Exhibit 10.1

                                                                  EXECUTION COPY


                                   $6,580,000

                      AMENDED AND RESTATED CREDIT AGREEMENT

                           Dated as of April 30, 2001

                                      among

                                 MEDIABAY, INC.

                          (f/k/a AUDIO BOOK CLUB, INC.)

                               RADIO SPIRITS, INC.

                                       and

                             AUDIO BOOK CLUB, INC.,

                                  as Borrowers,

                      THE BANKS, FINANCIAL INSTITUTIONS AND
                    OTHER INSTITUTIONAL LENDERS NAMED HEREIN,

                               as Lender Parties,

                                       and

                             ING (U.S.) CAPITAL LLC,

                             as Administrative Agent


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                                TABLE OF CONTENTS
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ARTICLE 1  DEFINITIONS AND ACCOUNTING TERMS...................................................1
 SECTION 1.1 Certain Defined Terms............................................................1
 SECTION 1.2 Computation of Time Periods.....................................................26
 SECTION 1.3 Accounting Terms................................................................26
 SECTION 1.4 Other Definitional Provisions...................................................26
ARTICLE 2  AMOUNTS AND TERMS OF THE ADVANCES  AND THE LETTERS OF CREDIT......................27
 SECTION 2.1 The Advances....................................................................27
 SECTION 2.2 Making the Advances.............................................................28
 SECTION 2.3 Issuance of and Drawings and Reimbursement Under Letters of Credit..............29
 SECTION 2.4 Repayment of Advances...........................................................31
 SECTION 2.5 Termination or Reduction of the Commitments.....................................32
 SECTION 2.6 Prepayments.....................................................................32
 SECTION 2.7 Interest........................................................................34
 SECTION 2.8 Fees............................................................................35
 SECTION 2.9 Increased Costs, Etc............................................................36
 SECTION 2.10 Payments and Computations......................................................37
 SECTION 2.11 Taxes..........................................................................38
 SECTION 2.12 Sharing of Payments, Etc.......................................................40
 SECTION 2.13 Use of Proceeds................................................................41
 SECTION 2.14 Defaulting Lenders.............................................................41
ARTICLE 3  CONDITIONS OF LENDING.............................................................43
 SECTION 3.1 Conditions Precedent to Extension of Revolving Credit Termination Date..........43
 SECTION 3.2 Conditions Precedent to Each Borrowing and Issuance.............................48
 SECTION 3.3 Determinations Under Section 3.1................................................49
ARTICLE 4  REPRESENTATIONS AND WARRANTIES OF THE BORROWERS...................................49
 SECTION 4.1 Organization....................................................................49
 SECTION 4.2 Subsidiaries....................................................................49
 SECTION 4.3 Corporate Power, Authorization..................................................50
 SECTION 4.4 Governmental Authorizations, Approvals..........................................50
 SECTION 4.5 Due Execution, Validity, Enforceability.........................................51
 SECTION 4.6 Financial Statements............................................................51
 SECTION 4.7 Inactive Subsidiaries...........................................................51
 SECTION 4.8 Accurate Information............................................................52
 SECTION 4.9 Litigation......................................................................52
 SECTION 4.10 Regulation U...................................................................52
 SECTION 4.11 ERISA..........................................................................52
 SECTION 4.12 Casualty.......................................................................52
 SECTION 4.13 Environmental Matters..........................................................52
 SECTION 4.14 Restrictive Agreements.........................................................53
 SECTION 4.15 Priority of Liens..............................................................53
 SECTION 4.16 Taxes..........................................................................54
 SECTION 4.17 Compliance with Securities Laws................................................54
 SECTION 4.18  [Intentionally Left Blank.]...................................................54
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 SECTION 4.19 Debt...........................................................................54
 SECTION 4.20 No Defaults, Compliance with Laws..............................................55
 SECTION 4.21 Owned Real Property............................................................55
 SECTION 4.22 Leased Real Property...........................................................55
 SECTION 4.23 Material Contracts.............................................................56
 SECTION 4.24 Investments....................................................................56
 SECTION 4.25 Intellectual Property..........................................................56
 SECTION 4.26 Fees...........................................................................56
 SECTION 4.27 Government Consents for Conduct of Business....................................57
ARTICLE 5  AFFIRMATIVE COVENANTS.............................................................57
 SECTION 5.1 Compliance with Law.............................................................57
 SECTION 5.2 Payment of Taxes, Etc...........................................................57
 SECTION 5.3 Compliance with Environmental Laws..............................................58
 SECTION 5.4 Preparation of Environmental Reports............................................58
 SECTION 5.5 Maintenance of Insurance........................................................59
 SECTION 5.6 Preservation of Corporate Existence, Etc........................................59
 SECTION 5.7 Rights..........................................................................59
 SECTION 5.8 Keeping of Books................................................................60
 SECTION 5.9 Maintenance of Properties, Etc..................................................60
 SECTION 5.10 Compliance with Terms of Leaseholds............................................60
 SECTION 5.11 Performance of Material Contracts..............................................60
 SECTION 5.12 Transactions with Affiliates...................................................60
 SECTION 5.13 Agreement to Grant Additional Security.........................................60
 SECTION 5.14 Borrow's Account...............................................................62
ARTICLE 6  NEGATIVE COVENANTS................................................................62
 SECTION 6.1 Liens, Etc......................................................................63
 SECTION 6.2 Debt............................................................................64
 SECTION 6.3 Accounts Payable................................................................66
 SECTION 6.4 Fundamental Changes.............................................................66
 SECTION 6.5 Sales, Etc. of Assets...........................................................66
 SECTION 6.6 Investments in Other Persons....................................................67
 SECTION 6.7 Dividends, Etc..................................................................68
 SECTION 6.8 Change in Nature of Business....................................................69
 SECTION 6.9 Charter Amendments..............................................................69
 SECTION 6.10 Accounting Changes.............................................................69
 SECTION 6.11 Prepayments, Etc. of Debt......................................................69
 SECTION 6.12 Amendment, Etc. of Material Contracts, Including Debt..........................69
 SECTION 6.13 Negative Pledge................................................................70
 SECTION 6.14 Partnerships, New Subsidiaries.................................................70
 SECTION 6.15 Speculative Transactions.......................................................71
 SECTION 6.16 Capital Expenditures...........................................................71
 SECTION 6.17 Issuance of Stock..............................................................71
 SECTION 6.18 Management Fees................................................................72
 SECTION 6.19 Senior Subordinated Debt Payments..............................................72
 SECTION 6.20 Herrick Senior Secured Note Payments...........................................72
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                                TABLE OF CONTENTS

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ARTICLE 7  REPORTING REQUIREMENTS............................................................72
 SECTION 7.1 Default Notice..................................................................72
 SECTION 7.2 Monthly Financials..............................................................73
 SECTION 7.3 Quarterly Financials............................................................73
 SECTION 7.4 Annual Financials...............................................................74
 SECTION 7.5 ERISA Events and ERISA Reports..................................................74
 SECTION 7.6 Plan Terminations...............................................................74
 SECTION 7.7 Actuarial Reports...............................................................75
 SECTION 7.8 Plan Annual Reports.............................................................75
 SECTION 7.9 Annual Plan Summaries...........................................................75
 SECTION 7.10 Multiemployer Plan Notices.....................................................75
 SECTION 7.11 Litigation.....................................................................75
 SECTION 7.12 Securities Reports.............................................................75
 SECTION 7.13 Creditor Reports...............................................................76
 SECTION 7.14 Agreement Notices..............................................................76
 SECTION 7.15 Revenue Agent Reports..........................................................76
 SECTION 7.16 Environmental Conditions.......................................................76
 SECTION 7.17 Real Property..................................................................76
 SECTION 7.18 Insurance......................................................................76
 SECTION 7.19 Borrowing Base Reports and Certificates........................................77
 SECTION 7.20 Management Letters.............................................................78
 SECTION 7.21 Permitted Acquisition Documents................................................77
 SECTION 7.22 Other Information..............................................................77
 SECTION 7.23 Cash Flow Projections..........................................................77
 SECTION 7.24 Receivables Report.............................................................77
 SECTION 7.25 Periodic Audit.................................................................78
ARTICLE 8  FINANCIAL COVENANTS...............................................................78
 SECTION 8.1 Minimum EBITDA..................................................................78
ARTICLE 9  EVENTS OF DEFAULT.................................................................79
 SECTION 9.1 Payment.........................................................................79
 SECTION 9.2 Representations and Warranties..................................................79
 SECTION 9.3 Certain Covenants...............................................................79
 SECTION 9.4 Other Covenants.................................................................79
 SECTION 9.5 Other Defaults..................................................................79
 SECTION 9.6 Bankruptcy, Etc.................................................................80
 SECTION 9.7 Judgments.......................................................................80
 SECTION 9.8 Loan Documents..................................................................80
 SECTION 9.9 Liens...........................................................................80
 SECTION 9.10 Change of Control..............................................................80
 SECTION 9.11 ERISA Events...................................................................81
 SECTION 9.12 Subordination Provisions.......................................................81
 SECTION 9.13 Management.....................................................................81
 SECTION 9.14 Borrowing Base Deficiency......................................................81
 SECTION 9.15 Note Escrow Agreement..........................................................82
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                                TABLE OF CONTENTS

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ARTICLE 10  THE ADMINISTRATIVE AGENT.........................................................82
 SECTION 10.1 Authorization and Action.......................................................83
 SECTION 10.2 Agent's Reliance, Etc..........................................................83
 SECTION 10.3 ING and Affiliates.............................................................84
 SECTION 10.4 Lender Party Credit Decision...................................................84
 SECTION 10.5 Indemnification................................................................84
 SECTION 10.6 Successor Administrative Agents................................................85
 SECTION 10.7 Events of Default..............................................................86
ARTICLE 11  MISCELLANEOUS....................................................................86
 SECTION 11.1 Amendments, Etc................................................................86
 SECTION 11.2 Notices Etc....................................................................87
 SECTION 11.3 No Waiver; Remedies; Counterclaims.............................................89
 SECTION 11.4 Costs and Expenses.............................................................89
 SECTION 11.5 Right of Set-off...............................................................90
 SECTION 11.6 Binding Effect.................................................................91
 SECTION 11.7 Assignments and Participations.................................................91
 SECTION 11.8 Execution in Counterparts......................................................94
 SECTION 11.9 No Liability of the Issuing Bank...............................................94
 SECTION 11.10 Confidentiality...............................................................94
 SECTION 11.11 Survival of Agreements and Representations; Construction......................95
 SECTION 11.12 Assurances....................................................................95
 SECTION 11.13 Severability..................................................................95
 SECTION 11.14 JURISDICTION, ETC.............................................................96
 SECTION 11.15 GOVERNING LAW.................................................................96
 SECTION 11.16 WAIVER OF JURY TRIAL..........................................................96
 SECTION 11.17 FINAL AGREEMENT...............................................................97
 SECTION 11.18 Amendment, Restatement and Waiver.............................................97
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                                TABLE OF CONTENTS

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EXHIBITS

Exhibit A    -    Form of Assignment and Acceptance
Exhibit B    -    Form of Revolving Credit Note
Exhibit C    -    Form of Compliance Certificate
Exhibit D    -    Form of Notice of Borrowing
Exhibit E    -    Form of Security Agreement
Exhibit F    -    Form of Borrowing Base Certificate
Exhibit G    -    Form of Intellectual Property Security Agreement
Exhibit H    -    Form of Subsidiary Guaranty
Exhibit I    -    Prior Loan Default Letter

SCHEDULES

Schedule I        Commitments and Applicable Lending Offices
Schedule 4.2      Organization and Subsidiaries
Schedule 4.4      Required Authorizations and Approvals
Schedule 4.7      Inactive Subsidiaries
Schedule 4.9      Disclosed Litigation
Schedule 4.11     Welfare Plans
Schedule 4.13     Environmental Assessment Reports
Schedule 4.14     Restrictive Agreements
Schedule 4.16     Open Tax Years
Schedule 4.19(a)  Existing Debt
Schedule 4.19(b)  Surviving Debt
Schedule 4.20     No Defaults
Schedule 4.21     Owned Real Estate
Schedule 4.22     Leased Real Estate
Schedule 4.23     Material Contracts
Schedule 4.24     Investments
Schedule 4.25     Intellectual Property
Schedule 5.5      Insurance
Schedule 5.12     Certain Transactions
Schedule 6.1(c)   Liens
Schedule 6.6(a)   Investments in Subsidiaries
Schedule 6.17     Existing Issuances, Etc. of Stock
Schedule 6.19     Senior Subordinated Debt Holders



<PAGE>

                      AMENDED AND RESTATED CREDIT AGREEMENT

          AMENDED AND RESTATED CREDIT AGREEMENT,  dated as of April 30, 2001, by
and among MediaBay,  Inc. (f/k/a Audio Book Club,  Inc.), a Florida  corporation
("MediaBay"  or the  "Company"),  Radio  Spirits,  Inc., a Delaware  corporation
("Radio  Spirits"),  and Audio Book Club, Inc., a Delaware  corporation  ("Audio
Book Club," and together with MediaBay and Radio Spirits,  the  "Borrowers"  and
each individually,  a "Borrower"),  the banks,  financial institutions and other
institutional lenders listed on the signature pages hereof as the Lender Parties
(the "Lender Parties"), ING (U.S.) CAPITAL LLC, as issuing bank ("Issuing Bank")
and as administrative  agent (together with any successor  appointed pursuant to
Article 10, the  "Administrative  Agent") for the Lender  Parties  (the  "Credit
Agreement").

                             PRELIMINARY STATEMENTS:

     MediaBay  desires  to amend and  restate  the terms and  provisions  of the
Credit  Agreement,  dated as of December 31, 1998 (as amended by  Amendment  and
Supplement No. 1 to the Credit  Agreement  dated as of June 14, 1999,  Amendment
No. 2 to the Credit Agreement dated as of November 10, 1999,  Amendment No. 3 to
the Credit  Agreement  dated as of April 4, 2000,  Amendment No. 4 to the Credit
Agreement  dated as of July 29, 2000,  Amendment  No. 5 to the Credit  Agreement
dated as of August 9, 2000, and Amendment No. 6 to the Credit Agreement dated as
of November 30, 2000, the "Prior Credit Agreement"),  among MediaBay, the banks,
financial  institutions and other institutional lenders named therein as Initial
Lenders and Fleet  National Bank as Initial  Issuing  Bank,  Swing Line Bank and
Administrative Agent, in the form hereof in order to, among other things, extend
the  Revolving  Credit  Termination  Date to September 30, 2002 and to add Radio
Spirits and Audio Book Club as Borrowers.

     NOW,  THEREFORE,  in  consideration  of the  premises  and  of  the  mutual
covenants and agreements  contained  herein,  the parties hereto hereby agree as
follows:

                                   ARTICLE 1

                        DEFINITIONS AND ACCOUNTING TERMS

     SECTION 1.1 Certain Defined Terms. As used in this Agreement, the following
terms shall have the following  meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):

     "Acquisition  Puts"  means the  obligation  of any  Borrower  or any of its
Subsidiaries to repurchase any of such  Borrower's  Common Stock or other Equity
Interests as and may be required as a result of any acquisition and as set forth
on Schedule 6.17.

