Document:

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                         FORBEARANCE AND FIFTH AMENDMENT
                               TO CREDIT AGREEMENT

         THIS FORBEARANCE AND FIFTH AMENDMENT, dated as of February 14, 2000
(the "Fifth Amendment"), is made and entered into by and among WEST COAST
ENTERTAINMENT CORPORATION (the "Company"), certain direct and indirect
subsidiaries thereof which are signatories hereto (together with the Company,
individually, a "Borrower"; collectively, the "Borrowers"), the several banks
and other financial institutions parties to the Credit Agreement (as hereinafter
defined) (individually, a "Bank"; collectively, the "Banks") and PNC BANK,
NATIONAL ASSOCIATION, as agent for the Banks (in such capacity, the "Agent").

                                   BACKGROUND

         WHEREAS, the Borrowers, the Banks and the Agent are parties to a
certain Credit Agreement, dated as of December 15, 1997 (as heretofore amended,
supplemented or otherwise modified, the "Credit Agreement") and various other
Loan Documents related thereto;

         WHEREAS, certain Defaults and Events of Default exist and are
continuing under the Credit Agreement, including, but not limited to, the
failure of the Borrowers to pay the full amount of the Bank Debt as and when it
became due on the Termination Date;

         WHEREAS, the Borrowers have requested the Banks to (i) temporarily
forbear from exercising their rights and remedies pursuant to the Credit
Agreement and the Loan Documents, (ii) continue to use the Banks' Cash
Collateral (hereinafter defined) to enable the Borrowers to pay certain expenses
and for general working capital on and after the Termination Date, and (iii)
make certain other amendments to the Credit Agreement;

         WHEREAS, the Required Banks have agreed to certain of the Borrowers'
requests pursuant to the terms and subject to the conditions set forth herein;
and

         WHEREAS, unless otherwise amended or defined herein, the capitalized
terms used in this Fifth Amendment shall have the same definitions as are
contained in the Credit Agreement.

         NOW THEREFORE, incorporating the Background herein and for good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree as
follows:

                                    SECTION I
                                 ACKNOWLEDGMENTS

          Acknowledgment of Events of Default; Enforceability of Credit
Agreement; Waiver of Defenses. The Borrowers acknowledge that: (i) certain
Defaults and Events of Default have occurred and/or currently exist under the
Credit Agreement, which Defaults or Events of Default are described on Schedule
I attached hereto (the "Existing Defaults"); (ii) the

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Existing Defaults are material in nature; (iii) to the extent that the Credit
Agreement or any of the Loan Documents require notification by the Banks to the
Borrowers of the existence of a Default and of an opportunity for the Borrowers
to cure such Default, such notice and period for cure have been properly given
to the Borrowers by the Banks or such requirements are hereby waived by the
Borrowers; (iv) as a result of the Existing Defaults, and but for the
forbearance provided for in this Fifth Amendment, the Agent, on behalf of the
Banks, and/or the Banks, without the need for further notice or declaration to
the Borrowers or any other entity, would be entitled to exercise their rights
and remedies under the Credit Agreement and the other Loan Documents; (v) the
Credit Agreement and the other Loan Documents are valid legal agreements,
enforceable against the Borrowers in every respect and all of the terms and
conditions thereof, as amended by this Fifth Amendment, are binding upon the
Borrowers; (vi) the Loans and other indebtedness owing to the Banks under the
Credit Agreement and the other Loan Documents are absolutely and unconditionally
owing without defense, offset or counterclaim, and (vii) no defenses, set-offs
or counterclaims exist with respect to the enforcement by the Agent or the Banks
of their respective rights under the Credit Agreement and the Loan Documents,
however, to the extent that any such defenses, set-offs or counterclaims exist,
the Borrowers hereby waive any and all such defenses, set-offs and counterclaims
which any of the Borrowers may have or claim to have relating to or arising from
the transactions reflected in the Loan Documents or to the enforcement by the
Agent or the Banks of their respective rights and remedies under the Credit
Agreement, the Loan Documents and applicable law.

           Acknowledgment of Indebtedness. The Borrowers acknowledge that as of
the Termination Date, the Borrowers are indebted to the Banks in the aggregate
amount of $85,108,731.19, consisting of the unpaid principal and interest on all
Loans and all other fees and charges due and owing to the Banks under the Credit
Agreement and the Loan Documents as more particularly described and set forth on
Schedule II attached hereto. The Borrowers acknowledge that the foregoing
amounts are owed together with all other amounts of interest, and the fees,
costs and expenses (the "Expenses") which shall continue to accrue, including,
without limitation, the fees and expenses of the Banks' attorneys and
consultants incurred in connection with the prior and continuing evaluation of
the Borrowers' performance under and compliance with the terms of the Credit
Agreement, the preparation, negotiation, execution and recordation of this Fifth
Amendment and the various other documents executed in connection with this Fifth
Amendment, and the verification of information provided to the Banks by the
Borrowers through the date of this Fifth Amendment.

           Acknowledgment of Liens and Priority/Grant of Security Interest. The
Borrowers acknowledge that the Agent holds, for the benefit of the Banks,
perfected security interests in and liens upon the Collateral pursuant to the
Security Documents, which security interests and liens are of the first priority
and which security interests and liens secure the Borrowers' obligations to the
Banks under the Loan Documents, as amended hereby. The Borrowers further
acknowledge the prior execution and delivery to the Agent for the benefit of the
Banks of the Security Documents and that, notwithstanding the execution and
delivery of this Fifth Amendment, the Security Documents remain in full force
and effect and the rights and remedies of the Agent and the Banks thereunder,
the obligations of the Borrowers thereunder, and the liens and security
interests created and provided for thereunder remain in full force and effect
and shall not be affected, impaired or discharged hereby.

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                                   SECTION II
                              FORBEARANCE COVENANTS

           Agreement to Forbear. The Agent and the Banks shall forbear from
exercising their rights and remedies under the Loan Documents during the period
(the "Forbearance Period") commencing on the Fifth Amendment Effective Date
(hereinafter defined) and ending on the earlier to occur of (i) August 31, 2000,
or (ii) at the election of the Required Banks, the occurrence of a Forbearance
Event of Default (hereafter defined) (or, at the election of the Required Banks,
the occurrence of any event which with the passage of time or the giving of
notice or both would constitute a Forbearance Event of Default). The aforesaid
date shall be called the "Forbearance Period Termination Date".

           Limitations. Nothing contained in this Fifth Amendment nor any
communication between the Agent and/or the Banks and any Borrower or any
officer, agent, employee, or representative of any Borrower shall be deemed to
constitute, in any manner, a direct or indirect extension of the Termination
Date or the time for or manner of payment of any amount due under the Credit
Agreement, or a present or future waiver of (i) any Defaults or Events of
Default existing under the Credit Agreement, including the Existing Defaults;
(ii) the ongoing obligation of the Borrowers to comply with the Credit
Agreement, as amended hereby; or (iii) any rights or remedies which the Agent
and/or the Banks have against the Borrowers under the Credit Agreement, the Loan
Documents and/or applicable law. Subject only to their agreement to forbear set
forth in section 2.1, the Agent and the Banks hereby reserve and preserve all of
their rights and remedies against the Borrowers under the Credit Agreement, the
Loan Documents and applicable law, including, without limitation, the right to
declare a Forbearance Event of Default and exercise remedies following the
occurrence of a Forbearance Event of Default under this Fifth Amendment.

