Sander & Baldonado, LLP
                          304 Park Av. South 11th Floor
                            New York, New York 10010
                             Telephone: 212-590-2350
                             Facsimile: 212-590-2351
                              ---------------------



February 11, 1999



Darrell A. James
CEO/President

A&R Online Inc. and A&R Entertainment Inc.

Dear Darrell:

This letter shall supersede all letters or other  communications  by and between
the  parties  hereto  (including  without  limitation,   by  and  between  their
respective agents, attorneys and so forth) prior to the above date regarding the
subject  matter  hereof,  and shall confirm the material  terms of the exclusive
recording  agreement reached between A&R Online Inc. and A&R Entertainment  Inc.
(hereinafter "You") and Prelude Development (hereinafter "Company") as follows:

1.   PRODUCT: One (1) album, with four (4) album options:

2.   TERRITORY: The World.

3.   CREATIVE  CONTROLS:  Prior to the recording of Master Recordings made under
     this agreement,  you and Company will mutually discuss the selection of the
     producer,  the  selection of material,  and the  selection of studios to be
     used for recording and mastering sessions,  but in any event, neither party
     will withhold consent unreasonably. All decisions regarding mixes, remixes,
     and the formats and order in which Master  Recordings will be released will
     be made by Company in consultation  with you. Company will not be obligated
     to accept the delivery of Master  Recordings,  which it determines  are not
     technically and/or  commercially  satisfactory for the manufacture and sale
     of Phonograph Records.

4.   ROYALTIES:  Company will accrue to your royalty account royalties inclusive
     of royalties payable to all third parties (such as the individual producer,
     at the rate set forth below) and such royalties shall be based on Net Sales
     of Phonograph Records consisting  entirely of Masters recorded by you under
     the agreement  and shall be computed on the suggested  retail list price of
     such Records.

     (a) As to Net Sales in the United States ("USNRC Net Sales"),  your royalty
     (the "Basic U.S. Rate") shall be:
<TABLE>
<CAPTION>
                      0-600,000 Units   500,000-1m Units          1m+Units

<S>                                <C>            <C>              <C>
First Album                        18%            18 1/4%          18 1/2%
Second Album                       18%            18 1/4%          18 1/2%
Third Album                        18%            18 1/4%          18 1/2%
Fourth Album                       18%            18 1/4%          18 1/2%
</TABLE>

     The  escalations set forth above in the subclause 6(a) shall be prospective
of 500,000 and  1,000,000  units and all of the royalties  and  escalations  set
forth above in this subclause 6(a) shall be based on USNRC Net Sales only.  Your
record royalties hereunder shall be subject to Company's standard reductions for
sales other than USNRC Sales.

     (b) USNRC Net Sales of Singles:  10%

     (c) Net Sales in Canada & UK: 75% of the otherwise applicable Basic Rate in
     the United States for the Record  concerned  (i.e.  without regard to sales
     escalations).

     (d)  Net  Sales  in the  EEC,  JAPAN  or  Australia:  65% of the  otherwise
     applicable  Basic Rate in the United States for the Record  concerned (i.e.
     without regard to sales escalations).

     (e) Net Sales in the rest of the  world:  50% of the  otherwise  applicable
     Basic Rate in the United  States for the  Record  concerned  (i.e.  without
     regard to sales escalations).

5.   ROYALTY  RESERVES:  Company  shall have the right to  establish  reasonable
     royalty reserves against anticipated returns and exchanges.  The reserve so
     established shall not exceed, with respect to single/LP commencing with the
     first full  accounting  period after the release of the respective  Record,
     and  twenty-five  percent 25% of all single/LP  Records shipped during each
     accounting  period  thereafter.  Each  reserve  shall be  fully  liquidated
     equally  over the four 4 full  accounting  periods  after  such  reserve is
     established.  Company shall have the right to establish  reserves in excess
     of such limitations if in Company's good faith business  judgment,  Company
     believes  that  the  percent   limitations   provided  for  herein  may  be
     insufficient to cover actual returns.

6.   MECHANICAL  ROYALTIES:  (50%) minimum statutory rate prevailing at the date
     of  respective  albums  initial  release,  11 cap  for  albums.  2  Outside
     compositions  @ full statutory rate for samples 87 1/2% of statutory rate @
     USNRC 500M prospectively 100% of statutory rate @ USNRC 1MM prospectively.

7.   MUSIC  PUBLISHING:  You  hereby  agree  to  grant  and  assign  to  Company
     affiliated  publishing  company,  (To be determined  later) a 50% copyright
     interest and 100% administration  rights in and to each musical composition
     written,  owned  or  acquired  by you  during  the  term of this  recording
     agreement  ("Compositions").  In connection  therewith,  you agree to enter
     into a separate Exclusive  Co-Publishing  Agreement with company affiliated
     publishing  company,  the terms of which shall be negotiated in good faith,
     but which shall include the right of company affiliated  publishing company
     to  administer  the  Compositions  throughout  the  world  and to charge an
     administration fee of 10%.

8.   INDEPENDENT PROMOTION/PUBLICITY: In the event that Company, in its sole and
     exclusive  discretion,  elects to expend  any  monies  in  connection  with
     independent  third party  promotion,  marketing  or publicity of any Record
     embodying Master  Recordings made under this agreement,  Company shall have
     the right to charge 100% of such costs  against and recoup same at any time
     from any and all royalties (other than mechanical  royalties)  according to
     your royalty account.

     If the foregoing is consistent with your understanding and agreement,  then
please sign the respective space provided below for your name.

Very truly yours,
Prelude Development Inc.

By: /s/
    -------------------------------
    Authorized signature

AGREED TO AND ACCEPTED

By: /s/
    -------------------------------
    Darrell A. James, CEO/President