Exhibit 10.40


                (Wherehouse Entertainment, Inc. Letterhead)




May 11, 1994


GGG, Inc.
Post Office Box 5240
Incline Village, Nevada  89452

Re:  Contract Terms

Dear Jerry:

The following are terms of the contract as agreed upon between
GGG, Inc. (Goldress) and Wherehouse Entertainment.

1)   President and Chief Operating Officer:  If we choose that
     Goldress not retain this title and function, we owe him the
     termination provisions of his contract.

2)   Change of Control:  Control is not "changed" as long as
     Merrill Lynch Capital Partners controls the Board of
     Directors and thus the Company, even if MLCP's economic
     ownership is less than 50%.  If control does change as
     defined above, we owe termination provisions of Goldress'
     contract.

3)   Base Compensation:  $300,000 per annum for three days a week
     of work; $400,000 for four days a week.  We will employ
     Goldress for four days a week for the present time with the
     expectation that we will revert to three days a week (and
     thus the lower annual base compensation) upon the hiring of
     a CFO.

4)   Goldress participates in the regular Company performance-
     based bonus plan for senior management.

5)   Termination Provisions:  The remainder of the contract;
     however, no more than $600,000 (two years base compensation
     at the $300,000 per annum rate), nor less than $400,000.

6)   Contract Effective Date:  October 1, 1993

7)   Term:  Three (3) years

8)   Options as previously agreed to:  30,000 shares at 444 per
     share.

Sincerely,



/s/ Scott Young                         /s/ Jerry E. Goldress
- --------------------                    ------------------------
Scott Young                             GGG, Inc.
Chairman and CEO                        Jerry E. Goldress, CEO



cc:  Board of Directors