           Termination of Commitments; Use of Cash Collateral.

           (a) On and as of the Termination Date, all Commitments to make Loans
under the Credit Agreement terminated. The Borrowers acknowledge that, on and as
of the Termination Date, the Borrowers' Available Commitments were equal to zero
(i.e. the Overadvance Commitments and the Second Overadvance Commitments were
fully drawn). Notwithstanding the foregoing and the passing of the Termination
Date, the Banks agree that, subject to the terms and conditions set forth in
paragraph 2.3(b) below, the Borrowers may use the proceeds of all revenues and
other funds received by them and deposited into the Concentration Account at the
Agent, which revenues and funds would ordinarily be applied to the Loans then
outstanding (the "Cash Collateral"), to fund the Borrowers' operations during
the Forbearance Period.

           (b) Provided there are sufficient available funds in the
Concentration Account, Cash Collateral shall be made available to the Borrowers
by the Agent through transfers from the Concentration Account to the Borrowers'
existing demand deposit account at the Agent (hereafter, the "Cash Collateral
Account"). With respect to all Cash Collateral

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disbursements made by the Agent hereunder, the Borrowers shall make a written
request therefore to the Agent specifying the amount to be disbursed (a "Cash
Collateral Request"), which Cash Collateral Request must be received by the
Agent prior to 10:00 a.m., Philadelphia time, on the requested disbursement
date. Each Cash Collateral Request shall contain a certification by the
Borrowers that the Borrowers are in compliance with all of the terms and
conditions of this Fifth Amendment, that no Forbearance Event of Default has
occurred and is existing, and that the amount requested in the Cash Collateral
Request will be spent on Budgeted Expenses in accordance with the Budget then in
effect. Under no circumstances shall the Agent or any Bank make or be required
to make transfers or disbursements to the Borrowers from funds other than from
the Cash Collateral contained in the Concentration Account at the time of the
Borrowers' request. The proceeds of all Cash Collateral disbursements shall be
used by the Borrowers solely to pay Budgeted Expenses in accordance with the
Budget, provided, however, that so long as there exists adequate Cash Collateral
in the Concentration Account at the time of the Borrowers' request and the
Borrowers are otherwise in compliance with the terms of the Credit Agreement as
amended hereby, the Borrowers may deviate with respect to any single Budgeted
Expense (excluding expenses related to the compensation of any present or former
directors or officers of the Company or any Borrower) by an amount up to 10% of
the amount shown on the Budget for that Budgeted Expense, and may deviate as to
all Budgeted Expenses, in the aggregate, in an amount up to 5% of such total
Budgeted Expenses.

           Revenue and Expense Reporting. On or before the twentieth day of each
month, the Borrowers shall furnish to each of the Banks a report in a form
satisfactory to the Required Banks setting forth for all Borrowers the aggregate
total amount of gross revenues, the operating costs and expenses (both on an
accrued and paid basis) and the income for the preceding month. The Borrowers
shall continue to furnish all other reports and information to the Banks as and
when required under the Credit Agreement, including, without limitation, the
weekly reports required under Section 5.16(b) of the Credit Agreement (as
amended hereby) showing the revenues and expenditures of the Borrowers for the
week ending immediately preceding the report date.

           Store Sales; Reports. During the Forbearance Period, the Borrowers
may enter into, and the Banks shall consent to, bona fide agreements for the
sale of the Borrowers' store operations and/or store level assets (each such
agreement, a "Sale Agreement"), provided that (i) the Borrowers may not sell, in
the aggregate, more than thirty-five percent (35%) of the Borrowers' store
operations and/or store level assets without the Required Banks further written
consent (which consent shall not be unreasonably withheld), (ii) the sum of the
Net Cash Proceeds (hereinafter defined) from the sales of stores or store level
assets (hereinafter referred to as "Sold Stores") average, at all times, at
least forty-five percent (45%) of the Sold Stores' aggregate trailing twelve
months revenues, and (iii) the other terms of such Sale Agreements are approved
by the Required Banks (which approval shall not be unreasonably withheld and
shall be deemed given if the Banks have failed to respond to a written request
for such approval on or prior to ten days following the date such approval is
sought in writing by the Borrowers). The Borrowers covenant and agree that they
shall not enter into any Sale Agreement which contains any provision which
makes, or which has the effect of making, it a condition to the completion of
such sale that the proposed merger of the Borrowers with Video City, Inc.
("VCI") be consummated. During the Forbearance Period, the Borrowers shall, and
shall cause its

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employees and agents, to furnish to the Banks on and as of the last day of
each month or, if such day is not a Business Day then on the next succeeding
Business Day, a schedule of all Sale Agreements entered into during the
immediately preceding month in a form satisfactory to the Required Banks setting
forth (i) the aggregate sale price, (ii) the projected transaction costs and
(iii) the Net Cash Proceeds anticipated to be received from each sale, together
with copies of all such Sale Agreements. As used herein, the term "Net Cash
Proceeds" shall mean the gross proceeds received or to be received from the sale
of a store or store level inventory, less all normal and reasonable transaction
costs related to such sale and the payables directly related to the applicable
Sold Store, provided that such payables are actually paid by the Borrowers from
the sales proceeds of the Sold Store immediately following the closing of such
sale or the buyer of such Sold Store has provided satisfactory evidence
regarding its payment of such payables. Notwithstanding anything to the contrary
contained herein, Net Cash Proceeds paid to the Banks during the Forbearance
Period shall effect a permanent repayment of the Loans.

           Management Agreement. The Banks acknowledge that the Company has
entered into that certain Agreement and Plan of Merger dated as of August 1,
1999 with VCI (the "Merger Agreement") pursuant to which the Borrowers will be
merged with VCI and that, on and as of the Fifth Amendment Effective Date the
Borrowers shall enter into a Management Agreement with VCI in substantially the
same form as the agreement attached hereto as Exhibit A (the "Management
Agreement"). The Borrowers shall provide for the effective implementation of and
oversight with respect to the services provided by VCI under the Management
Agreement. Notwithstanding anything to the contrary contained herein, the Banks
and the Borrowers acknowledge that it is currently a condition to the closing of
the merger under the Merger Agreement with VCI that the Banks and VCI enter into
an agreement regarding the satisfaction of the Bank Debt and that, as of the
Fifth Amendment Effective Date, all of the Banks and VCI have not entered into
any such agreement.

           Forbearance Monitoring. At all times after the Fifth Amendment
Effective Date, upon reasonable notice, the Borrowers shall permit the agents
and representatives of the Banks or any Bank, during normal business hours and
as often as may be desired, to visit and inspect any of their business premises
or properties, examine and make abstracts from any books and records, and review
and discuss with the officers, managers and employees of the Borrowers the
business, operations, properties, financial condition or any other matter
affecting the Borrowers and their compliance with the terms of the Credit
Agreement and this Fifth Amendment.

