	December 31,

	2011		2010
Guitar Center
Senior secured asset-based revolving facility	$	—	$	—
Senior secured term loan		621,762		621,762
Obligations under capital lease, payable in monthly installments through 2013		700		1,341
Senior unsecured notes		375,000		375,000

		997,462		998,103
Less current portion		646		641

Total Guitar Center long-term debt		996,816		997,462
Holdings
Senior unsecured PIK notes		564,673		564,673

Holdings total long-term debt	$	1,561,489	$	1,562,135

Guitar Center long-term debt as of December 31, 2011 consisted of (1) a senior secured asset-based revolving facility, referred to as the asset-based facility, with a maximum availability of $373 million and no amounts drawn as of December 31, 2011 and 2010, (2) a senior secured term loan facility, referred to as the term loan, with an initial aggregate principal amount of $650 million and (3) a senior unsecured loan facility, referred to as the senior notes, with an aggregate principal amount of $375 million.

Holdings long-term debt as of December 31, 2011 consisted of a senior subordinated unsecured payment-in-kind loan facility, referred to as the senior PIK notes, with an initial aggregate principal amount of $375 million.

Guitar Center's term loan, asset-based facility and senior notes are guaranteed by substantially all of its subsidiaries. The subsidiary guarantors are 100% owned, all of the guarantees are full and unconditional and joint and several and Guitar Center, Inc. has no assets or operations independent from its subsidiaries within the meaning of Regulation S-X, Rule 3-10. Any non-guarantor subsidiaries are minor.

On March 2, 2011, we entered into amendments and extensions to our asset-based facility, term loan, senior notes and senior PIK notes.

Lenders holding in excess of two-thirds of the commitments under our asset-based facility and in excess of 95% of our term loan facility elected to extend their commitments, and all of the holders of our senior notes and senior PIK notes consented to the transactions. The lenders were paid an aggregate of $8.1 million in arrangement, consent and extension fees as part of the transactions. Fees paid to lenders were capitalized as debt issuance costs and are included in other assets, net in the accompanying consolidated balance sheets. We amortize debt issuance costs to interest expense over the term of the related debts, using the effective interest method. Certain costs paid to third parties totaling $0.8 million for Holdings and $0.5 million for Guitar Center related to this amendment were expensed and are included in selling, general and administrative expenses in the accompanying consolidated statements of operations for the year ended December 31, 2011.

The transactions extended the terms of the facilities, modified pricing and amended the financial covenant and other terms of the facilities, including the following:

Loans held by lenders not agreeing to extend their loans in the transaction will continue at their existing pricing and maturity.

On September 27, 2011, we obtained a $15 million commitment under the extended terms of the asset-based facility to substitute commitments that were not extended by other participating lenders in March 2011. An aggregate of $0.2 million was paid in arrangement, consent, extension, and third party fees as part of the transaction. Fees paid were capitalized and are amortized into interest expense using the effective interest method.

As of December 31, 2011, the asset-based facility had a maximum borrowing amount of $373 million, subject to a borrowing base which is calculated monthly based on specified percentages of the value of eligible inventory, credit card receivables and trade receivables. Our obligations under this facility are secured by a first priority lien on all of our personal property, consisting of inventory, accounts receivable, cash and deposit accounts, as well as a second priority lien on our capital stock and assets.

The asset-based facility matures in February 2016 with respect to $268 million of the maximum borrowing amount and in October 2013 with respect to $105 million of the maximum borrowing amount. Outstanding principal is due and payable upon maturity. The asset-based facility requires mandatory pre-payment of principal in the event of extraordinary sales of assets or receipt of casualty or other insurance proceeds in excess of $2.5 million.

At our option, we can borrow under the asset-based facility at either the (a) London Inter-Bank Offered Rate, or LIBOR, plus a margin based on average borrowings that ranges from 2.75% to 3.25% on extended commitments and from 1.25% to 1.75% on non-extended commitments or (b) prime rate, plus a margin based on average borrowings that ranges from 1.75% to 2.25% on extended commitments and from 0% to 0.5% on non-extended commitments. Interest is payable on the agreed upon ending date of each related LIBOR borrowing agreement, and quarterly for prime rate borrowings.

