock,
subject to such terms and conditions as may be contained in the Restricted Stock
Award agreement. Unless the Administrator shall otherwise determine,
certificates evidencing the Restricted Stock shall remain in the possession of
the Company until such Restricted Stock is vested as provided in Section 6(d)
below, and the participant shall be required, as a condition of the grant, to
deliver to the Company a stock power endorsed in blank.

(c) RESTRICTIONS. Restricted Stock may not be sold, assigned, transferred,
pledged or otherwise encumbered or disposed of except as specifically provided
herein or in the Restricted Stock Award agreement. If a participant's employment
(or other business relationship) with the Company and its Subsidiaries
terminates for any reason, the Company shall have the right to repurchase
Restricted Stock that has not vested at the time of termination at its original
purchase price, from the participant or the participant's legal representative.
The Company must give notice within ninety (90) days  after termination of
employment if the Company desire to exercise this option.  The Company may
repurchase the shares with a note payable in equal annual installments over a
five year period with interest at the prime rate at the time of repurchase.

(d) VESTING OF RESTRICTED STOCK. The Administrator at the time of grant shall
specify the date or dates and/or the attainment of pre-established performance
goals, objectives and other conditions on which the non- transferability of the
Restricted Stock and the Company's right of repurchase or forfeiture shall
lapse.  Additionally, at the Administrator's discretion, the vesting can be
accelerated upon the achievement of specified performance goals. Subsequent to
such date or dates and/or the attainment of such pre-established performance
goals, objectives and other conditions, the shares on which all restrictions
have lapsed shall no longer be Restricted Stock and shall be deemed "vested."
Except as may otherwise be provided by the Administrator either in the Award
agreement or, subject to Section 15 below, in writing after the Award agreement
is issued, a participant's rights in any shares of Restricted Stock that have
not vested shall automatically terminate upon the participant's termination of
employment (or other business relationship) with the Company and its
Subsidiaries for any reason and such shares shall be subject to the Company's
right of repurchase as provided in Section 6(c) above.

(e) WAIVER, DEFERRAL AND REINVESTMENT OF DIVIDENDS. The Restricted Stock Award
agreement may require or permit the immediate payment, waiver, deferral or
reinvestment (in the form of additional Restricted Stock) of dividends paid on
the Restricted Stock.

(f) LIMIT ON RESTRICTED STOCK AWARDS. No more than 25% of the shares of Stock
reserved for issuance under the Plan may, in any Plan year, be used for
Restricted Stock Awards.

SECTION 7.

                COMMON STOCK IN LIEU OF CASH COMPENSATION AWARDS

<PAGE>
(a) GRANTS OF COMMON STOCK PAYABLE IN LIEU OF CASH. The Administrator may grant
shares of Stock available for issuance under the Plan to an eligible participant
in lieu of cash compensation earned by the participant under a short- or
long-term incentive plan of the Company (an "Other Incentive Plan), PROVIDED,
however, that the award made under the Other Incentive Plan allows for
satisfaction of such award by payment of Stock in lieu of cash compensation.
Additionally, shares of Stock may be granted if specified performance goals
established by the Administrator are met, provided that the performance goals so
established meet the requirements of Section 162(m) of the Code and that the
Administrator certifies that the performance goals have been met. In the event
of a grant of shares of Stock in lieu of cash compensation, such grant shall be
conditioned upon the participant's irrevocable election to waive receipt of all
or a portion of the cash compensation otherwise payable, which waiver shall
constitute payment in full by such participant for the shares of Stock granted
in lieu of such cash compensation. All shares of Stock granted under this
Section 7 shall be without restriction.

(b) DATE OF GRANT. Stock granted in lieu of cash compensation shall be granted
to each participant on the date the waived cash compensation would otherwise by
paid, provided, however, that with respect to a participant who is subject to
Section 16 of the Act, if such grant date is not at least six months and one day
from the date of the election, the grant shall be delayed until the date which
is six months and one day from the date of the election (or the next following
business day, if such date is not a business day) to the extent necessary to
conform to the requirements for exempt purchases under Rule 16b-3 of the Act.

(c) NUMBER OF SHARES. The number of shares of Stock granted in lieu of cash
compensation shall be determined by dividing the amount of the waived cash
compensation by the Fair Market Value of the Stock on the date the Stock is
granted. Such Stock shall be granted for the whole number of shares so
determined; the value of any fractional share shall be paid in cash.

SECTION 8.