           Existing Defaults. The Borrowers shall use their best efforts to cure
all Existing Defaults, to the extent such Existing Defaults are capable of being
cured. The Borrowers shall periodically notify the Banks of the status of each
Existing Default and the Borrowers' progress regarding the cure of same.

           Corporate Governance. To the extent there are vacancies in the number
of required directors or officers of any Borrower on or after the Fifth
Amendment Effective Date, the Borrowers shall use their best efforts to qualify,
appoint or elect such individuals necessary to fill any such vacancies as
expeditiously as possible.

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           Notices. The Borrowers shall promptly give notice to the Banks of the
occurrence of any Forbearance Event of Default and any other event which has or
reasonably could be expected to have a material adverse effect on (a) the
business, operations, property or condition (financial or otherwise) of the
Borrowers taken as a whole, (b) the ability of the Borrowers to perform their
obligations under this Fifth Amendment, the Credit Agreement or any other Loan
Document, or (c) the ability of any party to this Fifth Amendment or the
Management Agreement to perform under the terms thereof or consummate any
transactions contemplated thereby.

                                  SECTION III
                         AMENDMENTS TO CREDIT AGREEMENT

                   Amendments/Additions to Defined Terms.

                  (a) The definitions of the following terms contained in
Section 1.1 of the Credit Agreement shall be amended and restated in the
following manner as of the date of this Fifth Amendment:

                  "Budget" shall mean a budget and Cash Flow forecast for the
         Budgeted Period prepared and proposed by the Borrowers in accordance
         with Section 5.16(a) hereof and approved as to form and content by (i)
         the Required Banks, in their reasonable discretion, for so long as any
         Second Overadvance Loans are outstanding; (ii) thereafter, by the
         Required Overadvance Banks in their reasonable discretion for so long
         as any Overadvance Loans are outstanding; and (iii) thereafter by the
         Required Banks, in their reasonable discretion.

                  "Budgeted Expenses": shall refer to line items contained on
         the Budget indicating categories of expenditures anticipated to be made
         by the Borrowers during the Budgeted Period, except under no
         circumstances shall any Budgeted Expense reflect or anticipate the
         payment, advance, loan or other distribution of amounts to the current
         or former corporate officers or directors of the Company or any
         Borrower which exceed, in the aggregate, $61,538.46 during any Budgeted
         Period.

                  "Budgeted Period" shall mean the consecutive four week period
         covered by the Budget.

                  (b) Section 1.1 of the Credit Agreement shall be supplemented
and amended by inserting the following defined terms and definitions therein in
their correct alphabetical order:

                  "Fifth Amendment": shall mean this Forbearance and Fifth
         Amendment to the Credit Agreement dated as of February 14, 2000 among
         the Borrowers, the Banks and the Agent, as the same may be amended,
         supplemented or modified from time to time.

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                  "Fifth Amendment Effective Date": shall mean the date on which
         all the conditions set forth in Section VI of the Fifth Amendment have
         been duly satisfied in the sole and absolute discretion of the Agent
         and the Required Banks.

                    Amendment to Section 5.2 of the Credit Agreement. Section
5.2(c) of the Credit Agreement is deleted in its entirety.

                    Amendment to Section 5.16 of the Credit Agreement. Section
5.16 of the Credit Agreement is amended and restated in its entirety as follows:

         5.16 Updated Budgets. Furnish to the Agent and the Banks:

                  (a) Every four weeks, an updated Budget which projects the
         revenues and Budgeted Expenses of the Borrowers for the next Budgeted
         Period. No Budget provided by the Borrowers hereunder shall, without
         the prior consent of the Required Banks or the Required Overadvance
         Banks, as appropriate, restate and amend the Budgeted Expenses for the
         weeks covered in prior Budgets, except to the extent necessary to
         incorporate actual variances in cash received;

                  (b) On Tuesday of each week until the Bank Debt is fully paid
         or satisfied, a written report in a form acceptable to the Agent and
         the Required Banks, certified as true and correct by the person making
         the report, relating to the week ending on the immediately preceding
         Sunday, which report shall (i) set forth the expenditures of the
         Borrowers for the reported week and the manner in which the Cash
         Collateral and any other funds in the Borrowers' possession have been
         applied, (ii) compares the projected revenues and Budgeted Expenses of
         the Borrowers on the Budget for such week with the actual revenues and
         actual expenditures of the Borrowers during such week, together with a
         reasonable explanation of the variances, if any, between the Borrowers'
         actual and projected performance, and (iii) set forth the average
         number of days the Borrowers' leases for open stores are in arrears.

                    Amendment to Section 5.25 of the Credit Agreement. Section
5.25 of the Credit Agreement is deleted in its entirety.

                    Amendment to Section 6.1 of the Credit Agreement. Section
6.1 of the Credit Agreement is deleted in its entirety.

                    Amendment to Subsection 9.2 of the Credit Agreement.
Subsection 9.2 of the Credit Agreement is amended by requiring that all notices
and requests required to be delivered to Agent under the Credit Agreement also
be delivered to all the Banks at the addresses set forth below:

                           PNC Capital Recovery Corp. (Agent)
                           249 Fifth Avenue
                           Pittsburgh, PA  15222-2707
                           Attention:  Thomas J. McCool, Senior Vice President

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                           Telecopy: 412-762-4157

                           PNC Bank, N.A.
                           Special Assets Division
                           1600 Market Street, 11th Floor
                           Philadelphia, PA 19103
                           Attention: William R. Breisch, Vice President
                           Telecopy: (215) 585-8391

                           First Union Capital Markets Corp.
                           NC0737
                           301 South College Street, TW-5
                           Charlotte, NC  28288-0737
                           Attention:  Kerry M. Maxwell, Senior Vice President
                           Telecopy:  704-383-6249

                           Fleet National Bank
                           777 Main Street
                           Hartford, CT  06115
                           Attention: Donald R. Nicholson, Vice President
                           Telecopy:  860-986-2435

                           Summit Bank
                           4365 Route 1 South, 3rd Floor
                           Princeton, NJ 08543
                           Attention: Richard Napierkowski, Vice President
                           Telecopy: 609-243-0172

         With a Copy to:   Duane, Morris & Heckscher LLP
                           One Liberty Place
                           Philadelphia, PA 19103-7396
                           Attention:  Claudia Z. Springer, Esquire
                           Telecopy:  (215) 979-1020

                                   SECTION IV
                              RELEASE AND INDEMNITY

         Recognizing and in consideration of the Banks' and the Agent's
agreements to forbear from exercising their rights and remedies with respect to
the Existing Defaults as set forth in this Fifth Amendment, and to the other
amendments set forth herein, each Borrower, on behalf of itself and all persons
or entities claiming by, through, or under such Borrower, does hereby waive and
release each of the Banks and the Agent, and their respective officers,
attorneys, agents, and employees from any liability, suit, damage, claim, loss
or expense of any kind or nature whatsoever and howsoever arising that such
Borrower ever had or now has against any of them arising out of or relating to
any Bank's or the Agent's acts or omissions with respect to this

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Fifth Amendment, the Credit Agreement, the other Loan Documents or any other
matters described or referred to herein or therein. Each Borrower hereby further
agrees to indemnify and hold the Agent and each Bank, and their respective
officers, attorneys, agents, and employees harmless from any loss, damage,
judgment, liability or expense (including counsel fees) suffered by or rendered
against the Banks or the Agent or any of them on account of anything arising out
of this Fifth Amendment, the Credit Agreement, the other Loan Documents or any
other document delivered pursuant hereto or thereto, up to and including the
date hereof; provided that, no Borrower shall have any obligation hereunder to
the Agent or any Bank with respect to indemnified liabilities arising from the
breach by any Bank of its obligations under the Fifth Amendment, the Credit
Agreement or the other Loan Documents, or the gross negligence or willful
misconduct of the Agent or any Bank.