We are required to pay a commitment fee to the lenders at a rate of 0.5% per annum for extended commitments and 0.25% per annum for non-extended commitments. The commitment fee is payable each quarter based upon the unused portion of the commitment amount. We are required to pay an annual agency fee of $200,000, payable each quarter in advance. We also are required to pay fees for outstanding letters of credit equal to the applicable LIBOR margin for standby letters of credit or 50% of the LIBOR margin rate for commercial letters of credit.

As of December 31, 2011, we had outstanding letters of credit totaling $8.1 million and no borrowings outstanding on the asset-based facility. During 2011, our borrowings on the asset-based facility were not significant. During 2010 and 2009 we did not draw any amounts on the asset-based facility.

As of December 31, 2011, the $650 million term loan matures in April 2017 with respect to $613.8 million of the outstanding principal balance and in October 2014 with respect to $7.9 million of the outstanding principal balance. Principal is repaid in quarterly installments of 0.25% of the initial principal amount, which commenced on December 31, 2008 and continues through March 2017, with the remaining outstanding balance due on the maturity date. Our obligations under this facility are secured by a first priority lien on our capital stock and assets and a second priority lien on all of the assets subject to a first priority lien securing the asset-based facility.

The term loan requires prepayment of principal in an amount of up to 50% of our excess cash flows, as defined in the credit agreement, which commenced in the calendar year ended December 31, 2008. The excess cash flow prepayment is applied to the quarterly scheduled principal payments in the order that they are otherwise required to be paid. We were not required to make an excess cash flow payment for 2011.

The term loan bears interest at LIBOR plus a margin of 5.25% per annum with respect to the extended term loan and 3.50% per annum with respect to the non-extended term loan. We can elect to convert all or a portion of the balance due on the term loan to an interest rate based on the prime rate plus an applicable margin of 4.25% per annum with respect to the extended term loan and 2.5% per annum with respect to the non-extended term loan. Interest is payable on the agreed upon ending date of each related LIBOR borrowing agreement, and quarterly for prime rate borrowings. As of December 31, 2011, the applicable interest rate on the note was 5.83% on $613.8 million of outstanding principal and 3.80% on $7.9 million of outstanding principal.

We are required to pay an annual agency fee of $125,000, payable quarterly in advance.

The senior unsecured notes bear interest at 11.50% per annum, payable semi-annually in April and October. As of December 31, 2011, the senior notes were in the principal amount of $375 million and mature in October 2017.

The senior PIK notes bear interest at 14.09% per annum. Interest on the senior PIK notes is payable semi-annually in April and October, except that until October 15, 2010, interest on the senior PIK notes was at our election payable either by increasing the principal amount of the senior PIK notes or by issuing additional senior PIK notes. As of December 31, 2011, payment-in-kind interest of $189.7 million had been added to the initial principal balance senior PIK notes, and the resulting outstanding principal amount was $564.7 million.

For the interest payments due between April 2011 and October 2012 on the senior PIK notes, we may elect to pay 50% of the interest due by issuing additional Guitar Center senior notes. For periods after October 2012, interest on the senior PIK notes is payable only in cash. We did not elect to reinvest any part of the April 2011 or October 2011interest payments on the senior PIK note, but did make such an election for the interest payment due in April 2012.

In connection with an election available to us under the senior PIK notes, we anticipate making a one-time payment in April 2013. We estimate this payment will be $134.7 million, which is equal to the total accrued payment-in-kind amount as of the payment date, less the first annual payment-in-kind amount of $55 million. The remaining unpaid balance of the senior PIK notes will mature in April 2018.

These loan facilities contain covenants that, among other things, limit our ability to:

In addition, the asset-based facility requires us to maintain a minimum consolidated fixed charge coverage ratio during a cash dominion event when the excess availability in that facility falls below a minimum threshold or during certain events of default. The term loan requires us to maintain a maximum consolidated secured net leverage ratio and limits our ability to make capital expenditures.