     "Additional  Collateral  Documents"  has the meaning  specified  in Section
5.13(e).

     "Administrative  Agent" has the meaning specified in the recital of parties
to this Agreement.

     "Administrative  Agent's  Account" means the account of the  Administrative
Agent  maintained by the  Administrative  Agent with The Chase  Manhattan  Bank,
Account Name: ING


<PAGE>

(U.S.) Capital LLC, Account No. 066-297-311,  Attention:  Sue Mack or such other
account as Administrative Agent shall designate in writing.

     "Advance" means a Revolving Credit Advance or a Letter of Credit Advance.

     "Affiliate"  means,  as to any Person,  any other Person that,  directly or
indirectly,  controls,  is  controlled  by or is under common  control with such
Person  or is a  director  or  officer  of such  Person.  For  purposes  of this
definition,   (a)  the  term  "control"   (including  the  terms  "controlling,"
"controlled  by"  and  "under  common  control  with")  of a  Person  means  the
possession,  direct or indirect,  of the power to vote 50% or more of the Voting
Stock of such Person or to direct or cause the direction of the  management  and
policies of such  Person,  whether  through the  ownership of Voting  Stock,  by
contract or otherwise and (b) the families of any one or more of Norton Herrick,
Howard  Herrick and Michael  Herrick shall be deemed to be Affiliates of each of
them.  Without  limiting the foregoing,  a trust shall be deemed an Affiliate of
the trust's trustee.

     "After-Acquired Mortgaged Property" means any parcel (or adjoining parcels)
of real property (including any leaseholds) acquired by any Loan Party after the
Effective Date subject to a Mortgage granted to the Administrative Agent for the
benefit of the Secured Parties pursuant to Section 5.13.

     "Applicable  Lending Office" means, with respect to each Lender Party, such
Lender Party's Domestic Lending Office.

     "Applicable  Margin" means at any time and from time to time for Prime Rate
Advances a percentage per annum equal to 2.00%.

     "Asset  Disposition"  shall mean the disposition of any or all of the fixed
assets  of any  Borrower  or any of its  Subsidiaries  whether  by sale,  lease,
transfer,  loss,  damage,  destruction,  condemnation  or  otherwise;  provided,
however, that for purposes of Section 2.6(b), the term "Asset Disposition" shall
not include any sale,  lease,  transfer or other disposition of Inventory in the
ordinary course of business or any sale pursuant to Section 6.5(b), (e) or (f).

     "Assignment and Acceptance" means an assignment and acceptance entered into
by a Lender Party and an Eligible  Assignee,  and accepted by the Administrative
Agent and, so long as no Event of Default shall have occurred and be continuing,
by the Borrowers,  in accordance with Section 11.7 and in substantially the form
of Exhibit A hereto.

     "Audio  Book Club" has the meaning  specified  in the recital of parties to
this Agreement.

     "Available  Amount" of any Letter of Credit means, at any time, the maximum
amount  available to be drawn under such Letter of Credit at such time (assuming
compliance at such time with all conditions to drawing).

     "Bank Hedge  Agreement"  means any interest rate Hedge Agreement  permitted
under this  Agreement  that is entered into by and between the Borrowers and any
Lender.

     "Borrower(s)"  has the meaning  specified in the recital of parties to this
Agreement.


                                     - 2 -
<PAGE>

     "Borrowers'  Account" means the account of the Borrowers  maintained by the
Borrowers with Fleet National Bank at its office at One Federal Street,  Boston,
Massachusetts 02110, Account No. 9417544039.

     "Borrowing" means a Revolving Credit Borrowing.

     "Borrowing  Base" on any date  means the sum of (i) 70% of the value of the
net  Eligible  Receivables  plus  (ii)  40% of the  value  of the  net  Eligible
Inventory,  in each case set forth in the most recent Borrowing Base Certificate
delivered to the Administrative Agent pursuant to the terms of this Agreement on
or prior to such date.

     "Borrowing Base Certificate"  means a certificate in substantially the form
of Exhibit F hereto, duly certified by the Chief Financial Officer of MediaBay.

     "Borrowing  Base  Deficiency"  means,  at  any  time,  the  failure  of the
Borrowing  Base at such time to equal or exceed the lesser of (a) the  aggregate
principal  amount of the  Revolving  Credit  Advances  and the  Letter of Credit
Advances  outstanding at such time plus the aggregate Available Amount under all
Letters of Credit outstanding at such time or (b) $5,000,000.

     "Business  Day" means a day of the year on which banks are not  required or
authorized by law to close in New York, New York.

     "Capital Expenditures" means, for any Person for any period, the sum of all
expenditures  made,  directly  or  indirectly,  by  such  Person  or  any of its
Subsidiaries  during such period for Equipment,  fixed assets,  real property or
improvements,  and including computer software and internet development costs or
other costs typically treated as capital  expenditures  pursuant to GAAP, or for
replacements or substitutions  therefor or additions thereto,  that have been or
should be, in accordance with GAAP, reflected as additions to property, plant or
Equipment on a Consolidated balance sheet of such Person; provided, that Capital
Expenditures  shall not  include  capital  expenditures  to the extent that such
expenditures  constitute  a  reinvestment  of Net Cash  Proceeds  from any Asset
Disposition  permitted  under this  Agreement  in similar  fixed  assets,  which
investment  is made  before or within one hundred  eighty days after  receipt of
such Net Cash Proceeds.

     "Capitalized  Leases"  means all  leases  that  have been or should  be, in
accordance with GAAP, recorded as capitalized leases.

     "Cash  Equivalents"  means any of the  following,  to the extent owned by a
Borrower  or any of its  Subsidiaries,  free and clear of all Liens  other  than
Liens created under the  Collateral  Documents:  (a) readily  marketable  direct
obligations   of  the   Government  of  the  United  States  or  any  agency  or
instrumentality  thereof or obligations  unconditionally  guaranteed by the full
faith and credit of the Government of the United States having a maturity of not
greater  than  one  year  from  the  date  of  issuance  thereof,   (b)  insured
certificates  of deposit of or time  deposits  having a maturity  of not greater
than one year from the date of  issuance  thereof  with , or  overnight  Federal
Funds  transactions  that are issued or sold by, any  commercial  bank that is a
Lender  Party or a member of the  Federal  Reserve  System  that  issues (or the
parent of which issues) commercial paper rated as described in clause (c) and is
organized under the laws of the United States or any


                                     - 3 -
<PAGE>

State thereof and has combined capital and surplus of at least 500 million,  (c)
commercial paper, including asset-backed  commercial paper, having a maturity of
not greater  than one year from the date of issuance  thereof,  in an  aggregate
amount of no more than $2,500,000 per issuer  outstanding at any time, issued by
any  corporation  organized under the laws of any State of the United States and
rated at least  "Prime-1" (or the then  equivalent  grade) by Moody's  Investors
Service,  Inc.  or "A-1" (or the then  equivalent  grade) by  Standard  & Poor's
Ratings Group or an equivalent rating of any other nationally  recognized rating
agency,  (d) eurodollar time deposits maturing not more than one year after such
time with any  commercial  bank of the stature  referred to in clause (b) above;
(e) any  repurchase  agreement  entered  into  with any  commercial  bank of the
stature  referred to in clause (b) or a registered  broker/dealer of the stature
referred to in clause (f) below  which is (i)  secured by a  perfected  security
interest  in any  obligation  of the type  described  in any of the  clauses (a)
through (d) and (ii) has a market value at the time such  repurchase  agreements
is  entered  into of not less than  100% of the  repurchase  obligation  of such
commercial bank or broker/dealer thereunder, (f) investments in short-term asset
management accounts managed by any commercial bank of the stature referred to in
clause  (b) or a  registered  securities  broker/dealer  having  regulatory  net
capital,  as per its most recently filed FOCUS report, of not less than $100,000
million which are invested in  indebtedness  of any state or municipality of the
United States and which are rated under one of the two highest  ratings from any
nationally  recognized rating agency and/or general investment  contracts and/or
investments  of the type  described  in  clauses  (a)  through  (e) above or (g)
insured  money market funds  investing  primarily  in  investments  of the types
described in clauses (a) through (f).

     "CERCLA" means the Comprehensive  Environmental Response,  Compensation and
Liability Act of 1980, 42 U.S.C.ss.9601 et seq., as amended from time to time.

     "CERCLIS" means the Comprehensive Environmental Response,  Compensation and
Liability  Information  System maintained by the U.S.  Environmental  Protection
Agency.

     "Change of Control" means any of the following: (a) Norton Herrick, Michael
Herrick and/or Howard Herrick, together with their Affiliates, shall at any time
cease  to own  and  control  at  least  15%  of the  common  stock  of  MediaBay
outstanding  at any time after the date  hereof;  or (b) Radio  Spirits or Audio
Book Club cease to be Wholly-Owned  Subsidiaries of MediaBay;  or (c) during any
period, individuals who on the Effective Date constituted the Board of Directors
of any  Borrower  shall cease for any reason to  constitute  at least a majority
thereof unless the election,  or the nomination for election by such  Borrower's
shareholders,  of each  new  director  shall be  approved  by a vote of at least
two-thirds  of the  directors  then  still in office who were  directors  at the
beginning  of the  period,  or (d) Norton  Herrick or any trust of which he is a
beneficiary  shall at any time at any time after the Effective Date cease to own
and  control at least  2,960,000  shares of the common  stock of  MediaBay.  For
purposes of this definition  "control",  when used with respect to any specified
Person,  means the power to direct the  management  and policies of such Person,
directly or indirectly,  whether through the ownership of voting securities,  by
contract,  by family relationship or otherwise;  and the terms "controlling" and
"controlled" have the meanings correlative to the foregoing.

     "Collateral" means all "Collateral" referred to in the Collateral Documents
and all other property that is or is intended to be subject to any Lien in favor
of the Administrative Agent for the benefit of the Secured Parties.


                                     - 4 -
<PAGE>

     "Collateral  Documents"  means the  Security  Agreement,  the  Intellectual
Property Security Agreement,  each Collateral Assignment of Lease, the Mortgages
and any other  agreement  that  creates or purports to create a Lien in favor of
the Administrative  Agent for the benefit of the Secured Parties,  including the
Additional Collateral Documents delivered pursuant to Section 5.13.

     "Commitment"  means a  Revolving  Credit  Commitment  or a Letter of Credit
Commitment.

     "Company"  has the  meaning  specified  in the  recital  of parties to this
Agreement.

     "Compliance   Certificate"   with  respect  to  the   Borrowers  and  their
Subsidiaries, a certificate in substantially the form of Exhibit C hereto to the
effect that:  (a) as of the  effective  date of the  certificate,  no Default or
Event of Default under this Agreement  exists or would exist after giving effect
to the action  intended  to be taken by any Loan  Party,  as  described  in such
certificate,  including,  without  limitation,  that the  covenant  set forth in
Article 8 hereof  would not be  breached  after  giving  effect to such  action,
together  with a  calculation  in  reasonable  detail,  and in  form  reasonably
satisfactory  to the  Administrative  Agent,  of  such  compliance,  and (b) the
representations  and warranties  contained in Article 4 hereof are true and with
the same effect as though such  representations  and warranties were made on the
date of such certificate,  unless stated to relate to a specific earlier date in
which  case such  specified  representations  and  warranties  shall be true and
correct as of such earlier date,  and, except for changes in the ordinary course
of business not prohibited by this Agreement, none of which, either singly or in
the  aggregate,  have had a Material  Adverse  Effect on the Borrowers and their
Subsidiaries taken as a whole, which certificate shall be executed and delivered
by the chief financial officer of each of the Borrowers.

     "Confidential Information" means information that any Borrower furnishes to
the  Administrative  Agent or any Lender  Party other than any such  information
that is or becomes generally available to the public other than as a result of a
breach  by the  Administrative  Agent or any  Lender  Party  of its  obligations
hereunder or that is or becomes  available to the  Administrative  Agent or such
Lender Party from a source other than a Borrower that is not, to the best of the
Administrative Agent's or such Lender Party's knowledge,  acting in violation of
a  confidentiality  agreement  with the  Borrowers,  provided that  Confidential
Information  shall  include  the  Information  Memorandum  and all  projections,
forecasts,  budgetary data, business plans and other forward-looking information
of the Borrowers and their Subsidiaries unless such information becomes publicly
available as described above.

     "Consolidated"  refers to the consolidation of accounts, in accordance with
GAAP,  of any  Person and all of its  Subsidiaries,  and if not  specified,  the
Borrowers and all of their Subsidiaries.

     "Consolidated  Debt to EBITDA" has the same meaning as Consolidated Debt to
EBITDA Ratio.

     "Consolidated  Debt to EBITDA  Ratio"  means,  for any fiscal  quarter of a
Borrower,  a ratio of (a) Debt of such Borrower and its  Subsidiaries  as at the
end of such fiscal quarter to (b)


                                     - 5 -
<PAGE>

EBITDA for the most recently completed four fiscal quarters of such Borrower and
its Subsidiaries.

     "Current  Assets" of any Person means all assets of such Person that would,
in accordance with GAAP, be classified as current assets of a company conducting
a  business  the same as or  similar  to that of such  Person,  after  deducting
adequate  reserves in each case in which a reserve is proper in accordance  with
GAAP.

     "Current  Liabilities" of any Person means (a) Debt of such Person,  except
Funded Debt,  that by its terms is payable on demand or matures  within one year
after the date of determination (excluding any Debt renewable or extendible,  at
the  option  of such  Person,  to a date  more  than one year  from such date or
arising under a revolving credit or similar  agreement that obligates the lender
or  lenders  to  extend  credit  during a period of more than one year from such
date),  (b) all  amounts of Funded  Debt of such  Person  required to be paid or
prepaid within one year after such date and (c) all other items (including taxes
accrued  as  estimated)  that in  accordance  with GAAP would be  classified  as
current liabilities of such Person.