                                 TAX WITHHOLDING

(a) PAYMENT BY PARTICIPANT. Each participant shall, no later than the date as of
which the value of an Award or of any Stock or other amounts received thereunder
first becomes includable in the gross income of the participant for Federal
income tax purposes, pay to the Company, or make arrangements satisfactory to
the Administrator regarding payment of, any Federal, state, or local taxes of
any kind required by law to be withheld with respect to such income. The Company
and its Subsidiaries shall, to the extent permitted by law, have the right to
deduct any such taxes from any payment of any kind otherwise due to the
participant. The Company's obligation to deliver stock certificates to any
participant is subject to and conditioned on tax obligations being satisfied by
the participant.

(b) PAYMENT IN STOCK. Subject to approval by the Administrator, a participant
may elect to have such tax withholding obligation satisfied, in whole or in
part, by (i) authorizing the Company to withhold from shares of Stock to be
issued pursuant to any Award a number of shares with an aggregate Fair Market
Value (as of the date the withholding is effected) that would satisfy the
withholding amount due, or (ii) transferring to the Company shares of Stock

<PAGE>
owned by the participant with an aggregate Fair Market Value (as of the date the
withholding is effected) that would satisfy the withholding amount due.

SECTION 9.

                        TRANSFER, LEAVE OF ABSENCE, ETC.

For purposes of the Plan, the following events shall not be deemed a termination
of employment:

(a) a transfer to the employment of the Company from a Subsidiary or from the
Company to a Subsidiary, or from one Subsidiary to another; or

(b) an approved leave of absence for military service or sickness, or for any
other purpose approved by the Company, if the employee's right to re- employment
is guaranteed either by a statute or by contract or under the written policy
pursuant to which the leave of absence was granted or if the Administrator
otherwise so provides in writing.

SECTION 10.

                           AMENDMENTS AND TERMINATION

The Board may, at any time, amend or discontinue the Plan, and the Administrator
may, at any time, amend or cancel any outstanding Award for the purpose of
satisfying changes in law or for any other lawful purpose, but no such action
shall adversely affect rights under any outstanding Award without the holder's
written consent. The Administrator may provide substitute Awards at the same or
reduced exercise or purchase price or with no exercise or purchase price in a
manner not inconsistent with the terms of the Plan, but such price, if any, must
satisfy the requirements which would apply to the substitute or amended Award if
it were then initially granted under this Plan, but no such action shall
adversely affect rights under any outstanding Award without the holder's written
consent. If and to the extent determined by the Administrator to be required by
(a) the Code to ensure that Incentive Stock Options granted under the Plan are
qualified under Section 422 of the Code or ensure that compensation earned under
Stock Options granted under the Plan qualifies as performance-based compensation
under Section 162(m) of the Code, if and to the extent intended to so qualify,
or (b) the rules of the Nasdaq bulletin board Stock Market, Plan amendments
shall be subject to approval by the Company's stockholders entitled to vote at a
meeting of stockholders. Nothing in this Section 15 shall limit the Board's
authority to take any action permitted pursuant to Section 3(c) or 3(d).

SECTION 11.

                                 STATUS OF PLAN

Unless the Administrator shall otherwise expressly determine in writing, with
respect to the portion of any Award which has not been exercised and any
payments in cash, Stock or other consideration not received by a participant, a
participant shall have no rights greater than those of a general creditor of the
Company. In its sole discretion, the Administrator may authorize the

<PAGE>
creation of trusts or other arrangements to meet the Company's obligations to
deliver Stock or make payments with respect to Awards hereunder, provided that
the existence of such trusts or other arrangements is consistent with the
foregoing sentence.

SECTION 12.

                     CHANGE OF CONTROL AND MERGER PROVISIONS

(a) In contemplation of and subject to the consummation of a consolidation or
merger or sale of all or substantially all of the assets of the Company in which
outstanding shares of Stock are exchanged for securities, cash or other property
of an unrelated corporation or business entity or in the event of a liquidation
or dissolution of the Company or in the event of a corporate reorganization of
the Company (in each case, a "Transaction"), the Board, or the board of
directors of any corporation or other entity assuming the obligations of the
Company, may, in its discretion, take any one or more of the following actions,
as to outstanding Awards: (i) provide that such Awards shall be assumed or
equivalent awards shall be substituted, by the acquiring or succeeding
corporation or other entity (or an affiliate thereof), and/or (ii) upon written
notice to the participants, provide that all Awards will terminate immediately
prior to the consummation of the Transaction. In the event that, pursuant to
clause (ii) above, Awards will terminate immediately prior to the consummation
of the Transaction, all vested Awards, other than Options, shall be fully
settled in cash or in kind at such appropriate consideration as determined by
the Administrator in its sole discretion after taking into account any and all
consideration payable per share of Stock pursuant to the Transaction (the
"Transaction Price") and all Stock Options shall be fully settled, in cash or in
kind, in an amount equal to the difference between (A) the Transaction Price
times the number of shares of Stock subject to such outstanding Stock Options
(to the extent then exercisable at prices not in excess of the Transaction
Price) and (B) the aggregate exercise price of all such outstanding Stock
Options. In addition, the Board, or the board of directors of any corporation or
other entity assuming the obligations of the Company, may, in its discretion,
permit each participant, within a specified period determined by the Board prior
to the consummation of the Transaction, to exercise all outstanding Stock
Options, including those that are not then exercisable, subject to the
consummation of the Transaction.