                                    SECTION V
                         REPRESENTATIONS AND WARRANTIES

         Each of the Borrowers hereby represents and warrants to the Agent and
the Banks that:

         5.1 Representations and Warranties. Unless otherwise expressly amended
or excluded in the Fifth Amendment, all representations and warranties made in
the Credit Agreement are true and correct in all material respects on and as of
the date hereof as if made on and as of the date hereof; and

         5.2 Amendment Authorized and Enforceable. The execution and delivery by
each of the Borrowers of this Fifth Amendment and the Management Agreement and
all other documents and instruments related hereto or required herein have been
duly authorized by all requisite action on behalf of the Borrowers, and this
Fifth Amendment and the Management Agreement and such all other such documents
and instruments constitute the legal, valid and binding obligation of each
Borrower, enforceable against each of them in accordance with their terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law).

                                   SECTION VI
                              CONDITIONS PRECEDENT

         The following conditions shall have occurred or shall exist in order
for this Fifth Amendment to be deemed in effect and binding upon the parties
hereto:

         6.1 Execution. All of the parties hereto, where required, shall have
executed originals or counterparts of this Fifth Amendment and all other
documentation required herein and shall have delivered same to the Agent or to
the Banks' counsel;

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<PAGE>   10
         6.2 Budget and Financial Reports. The Borrowers shall have delivered to
the Agent and the Banks (i) a current Budget, (ii) a cash flow projection
through August 31, 2000, (iii) pro forma or projected profit and loss statements
and balance sheets, and (iv) all other reports, financial statements and
projections for the Borrowers that are reasonably required by the Agent and the
Required Banks, each in form and substance acceptable to the Required Banks;

         6.3 Officers and Directors. On and as of the Fifth Amendment Effective
Date, the current directors and officers (the "Current Directors/Officers") of
each Borrower shall have, on behalf of the respective Borrowers, qualify,
appoint and elect at minimum one adult individual (each such person a
"Designee," together with all such persons the "Designees"), to serve as the
director(s) and officer(s) of each Borrower upon and after the Fifth Amendment
Effective Date and, immediately after such action is taken, the Current
Directors/Officers shall have resigned each of their respective positions as
directors and/or officers of the Borrowers.

         6.4 Documents. All corporate and other proceedings, and all documents,
instruments and other legal matters in connection with the transaction
contemplated by this Fifth Amendment (including, without limitation, the
qualification, appointment and election of the Designee in accordance with
Section 6.3), shall be satisfactory in form and substance to the Agent and the
Banks' counsel, and the Agent shall have received copies of all such documents,
instruments and resolutions, as well as all such documents, instruments and
resolutions authorizing each Borrower to execute, deliver and perform under the
Credit Agreement as amended by this Fifth Amendment;

         6.5 Management Agreement. The Management Agreement, substantially in
the form attached hereto as Exhibit A, shall have been fully executed and
delivered by the parties thereto;

         6.6 Mutual Releases. Mutual releases by and among the Banks and the
Current Directors/Officers of each of the Borrowers shall have been executed and
delivered to the respective parties, which such releases shall be substantially
in the form attached hereto as Exhibit B.

         6.7 Representations and Warranties True and Correct. Each of the
representations and warranties made in the Credit Agreement shall, after giving
effect to this Fifth Amendment, be true and correct in all material respects;
and

         6.8 Fees and Expenses. The Borrowers shall have paid or have made
arrangements acceptable to the Banks for the payment of all Expenses.

                                   SECTION VII
                              DEFAULTS AND REMEDIES

         7.1. Events of Default. The occurrence of any one or more of the
following events shall constitute an immediate event of default under this Fifth
Amendment (a "Forbearance Event of Default") and shall constitute an Event of
Default under the Credit Agreement without any obligation by any Bank to provide
notice thereof or right to cure unless specifically stated:

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<PAGE>   11
                  (a) The Borrowers fail to timely comply with any term,
condition, undertaking or covenant contained in this Fifth Amendment and, except
as expressly amended or modified, the Credit Agreement and the Loan Documents,
or in any documents or instruments executed or delivered by the Borrowers in
connection herewith or therewith, which failure has not been or is incapable of
being cured within ten days from the date thereof. Notwithstanding the
foregoing, Existing Defaults which are continuing on and after the Fifth
Amendment Effective Date shall not be deemed Forbearance Events of Default
provided the Borrowers are not in violation of Section 2.8 of this Fifth
Amendment and provided further that the failure to make payments of any
principal amount or interest on the Loans during the Forbearance Period shall
not constitute a violation of section 2.8 or a Forbearance Event of Default.

                  (b) The Borrowers institute or commence any action or any
legal or equitable proceeding seeking to rescind, amend, alter, revoke,
terminate, or otherwise modify the provisions of this Fifth Amendment, the
Credit Agreement or the Loan Documents or any documents or instruments executed
or delivered by the Borrowers in connection herewith or therewith;

                  (c) The validity, binding nature of, or enforceability of any
material term or provision of the Credit Agreement, as amended or modified by
this Fifth Amendment, or the Loan Documents is disputed or any material term or
provision of the Credit Agreement or the Loan Documents is found or declared to
be invalid, avoidable, or unenforceable by any court of competent jurisdiction;

                  (d) The Borrowers' total revenues for the trailing two
calendar month period, as tested as of the last day of each calendar month,
shall be (i) less than 85 percent of the corresponding projected revenues as set
forth in Exhibit C attached hereto, and (ii) less than 93 percent of the
corresponding projected year-to-date revenues, provided that, if the Borrowers
close any stores, with the Required Banks' consent pursuant to Section 6.19 of
the Credit Agreement, total projected revenues as set forth on Exhibit C shall
be adjusted by subtracting the amount of the revenues reasonably attributable
and projected for such closed stores;

                  (e) Any account or trade payable of any Borrower which is
incurred following the Fifth Amendment Effective Date remains unpaid for a
period of more than 30 days past its original due date (except for trade
payables or accounts which, in the aggregate, do not exceed $10,000 in amount),
or any account or trade payable of any Borrower which was incurred prior to the
Fifth Amendment Effective Date (other than trade payables arising from closed
stores) remains unpaid for more than 60 days past the later of (i) the Fifth
Amendment Effective (ii) the original due date of such payable;