     "Debt" of any Person means, without duplication, the following:

          (a) all indebtedness of such Person for borrowed money;

          (b) all Obligations of such Person for the deferred  purchase price of
     property  or services  other than  accounts  payable  and accrued  expenses
     included in Current  Liabilities  which payables and expenses were incurred
     in respect of property  or services  purchased  in the  ordinary  course of
     business;

          (c)  all  Obligations  of  such  Person  evidenced  by  notes,  bonds,
     debentures or other similar borrowing or securities instruments;

          (d) all  Obligations  of such  Person  created  or  arising  under any
     conditional  sale or  other  title  retention  agreement  with  respect  to
     property  acquired by such Person  (even  though the rights and remedies of
     the seller or lender  under  such  agreement  in the event of  default  are
     limited to repossession or sale of such property);

          (e) all Obligations of such Person as lessee under Capitalized Leases;

          (f) all  Obligations,  contingent or  otherwise,  of such Person under
     acceptance, letter of credit or similar facilities;

          (g) all  Obligations  of such  Person  to  purchase,  redeem,  retire,
     defease or otherwise make any payment in respect of any capital stock of or
     other  ownership  or profit  interest in such Person or any other Person or
     any  warrants,  rights or options to acquire such capital  stock other than
     the  Obligations  of any  Borrower  or  its  Subsidiaries  pursuant  to the
     Acquisition  Puts,  provided  that in the event such  Acquisition  Puts are
     converted into  indebtedness of such Borrower or its  Subsidiaries any such
     amounts owed in respect thereof shall be deemed to be "Debt";


                                     - 6 -
<PAGE>

          (h) all Debt of others referred to in clauses (a) through (g) above or
     clause (i) below  guaranteed  directly or  indirectly in any manner by such
     Person,  or in effect  guaranteed  directly  or  indirectly  by such Person
     through  an  agreement  (A) to pay or  purchase  such Debt or to advance or
     supply  funds for the payment or purchase  of such Debt,  (B) to  purchase,
     sell or lease (as  lessee  or  lessor)  property,  or to  purchase  or sell
     services,  primarily for the purpose of enabling the debtor to make payment
     of such Debt or to assure  the  holder of such Debt  against  loss,  (C) to
     supply funds to or in any other manner invest in the debtor  (including any
     agreement  to pay for  property or services  irrespective  of whether  such
     property is received  or such  services  are  rendered)  primarily  for the
     purpose of  enabling  the debtor to make  payment of such Debt or to assure
     the holder of such Debt against loss, or (D) otherwise to assure a creditor
     against loss; and

          (i) all Debt  referred  to in clauses (a) through (h) above of another
     Person  secured  by (or for which the  holder of such Debt has an  existing
     right,  contingent  or  otherwise,  to be secured  by) any Lien on property
     (including,  without  limitation,  accounts,  contract rights or inventory)
     owned by such  Person,  even  though  such Person has not assumed or become
     liable for the payment of such Debt;

provided,  however,  that for purposes of clarification,  customary  indemnities
issued by any Borrower or its  Subsidiaries  in the ordinary  course of business
shall not be deemed to be Debt.

     "Debt  Issuance"  means any  issuance  or sale or other  incurrence  by any
Borrower or any of its  Subsidiaries of any Debt;  provided,  however,  that for
purposes of  determination of Net Cash Proceeds under Section  2.6(b)(iii),  the
term "Debt  Issuance"  shall not include the incurrence of Debt permitted  under
Section 6.2.

     "Default" means any Event of Default or any event that would  constitute an
Event of Default but for the requirement  that notice be given or time elapse or
both.

     "Defaulted  Advance"  means,  with respect to any Lender Party at any time,
the  portion of any  Advance  required  to be made by such  Lender  Party to the
Borrowers  pursuant to Section 2.1 or 2.2 at or prior to such time which has not
been made by such Lender Party or by the Administrative Agent for the account of
such Lender Party  pursuant to Section 2.2(e) as of such time. In the event that
a portion  of a  Defaulted  Advance  shall be deemed  made  pursuant  to Section
2.15(a),  the remaining  portion of such Defaulted Advance shall be considered a
Defaulted Advance originally  required to be made pursuant to Section 2.1 on the
same date as the Defaulted Advance so deemed made in part.

     "Defaulted Amount" means, with respect to any Lender Party at any time, any
amount required to be paid by such Lender Party to the  Administrative  Agent or
any other Lender Party hereunder or under any other Loan Document at or prior to
such  time  which  has not  been so paid  as of such  time,  including,  without
limitation,  any  amount  required  to be paid by such  Lender  Party to (a) the
Issuing  Bank  pursuant  to Section  2.3(c) to purchase a portion of a Letter of
Credit Advance made by the Issuing Bank, (b) the  Administrative  Agent pursuant
to Section  2.2(e) to reimburse the  Administrative  Agent for the amount of any
Advance made by the  Administrative  Agent for the account of such Lender Party,
(c)  any  other  Lender   Party   pursuant  to  Section  2.13  to  purchase  any
participation in Advances owing to such other Lender Party and (d) the


                                     - 7 -
<PAGE>

Administrative  Agent or the Issuing Bank  pursuant to Section 10.5 to reimburse
the  Administrative  Agent or the Issuing Bank for such Lender  Party's  ratable
share  of  any  amount  required  to be  paid  by  the  Lender  Parties  to  the
Administrative  Agent or the Issuing Bank as provided therein. In the event that
a portion  of a  Defaulted  Amount  shall be deemed  paid  pursuant  to  Section
2.15(b),  the remaining  portion of such Defaulted  Amount shall be considered a
Defaulted  Amount  originally  required to be paid  hereunder or under any other
Loan Document on the same date as the Defaulted Amount so deemed paid in part.

     "Defaulting  Lender"  means,  at any time,  any Lender Party that,  at such
time, (a) owes a Defaulted  Advance or a Defaulted  Amount or (b) shall take any
action or be the  subject of any action or  proceeding  of a type  described  in
Section 9.6.

     "Disclosed Litigation" has the meaning specified in Section 4.9.

     "Disposal"  means the discharge,  deposit,  injection,  dumping,  spilling,
leaking or placing of any solid  waste or  hazardous  waste,  as those terms are
defined by any  federal,  state,  local or foreign  law,  into or on any land or
water so that such solid waste or hazardous  waste or any  constituents  thereof
may enter the  environment  or be emitted  into the air or  discharged  into any
waters, including ground waters.

     "Domestic  Lending  Office"  means,  with respect to any Lender Party,  the
office of such Lender Party specified as its "Domestic  Lending Office" opposite
its name on Schedule I hereto or in the Assignment  and  Acceptance  pursuant to
which it became a Lender Party, as the case may be, or such other office of such
Lender Party as such Lender Party may from time to time specify to the Borrowers
and the Administrative Agent.

     "Domestic Subsidiary" means any Subsidiary organized under the laws of the
United States of America or any State thereof.

     "EBITDA"  means,  for any period,  the sum,  determined  on a  Consolidated
basis, of (i) net income (or net loss), (ii) Interest Expense,  (iii) income tax
expense,  (iv) depreciation  expense,  (v) extraordinary and nonrecurring losses
and (vi) amortization  expense,  minus  extraordinary and nonrecurring gains (in
each case  determined in accordance  with GAAP) plus (i) the pro forma effect on
EBITDA for such period of any Permitted Acquisition made by a Borrower (such pro
forma effect to be reasonably  acceptable to the Administrative  Agent) and (ii)
non-cash stock compensation,  provided that, as required by the last sentence of
Section 1.3,  EBITDA  shall be adjusted for the effect of reporting  advertising
expenses and New Member Acquisition Costs as expensed as incurred.

     "Effective Date" has the meaning specified in Section 11.18(a).

     "Eligible  Assignee"  means with  respect to any  Facility  (other than the
Letter of Credit Facility),  (a) a Lender; (b) an Affiliate of a Lender; and (c)
subject to the prior  approval  of the  Administrative  Agent and, so long as no
Event of Default  shall have occurred and be  continuing,  the  Borrowers,  such
approval by the  Borrowers  not to be  unreasonably  withheld or delayed,  (i) a
commercial  bank  organized  under the laws of the United  States,  or any State
thereof,  and having total assets in excess of $500,000,000;  (ii) a savings and
loan association or savings bank


                                     - 8 -
<PAGE>

organized under the laws of the United States, or any State thereof,  and having
total assets in excess of $500,000,000;  (iii) a commercial bank organized under
the laws of any  other  country  that is a member  of the OECD or has  concluded
special lending  arrangements  with the  International  Monetary Fund associated
with its General Arrangements to Borrow or of the Cayman Islands, or a political
subdivision  of  any  such  country,  and  having  total  assets  in  excess  of
$500,000,000,  so long as such bank is acting through a branch or agency located
in the United  States;  (iv) the central bank of any country that is a member of
the OECD;  and (v) a  finance  company,  insurance  company  or other  financial
institution or fund (whether a corporation,  partnership, trust or other entity)
that is engaged in making, purchasing or otherwise investing in commercial loans
in the  ordinary  course of its  business  and having  total assets in excess of
$500,000,000;  and, with respect to the Letter of Credit Facility, a Person that
is an  Eligible  Assignee  under  subclause  (i) or (iii) of clause  (c) of this
definition and is approved by the Administrative  Agent and the Borrowers,  such
approval by the Borrowers not to be unreasonably withheld or delayed;  provided,
however,  that no Loan Party or  Affiliate  of a Loan Party shall  qualify as an
Eligible Assignee under this definition.

     "Eligible   Inventory"  means  Inventory  of  a  Borrower  located  in  the
continental  United  States  (minus any  reserves  reasonably  requested  by the
Administrative  Agent) as to which (a) such Borrower has acquired title, (b) the
Lenders have a first and only perfected  security interest and (c) such Borrower
shall have  furnished  to the  Administrative  Agent  information  adequate  for
purposes  of  identification  at  times  and in  form  and  substance  as may be
reasonably requested by the Administrative Agent; provided, that Inventory shall
not  constitute  Eligible  Inventory  (i) if and when  such  Borrower  sells it,
otherwise passes title thereto or consumes it, (ii) if the Lenders release their
security interest therein, or (iii) to the extent that it (A) is obsolete or not
currently useable or salable in the ordinary course of such Borrower's business,
(B) is produced in violation of the Fair Labor  Standards Act and subject to the
so-called  "hot goods"  provision  contained in Title 29,  ss.215(a)  (1) of the
United States Code,  (C)  constitutes  raw materials or work in process (i.e. is
other than "finished  goods"),  or (D) is Inventory held for consumption by such
Borrower  or a  Subsidiary  of such  Borrower  and not for sale in the  ordinary
course of business.  Any Inventory which is Eligible  Inventory at any time, but
which  subsequently  fails  to meet  any of the  foregoing  requirements,  shall
forthwith cease to be Eligible  Inventory until such time as it once again meets
all of the foregoing requirements.

     "Eligible  Receivables"  means only such  Receivables  of a Borrower as the
Administrative Agent, in its reasonable judgment,  shall from time to time elect
to consider  Eligible  Receivables for purposes of this Agreement.  The value of
such  Receivables  shall  be  determined  by  the  Administrative  Agent  in its
reasonable judgment taking into consideration,  among other factors,  their book
value determined in accordance with GAAP, including, not by limitation, reserves
with respect to such Receivables  arising from  bill-and-hold,  guaranteed sale,
sale-or-return,  sale on consignment basis or otherwise.  By way of example only
(without  deducting amounts more than once), and without limiting the discretion
of the  Administrative  Agent to  consider  any  Receivables  not to be Eligible
Receivables,  the  Administrative  Agent  shall  consider  any of the  following
classes of Receivables not to be Eligible Receivables:

          (a)  Receivables  that do not arise out of sales of goods or rendering
     of services in the ordinary course of such Borrower's business;


                                     - 9 -
<PAGE>

          (b)  Receivables on terms other than those normal or customary in such
     Borrower's business;

          (c)  Receivables  owing from any Person that is an  Affiliate  of such
     Borrower;

          (d)  Receivables  more than 60 days past the date due, with respect to
     retail  Receivables,  or more than 90 days past the original  invoice date,
     with respect to consumer Receivables;

          (e) Retail  Receivables  owing from any one retail customer from which
     more than 50% of the retail  Receivables  owing from such  customer is more
     than 60 days past due;

          (f)  Receivables  owing  from any  Person  that  shall  take or be the
     subject of any action or proceeding of a type described in Section 9.6;

          (g)  Receivables  (i) owing from any Person that is also a supplier to
     or  creditor  of such  Borrower  unless such Person has waived any right of
     set-off in a manner reasonably  acceptable to the  Administrative  Agent or
     (ii)  representing any  manufacturer's  or supplier's  credits,  discounts,
     incentive  plans  or  similar  arrangements   entitling  such  Borrower  to
     discounts on future purchases therefrom;

          (h)  Receivables  owing  from an  account  debtor  that is an  agency,
     department  or  instrumentality  of the United  States or any State thereof
     unless  such  Borrower  shall  have  satisfied  the   requirements  of  the
     Assignment  of  Claims  Act of 1940,  as  amended,  and any  similar  State
     legislation and the Administrative  Agent is satisfied as to the absence of
     set-offs,  counterclaims  and other  defenses  on the part of such  account
     debtor;

          (i)   Receivables   the  full  and   timely   payment   of  which  the
     Administrative  Agent in its reasonable  judgment,  after consultation with
     such Borrower, believes to be doubtful; and

          (j)  Receivables  in respect of which the  Security  Agreement,  after
     giving effect to the related filings of financing statements that have then
     been made,  if any,  does not or has ceased to create a valid and perfected
     first and only priority  lien or security  interest in favor of the Secured
     Parties securing the Secured Obligations.

     "Environmental  Action"  means any action,  suit,  demand,  demand  letter,
claim,  notice of non-compliance or violation,  notice of liability or potential
liability,  investigation,   proceeding,  consent  order  or  consent  agreement
relating  in any way to any  Environmental  Law,  any  Environmental  Permit  or
Hazardous Material or arising from alleged injury or threat to public health and
safety  or  the  environment,   including,   without  limitation,   (a)  by  any
governmental or regulatory  authority or third party for  enforcement,  cleanup,
Removal,  Response,  Remedial  or  other  actions  or  damages  and  (b)  by any
governmental or regulatory  authority or third party for damages,  contribution,
indemnification, cost recovery, compensation or injunctive relief.

     "Environmental  Law" means any international or transnational law, federal,
state, local or foreign statute, law, ordinance, rule, regulation,  code, order,
writ, judgment, injunction, decree or judicial or agency interpretation,  policy
or guidance relating to pollution or protection of the


                                     - 10 -
<PAGE>


environment or natural resources,  including, without limitation, those relating
to the use, handling,  transportation,  treatment, storage, disposal, threatened
release, release or discharge of Hazardous Materials.

     "Environmental Permit" means any permit,  approval,  identification number,
license or other authorization required under any Environmental Law.

     "Equipment"  has the  meaning  specified  in Section  1(a) of the  Security
Agreement.

     "Equity  Issuance"  means any  issuance or sale by a Borrower or any of its
Subsidiaries of its capital stock or other equity  securities or any obligations
convertible  into or exchangeable  for, or giving any Person a right,  option or
warrant to acquire such stock,  securities or such  convertible or  exchangeable
obligations;  provided,  however, that for purposes of Section 2.6(b)(iii),  the
term  "Equity  Issuance"  shall not include  any  issuance or sale of (a) Equity
Interests of such  Borrower to any Person as  consideration  paid in  connection
with a Permitted Acquisition; (b) Equity Interests of such Borrower issued on or
before  the  Effective  Date  in  connection  with  any  acquisition  which  are
consistent  with the  provisions  of Section 6.17 and disclosed on Schedule 6.17
hereto;  (c)  common  stock of such  Borrower  issued  to any  director  of such
Borrower  required by applicable  law in  connection  with such Person acting in
such  capacity;  (d) common stock of such Borrower to  management  and employees
thereof, respectively,  pursuant to any stock option plan permitted hereunder or
the  exercise  of options  issued  pursuant  thereto;  (e) common  stock of such
Borrower issued upon exercise of any outstanding warrants,  rights or options or
upon conversion of any outstanding convertible securities,  in each case only if
outstanding  on the  Effective  Date  or  issued  to the  holder  of the  Senior
Subordinated Debt thereafter in accordance with the Letter Agreement; (f) Equity
Interests issued in compliance with the provisions of Section 6.17(e), except to
the extent net  proceeds  thereof  exceed the net proceeds  actually  applied to
replace  or  repay,  in  whole  or in  part,  the  Senior  Subordinated  Debt in
accordance  with  Section  6.17 (e);  and (g)  Equity  Interests  issued by such
Borrower to the extent the net  proceeds  therefrom  are applied to satisfy such
Borrower's obligations under the Acquisition Puts (in each case if then required
to be paid) so long as (i) such  application  is made within one hundred  eighty
(180)  days  after the  issuance  of such  Equity  Interests,  (ii) any such net
proceeds  not so  applied  within  such  period  shall be  applied  to repay the
Advances in  accordance  with  Section 2.6,  and (iii) such  Borrower  otherwise
complies with Section 6.7(c) and Section  6.7(e) in satisfying  the  Acquisition
Puts.