(b) Upon the occurrence of a Change of Control as defined in Section 17(c)
below, unless otherwise specified in the Award instrument, unless otherwise
determined by the Board in office immediately prior to such Change of Control or
specified in the Plan Award instrument, each Award outstanding shall be
accelerated, such that all Stock Options shall become fully exercisable and the
restricted period on all shares of Restricted Stock shall terminate immediately.

(c) "Change of Control" shall be defined as any "person," as such term is used
in Sections 13(d) and 14(d) of the Act (other than the Company, any of its
Subsidiaries, any "affiliate" or "associate" (as such terms are defined in Rule
12b-2 under the Act) of the foregoing persons, or any trustee, fiduciary or
other person or entity holding securities under any employee benefit plan or
trust of the Company or any of its Subsidiaries), together with all "affiliates"
and "associates" (as such terms are defined in Rule 12b-2 under the Act) of such
person, shall become the "beneficial owner" (as such term is defined in Rule
13d-3 under the Act), directly or

<PAGE>
indirectly, of securities of the Company representing 25% or more of the
combined voting power of the Company's then outstanding securities having the
right to vote in an election of the Company's Board of Directors ("Voting
Securities") (other than as a result of an acquisition of securities directly
from the Company).

Notwithstanding the foregoing, a "Change of Control" shall not be deemed to have
occurred for purposes of the foregoing clause (i) solely as the result of an
acquisition of securities by the Company which, by reducing the number of shares
of Voting Securities outstanding, increases the proportionate number of shares
of Voting Securities beneficially owned by any person (as defined in the
foregoing clause (i)) to 25% or more of the combined voting power of all then
outstanding Voting Securities; PROVIDED, however, that if such person shall
thereafter become the beneficial owner of any additional shares of Voting
Securities (other than pursuant to a stock split, stock dividend, or similar
transaction or as a result of an acquisition of securities directly from the
Company), then a "Change of Control" shall be deemed to have occurred for
purposes of the foregoing clause.

SECTION 13.

                               GENERAL PROVISIONS

(a) NO DISTRIBUTION; COMPLIANCE WITH LEGAL REQUIREMENTS. The Administrator may
require each person acquiring Stock pursuant to an Award to represent to and
agree with the Company in writing that such person is acquiring the shares
without a view to distribution thereof. No shares of Stock shall be issued
pursuant to an Award until all applicable securities law and other legal and
stock exchange or similar requirements have been satisfied. The Administrator
may require the placing of such stop-orders and restrictive legends on
certificates for Stock and Awards as it deems appropriate.

(b) DELIVERY OF STOCK CERTIFICATES. Stock certificates to be delivered to
participants under this Plan shall be deemed delivered for all purposes when the
Company or a stock transfer agent of the Company shall have mailed such
certificates in the United States mail, addressed to the participant, at the
participant's last known address on file with the Company.

(c) OTHER COMPENSATION ARRANGEMENTS; NO EMPLOYMENT RIGHTS. Nothing contained in
this Plan shall prevent the Board from adopting other or additional compensation
arrangements, including trusts, and such arrangements may be either generally
applicable or applicable only in specific cases. The adoption of this Plan and
the grant of Awards shall not confer upon any employee any right to continued
employment with the Company or any Subsidiary and shall not interfere in any way
with the right of the Company or any Subsidiary to terminate the employment of
any of its employees at any time.

(d) TRADING POLICY RESTRICTIONS. Sale of Stock aquired pursuant to an Option or
other Awards under the Plan shall be subject to such Company
insider-trading-policy-related restrictions, terms and conditions as may be
established by the Administrator, or in accordance with policies set by the
Administrator, from time to time.

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SECTION 14.

                             EFFECTIVE DATE OF PLAN

The Plan shall become effective immediately on adoption by the board of
directors of the Company (the "Board")

SECTION 15.

                                  GOVERNING LAW

This Plan and all Awards and actions taken thereunder shall be governed by, and
construed in accordance with, the laws of the State of Texas, applied without
regard to conflict of law principles.

DATE APPROVED BY BOARD OF DIRECTORS: SEPTEMBER 29, 2003

DATE APPROVED BY STOCKHOLDERS: ___________________

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