                  (f) The Designee(s) provided for in Section 6.3 shall be
removed or shall resign for any reason and a replacement or successor reasonably
satisfactory to the Required Banks is not immediately and duly qualified,
appointed and elected;

                  (g) Any judgments or decree (other than judgments or decrees
on record as of the Fifth Amendment Effective Date) shall be entered against any
Borrower involving in the

                                     - 11 -
<PAGE>   12
aggregate a liability (excluding any such judgments or orders which are fully
covered by insurance, subject to any customary deductible, and under which the
applicable insurance carrier has acknowledged such full coverage in writing) of
$10,000 or more and such judgment or decree shall not have been vacated,
discharged, stayed or bonded pending appeal, within 30 days from the entry
thereof;

                  (h) A bankruptcy petition is filed by any of the Borrowers or
any bankruptcy case is filed against any Borrower (and in the case of an
involuntary case commenced against any Borrower, such case remains undismissed
for a period of thirty (30) days or an order for relief is entered in such
case); or

                  (i) The termination of the Management Agreement for any
reason, the receipt or delivery by the Company or any Borrower of any notice of
termination of the Management Agreement, or the occurrence of any event or the
existence of any circumstance that would constitute "cause" for the termination
of the Management Agreement.

         7.2. Remedies. Upon the occurrence of a Forbearance Event of Default,
or on or following the Forbearance Period Termination Date, the Banks'
obligations hereunder shall terminate and the Agent's and the Banks shall have
and may exercise, at their option and without notice, all of the remedies set
forth in the Credit Agreement, as amended hereby, and any of the Loan Documents
and/or under applicable law.

                                     - 12 -
<PAGE>   13
                                  SECTION VIII
                                  MISCELLANEOUS

         8.1 Limited Effect. Except as expressly provided for in this Fifth
Amendment, the Credit Agreement and the Loan Documents shall continue to be, and
shall remain, unaltered and in full force and effect in accordance with their
terms. To the extent that any existing provision of the Credit Agreement is
inconsistent with the specific provisions of this Fifth Amendment, the
provisions of this Fifth Amendment shall control. Notwithstanding the foregoing,
reference to this Fifth Amendment need not be made in the Credit Agreement, or
in any other instrument or document executed in connection therewith or
herewith, or in any certificate, letter or communication issued or made pursuant
to or with respect to the Credit Agreement, any reference in any of such items
to the Credit Agreement being sufficient to refer to the Credit Agreement as
amended hereby.

         8.2 Additional Action. The Borrowers and the Agent agree to take such
further action to execute and deliver to each other such additional agreements,
instruments and documents as may reasonably be required to carry out the
purposes of this Fifth Amendment.

         8.3 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.

         8.4 Governing Law. This Fifth Amendment shall be governed by and
construed in accordance with the internal laws of the Commonwealth of
Pennsylvania without regard to principles of conflicts of law.

         8.5 Successor and Assigns. The terms and provisions of this Fifth
Amendment shall be binding upon and shall inure to the benefit of the Borrowers,
the Agent and the Banks and their respective successors and assigns.

         8.6 Counterparts. This Fifth Amendment may be executed in one or more
counterparts, each of which shall be deemed to be an original, and all of which
shall constitute one and the same instrument. Delivery of an executed
counterpart of a signature page of this Fifth Amendment by facsimile shall be
effective as delivery of a manually executed counterpart of this Fifth
Amendment.

         8.7 Headings. The headings of any paragraph of this Fifth Amendment are
for convenience only and shall not be used to interpret any provision hereof.

         8.8 Modifications. No modification hereof or any agreement referred to
herein shall be binding or enforceable unless in writing and signed on behalf of
the party against whom enforcement is sought.

                                     - 13 -
<PAGE>   14
         IN WITNESS WHEREOF, the parties hereto have caused this Fifth Amendment
to be duly executed and delivered by their proper and duly authorized officers
as of the day and year first above written.

                                     - 14 -
<PAGE>   15
<TABLE>
<S>                                         <C>
ATTEST:                                     WEST COAST ENTERTAINMENT
                                            CORPORATION

By: /s/ Joseph Ciano                        By: /s/ T. Kyle Standley
Name: Joseph Ciano                          Name: T. Kyle Standley
Title: Controller                           Title: Chief Executive Officer

ATTEST:                                     VIDEOSMITH, INCORPORATED

By: /s/ Joseph Ciano                        By: /s/ T. Kyle Standley
Name: Joseph Ciano                          Name: T. Kyle Standley
Title: Controller                           Title: Chief Executive Officer

ATTEST:                                     WEST COAST FRANCHISING COMPANY

By: /s/ Joseph Ciano                        By: /s/ T. Kyle Standley
Name: Joseph Ciano                          Name: T. Kyle Standley
Title: Controller                           Title: Chief Executive Officer

ATTEST:                                     PALMER WEST COAST CORPORATION

By: /s/ Joseph Ciano                        By: /s/ T. Kyle Standley
Name: Joseph Ciano                          Name: T. Kyle Standley
Title: Controller                           Title: Chief Executive Officer

ATTEST:                                     PALMER VIDEO CORPORATION

By: /s/ Joseph Ciano                        By: /s/ T. Kyle Standley
Name: Joseph Ciano                          Name: T. Kyle Standley
Title: Controller                           Title: Chief Executive Officer

ATTEST:                                     PALMER INVESTMENT CORPORATION

By: /s/ Joseph Ciano                        By: /s/ T. Kyle Standley
Name: Joseph Ciano                          Name: T. Kyle Standley
Title: Controller                           Title: Chief Executive Officer
</TABLE>

                       [signatures continued on next page]

                                     - 15 -
<PAGE>   16
<TABLE>
<S>                                         <C>
ATTEST:                                     CASABLANCA DISTRIBUTING
                                            CORPORATION

By: /s/ Joseph Ciano                        By: /s/ T. Kyle Standley
Name: Joseph Ciano                          Name: T. Kyle Standley
Title: Controller                           Title: Chief Executive Officer

ATTEST:                                     RKT MERGER CO.

By: /s/ Joseph Ciano                        By: /s/ T. Kyle Standley
Name: Joseph Ciano                          Name: T. Kyle Standley
Title: Controller                           Title: Chief Executive Officer

ATTEST:                                     SHOWTIME, INC.

By: /s/ Joseph Ciano                        By: /s/ T. Kyle Standley
Name: Joseph Ciano                          Name: T. Kyle Standley
Title: Controller                           Title: Chief Executive Officer

ATTEST:                                     VIDEO GIANT INC.

By: /s/ Joseph Ciano                        By: /s/ T. Kyle Standley
Name: Joseph Ciano                          Name: T. Kyle Standley
Title: Controller                           Title: Chief Executive Officer
</TABLE>

                       [signatures continued on next page]

                                     - 16 -
<PAGE>   17
<TABLE>
<S>                                         <C>
ATTEST:                                     VIDEO KING OF BROOME COUNTY, INC.