     "Equity  Interests"  means, in any Person,  any and all shares,  interests,
participations,  rights or other equivalents (however designated) of any capital
stock or other  ownership  of any  profit  interest,  and any and all  warrants,
rights,  options,  obligations  or other  securities  of or in such Person,  and
rights  to  acquire  any  of  the  foregoing,   including,  without  limitation,
partnership  interests  and joint venture  (whether  general or limited) and any
other interest or participation  that confers on a Person the right to receive a
share of the  profits  and  losses  of,  or  distributions  of assets  of,  such
partnership  or joint  venture,  but  excluding  debt  for  borrowed  money  and
excluding any debt security that is convertible into, or exchangeable for any of
the foregoing equity interests.

     "ERISA"  means the Employee  Retirement  Income  Security  Act of 1974,  as
amended from time to time, and the  regulations  promulgated  and rulings issued
thereunder.


                                     - 11 -
<PAGE>

     "ERISA  Affiliate"  means any Person that for purposes of Title IV of ERISA
is a member of the controlled  group of any Loan Party,  or under common control
with any Loan Party,  within the meaning of Section 414 of the Internal  Revenue
Code.

     "ERISA Event" means (a) (i) the  occurrence of a reportable  event,  within
the meaning of Section 4043 of ERISA, with respect to any Plan unless the 30-day
notice  requirement  with respect to such event has been waived by the PBGC,  or
(ii) the  requirements  of subsection  (1) of Section  4043(b) of ERISA (without
regard to subsection (2) of such Section) are met with respect to a contributing
sponsor,  as defined in Section  4001(a)(13)  of ERISA,  of a Plan, and an event
described in paragraph (9), (10), (11), (12) or (13) of Section 4043(c) of ERISA
is  reasonably  expected to occur with respect to such Plan within the following
30 days;  (b) the  application  for a minimum  funding  waiver with respect to a
Plan; (c) the provision by the  administrator  of any Plan of a notice of intent
to  terminate  such Plan  under  ERISA  Section  4041(c),  pursuant  to  Section
4041(a)(2) of ERISA  (including any such notice with respect to a plan amendment
referred to in Section  4041(e) of ERISA);  (d) the cessation of operations at a
facility of any Loan Party or any ERISA Affiliate in the circumstances described
in Section  4062(e) of ERISA;  (e) the withdrawal by any Loan Party or any ERISA
Affiliate  from a Multiple  Employer  Plan during a plan year for which it was a
substantial  employer,  as  defined  in  Section  4001(a)(2)  of ERISA;  (f) the
conditions  for  imposition of a lien under  Section  302(f) of ERISA shall have
been met with  respect to any Plan;  (g) the  adoption of an amendment to a Plan
requiring  the  provision  of security  to such Plan  pursuant to Section 307 of
ERISA;  or (h) the  institution  by the PBGC of  proceedings to terminate a Plan
pursuant to Section 4042 of ERISA,  or the  occurrence of any event or condition
described in Section 4042 of ERISA that constitutes  grounds for the termination
of, or the appointment of a trustee to administer, such Plan.

     "Events of Default" has the meaning specified in Article 9.

     "Excess  Cash Flow"  means for any period the sum of (a) EBITDA of MediaBay
and its Subsidiaries for such period (provided that EBITDA, for purposes of this
definition of Excess Cash Flow,  shall be computed  without giving effect to the
final clause of the  definition of "EBITDA"  relating to the addition of the pro
forma effect of Permitted  Acquisitions)  plus (b) the  aggregate  amount of all
non-cash charges deducted from Consolidated net income for such period,  but not
added  back in  arriving  at  EBITDA  plus (c) if there  was a net  increase  in
Consolidated  Current  Liabilities of MediaBay and its Subsidiaries  during such
period,  the  amount of such net  increase  other than  arising  out of (i) Debt
permitted pursuant to Section 6.2, (ii) the reclassification of the Obligations,
and (iii) the Huntingdon  Financing Debt and the Huntingdon Secured Subordinated
Debt,  plus (d) if there  was a net  decrease  in  Consolidated  Current  Assets
(excluding cash and Cash Equivalents and deferred member  acquisition  costs) of
MediaBay and its Subsidiaries during such period the amount of such net decrease
less (e) the aggregate amount of mandatory and optional  prepayments (other than
optional  prepayments  of the  Letter of Credit  Advances  or  Revolving  Credit
Advances made pursuant to clause (i) of the second  sentence of Section  2.6(a))
or repayments of principal made by MediaBay and its  Subsidiaries  on any Funded
Debt of MediaBay and its Subsidiaries  during such period or made or required to
be made pursuant to Section  2.6(b) during or subsequent to such period less (f)
Capital  Expenditures of MediaBay and its  Subsidiaries  during such period less
(g) the aggregate amount of all federal,  state, local and foreign taxes paid by
MediaBay and its


                                     - 12 -
<PAGE>


Subsidiaries  during such period less (h) the aggregate  amount of interest paid
on any Debt of  MediaBay  and its  Subsidiaries  during such period less (i) the
aggregate  amount of all  non-cash  credits  included in arriving at such EBITDA
less  (j) if  there  was a net  decrease  in  Consolidated  Current  Liabilities
(excluding the  reclassification  of the Obligations,  the Huntingdon  Financing
Debt  and  the  Huntingdon  Secured  Subordinated  Debt)  of  MediaBay  and  its
Subsidiaries  during such period,  the amount of such net  decrease  less (k) if
there was a net increase in Consolidated Current Assets (excluding cash and Cash
Equivalents) of MediaBay and its  Subsidiaries  during such period the amount of
such increase  less (l) dividends  paid by MediaBay to the holders of its common
stock  during such period to the extent that  MediaBay is  permitted to pay such
dividends under this Agreement.

     "Existing Debt" has the meaning specified in Section 4.19(a).

     "Extraordinary  Receipt"  means any cash  received by or paid to or for the
account of any Person not in the ordinary course of business, including, without
limitation,  tax refunds, pension plan reversions,  proceeds of insurance (other
than proceeds of business  interruption and associated  similar insurance to the
extent such proceeds  constitute  compensation for lost earnings),  condemnation
awards (and payments in lieu thereof) and indemnity payments; provided, however,
that an  Extraordinary  Receipt  shall not include cash  receipts  received from
proceeds of  insurance,  condemnation  awards (and  payments in lieu thereof) or
indemnity  payments to the extent that such proceeds,  awards or payments (a) in
respect of loss or damage to Equipment, fixed assets, real property or Inventory
are applied (or in respect of which  expenditures  were previously  incurred) to
replace or repair the  Equipment,  fixed  assets,  real property or Inventory in
respect of which such  proceeds,  awards or payments were received in accordance
with the terms of the Loan  Documents,  so long as (i) such  application is made
within  one  hundred  eighty  (180) days  after  such  Person's  receipt of such
proceeds,  awards or payments  and (ii) such  proceeds,  awards or payments  are
received by such Person within  fifteen (15) months after the occurrence of such
damage or loss;  or (b) are received by any Person in respect of any third party
claim  against such Person and applied to pay (or to  reimburse  such Person for
its prior  payment of) such claim and the costs and expenses of such Person with
respect thereto.

     "Facility"  means the  Revolving  Credit  Facility  or the Letter of Credit
Facility.

     "Federal Funds Rate" means, for any period, a fluctuating interest rate per
annum equal for each day during such period to the weighted average of the rates
on overnight  Federal  funds  transactions  with members of the Federal  Reserve
System arranged by Federal funds brokers, as published for such day (or, if such
day is not a Business Day, for the next  preceding  Business Day) by the Federal
Reserve Bank of New York,  or, if such rate is not so published for any day that
is a  Business  Day,  the  average  of the  quotations  for  such  day for  such
transactions  received  by the  Administrative  Agent from three  Federal  funds
brokers of recognized standing selected by it.

     "Fiscal  Year" means a fiscal  year of any  Borrower  and its  Consolidated
Subsidiaries ending on December 31 in any calendar year.

     "Fleet"  means Fleet  National  Bank in its capacity as a Lender or Issuing
Bank or Swing Line Bank under the Prior Credit Agreement.


                                     - 13 -
<PAGE>

     "Foreign  Subsidiary" means any Subsidiary  organized under the laws of any
jurisdiction other than the United States of America or any State thereof.

     "Funded Debt" means, with respect to the Borrowers,  the Advances, and with
respect to the Borrowers  and the other Loan Parties and any other  Person,  all
other Debt of such Person that by its terms matures more than one year after the
date of determination or matures within one year from such date but is renewable
or extendible,  at the option of such Person, to a date more than one year after
such date or arises under a revolving credit or similar agreement that obligates
the  lender or lenders  to extend  credit  during a period of more than one year
after such date, including the current portion of all such Debt.

     "GAAP" means  generally  accepted  accounting  principles  set forth in the
opinions and  pronouncements of the Accounting  Principles Board of the American
Institute of Certified Public  Accountants and statements and  pronouncements of
the Financial Accounting Standards Board and statements,  pronouncements,  rules
and regulations of the Securities and Exchange Commission that are applicable to
the circumstances as of the date of determination.

     "Guaranteed  Obligations"  has  the  meaning  specified  in the  Subsidiary
Guaranties.

     "Guarantors"  means (a) each Domestic  Subsidiary  of the Borrowers  (other
than Radio  Spirits and Audio Book Club and the Inactive  Subsidiaries)  and (b)
each  Person  which shall have  executed  and  delivered  or become a party to a
Subsidiary Guaranty hereunder.

     "Hazardous   Materials"   means  (a)   petroleum  or  petroleum   products,
by-products or breakdown products,  radioactive  materials,  asbestos-containing
materials,  polychlorinated biphenyls and radon gas and (b) any other chemicals,
materials  or  substances  designated,  classified  or regulated as hazardous or
toxic or as a pollutant or contaminant under any Environmental Law.

     "Hedge  Agreements"  means  interest rate swap,  cap or collar  agreements,
interest rate future or option  contracts,  currency swap  agreements,  currency
future or option contracts and other similar agreements.

     "Hedge  Bank"  means any Lender in its  capacity as a party to a Bank Hedge
Agreement.

     "Huntingdon" means Huntingdon Corporation, a Florida corporation.

     "Huntingdon Financing Debt" means the $2,500,000 senior secured loan (which
may be increased to  $3,000,000)  made to MediaBay  and its  Subsidiaries  on or
about the date hereof by Huntingdon or its affiliates  which,  on the Huntingdon
Issue Date will become evidenced by the Huntingdon Senior Secured Note.

     "Huntingdon  Financing  Documents"  means  all  documents  entered  into or
delivered in connection with the Huntingdon  Financing Debt  including,  without
limitation, the Huntingdon Senior Secured Note.


                                     - 14 -
<PAGE>

     "Huntingdon  Financing  Intercreditor  Agreement"  means the  Intercreditor
Agreement dated the date of this Agreement among, inter alia, the lenders of the
Huntingdon  Financing Debt and the Lenders, and comprising one of the Huntingdon
Financing Documents.

     "Huntingdon  Issue Date" means the tenth calendar day following the date on
which the Company sends written  notice to its  shareholders  of the  Huntingdon
Financing Debt and the Huntingdon Secured Subordinated Debt.

     "Huntingdon Secured  Subordinated Debt" means the secured subordinated loan
in the amount of $800,000 made to MediaBay  pursuant to the  Huntingdon  Secured
Subordinated Note.

     "Huntingdon  Secured  Subordinated  Debt  Documents"  means  all  documents
entered into or delivered in connection with the Huntingdon Secured Subordinated
Debt, including, without limitation, the Huntingdon Secured Subordinated Note.

     "Huntingdon  Secured  Subordinated   Intercreditor   Agreement"  means  the
Intercreditor  Agreement dated the date of this Agreement among, inter alia, the
lenders  of the  Huntingdon  Secured  Subordinated  Debt  and the  Lenders,  and
comprising one of the Huntingdon Secured Subordinated Debt Documents.

     "Huntingdon   Secured   Subordinated   Note"  means  that  certain  secured
convertible subordinated promissory note in the amount of $800,000 which will be
dated as of the Huntingdon Issue Date payable by MediaBay to Huntingdon.

     "Huntingdon   Senior  Secured  Note"  means  that  certain  senior  secured
convertible  promissory note in the amount of $2,500,000  which will be dated as
of the  Huntingdon  Issue Date (and the date of an  additional  $500,000 loan by
Huntingdon to the Company, if made) payable by MediaBay to Huntingdon.

     "Inactive  Subsidiaries"  means the  Domestic  Subsidiaries  identified  on
Schedule 4.7.

     "Indemnified Party" has the meaning specified in Section 11.4(b).

     "ING" means ING (U.S.)  Capital LLC in its  capacity as a Lender or Issuing
Bank.

     "Initial  Issuing  Bank"  has  the  meaning  specified  in the  Preliminary
Statements to this Agreement.

     "Initial Lenders" has the meaning  specified in the Preliminary  Statements
to this Agreement.

     "Insufficiency" means, with respect to any Plan, the amount, if any, of its
unfunded benefit liabilities, as defined in Section 4001(a)(18) of ERISA.

     "Intellectual  Property  Security  Agreement" has the meaning  specified in
Section 3.1(a).

     "Interest  Expense"  means,  with  respect to any  Person  for any  period,
interest  expense  on all Debt of such  Person for such  period net of  interest
income for such period, whether paid or


                                     - 15 -
<PAGE>

accrued, determined on a Consolidated basis for such Person and its Subsidiaries
and in accordance with GAAP, and including,  without limitation, (a) in the case
of the Borrower,  interest  expense in respect of Debt  resulting from Advances,
(b) the interest  component of all obligations  under  Capitalized  Leases,  (c)
commissions,  discounts and other fees and charges  payable in  connection  with
letters of credit (including,  without limitation,  Letters of Credit),  and (d)
all fees paid by the Borrowers pursuant to Section 2.8(a).

     "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended
from  time  to  time,  and  the  regulations   promulgated  and  rulings  issued
thereunder.

     "Inventory"  of any  person  means  all of  such  Person's  now  owned  and
hereafter acquired  inventory,  goods,  merchandise and other personal property,
wherever located, to be furnished under any contract of service or held for sale
or lease, all returned goods, raw materials, other materials and supplies of any
kind,  nature or  description  which are or might be consumed  in such  Person's
business or used in connection with the packing, shipping, advertising,  selling
or finishing of such goods,  merchandise and such other personal  property,  and
all documents of title or other documents representing them.

     "Investment"  in any Person means any loan or advance to such  Person,  any
purchase or other  acquisition of any capital stock or other ownership or profit
interest,  warrants,  rights,  options,  obligations or other securities of such
Person, any capital  contribution to such Person or any other investment in such
Person,  including,  without limitation,  any arrangement  pursuant to which the
investor  incurs  Debt of the  types  referred  to in  clause  (h) or (i) of the
definition of "Debt" in respect of such Person.