Future maturities of long-term debt as of December 31, 2011 are as follows (in thousands):

	Guitar Center		Holdings		Holdings Consolidated

2012	$	646	$	—	$	646
2013		5,941		—		5,941
2014		14,314		—		14,314
2015		6,500		—		6,500
2016		6,500		—		6,500
2017		963,561		—		963,561
Thereafter		—		564,673		564,673

	$	997,462	$	564,673	$	1,562,135

The guarantors under the term loan, the asset-based facility and the senior notes are generally not restricted in their ability to dividend or otherwise distribute funds to Guitar Center except for restrictions imposed under applicable state corporate law. However, Guitar Center is limited in its ability to pay dividends or otherwise make distributions to Holdings under the term loan, the asset-based facility and the indenture governing the senior notes. Specifically, the term loan and the asset-based facility each prohibits Guitar Center from making any distributions to Holdings except for limited purposes, including, but not limited to: (i) the payment of interest on the senior PIK notes by Holdings so long as no payment or bankruptcy event of default exists; (ii) general corporate, overhead and similar expenses of Holdings incurred in the ordinary course of business, (iii) the payment of taxes by Holdings as the parent of a consolidated group that includes Holdings, Guitar Center and the guarantors, (iv) the partial redemption or prepayment of the senior PIK notes by Holdings to the extent necessary to make an "applicable high yield discount obligation" (AHYDO) "catch-up" payment thereon and (v) advisory fees not to exceed the amounts payable in respect thereof under the advisory agreement with Bain Capital as in effect on October 9, 2007 so long as certain events of default do not exist. Notwithstanding the foregoing, so long as no event of default existed or exists, Guitar Center may make distributions to Holdings in an aggregate amount not to exceed $25 million after March 2, 2011.

The senior notes indenture provides that Guitar Center can generally pay dividends and make other distributions to Holdings in an amount not to exceed (a) 50% of Guitar Center's consolidated net income for the period beginning March 2, 2011 and ending as of the end of the last fiscal quarter before the proposed payment, plus (b) 100% of the net cash proceeds received by Guitar Center from the issuance and sale of capital stock, plus (c) 100% of cash contributions to Guitar Center's capital, plus (d) to the extent not included in consolidated net income, 100% of the amount received in cash from the sale or other disposition of certain investments, provided that certain conditions are satisfied, including that Guitar Center would, at the time of the proposed payment and after giving pro forma effect thereto, have been permitted to incur at least $1.00 of additional indebtedness pursuant to the fixed charge coverage ratio test set forth in the indenture. Similar provisions regarding dividends and other distributions payable by Holdings are included in the senior PIK notes indenture.

Notwithstanding the foregoing, the senior notes indenture provides that Guitar Center can generally pay dividends and make other distributions to Holdings to, among other things, fund (A) interest payments on the senior PIK notes, (B) any mandatory redemption of a portion of the senior PIK notes pursuant to the senior PIK notes indenture, (C) an offer to purchase upon a change of control or asset sale to the extent required by the terms of the senior PIK notes indenture, (D) tax payments, (E) general corporate overhead and operating expenses and (F) fees of Holdings under the advisory agreement with Bain Capital.

Holdings has no assets or liabilities other than its net investment in Guitar Center, deferred financing fees related to the senior PIK notes and the outstanding balance on the senior PIK notes. It has no operating activities and its net loss consists of interest expense on the senior PIK notes.

Amortization of deferred financing fees included in interest expense was $2.5 million in 2011 and $2.1 million in 2010. Unamortized deferred financing fees were $12.9 million at December 31, 2011 and $7.9 million at December 31, 2010.

Amortization of deferred financing fees included in interest expense was $2.9 million in 2011 and $2.5 million in 2010. Unamortized deferred financing fees were $15.5 million at December 31, 2011 and $10.0 million at December 31, 2010.

Unamortized deferred financing fees will be recognized in interest expense over the remaining terms of the respective debt agreements.