By: /s/ Joseph Ciano                        By: /s/ T. Kyle Standley
Name: Joseph Ciano                          Name: T. Kyle Standley
Title: Controller                           Title: Chief Executive Officer

ATTEST:                                     KING VIDEO ENTERPRISES, INC.

By: /s/ Joseph Ciano                        By: /s/ T. Kyle Standley
Name: Joseph Ciano                          Name: T. Kyle Standley
Title: Controller                           Title: Chief Executive Officer

ATTEST:                                     WEST COAST FINANCING CORPORATION

By: /s/ Joseph Ciano                        By: /s/ T. Kyle Standley
Name: Joseph Ciano                          Name: T. Kyle Standley
Title: Controller                           Title: Chief Executive Officer

ATTEST:                                     WEST COAST LICENSING CORPORATION

By: /s/ Joseph Ciano                        By: /s/ T. Kyle Standley
Name: Joseph Ciano                          Name: T. Kyle Standley
Title: Controller                           Title: Chief Executive Officer

ATTEST:                                     WEST COAST ENTERTAINMENT
                                            CORPORATION OF DELAWARE, INC.

By: /s/ Joseph Ciano                        By: /s/ T. Kyle Standley
Name: Joseph Ciano                          Name: T. Kyle Standley
Title: Controller                           Title: Chief Executive Officer
</TABLE>

                       [signatures continued on next page]

                                     - 17 -
<PAGE>   18
<TABLE>
<S>                                         <C>
ATTEST:                                     WEST COAST ENTERTAINMENT
                                             CORPORATION OF INDIANA, INC.

By: /s/ Joseph Ciano                        By: /s/ T. Kyle Standley
Name: Joseph Ciano                          Name: T. Kyle Standley
Title: Controller                           Title: Chief Executive Officer

ATTEST:                                     WEST COAST ENTERTAINMENT
                                             CORPORATION OF NEW JERSEY, INC.

By: /s/ Joseph Ciano                        By: /s/ T. Kyle Standley
Name: Joseph Ciano                          Name: T. Kyle Standley
Title: Controller                           Title: Chief Executive Officer

ATTEST:                                     WEST COAST ENTERTAINMENT
                                             CORPORATION OF PENNSYLVANIA, INC.

By: /s/ Joseph Ciano                        By: /s/ T. Kyle Standley
Name: Joseph Ciano                          Name: T. Kyle Standley
Title: Controller                           Title: Chief Executive Officer

ATTEST:                                     WEST COAST ENTERTAINMENT OF
                                             LOUISIANA, INC.

By: /s/ Joseph Ciano                        By: /s/ T. Kyle Standley
Name: Joseph Ciano                          Name: T. Kyle Standley
Title: Controller                           Title: Chief Executive Officer

ATTEST:                                     WEST COAST VIDEO OF NEW JERSEY, INC.

By: /s/ Joseph Ciano                        By: /s/ T. Kyle Standley
Name: Joseph Ciano                          Name: T. Kyle Standley
Title: Controller                           Title: Chief Executive Officer
</TABLE>

                       [signatures continued on next page]

                                     - 18 -
<PAGE>   19
<TABLE>
<S>                                         <C>
ATTEST:                                     WEST COAST VIDEO OF LAWRENCE,
                                             MASSACHUSETTS, INC.

By: /s/ Joseph Ciano                        By: /s/ T. Kyle Standley
Name: Joseph Ciano                          Name: T. Kyle Standley
Title: Controller                           Title: Chief Executive Officer

ATTEST:                                     WEST COAST TECHNOLOGY, LTD., INC.

By: /s/ Joseph Ciano                        By: /s/ T. Kyle Standley
Name: Joseph Ciano                          Name: T. Kyle Standley
Title: Controller                           Title: Chief Executive Officer

ATTEST:                                     DON'S VIDEO, INC.

By: /s/ Joseph Ciano                        By: /s/ T. Kyle Standley
Name: Joseph Ciano                          Name: T. Kyle Standley
Title: Controller                           Title: Chief Executive Officer
</TABLE>

                       [signatures continued on next page]

                                     - 19 -
<PAGE>   20
<TABLE>
<S>                                         <C>
ATTEST:                                     FIRST UNION NATIONAL BANK

By: /s/ Ron R. Ferguson                     By: /s/ Matthew Berk
Name: Ron R. Ferguson                       Name: Matthew Berk
Title: Director                             Title: Director

ATTEST:                                     FLEET NATIONAL BANK f/k/a
                                             BANKBOSTON, N.A.

By: /s/ Andrew J. Maidman                   By: /s/ Donald R. Nicholson
Name: Andrew J. Maidman                     Name: Donald R. Nicholson
Title: Vice President                       Title: Senior Vice President

ATTEST:                                     SUMMIT COMMERCIAL LEASING
                                             CORPORATION

By:                                         By:
Name:                                       Name:
Title:                                      Title:

ATTEST:                                     PNC BANK NATIONAL ASSOCIATION,
                                             as a Bank and as Agent

By: /s/ Robert A. Harmer                    By: /s/ William R. Breisch
Name: Robert A. Harmer                      Name: William R. Breisch
Title: Assistant Vice President             Title: Vice President
</TABLE>

                                     - 20 -
<PAGE>   21
                                   SCHEDULE I

                                EXISTING DEFAULTS

                                     - 21 -
<PAGE>   22
                                   SCHEDULE II

                                    BANK DEBT

<TABLE>
<S>                                                                    <C>
         Principal Balance                                             $ 74,499,734.55
         Accrued and Unpaid Interest                                   $  1,501,501.81
         Commitment Extension Fees                                     $  7,007,000.00
         Interest Differential                                         $  1,046,462.79
         Additional Unpaid Default Interest                            $    804,032.04
         Unpaid Amendment Fees                                         $    250,000.00
                                                                       ---------------

         Total Bank Debt as of Termination Date                        $ 85,108,731.19
                                                                       ===============
</TABLE>

                                     - 22 -<PAGE>   1
                              MANAGEMENT AGREEMENT

         This Management Agreement ("Agreement") is entered into as of March 3,
2000, by and among VIDEO CITY, INC., a Delaware corporation ("VCI") and WEST
COAST ENTERTAINMENT CORPORATION, a Delaware corporation ("West Coast").

                                   BACKGROUND

           VCI, West Coast and Keystone Merger Corp. have entered into that
certain Agreement and Plan of Merger, dated as of August 1, 1999 (as amended,
modified or supplemented through the date hereof, the "Merger Agreement"), a
copy of which is attached hereto as Exhibit "A" pursuant to which VCI shall
acquire West Coast (the "Acquisition");

           West Coast owns and operates several chains of retail video stores
(all of such owned stores referred to herein, collectively, as the "West Coast
Stores"), a franchise program under which retail video stores operate under West
Coast's trade names, an e-commerce business dedicated to the sale of video
products through the Internet, and various other businesses (collectively, the
"West Coast Business");

           VCI owns and operates several chains of retail video stores, has
extensive experience in the retail video industry, and will own the West Coast
Business upon consummation of the Acquisition; and

           In anticipation of the closing of the Merger Agreement, West Coast
desires to retain the services of VCI and VCI desires to manage and operate the
West Coast Business for the period and pursuant to the terms set forth in this
Agreement.

           NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:

           Management of West Coast Business. West Coast hereby retains the
services of VCI to operate and manage the West Coast Business for the term and
in accordance with the terms and conditions set forth below.

           Term. The term of this Agreement shall be from the date hereof until
the closing of the Acquisition of West Coast by VCI; provided, however, this
Agreement may be terminated (a) by West Coast on or after August 31, 2000 by
delivering notice of such termination to VCI at least 45 calendar days in
advance of the date such termination becomes effective; (b) at any time and
immediately by West Coast for "Cause" (defined below); or (c) by VCI at any time
by delivering notice of such termination to West Coast at least 120 calendar
days in advance of the date such termination becomes effective if the Merger
Agreement is terminated or if it is otherwise determined by West Coast and VCI
that the Acquisition will not occur. The date upon which the termination of this
Agreement becomes effective shall hereinafter be called the "Termination Date".
Upon the Termination Date, this Agreement shall be of no further force or
effect, except that VCI shall be entitled to the Management Fee (defined below)
through the

                                     - 1 -
<PAGE>   2
Termination Date (prorated for a short week as necessary) and the Management
Termination Fee (defined below), as applicable, and the parties shall cooperate
with each other regarding the prompt, complete and accurate transfer of all
books, accounts and records in every form and format, and in all other respects
as is necessary and appropriate to achieve a complete and smooth transition of
the management of the West Coast Business. Neither this Agreement nor its
termination shall affect the parties' respective rights and obligations under
the Merger Agreement.

           VCI's Authority. Subject to the limitations and covenants set forth
in paragraphs 4 and 5 below, West Coast hereby confers upon VCI the full
discretion and authority to operate and manage the West Coast Business, which
authority shall include, without limitation, the authority to do any one or more
of the following:

                  () To hire, train, supervise, relocate and discharge
employees;

                  () To select suppliers and distributors and to purchase or
lease video cassettes, digital video discs, game cartridges, video players, game
equipment, accessories, concessions and other products as may reasonably be
deemed by VCI to be appropriate and consistent with the operation of the video
rental/sale business;

                  () To collect the revenue of the West Coast Business;

                  () To facilitate the payment of expenses incurred by the West
Coast Business in the ordinary course of business, including but not limited to
wages, payroll taxes, rent, utilities, insurance, and the purchase and lease of
inventory;

                  () To execute any checks, arrange for the wire transfers of
funds or make any other form of payment on behalf of West Coast in the ordinary
course of business.

                  () To sell "sell-through" merchandise, consisting of video
cassettes, digital video discs, accessories, concessions and other inventory
held for sale in the ordinary course of business;

                  () To negotiate on all matters with the lessors of the real
property of the West Coast Stores;

                  () To negotiate and enter into agreements necessary or
advisable for the operation and management of the West Coast Business;

                  () To negotiate and enter into agreements necessary or
advisable for the sale of the West Coast Stores;

                  () To advertise and market the products and services of the
West Coast Business; and

                                     - 2 -
<PAGE>   3
                  () To implement and manage inventory control and management
information systems of the West Coast Business,

         Limitations on Authority. The authority granted in paragraph 3 is
subject, in each instance, to the terms of, and the restrictions, limitations
and covenants contained in all credit and lending agreements and documents
between West Coast and its lenders (the "Lenders"), specifically, that certain
Credit Agreement dated December 15, 1997, as the same has been and may hereafter
be amended, and any and all notes, agreements, instruments or documents in any
way relating thereto (collectively, the "Loan Documents"). VCI covenants and
agrees with West Coast that at all times during the term of this Management
Agreement, VCI shall, to the extent of the authority granted to it hereunder,
cause West Coast to perform all of West Coast's obligations under the Loan
Documents (including complying with all reporting requirements thereunder), and
shall not take any action or cause any act to be done which shall constitute an
Event of Default, as that term is defined in the Loan Documents, or cause West
Coast to be in breach of any of its obligations, covenants or agreements under
the Loan Documents. VCI covenants and agrees to make its representatives
available to meet and/or consult with the Lenders, their agents, employees,
consultants and attorneys as and when reasonably requested by such Lenders
regarding all issues impacting upon the operation of the West Coast Business and
West Coast's performance under and compliance with the terms of the Loan
Documents.

         Covenants. The parties acknowledge that the businesses of VCI and West
Coast are substantially very similar. Until the consummation of the Merger,
should that occur, VCI shall maintain and keep all assets, funds and the
computer system and software of West Coast and its affiliates and subsidiaries
separate and apart from the assets, funds, computer system and software of VCI,
and VCI shall maintain separate financial records and management information
systems regarding the business of West Coast and its affiliates and
subsidiaries. Without limiting the generality of the foregoing, VCI shall (a)
maintain a sufficient number of West Coast employees necessary and appropriate
for the continued operation of West Coast as a separate entity, (b) maintain the
existence and effectiveness of all material contracts and leases and all other
assets necessary and appropriate for the continued operation of West Coast as a
separate entity, including, without limitation, all revenue sharing contracts to
which West Coast is party, (c) maintain the existence and effectiveness of all
material permits and licenses, (d) maintain the corporate existence of each West
Coast entity and, where necessary or appropriate, the qualification to do
business in all jurisdictions where West Coast and its affiliates do business,
(e) prepare and file or cause the preparation and filing (subject to valid
requests for extension) of all tax returns to all local, state and federal
governmental authorities, (f) prepare and file or cause the preparation and
filing (subject to valid requests for extension) of all reports required to be
filed with the Securities and Exchange Commission, (g) maintain insurance
coverages pursuant to past practices, (h) comply in all material respects with
all laws applicable to the West Coast Business.

         Management Compensation. During the term of this Agreement, West Coast
hereby agrees to pay VCI, on a weekly basis, for its services in operating and
managing the West Coast Business (the "Management Services") an amount
(collectively, the "Management Fee") equal to the percentage of the gross
revenues actually collected (after application of discounts, credits and
rebates, if any) as and for the periods set forth in the schedule below
("Revenues"),

                                     - 3 -
<PAGE>   4
less all costs and expenses of West Coast incurred and paid on a weekly basis
during the term of this Agreement in the ordinary course of business (excluding
"extraordinary expenses") which West Coast has customarily classified as
selling, general and administrative expenses on its Consolidated Statements of
Operations ("SG&A"), provided that in no event shall the Management Fees paid to
VCI under this Agreement be less than $400,000 per calendar month.