     "Issuing Bank" means the Issuing Bank and each Eligible Assignee to which a
Letter of Credit  Commitment  hereunder  has been  assigned  pursuant to Section
11.7.

     "L/C Cash  Collateral  Account"  has the meaning  specified in the Security
Agreement.

     "L/C Related Documents" has the meaning specified in Section 2.4(b)(ii)(A).

     "Lender Party" means any Lender or the Issuing Bank.

     "Lenders"  means the Initial  Lenders  and each Person that shall  become a
Lender hereunder pursuant to Section 11.7.

     "Letter  of  Credit"  means  any  Letter  of Credit  issued  hereunder  (as
specified in Section 2.3(a)).

     "Letter of Credit Advance" means an advance made by the Issuing Bank or any
Revolving Credit Lender pursuant to Section 2.3(c).

     "Letter of Credit Agreement" has the meaning specified in Section 2.3(a).

     "Letter of Credit  Commitment" means, with respect to the Issuing Bank, the
amount set forth opposite the Issuing Bank's name on Schedule I hereto under the
caption  "Letter of Credit  Commitment" or, if the Issuing Bank has entered into
one or more Assignments and


                                     - 16 -
<PAGE>


Acceptances,  set forth for the Issuing Bank in the Register  maintained  by the
Administrative  Agent pursuant to Section  11.7(d) as the Issuing Bank's "Letter
of Credit  Commitment",  as such  amount may be reduced at or prior to such time
pursuant to Section 2.5.

     "Letter of Credit  Facility"  means,  at any time,  an amount  equal to the
amount of the Issuing  Bank's Letter of Credit  Commitment at such time, as such
amount may be reduced pursuant to Section 2.5.

     "Lien" means any lien,  security interest or other charge or encumbrance of
any kind,  or any other type of  preferential  arrangement,  including,  without
limitation,  the lien or retained security title of a conditional vendor and any
easement, right of way or other encumbrance on title to real property.

     "Loan  Documents"  means  (a)  this  Agreement,  (b) the  Notes,  (c)  each
Subsidiary  Guaranty,  (d) the Collateral  Documents,  (e) each Letter of Credit
Agreement,   (f)  each  Additional  Collateral  Document,   and  (g)  all  other
agreements,  instruments and documents executed in connection therewith, in each
case as the same may at any time be amended, supplemented, restated or otherwise
modified and in effect.

     "Loan Parties" means the Borrowers,  each Guarantor,  and each other Person
who shall,  at any time,  have  executed  and  delivered a Loan  Document to the
Administrative Agent.

     "Management  Fees"  for  any  period,  all  fees,   emoluments  or  similar
compensation paid to or incurred with respect to any Person (other than any such
fees,  emoluments or similar compensation paid to or incurred and payable to any
Loan Party) in respect of services rendered in connection with the management or
supervision  of the  management  of any Loan  Party,  other  than (a)  salaries,
bonuses  and other  compensation  paid to any  full-time  executive  employee in
respect of such full-time  employment,  (b) fees and other  compensation paid in
the  ordinary  course of  business by any Loan Party to any Person who is not an
Affiliate   thereof  and  (c)  reimbursement  to  Affiliates  of  expenses  (not
management fees) for services  provided to a Borrower and/or its Subsidiaries in
the ordinary course of business including,  without limitation,  for bookkeeping
services,  tax and legal  advice,  use of an aircraft and use of  accounting  or
other  personnel,  on terms which are no less favorable to such Borrower and its
Subsidiaries than they would obtain in a comparable arms-length transaction with
a Person not an Affiliate so long as the  aggregate  amount  payable by all Loan
Parties  to all  Affiliates  (excluding  payments  by the  Subsidiaries  of such
Borrower  directly to such  Borrower or to other  Wholly-Owned  Subsidiaries  or
payments by such Borrower to its Wholly-Owned  Subsidiaries) does not exceed Two
Hundred Thousand ($200,000.00) Dollars, for all Borrowers,  in any single fiscal
year of the Borrowers.

     "Margin Stock" has the meaning specified in Regulation U.

     "Material  Adverse  Effect"  means  (a) a  material  adverse  effect on the
business,   condition   (financial  or   otherwise),   results  of   operations,
performance,  reasonably  foreseeable  business  prospects  or  properties  of a
Borrower and its Subsidiaries  (taken as a whole), (b) a material adverse affect
on the  ability  of any Loan  Party to perform  its  obligations  under the Loan
Documents  to which it is a party,  (c) an  adverse  affect  on the  rights  and
remedies of the


                                     - 17 -
<PAGE>

Administrative  Agent and the Lender  Parties under any of the Loan Documents or
(d) a material adverse affect on the Facilities.

     "Material Contract" means, with respect to any Person, each contract listed
on Schedule  4.23,  each contract which is a replacement or a substitute for any
contract listed on such Schedule and each other contract to which such Person is
a party which is  material to the  business,  financial  condition,  operations,
performance,  properties or reasonably  foreseeable  business  prospects of such
Person.

     "MediaBay"  has the  meaning  specified  in the  recital of parties to this
Agreement.

     "Mortgage"  means  each  mortgage,  deed of trust,  leasehold  mortgage  or
leasehold deed of trust or other similar document  executed and delivered by the
appropriate Loan Party, in form and substance  acceptable to the  Administrative
Agent and the  Lenders  in order  (a) to  provide  that  such Loan  Party is the
mortgagor or grantor, (b) to comply with and/or provide for specific laws of the
jurisdictions in which the real property or leasehold  property to be encumbered
is located,  and (c) to assure that the Administrative  Agent for the benefit of
the Secured Parties has a perfected Lien on such Property.

     "Mortgaged  Property"  means  each  real  property  or  leasehold  property
specified on Schedule 4.21 or 4.22, respectively,  that is subject to a Mortgage
and shall include After-Acquired Mortgaged Property.

     "Multiemployer  Plan"  means a  multiemployer  plan,  as defined in Section
4001(a)(3) of ERISA, to which any Loan Party or any ERISA Affiliate is making or
accruing an obligation to make contributions, or has within any of the preceding
five plan years made or accrued an obligation to make contributions.

     "Multiple  Employer  Plan"  means a single  employer  plan,  as  defined in
Section  4001(a)(15) of ERISA,  that (a) is maintained for employees of any Loan
Party or any ERISA Affiliate and at least one Person other than the Loan Parties
and the ERISA  Affiliates or (b) was so  maintained  and in respect of which any
Loan Party or any ERISA  Affiliate  could have  liability  under Section 4064 or
4069 of ERISA in the event such plan has been or were to be terminated.

     "Net Cash Proceeds"  means,  with respect to any sale,  lease,  transfer or
other  disposition  of any asset or any Debt Issuance or Equity  Issuance by any
Person, or any  Extraordinary  Receipt received by or paid to or for the account
of any Person,  the aggregate amount of cash received from time to time (whether
as  initial   consideration  or  through  payment  or  disposition  of  deferred
consideration)  by  or  on  behalf  of  such  Person  in  connection  with  such
transaction after deducting therefrom only (without  duplication) (a) reasonable
and customary  brokerage  commissions,  underwriting  fees and discounts,  legal
fees, finder's fees and other normal and customary  out-of-pocket costs incurred
in  connection  with  such  transaction,  (b) the  amount  of taxes  payable  in
connection  with or as a result of such  transaction and (c) with respect to any
asset, the amount of any Debt secured by a Lien on such asset that, by the terms
of such  transaction,  is required to be repaid upon such  disposition,  in each
case to the extent, but only to the extent, that the amounts so deducted are, at
the time of or shortly after the receipt of such


                                     - 18 -
<PAGE>

cash,  actually  paid to a Person that is not an Affiliate of such Person or any
Loan Party or any Affiliate of any Loan Party and are properly  attributable  to
such transaction or to the asset that is the subject thereof.

     "New Member  Acquisition  Costs" means amounts  expended by a Borrower or a
Subsidiary  of a  Borrower  for any type of  advertising  in any  medium for the
purpose of acquiring customers.

     "Note" means a Revolving Credit Note.

     "Notice of Borrowing" has the meaning specified in Section 2.2(a).

     "Notice of Issuance" has the meaning specified in Section 2.3(a).

     "Notice of Renewal" has the meaning specified in Section 2.1(b).

     "Notice of Termination" has the meaning specified in Section 2.1(b).

     "NPL" means the National Priorities List under CERCLA.

     "Obligation" means, with respect to any Person, any payment, performance or
other obligation of such Person of any kind, including,  without limitation, any
liability of such Person on any claim,  whether or not the right of any creditor
to  payment  in  respect  of such  claim is  reduced  to  judgment,  liquidated,
unliquidated,   fixed,  contingent,   matured,  disputed,   undisputed,   legal,
equitable,  secured or unsecured,  and whether or not such claim is  discharged,
stayed or  otherwise  affected by any  proceeding  referred  to in Section  9.7.
Without  limiting the generality of the foregoing,  the  Obligations of the Loan
Parties under the Loan  Documents  include (a) the  obligation to pay principal,
interest, Letter of Credit commissions, charges, expenses, fees, attorneys' fees
and disbursements, indemnities and other amounts payable by any Loan Party under
any Loan Document,  (b) the obligation of any Loan Party to reimburse any amount
in  respect  of any of the  foregoing  that any  Lender  Party  may,  after  the
occurrence and during the  continuance  of an Event of Default,  elect to pay or
advance on behalf of such Loan Party, and (c) any other obligations  arising out
of or under, based upon or relating to the Loan Documents.

     "OECD" means the Organization for Economic Cooperation and Development.

     "Open Year" has the meaning specified in Section 4.16.

     "Other Taxes" has the meaning specified in Section 2.11(b).

     "Owned  Herrick  Shares" means any or all shares of capital stock issued by
MediaBay   having  voting  rights,   that  are  owned  or  controlled   (whether
beneficially  and/or of  record)  by Norton  Herrick,  Michael  Herrick,  Howard
Herrick and their Affiliates in the aggregate.

     "PBGC" means the Pension Benefit Guaranty Corporation (or any successor).

     "Permitted  Acquisitions"  means any  acquisition  by any of the Borrowers'
Subsidiaries of all or  substantially  all of the assets or the capital stock of
any Person (or segment of such


                                     - 19 -
<PAGE>


Person's  business) which has been consented to in writing by the Administrative
Agent and the  Required  Lenders.  Concurrently  with the making of a  Permitted
Acquisition,  the Borrowers  shall,  as additional  collateral  security for the
Obligations,  grant or cause to be granted to the  Administrative  Agent for the
ratable benefit of the Lenders, prior liens on and security interest (subject to
Permitted  Liens  existing  with  respect  to  such  assets  at the  time of the
Permitted  Acquisition)  in any of the  acquired  assets  by the  execution  and
delivery  to the  Administrative  Agent  of  such  agreements,  instruments  and
documents  as shall be  reasonably  satisfactory  in form and  substance  to the
Administrative   Agent  and  the   Borrowers   shall  have   delivered   to  the
Administrative  Agent  a  Compliance  Certificate  effective  as of the  date of
consummation of such acquisition

     "Permitted  Liens"  means  any of  the  following:  (a)  Liens  for  taxes,
assessments  and  governmental  charges or levies (i) not yet due and payable or
(ii) that are due and payable and that are being  contested in good faith and by
appropriate proceedings diligently conducted, provided that in the case of Liens
under this clause (ii), reserves or other appropriate provisions shall have been
established  therefor in accordance with GAAP; (b) Liens imposed by law, such as
materialmen's,  mechanics', carriers', workmen's and repairmen's Liens and other
similar Liens arising in the ordinary  course of business  securing  obligations
that are not  overdue  for a period of more than  sixty  (60) days or which,  if
overdue,  are  being  contested  in good  faith and by  appropriate  proceedings
diligently  conducted,  provided that reserves or other  appropriate  provisions
shall have been  established  therefor in accordance  with GAAP;  (c) pledges or
deposits  to secure  obligations  under  workers'  compensation  laws or similar
legislation  or to secure public or statutory  obligations;  (d) Permitted  Real
Property Encumbrances; (e) in the case of any Permitted Acquisition, any Lien in
respect  of  property  of the  acquired  Person  existing  at the  time  of such
acquisition  if such Lien would  constitute  a  Permitted  Lien under any of the
preceding clauses of this definition or otherwise permitted by Section 6.1(d) or
(e)  provided  that in respect of all Liens  referred  to in this clause (e) (i)
such Lien was not created in  contemplation of such event, and (ii) no such Lien
shall at any time extend to or cover any asset of a Borrower  or any  Subsidiary
other  than the  assets  on which it was  originally  imposed  and  improvements
thereto and proceeds  thereof;  (f) judgment and other  similar Liens arising in
connection with court  proceedings,  provided the execution or other enforcement
of such Liens is effectively stayed or bonded and the claims secured thereby are
being  contested  in good faith and by  appropriate  proceedings  and no Default
otherwise  exists under Section 9.7 hereof;  (g) Liens (other than Liens created
or imposed  under ERISA)  incurred or deposits  made in the  ordinary  course of
business in connection with workers'  compensation,  unemployment  insurance and
other  types of  social  security,  or to secure  the  performance  of  tenders,
statutory  obligations,  surety  and  appeal  bonds,  bids,  leases,  government
contracts,  performance and return-of-money  bonds and other similar obligations
(exclusive in any case of obligations  incurred in connection with the borrowing
of money or the  obtaining  of advances or credit);  (h) Liens  arising from the
sales of accounts  receivable for collection in the ordinary  course of business
to the extent such sales are permitted in  accordance  with the terms of Section
6.5(g);  (i)  the  junior  Liens  on  all  of the  Borrowers  assets  (excluding
inventory,  receivables  and cash) granted to Huntingdon in connection  with the
Herrick Secured Subordinated Loan; and (j) the Liens on all of the assets of the
Borrowers (excluding  inventory,  receivables and cash) granted to Huntingdon in
connection with the Huntingdon  Financing Debt,  provided,  that, the holders of
the Liens set forth in clauses (i) and (j) above shall have no rights to vote as
a secured creditor in any proceeding of the type described in Section 9.6.


                                     - 20 -
<PAGE>

     "Permitted  Real  Property   Encumbrances"   means,  with  respect  to  any
particular real property,  easements, zoning restrictions or other restrictions,
rights-of-way,  minor encroachments,  covenants or encumbrances on real property
imposed by law or arising in the ordinary  course of business  that do not arise
out of the  incurrence  of any Debt and that do not and could not  reasonably be
expected  to  materially  detract  from the value of the  affected  property  or
interfere  materially with the ordinary conduct of business of a Borrower or any
of its  Subsidiaries  or materially  impair the use thereof to a Borrower or any
Subsidiary.

     "Person"  means  an  individual,  partnership,   corporation  (including  a
business  trust),  limited  liability  company,  joint  stock  company,   trust,
unincorporated  association,  joint venture or other entity,  or a government or
any political subdivision or agency thereof.

     "Plan" means a Single Employer Plan or a Multiple Employer Plan.

     "Prime  Rate" means a  fluctuating  interest  rate per annum in effect from
time to time, which rate per annum shall at all times be equal to the higher of:

          (a) the rate of interest announced publicly by The Wall Street Journal
     as the "base rate on corporate loans posted by at least 75% of the nation's
     30 largest  banks" (or, if The Wall Street  Journal  ceases  quoting a base
     rate of the  type  described,  the  highest  per  annum  rate  of  interest
     published  by the  Federal  Reserve  Board in Federal  Reserve  statistical
     release H.15 (519)  entitled  "Selected  Interest  Rates" as the Bank prime
     loan rate or its equivalent); or

          (b) 1/2 of one percent per annum above the Federal Funds Rate.

     Each change in any interest rate provided for in the Credit Agreement based
upon the Prime Rate shall  take  effect at the time of such  change in the Prime
Rate.

     "Prime Rate  Advance"  means an Advance that bears  interest as provided in
Section 2.7(a).

     "Prior  Credit  Agreement"  has the meaning  specified  in the  Preliminary
Statements to this Agreement.

     "Prior Loan Default  Letter" means the letter  attached hereto as Exhibit I
setting  forth the  defaults of MediaBay and  Guarantors  under the Prior Credit
Agreement.

     "Pro Rata Share" of any amount means,  with respect to any Revolving Credit
Lender at any time, the product of such amount times a fraction the numerator of
which is the amount of such Lender's  Revolving  Credit  Commitment at such time
and the denominator of which is the Revolving Credit Facility at such time.

     "Radio Spirits" has the meaning specified in the recital of parties to this
Agreement.

     "Radio  Spirits   Subordinated   Security  Agreement"  means  the  Security
Agreement dated and effective as of December 11, 1998 between MediaBay,  Classic
Radio Holding Corp. and


                                     - 21 -
<PAGE>

Classic Radio  Acquisition  Corp., on the one hand, and Carl Amari, on the other
hand, as in effect on the date of this Agreement.

     "Receivables"  means all  Receivables  referred  to in Section  1(c) of the
Security Agreement.

     "Reduction Amount" has the meaning specified in Section 2.6(b)(v).

     "Register" has the meaning specified in Section 11.7(d).

     "Regulation T" means  Regulation T of the Board of Governors of the Federal
Reserve System, as in effect from time to time.

     "Regulation U" means  Regulation U of the Board of Governors of the Federal
Reserve System, as in effect from time to time.

     "Regulation X" means  Regulation X of the Board of Governors of the Federal
Reserve System, as in effect from time to time.

     "Regulatory  Authority"  means any federal,  state,  local or other U.S. or
foreign governmental authority, bureau or agency.

     "Release" means any release, spill, emission,  leaking,  pumping,  pouring,
emitting,  emptying,  discharging,  injecting,  escaping,  leaching,  dumping or
disposing  into the  environment  (including  the  abandonment  or discarding of
barrels,  containers  and other  closed  receptacles  containing  any  Hazardous
Materials)  or into or from any property,  including,  without  limitation,  the
movement of any Hazardous  Materials  through the air,  soil,  surface waters or
ground water.

     "Remedial"  shall have the meaning as set forth in CERCLA at 42 U.S.C.  ss.
9601(24) and/or any other applicable Environmental Laws.

     "Removal"  shall have the  meaning as set forth in CERCLA at 42 U.S.C.  ss.
9601(23) and/or any other applicable Environmental Laws.

     "Required  Lenders"  means at any time  Lenders owed or holding 100% (or if
there are more  than two (2)  Lenders,  greater  than 50%) of the sum of (a) the
aggregate principal amount of the Advances  outstanding at such time and (b) the
aggregate  Available  Amount of all Letters of Credit  outstanding at such time,
or, if no such principal amount and no Letters of Credit are outstanding at such
time, Lenders holding 100% of the aggregate of the Revolving Credit Commitments;
provided, however, that if any Lender shall be a Defaulting Lender at such time,
there shall be excluded from the  determination of Required Lenders at such time
(i) the aggregate  principal amount of the Advances owing to such Lender (in its
capacity  as a Lender)  and  outstanding  at such time,  and (ii) the  Revolving
Credit  Commitment of such Lender at such time. For purposes of this definition,
the Letter of Credit Advances owing to the Issuing Bank and the Available Amount
of each Letter of Credit shall be considered to be owed to the Revolving  Credit
Lenders  ratably  in  accordance   with  their   respective   Revolving   Credit
Commitments.


                                     - 22 -
<PAGE>

     "Response"  shall have the meaning as set forth in CERCLA at 42 U.S.C.  ss.
9601(25) and/or any other applicable Environmental Laws.

     "Responsible  Officer"  means,  with  respect to any Loan Party,  the Chief
Executive  Officer,  the  President,  the  Chief  Financial  Officer,  any  Vice
President, the Controller or the Treasurer of such Loan Party.

     "Revolving Credit Advance" has the meaning specified in Section 2.1(a).

     "Revolving Credit  Availability"  means, at any time, the lesser of (a) the
Revolving Credit Facility and (b) the Borrowing Base; provided, however, so long
as the  Borrowing  Base is at least  $5,000,000,  the  entire  Revolving  Credit
Facility may remain outstanding.

     "Revolving Credit  Borrowing" means a borrowing  consisting of simultaneous
Revolving Credit Advances of the same Type made by the Revolving Credit Lenders.

     "Revolving Credit  Commitment"  means, with respect to any Revolving Credit
Lender at any time, the amount set forth opposite such Lender's name on Schedule
I hereto under the caption  "Revolving Credit Commitment" or, if such Lender has
entered into one or more Assignments and Acceptances,  set forth for such Lender
in the  Register  maintained  by the  Administrative  Agent  pursuant to Section
11.7(d) as such Lender's  "Revolving  Credit  Commitment," as such amount may be
reduced at or prior to such time pursuant to Section 2.5; provided, however, the
aggregate  amount  of  the  "Revolving  Credit   Commitment"  shall  not  exceed
$6,580,000 with respect to any or all Revolving Credit Lenders at any time.

     "Revolving Credit Facility" means, at any time, the aggregate amount of the
Revolving Credit Lenders' Revolving Credit Commitments at such time.

     "Revolving  Credit  Lender"  means any Lender that has a  Revolving  Credit
Commitment.

     "Revolving Credit Note" means a promissory note of the Borrowers payable to
the order of any Revolving Credit Lender, in substantially the form of Exhibit B
hereto,  evidencing the aggregate  indebtedness  of the Borrowers to such Lender
resulting from the Revolving Credit Advances made by such Lender.

     "Revolving Credit Termination Date" means September 30, 2002.

     "Secured Obligations" has the meaning specified in the Security Agreement.

     "Secured Parties" means the Administrative  Agent, the Lender Parties,  and
the Hedge Banks and the other Persons the Obligations  owing to which are or are
purported  to be secured  by the  Collateral  under the terms of the  Collateral
Documents.

     "Security Agreement" has the meaning specified in Section 3.1(a).

     "Senior Debt" means, as at any date of determination thereof, the aggregate
outstanding  principal balance of (a) all Revolving Credit Advances (b) all Debt
of the Borrower and its Subsidiaries, if any, secured by purchase money security
interests, conditional sale arrangements


                                     - 23 -
<PAGE>

or other similar  security  interests,  (c)  obligations of any Borrower and its
Subsidiaries,  if any, with respect to Capitalized  Leases and (d) other Debt of
any Borrower and its Subsidiaries,  if any, which is senior to other Debt in the
priority of payment.

     "Senior  Subordinated  Debt" means the 9% Convertible  Senior  Subordinated
Promissory  Notes due  December  31,  2004  issued by  MediaBay  as set forth on
Schedule  6.19  and  any  guaranties  thereof  permitted  to be  issued  by  the
Subsidiaries of the Company from time to time pursuant to Section 6.2(c)(iv), as
the same may be amended,  modified or supplemented  from time to time consistent
with the terms of this Agreement.

     "Senior  Subordinated  Debt Documents" means all documents  entered into or
delivered in connection with the Senior Subordinated Debt.

     "Senior Subordinated Security Agreement" means the Security Agreement dated
December 30, 1998 between  MediaBay,  Classic Radio  Holding  Corp.  and Classic
Radio  Acquisition  Corp.  on the one hand,  and  Norton  Herrick as a holder of
$1,984,250 of the Senior Subordinated Debt.

     "Single  Employer Plan" means a single employer plan, as defined in Section
4001(a)(15) of ERISA,  that (a) is maintained for employees of any Loan Party or
any ERISA  Affiliate  and no Person  other than the Loan  Parties  and the ERISA
Affiliates  or (b) was so  maintained  and in respect of which any Loan Party or
any ERISA  Affiliate  could have  liability  under  Section 4069 of ERISA in the
event such plan has been or were to be terminated.

     "Solvent" and "Solvency"  mean,  with respect to any Person on a particular
date,  that on such  date (a) the fair  value of the  assets  of such  Person is
greater than the total amount of  liabilities,  including,  without  limitation,
contingent  liabilities,  of such Person,  (b) the present fair salable value of
the assets of such  Person is not less than the amount  that will be required to
pay the probable  liability of such Person on its debts as they become  absolute
and  matured,  (c) such Person does not intend to, and does not believe  that it
will, incur debts or liabilities  beyond such Person's ability to pay such debts
and liabilities as they mature and (d) such Person is not engaged in business or
a  transaction,  and is not about to engage in  business or a  transaction,  for
which such Person's property would constitute an unreasonably small capital. The
amount of  contingent  liabilities  at any time shall be  computed as the amount
that,  in the light of all the facts and  circumstances  existing  at such time,
represents  the amount  that can  reasonably  be expected to become an actual or
matured liability.

     "Standby  Letter of Credit"  means any Letter of Credit  other than a Trade
Letter of Credit.

     "Subordinated  Debt" means any Debt of a Borrower that is  subordinated  to
the  Obligations  of such Borrower  under the Loan  Documents and that otherwise
contains  terms and  conditions  satisfactory  to the  Administrative  Agent and
Required Lenders and shall include, without limitation,  the Senior Subordinated
Debt.

     "Subsidiary"  of any  Person  means  any  corporation,  partnership,  joint
venture,  limited liability company, trust or estate of which (or in which) more
than 50% of (a) the issued and outstanding  capital stock having ordinary voting
power  to  elect a  majority  of the  Board  of


                                     - 24 -
<PAGE>

Directors of such corporation (irrespective of whether at the time capital stock
of any other  class or classes of such  corporation  shall or might have  voting
power upon the occurrence of any  contingency),  (b) the interest in the capital
or profits or distributions or general or limited partnership  interests of such
partnership,  joint venture or limited  liability  company or (c) the beneficial
interest in such trust or estate, is at the time directly or indirectly owned or
controlled  by such  Person,  by  such  Person  and  one or  more  of its  other
Subsidiaries  or by one or more  of such  Person's  other  Subsidiaries.  Unless
otherwise  specified  herein,  the term Subsidiary  shall mean a Subsidiary of a
Borrower.

     "Subsidiary Guaranty" has the meaning specified in Section 3.1(a).

     "Surviving Debt" shall have the meaning specified in Section 4.19(b).

     "Taxes" has the meaning specified in Section 2.11(a).

     "Termination   Date"  means  the  date  of  termination  in  whole  of  the
Commitments pursuant to Section 2.5 or Article 9.

     "Trade  Letter of Credit" means any Letter of Credit that is issued for the
benefit of a supplier of Inventory to a Borrower or any of its  Subsidiaries  to
effect payment for such Inventory, the conditions to drawing under which include
the presentation to the Issuing Bank of negotiable bills of lading, invoices and
related documents  sufficient,  in the judgment of the Issuing Bank, to create a
valid and perfected  lien on or security  interest in such  Inventory,  bills of
lading, invoices and related documents in favor of the Issuing Bank.

     "Transaction" means the transactions contemplated by the Loan Documents.

     "Voting Stock" means capital stock issued by a  corporation,  or equivalent
interests  in any other  Person,  the  holders of which are  ordinarily,  in the
absence of  contingencies,  entitled to vote for the election of  directors  (or
persons performing  similar  functions) of such Person,  even if the right so to
vote has been suspended by the happening of such a contingency.

     "Welfare  Plan" means a welfare  plan, as defined in Section 3(1) of ERISA,
that is  maintained  for  employees of any Loan Party or in respect of which any
Loan Party could have liability.

     "Wholly-Owned  Subsidiary"  of any Person means a Subsidiary of such Person
all of the outstanding  Equity  Interests of which shall at the time be owned by
such  Person or by one or more  Wholly-Owned  Subsidiaries  of that  Person or a
combination thereof.

     "Withdrawal  Liabilities" has the meaning specified in Part I of Subtitle E
of Title IV of ERISA.


                                     - 25 -
<PAGE>

     SECTION  1.2  Computation  of  Time  Periods.  In  this  Agreement  in  the
computation of periods of time from a specified date to a later  specified date,
the word "from" means "from and  including"  and the words "to" and "until" each
mean "to but excluding."

     SECTION  1.3  Accounting  Terms.  For  purposes  of  this  Agreement,   all
accounting terms not otherwise  defined herein shall have the meanings  assigned
to  such  terms  in  conformity  with  GAAP.   Financial  statements  and  other
information  furnished  to Lender  pursuant  to Article 7 shall be  prepared  in
accordance  with  GAAP  (as in  effect  at the  time of such  preparation)  on a
consistent  basis,  subject to the final  sentence of this  Section  1.3. In the
event any  "Accounting  Changes" (as defined below) shall occur and such changes
affect  financial  covenants,  standards or terms in this Agreement  (other than
changes which have an immaterial effect on such financial  covenants,  standards
or terms),  then the Borrowers and the Lenders agree to enter into  negotiations
in order to amend such  provisions of this Agreement so as to equitably  reflect
such Accounting Changes with the desired result that the criteria for evaluating
the financial  condition of any Borrower shall be the same after such Accounting
Changes as if such Accounting  Changes had not been made, and until such time as
such an amendment  shall have been  executed and  delivered by the Borrowers and
the Lenders, (a) all financial covenants,  standards and terms in this Agreement
shall be calculated and/or construed as if such Accounting  Changes had not been
made,  and  (b)  the  Borrowers  shall  prepare  footnotes  to  each  Compliance
Certificate and the financial statements required to be delivered hereunder that
show the differences between the financial  statements  delivered (which reflect
such  Accounting  Changes)  and the basis  for  calculating  financial  covenant
compliance (without reflecting such Accounting Changes),  and, in any event, the
terms of the last sentence of this Section 1.3 shall supersede the provisions of
this sentence to the extent of any  inconsistency.  "Accounting  Changes" means:
(a)  changes  in  accounting  principles  required  by GAAP and  implemented  by
Borrower;  (b) changes in  accounting  principles  recommended  by a  Borrower's
certified public  accountants;  (c) changes in carrying value of a Borrower's or
any of its Subsidiaries'  assets,  liabilities or equity accounts resulting from
adjustments  that, in each case,  were  applicable  to, but not included in, the
audited Financials;  and (d) changes in accounting  principles permitted by GAAP
(other than with respect to any changes to a Borrower's method of accounting for
New  Member  Acquisition  Costs or  advertising  expenses  as  reflected  in the
financial  statements  of a  Borrower  and  its  Subsidiaries  provided  by such
Borrower  pursuant  to  Section  4.6)  which in the  reasonable  opinion of such
Borrower's  management  provide for more  meaningful  disclosure in light of the
business  conducted by such Borrower and its  Subsidiaries and which changes are
concurred with by such Borrower's  certified public accountants and which do not
effect a material change. Notwithstanding any other provision in this Agreement,
in any event, for all purposes of reporting and compliance under this Agreement,
New  Member  Acquisition  Costs and  advertising  expenses  shall be  treated as
expensed and not amortized  regardless of GAAP, provided that, in complying with
the reporting provisions of this Agreement,  including applicable  provisions of
Section 7 hereof,  the Borrowers  shall be permitted to deliver their audited or
publicly filed financial statements,  in accordance with GAAP (which may require
amortization of advertising  expenses and New Member  Acquisition Costs) so long
as  together  therewith  the  Borrowers  shall have  delivered  to the Lenders a
schedule  reporting  EBITDA and net  income as if  advertising  and New  Members
Acquisition Costs were expensed as incurred .