<TABLE>
<CAPTION>
                      Period                       Management Fee
                      ------                       --------------
<S>                                     <C>
               0 - 30 Days              Revenues multiplied by 14% less SG&A
               31- 60 Days              Revenues multiplied by 13% less SG&A
               60 Days - Termination    Revenues multiplied by 12% less SG&A
</TABLE>

The Management Fee shall be payable to VCI by West Coast weekly on each Tuesday
for the Management Services rendered during the preceding week (Sunday through
Saturday). In the event this Agreement is terminated before August 31, 2000 for
any reason other than (i) by West Coast for Cause, or (ii) voluntarily by VCI
after proper notice as herein required, then West Coast shall pay to VCI on the
date of such termination a management services termination fee (the "Management
Termination Fee") in an amount in cash equal to the lesser of (x) $750,000 (if
the Termination Date occurs during the first 60 days following the date of this
Agreement) or $500,000 (if the Termination Date occurs anytime after the first
60 days of the date of this Agreement) or (y) 12 percent of gross revenues
collected during the 30 days immediately preceding the Termination Date. The
Management Termination Fee is in addition to the Management Fee and is payable
irrespective of the amount of Management Fee that is otherwise payable. The
parties hereto acknowledge and agree that the Management Fee and the Management
Termination Fee are integral parts of the transactions contemplated by this
Agreement.

         Compliance with Projections. VCI covenants and agrees that it shall use
the Revenues received by West Coast (except for any Management Termination Fee)
to pay in cash all costs and expenses of West Coast incurred in the ordinary
course of business during the term of this Agreement, including the Management
Fee, which costs and expenses shall not exceed, at any time, the amounts set
forth in the six month operating revenue and expense projections heretofore
provided to West Coast, a copy of which are attached hereto as Exhibit "B". VCI
further covenants and agrees that Revenues for the trailing two calendar month
period, as tested as of the last day of each calendar month, shall at no time be
be (i) less than 85 percent of the corresponding projected revenues as set forth
in Exhibit B attached hereto, and (ii) less than 93 percent of the corresponding
projected year-to-date revenues, provided that, if any West Coast stores are
closed, with the Lenders' consent pursuant to the Loan Documents, total
projected Revenues as set forth on Exhibit B shall be adjusted by subtracting
the amount of the revenues reasonably attributable and projected for such closed
stores.

         SG&A. A schedule setting forth, in line item detail, all expenses which
are SG&A expenses and providing examples of any "extraordinary expenses" is
attached hereto as Exhibit "C". For purposes of calculating the total SG&A
during each week of the term of this Agreement and notwithstanding West Coast's
obligation to pay all such amounts, the amount of out-of-pocket fees and
expenses attributable to the Banks and its agents (including the Banks'

                                     - 4 -
<PAGE>   5
counsel and other professionals) in connection with the workout of the loans
under the Loan Documents between West Coast and its Lenders shall not exceed an
average of $15,000 per calendar week.

         Limit on Liability. Subject to paragraphs 4 and 5, VCI shall have
reasonable business judgment discretion with regard to the operation and
management of the West Coast Business, including, but not limited to, the
selection and depth of inventory, the staffing, marketing and promotion of the
West Coast Business, hours of operation and all other matters, and West Coast
shall have no claim against VCI or its directors, officers, employees, counsel,
agents or affiliates based on, arising out of or relating to amount of Revenues
or operations of the West Coast Business during the term of this Agreement, or
the financial condition, results of operations, condition of assets, liabilities
or prospects of the West Coast Business, except for any claim which is based on,
arises out of or relates to the gross negligence or willful misconduct of VCI.

         Financial Reports. VCI shall submit monthly written reports to West
Coast reporting the gross revenue, operating costs and expenses and income of
the West Coast Business for each calendar month within 20 days after such
period. On each Tuesday, VCI shall also submit weekly written management fee
billing summaries in a form reasonably acceptable to VCI and West Coast to
reconcile the fees paid by West Coast which constitute the Management Fee.

         Termination for Cause. West Coast shall have the right to immediately
terminate this Agreement at any time for Cause. As used herein, the term "Cause"
shall mean any act taken by VCI which (i) is beyond the limits of its authority
contained in this Agreement, (ii) constitutes a material breach of VCI's
covenants or obligations contained in this Agreement, including, without
limitation, VCI's obligation to cause the West Coast Business to meet the
projections attached hereto as Exhibit "B" in accordance with paragraph 7 above,
or (iii) would cause or result in material and irreparable harm to the West
Coast Business or a substantial diminution in the value of West Coast's assets.

         Indemnification. West Coast agrees to indemnify and hold harmless VCI
and its directors, officers, employees, counsel, agents or affiliates against
any and all loss, liability, claim, and damage whatsoever (including, but not
limited to, any and all expenses and legal fees whatsoever reasonably incurred
in investigating, preparing or defending against any litigation commenced or
threatened or any claim whatsoever) arising out of or in connection with VCI's
operation and management of the West Coast Business; provided, however, such
indemnity shall not apply to any portion of such loss, liability, claim, or
damage to the extent it is found in a final judgment by a court of competent
jurisdiction to have resulted from the gross negligence or willful misconduct of
VCI.

         Assignability. Neither this Agreement nor any of the rights or
obligations hereunder may be assigned by a party without the prior written
consent of the other party. Subject to the foregoing, this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, and no other person shall

                                     - 5 -
<PAGE>   6
have any right, benefit or obligation under this Agreement as a third party
beneficiary or otherwise.

         Notices. All notices to VCI shall be addressed to the Chief Executive
Officer at the principal executive office of VCI, and all notices to other
parties shall be addressed to the address on file with VCI, or to such other
address as either may designate to the other in writing. All notices, requests,
demands and other communications which are required or may be given under this
Agreement shall be in writing and shall be deemed to have been duly given when
received if personally delivered; when transmitted if transmitted by telecopy,
electronic or digital transmission method (with positive confirmation report
generated by the sender's machine); the day after it is sent, if sent for next
day delivery to a domestic address by recognized overnight delivery service
(e.g., FED EX); and upon receipt, if sent by certified or registered mail,
return receipt requested.

         Attorneys' Fees. In the event of any legal action or proceeding to
enforce or interpret the provisions hereof, the prevailing party shall be
entitled (in addition to costs) to reasonable attorneys' fees, as determined by
the court and, if applicable, the appellate court.

         Miscellaneous. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without reference to choice of
law provisions. In the event that any one or more of the provisions contained in
this Agreement or in any other instrument referred to herein, shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, then to
the maximum extent permitted by law, such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement or any
other such instrument. This Agreement may not be amended except by a writing
signed by each party. The section headings of this Agreement are for convenience
of reference only, and shall not be used to construe or interpret any section,
term or provision of this Agreement. Time is of the essence in the performance
of this Agreement in all particulars. This Agreement constitutes the entire
agreement among the parties pertaining to the subject matter hereof and
supersedes all prior agreements, understandings, negotiations and discussions,
whether oral or written, of the parties.

         Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Delivery of an executed
counterpart of a signature page of this Agreement by facsimile shall be
effective as delivery of a manually executed counterpart of this Agreement.

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

                                                  VIDEO CITY, INC.

                                                  By: /s/ Robert Y. Lee
                                                  Name: Robert Y. Lee
                                                  Title: Chief Executive Officer

                                     - 6 -
<PAGE>   7
                                                  WEST COAST ENTERTAINMENT
                                                  CORPORATION

                                                  By: /s/ T. Kyle Standley
                                                  Name: T. Kyle Standley
                                                  Title: Chief Executive Officer

                                     - 7 -

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