     SECTION  1.4  Other  Definitional  Provisions.  References  to  "Sections",
"subsections",  "Exhibits" and  "Schedules"  shall be to Sections,  subsections,
Exhibits and Schedules,


                                     - 26 -
<PAGE>

respectively,  of this Agreement unless otherwise  specifically provided. Any of
the terms defined in Section 1.1 may, unless the context otherwise requires,  be
used  in the  singular  or  the  plural  depending  on the  reference.  In  this
Agreement,  words  importing  any gender  include the other  genders;  the words
"including,"  "includes"  and  "include"  shall be deemed to be  followed by the
words  "without  limitation";  references  to agreements  and other  contractual
instruments shall be deemed to include subsequent amendments,  assignments,  and
other modifications thereto, but only to the extent such amendments, assignments
and other modifications are not prohibited by the terms of this Agreement or any
other Loan Document;  references to Persons include their  respective  permitted
successors  and  assigns  or,  in the  case  of  governmental  Persons,  Persons
succeeding  to the relevant  functions of such  Persons;  and all  references to
statutes and related  regulations  shall include any  amendments of same and any
successor statutes and regulations.

                                   ARTICLE 2

                        AMOUNTS AND TERMS OF THE ADVANCES
                            AND THE LETTERS OF CREDIT

     SECTION 2.1 The Advances.

     (a) The Revolving Credit  Advances.  Each Revolving Credit Lender severally
agrees,  on the terms and  conditions  hereinafter  set forth,  to make advances
(each a "Revolving  Credit  Advance") to the Borrowers  from time to time on any
Business Day during the period from the date hereof until the  Revolving  Credit
Termination  Date in an amount for each such Advance not to exceed such Lender's
Unused  Revolving Credit  Commitment at such time;  provided,  however,  that no
Revolving  Credit Lender shall have any  obligation  to make a Revolving  Credit
Advance under this Section  2.1(a) to the extent such  Revolving  Credit Advance
would cause the aggregate amount of Revolving Credit Advances outstanding (after
giving effect to any immediate  application  of the proceeds  thereof) to exceed
the  Revolving  Credit  Availability;  and  provided,  further,  that during the
respective  periods  described  below no Revolving  Credit  Advance or Letter of
Credit Advance shall be made or remain outstanding and no Letter of Credit shall
be issued if, after giving effect thereto,  the outstanding  principal amount of
all Revolving Credit Advances,  Letter of Credit Advances and Available Amounts,
would  exceed  $6,580,000.  Each  Revolving  Credit  Borrowing  shall  be  in an
aggregate amount of $500,000 or an integral multiple of $100,000 (other than, in
each case,  a Borrowing  the  proceeds of which shall be used solely to repay or
prepay in full  outstanding  Letter of Credit  Advances)  and shall  consist  of
Revolving  Credit Advances made  simultaneously  by the Revolving Credit Lenders
ratably according to their Revolving Credit Commitments.

     (b) Letters of Credit. The Issuing Bank agrees, on the terms and conditions
hereinafter  set  forth,  to issue  letters  of credit  for the  account  of the
Borrowers  from time to time on any  Business  Day during  the  period  from the
Effective  Date until sixty (60) days before the  Revolving  Credit  Termination
Date (i) in an  aggregate  Available  Amount  for all  Letters  of Credit not to
exceed at any time the Issuing  Bank's Letter of Credit  Commitment at such time
and (ii) in an Available  Amount for each such Letter of Credit not to exceed an
amount equal to the Unused Revolving Credit  Commitments of the Revolving Credit
Lenders  at such  time.  No Letter  of  Credit  shall  have an  expiration  date
(including all rights of the Borrowers or the  beneficiary  to


                                     - 27 -
<PAGE>

require  renewal)  later  than (A) the  earlier  of sixty  (60) days  before the
Revolving  Credit  Termination  Date,  (B) in the case of a  Standby  Letter  of
Credit,  365 days after the date of  issuance  thereof  and (C) in the case of a
Trade  Letter of  Credit,  180 days  after  the date of  issuance  thereof.  The
foregoing  notwithstanding,  any Standby Letter of Credit may, by its terms,  be
renewable annually upon notice (a "Notice of Renewal") given to the Issuing Bank
and the  Administrative  Agent on or prior to any date for notice of renewal set
forth in such Letter of Credit (but in any event at least five (5) Business Days
prior to the date of the proposed  renewal of such Standby Letter of Credit) and
upon fulfillment of the applicable conditions set forth in Article 3 unless such
Issuing  Bank  shall  have   notified  the   Borrowers   (with  a  copy  to  the
Administrative  Agent)  on or prior to the date for  notice of  termination  set
forth in such Letter of Credit (but in any event at least  thirty (30)  Business
Days prior to the date of  automatic  renewal) of its election not to renew such
Standby Letter of Credit (a "Notice of Termination"); provided that the terms of
each Standby Letter of Credit that is automatically renewable annually shall not
permit the expiration  date (after giving effect to any renewal) of such Standby
Letter of Credit in any event to be  extended  to a date  later  than sixty (60)
days before the Revolving Credit Termination Date. If either a Notice of Renewal
is not given by the Borrowers or a Notice of Termination is given by the Issuing
Bank pursuant to the  immediately  preceding  sentence,  such Standby  Letter of
Credit  shall  expire  on the  date  on  which  it  otherwise  would  have  been
automatically renewed; provided, however, that even in the absence of receipt of
a Notice of Renewal,  the Issuing Bank may, in its discretion  unless instructed
to the contrary by the Administrative Agent or the Borrowers, deem that a Notice
of Renewal had been  timely  delivered  and,  in such case,  a Notice of Renewal
shall be deemed to have been so delivered for all purposes under this Agreement.
Within the limits of the Letter of Credit  Facility,  and  subject to the limits
referred to above,  the  Borrowers may request the issuance of Letters of Credit
under this Section 2.1(b),  repay any Letter of Credit  Advances  resulting from
drawings  under  Letters of Credit  pursuant  to Section  2.3(c) and request the
issuance of additional Letters of Credit under this Section 2.1(b).

     SECTION 2.2 Making the Advances.

     (a) Except as  otherwise  provided in Section 2.3 each  Borrowing  shall be
made on notice,  given not later  than  11:00 A.M.  (New York time) on the first
Business Day prior to the date of the proposed Borrowing by the Borrowers to the
Administrative  Agent, which shall give to each appropriate Lender prompt notice
thereof by telex or  telecopier.  Each such notice of a Borrowing  (a "Notice of
Borrowing") may be by telephone,  confirmed  immediately in writing, or telex or
telecopier in substantially the form of Exhibit D hereto, specifying therein the
requested (i) date of such  Borrowing,  (ii) Facility under which such Borrowing
is to be made, and (iii) aggregate  amount of such Borrowing.  Each  appropriate
Lender shall,  before 11:00 A.M. (New York time) on the date of such  Borrowing,
make  available  for  the  account  of  its  Applicable  Lending  Office  to the
Administrative  Agent at the Administrative  Agent's Account, in same day funds,
such  Lender's  ratable  portion  of  such  Borrowing  in  accordance  with  the
respective  Commitments  under the  applicable  Facility  of such Lender and the
other  appropriate  Lenders.  After the  Administrative  Agent's receipt of such
funds and upon fulfillment of the applicable  conditions set forth in Article 3,
the  Administrative  Agent will make such funds  available  to the  Borrowers by
crediting the Borrowers'  Account;  provided,  however,  that in the case of any
Revolving Credit Borrowing,  the Administrative Agent shall first make a portion
of such funds equal to the  aggregate  principal  amount of any Letter of Credit
Advances made by the Issuing Bank and by any other  Revolving  Credit Lender and
outstanding  on the  date of such  Revolving  Credit  Borrowing,  plus  interest
accrued and


                                     - 28 -
<PAGE>

unpaid  thereon to and as of such date,  available  to the Issuing Bank and such
other Revolving Credit Lenders for repayment of such Letter of Credit Advances.

     (b) Each  Notice of  Borrowing  shall be  irrevocable  and  binding  on the
Borrowers.

     (c) Unless the  Administrative  Agent  shall have  received  notice from an
appropriate  Lender prior to the date of any  Borrowing  under a Facility  under
which such Lender has a Commitment  that such Lender will not make  available to
the  Administrative  Agent such Lender's ratable portion of such Borrowing,  the
Administrative Agent may assume that such Lender has made such portion available
to the  Administrative  Agent on the date of such  Borrowing in accordance  with
subsection (a) of this Section 2.2 and the Administrative Agent may, in reliance
upon  such  assumption,   make  available  to  the  Borrowers  on  such  date  a
corresponding  amount.  If and to the extent that such Lender  shall not have so
made such ratable portion available to the Administrative Agent, such Lender and
the  Borrowers  severally  agree  to repay  or pay to the  Administrative  Agent
forthwith on demand such corresponding  amount and to pay interest thereon,  for
each day from the date such amount is made available to the Borrowers  until the
date such amount is repaid or paid to the  Administrative  Agent,  at (i) in the
case of the Borrowers,  the interest rate  applicable at such time under Section
2.7 to Advances  comprising  such Borrowing and (ii) in the case of such Lender,
the  Federal  Funds  Rate.  If any Lender so fails to make its  ratable  portion
available to the Administrative  Agent, the  Administrative  Agent shall use its
best efforts to obtain such ratable  portion from such Lender and,  upon receipt
of such  amount,  shall  promptly  forward it to  Borrowers,  provided  that the
foregoing shall not be deemed to change the Administrative  Agent's  obligations
hereunder,  or to cause the several  obligations  of the Lenders to become joint
obligations.  If  such  Lender  shall  pay  to  the  Administrative  Agent  such
corresponding amount, such amount so paid shall constitute such Lender's Advance
as part of such Borrowing for all purposes.

     (d) The  failure of any Lender to make the Advance to be made by it as part
of any Borrowing shall not relieve any other Lender of its  obligation,  if any,
hereunder to make its Advance on the date of such Borrowing, but no Lender shall
be  responsible  for the  failure of any other  Lender to make the Advance to be
made by such other Lender on the date of any Borrowing.

     SECTION 2.3  Issuance of and Drawings and  Reimbursement  Under  Letters of
Credit.

     (a)  Request  for  Issuance.  Each  Letter of Credit  shall be issued  upon
notice,  given not later than 11:00 A.M.  (New York time) on the fifth  Business
Day prior to the date of the proposed  issuance of such Letter of Credit, by the
Borrowers to the Issuing Bank, which shall give to the Administrative  Agent and
each Revolving Credit Lender prompt notice thereof by telex or telecopier.  Each
such notice of issuance of a Letter of Credit (a "Notice of Issuance")  shall be
by  telephone,  confirmed  immediately  in  writing,  or  telex  or  telecopier,
specifying  therein the requested  (i) date of such  issuance  (which shall be a
Business Day), (ii) Available Amount of such Letter of Credit,  (iii) expiration
date of such Letter of Credit,  (iv) name and address of the beneficiary of such
Letter of Credit and (v) form of such Letter of Credit, and shall be accompanied
by such  application  and agreement for letter of credit as the Issuing Bank may
specify to the  Borrowers for use in connection  with such  requested  Letter of
Credit (a "Letter of Credit Agreement"). If the requested form of such Letter of
Credit is reasonably acceptable to


                                     - 29 -
<PAGE>

the Issuing Bank,  the Issuing Bank will,  upon  fulfillment  of the  applicable
conditions  set forth in Article 3, make such Letter of Credit  available to the
Borrowers at its office referred to in Section 11.2 or as otherwise  agreed with
the Borrowers in connection  with such issuance.  In the event and to the extent
that the provisions of any such Letter of Credit  Agreement  shall conflict with
this Agreement, the provisions of this Agreement shall govern.

     (b) Letter of Credit  Reports.  The Issuing  Bank shall  furnish (i) to the
Administrative  Agent on the first  Business  Day of each week a written  report
summarizing issuance and expiration dates of Letters of Credit issued during the
previous week and drawings during such week under all Letters of Credit, (ii) to
the Administrative  Agent, the Borrowers and each Revolving Credit Lender on the
first  Business  Day of each month a written  report  summarizing  issuance  and
expiration  dates of Letters of Credit  issued  during the  preceding  month and
drawings  during  such  month  under  all  Letters  of  Credit  and (iii) to the
Administrative  Agent,  the  Borrowers and each  Revolving  Credit Lender on the
first  Business Day of each calendar  quarter a written report setting forth the
average daily aggregate  Available Amount during the preceding  calendar quarter
of all Letters of Credit.

     (c) Drawing and  Reimbursement.  The payment by the Issuing Bank of a draft
drawn  under any Letter of Credit  shall  constitute  for all  purposes  of this
Agreement  the making by the Issuing  Bank of a Letter of Credit  Advance  which
shall  be a  Prime  Rate  Advance  in the  amount  of  such  draft.  Each of the
Borrowers,  the  Administrative  Agent and each  Revolving  Credit Lender hereby
acknowledges  and agrees that Letter of Credit  Advances may be made,  or deemed
made, by the Issuing Bank in respect of any Letter of Credit and to  participate
in all Letter of Credit Advances made hereunder as provided herein. Upon written
demand by the Issuing  Bank,  with a copy of such  demand to the  Administrative
Agent,  each  Revolving  Credit Lender shall purchase from the Issuing Bank, and
the Issuing  Bank shall sell and assign to each such  Revolving  Credit  Lender,
such Lender's Pro Rata Share of such outstanding  Letter of Credit Advance as of
the  date  of such  purchase,  by  making  available  (for  the  account  of its
Applicable Lending Office) to the  Administrative  Agent (for the account of the
Issuing Bank), by deposit to the  Administrative  Agent's  Account,  in same day
funds,  an amount equal to the portion of the  outstanding  principal  amount of
such Letter of Credit  Advance to be purchased by such  Lender.  Promptly  after
receipt  thereof,  the  Administrative  Agent shall  transfer  such funds to the
Issuing Bank. The Borrowers hereby agree to each such sale and assignment.  Each
Revolving  Credit Lender agrees to purchase its Pro Rata Share of an outstanding
Letter of Credit  Advance on (i) the Business  Day on which  demand  therefor is
made by the Issuing Bank; provided that notice of such demand is given not later
than 11:00 A.M. (New York time) on such Business Day or (ii) the first  Business
Day next  succeeding  such  demand if notice of such  demand is given after such
time. Upon any such assignment by the Issuing Bank to any other Revolving Credit
Lender of a portion of a Letter of Credit  Advance,  the Issuing Bank represents
and  warrants  to such  other  Lender  that the  Issuing  Bank is the  legal and
beneficial  owner of such interest  being  assigned by it, free and clear of any
liens,   but  makes  no  other   representation   or  warranty  and  assumes  no
responsibility with respect to such Letter of Credit Advance, the Loan Documents
or any Loan Party.  If and to the extent that any Revolving  Credit Lender shall
not have so made the amount of such Letter of Credit  Advance  available  to the
Administrative  Agent,  such  Revolving  Credit  Lender  agrees  to  pay  to the
Administrative  Agent  forthwith on demand such amount  together  with  interest
thereon, for each day from the date of demand by the Issuing Bank until the date
such amount is paid to the  Administrative  Agent, at the Federal Funds Rate for
its account or the


                                     - 30 -
<PAGE>

account of the Issuing  Bank,  as  applicable.  If such Lender  shall pay to the
Administrative  Agent such  amount for the  account of the  Issuing  Bank on any
Business  Day,  such amount so paid in respect of principal  shall  constitute a
Letter of Credit  Advance made by such Lender on such  Business Day for purposes
of this Agreement,  and the outstanding principal amount of the Letter of Credit
Advance  made by the  Issuing  Bank  shall be  reduced  by such  amount  on such
Business Day.

     (d) Failure to Make Letter of Credit Advances. The failure of any Lender to
make any  Letter of Credit  Advance  to be made by it on the date  specified  in
Section 2.3(c) shall not relieve any other Lender of its obligation hereunder to
make  its  Letter  of  Credit  Advance  on such  date,  but no  Lender  shall be
responsible  for the  failure  of any other  Lender to make the Letter of Credit
Advance to be made by such other Lender on such date.

     SECTION 2.4 Repayment of Advances.

     (a)  Revolving   Credit   Advances.   The  Borrowers  shall  repay  to  the
Administrative  Agent for the ratable  account of the Revolving  Credit  Lenders
outstanding  Revolving  Credit  Advances on the  following  dates in the amounts
indicated,  each of which repayments shall result in a corresponding,  automatic
and permanent reduction,  on a pro rata basis, of the aggregate Revolving Credit
Commitments of the Revolving Lenders:

                              Date                                 Amount
                              ----                                 ------
September 30, 2001                                                $100,000

Each of December 31, 2001, March 31, 2002 and June 30, 2002       $300,000


and the  Borrowers  shall  repay to the  Administrative  Agent  for the  ratable
account of the Revolving Credit Lenders on the Revolving Credit Termination Date
the  aggregate   principal   amount  of  the  Revolving   Credit  Advances  then
outstanding.

     (b)  Letter  of  Credit  Advances.  (i) The  Borrowers  shall  repay to the
Administrative  Agent  for the  account  of the  Issuing  Bank  and  each  other
Revolving  Credit Lender that has made a Letter of Credit Advance on the earlier
of demand made by the  Administrative  Agent to the  Borrowers and the Revolving
Credit  Termination  Date the  outstanding  principal  amount of each  Letter of
Credit Advance made by each of them.

          (ii) The Obligations of the Borrowers under this Agreement, any Letter
     of Credit  Agreement and any other agreement or instrument  relating to any
     Letter of Credit shall be unconditional and irrevocable,  and shall be paid
     strictly in  accordance  with the terms of this  Agreement,  such Letter of
     Credit   Agreement  and  such  other  agreement  or  instrument  under  all
     circumstances, including, without limitation, the following circumstances:

               (A) any lack of validity or  enforceability of any Loan Document,
          any  Letter of  Credit  Agreement,  any  Letter of Credit or any other
          agreement or instrument


                                     - 31 -
<PAGE>

          relating  to  any of  the  foregoing  (all  of  the  foregoing  being,
          collectively, the "L/C Related Documents");

               (B) any change in the time,  manner or place of payment of, or in
          any other term of, all or any of the  Obligations  of the  Borrower in
          respect of any L/C Related  Document or any other  amendment or waiver
          of or any  consent  to  departure  from all or any of the L/C  Related
          Documents;

               (C) the existence of any claim,  set-off,  defense or other right
          that the Borrower may have at any time against any  beneficiary or any
          transferee  of a Letter of Credit  (or any  Persons  for whom any such
          beneficiary or any such  transferee may be acting),  the Issuing Bank,
          or any other  Person,  whether  in  connection  with the  transactions
          contemplated   by  the  L/C  Related   Documents   or  any   unrelated
          transaction;

               (D) any statement or any other document  presented under a Letter
          of Credit proving to be forged, fraudulent, invalid or insufficient in
          any respect or any statement therein being untrue or inaccurate in any
          respect,  except where the Issuing Bank acts with gross  negligence or
          willful  misconduct  in accepting an  insufficient  such  statement or
          document; or

               (E) any exchange,  release or non-perfection of any Collateral or
          other collateral,  or any release or amendment or waiver of or consent
          to departure from any Subsidiary Guaranty or any other guarantee,  for
          all or any of the  Obligations  of the  Borrower in respect of the L/C
          Related Documents.

     SECTION 2.5 Termination or Reduction of the Commitments.

     (a) Optional. The Borrowers jointly may, upon at least three Business Days'
notice to the  Administrative  Agent,  terminate  in whole or reduce in part the
unused portions of the Unused Revolving Credit Commitments;  provided,  however,
that each partial reduction of a Facility (i) shall be in an aggregate amount of
$100,000 or an integral  multiple of $100,000 in excess thereof,  and (ii) shall
be  made  ratably  among  the  appropriate  Lenders  in  accordance  with  their
Commitments with respect to such Facility.

     (b) Mandatory. From time to time thereafter upon each repayment pursuant to
Section  2.4(a) or prepayment  of any portion of  outstanding  Revolving  Credit
Advances,  the aggregate  Revolving  Credit  Commitments of the Revolving Credit
Lenders shall be automatically and permanently  reduced, on a pro rata basis, by
an  amount  equal  to  the  amount  by  which  the  aggregate  Revolving  Credit
Commitments  immediately prior to such reduction exceed the aggregate  Revolving
Credit Advances then outstanding.

     SECTION 2.6 Prepayments.

     (a) Optional.  The Borrowers may, without premium or penalty, upon at least
one (1) Business Day's notice to the  Administrative  Agent stating the proposed
date and aggregate  principal  amount of the  prepayment,  and if such notice is
given, the Borrowers shall, prepay the outstanding aggregate principal amount of
the Advances, in whole or ratably in part, together with accrued interest to the
date of such prepayment on the aggregate  principal  amount  prepaid;


                                     - 32 -
<PAGE>

provided,  however,  that  each  partial  prepayment  shall  be in an  aggregate
principal  amount of  $100,000  or an  integral  multiple  of $100,000 in excess
thereof.  Each  prepayment  made pursuant to this Section  2.6(a) shall,  at the
Borrowers'  option,  be applied to repay the Facilities in the following manner:
first,  ratably to the  Revolving  Credit  Facility,  and ratably to each unpaid
amortization  payment  set  forth in  Section  2.4(a)  until  such  amortization
payments are paid in full;  second,  to prepay  Revolving  Credit  Advances then
outstanding  until such Revolving  Credit  Advances are paid in full; and third,
deposited in the L/C Cash Collateral  Account to cash  collateralize 100% of the
Available Amount of the Letters of Credit then outstanding.  Upon the drawing of
any Letter of Credit for which  funds are on deposit in the L/C Cash  Collateral
Account,  such funds  shall be  applied to  reimburse  the  Issuing  Bank or the
Revolving Credit Lenders, as applicable.

     (b) Mandatory. (i) Within ninety (90) days following the end of Fiscal Year
2001, if the ratio of Consolidated Debt to EBITDA at the end of such Fiscal Year
exceeds 4.25:1,  the Borrowers  shall execute and deliver to the  Administrative
Agent a certificate  of the applicable  Borrower's  Chief  Executive  Officer or
Chief Financial  Officer  demonstrating  its calculation of Excess Cash Flow for
such Fiscal Year along with a prepayment of the then outstanding  Advances equal
to seventy-five percent (75%) of the annual Excess Cash Flow; provided, however,
that (A) if the ratio of Consolidated Debt to EBITDA, measured at the end of and
for such Fiscal Year of such Borrower, for such Fiscal Year of such Borrower, is
less  than or  equal  to  4.25:1,  then  the  required  prepayment  of the  then
outstanding Advances shall be in the amount of fifty percent (50%) of the annual
Excess Cash Flow for such Fiscal Year rather than seventy-five  percent (75%) of
such annual Excess Cash Flow.

          (ii) Upon receipt by any Loan Party or any of its  Subsidiaries of Net
     Cash Proceeds from any Asset  Disposition,  the Borrowers  shall prepay the
     then outstanding  Advances in an amount equal to one-hundred percent (100%)
     of such Net Cash Proceeds payable  concurrently  with  consummation of such
     Asset Disposition.

          (iii) Within  fifteen (15) days after receipt by any Loan Party or any
     of its  Subsidiaries  of Net Cash  Proceeds from any Equity  Issuance,  the
     Borrowers may retain up to $2,000,000 in the aggregate,  as working capital
     and then shall prepay the then  outstanding  Advances in an amount equal to
     fifty percent (50%) of such Net Cash Proceeds in excess of $2,000,000.

          (iv) Within  fifteen (15) days after  receipt of Net Cash  Proceeds by
     any Loan Party or any of its Subsidiaries  from any  Extraordinary  Receipt
     received  by or paid to or for the  account of any Loan Party or any of its
     Subsidiaries and not otherwise included in clause (i), (ii) or (iii) above,
     the Borrowers shall prepay the then outstanding Advances in an amount equal
     to one hundred percent (100%) of such Net Cash Proceeds.

          (v) Each prepayment  made pursuant to clause (i), (ii),  (iii) or (iv)
     shall be subject to the provisions of Section  11.4(c) and shall be applied
     to prepay the  Facilities in the following  manner:  first,  ratably to the
     Revolving   Credit  Facility  to  repay  Revolving   Credit  Advances  then
     outstanding until such Revolving Credit Advances are paid in full;  second,
     to repay Letter of Credit  Advances then  outstanding  until such Letter of
     Credit  Advances  are paid in full;  and third,  deposited  in the L/C Cash
     Collateral  Account to cash  collateralize  100% of the


                                     - 33 -
<PAGE>

     Available  Amount of the  Letters  of  Credit  then  outstanding.  Upon the
     drawing of any  Letter of Credit for which  funds are on deposit in the L/C
     Cash  Collateral  Account,  such funds  shall be applied to  reimburse  the
     Issuing Bank or the Revolving  Credit  Lenders,  as applicable.  The amount
     remaining  (if any) after the  required  prepayment  of the  Advances  then
     outstanding and the 100% cash  collateralization of the aggregate Available
     Amount of Letters of Credit then  outstanding  (the sum of such  prepayment
     amounts, cash collateralization amounts and remaining amount being referred
     to herein as the "Reduction Amount") may be retained by the Borrowers. Upon
     the  drawing of any Letter of Credit for which  funds are on deposit in the
     L/C Cash Collateral  Account,  such funds shall be applied to reimburse the
     Issuing Bank or the  Revolving  Credit  Lenders,  as  applicable.  Upon the
     termination of all of the Commitments and the indefeasible  payment in full
     of  all  Obligations,   including,   without  limitation,   termination  or
     expiration of all Letters of Credit and the indefeasible payment in full of
     all  Obligations  in respect of all  Letters  of Credit,  then all  amounts
     remaining on deposit in the L/C Cash  Collateral  Account shall be returned
     to the Borrowers.

          (vi) The Borrowers  shall,  within fifteen (15) days following the end
     of each month in each  Fiscal  Year,  pay to the  Administrative  Agent for
     deposit in the L/C Cash  Collateral  Account an amount  sufficient to cause
     the  aggregate  amount on  deposit  in such  Account to equal the amount by
     which  the  aggregate  Available  Amount  of all  Letters  of  Credit  then
     outstanding exceeds the Letter of Credit Facility on such Business Day.

          (vii) At any time  that  the  aggregate  amount  of  Revolving  Credit
     Advances  outstanding exceeds the Revolving Credit Facility,  the Borrowers
     shall  immediately  repay Revolving Credit Advances to the extent necessary
     to reduce the principal balance of Revolving Credit Borrowings to an amount
     equal to or less than the Revolving Credit Facility.

          (viii) The foregoing  notwithstanding,  the provisions of this Section
     2.6(b) shall not be construed to permit any Equity Issuance,  Debt Issuance
     or  Asset  Disposition   otherwise  prohibited  under  the  terms  of  this
     Agreement.

     (c) Application of Prepayments to the Revolving  Facility.  Upon receipt of
any amounts to be applied to the  prepayment in respect of the Revolving  Credit
Facility pursuant to this Section 2.6, the Administrative Agent shall apply such
amounts to the prepayment of the Revolving Credit Advances ratably.

     SECTION 2.7 Interest.

     (a)  Scheduled  Interest.  The  Borrowers  shall pay to the  Administrative
Agent,  for the benefit of the Lenders,  interest on the unpaid principal amount
of each Advance  owing to each Lender from the date of such  Advance  until such
principal amount shall be paid in full at a rate per annum equal at all times to
the sum of (x) the  Prime  Rate  in  effect  from  time  to  time  plus  (y) the
Applicable  Margin  for such  Advance  in effect  from time to time,  payable in
arrears on the last day of each month  commencing  April 30,  2001,  during such
periods and on the date such Prime Rate Advance shall be paid in full.

     (b) Default  Interest.  Upon the occurrence and during the continuance of a
Default,  the Borrowers shall pay interest on (i) the unpaid principal amount of
each Advance owing to


                                     - 34 -
<PAGE>

each Lender, payable in arrears on the dates referred to in clause (a) above and
on demand, at a rate per annum equal at all times to 2% per annum above the rate
per annum  required to be paid on such Advance  pursuant to clause (a) above and
(ii) to the fullest extent permitted by law, the amount of any interest,  fee or
other amount payable  hereunder that is not paid when due (whether at the stated
maturity, by acceleration or otherwise),  from the date such amount shall be due
until  such  amount  shall be paid in full,  payable in arrears on the date such
amount  shall be paid in full and on  demand,  at a rate per annum  equal at all
times to 2% per annum above the rate per annum  required to be paid, in the case
of  interest,  on the Advance on which such  interest  has  accrued  pursuant to
clause (a) above,  and, in all other cases,  on Prime Rate Advances  pursuant to
clause (a) above.

     (c)  Notice  of  Interest  Rate.  Promptly  after  receipt  of a Notice  of
Borrowing pursuant to Section 2.2(a), the Administrative Agent shall give notice
to the Borrowers and each  appropriate  Lender of the  applicable  interest rate
determined by the Administrative Agent.

     (d) Limitations on Interest. All agreements between and among any Borrower,
any Guarantors,  any other Loan Party and the Lenders and/or the  Administrative
Agent  are  hereby  expressly  limited  so  that  in  no  contingency  or  event
whatsoever,  whether by reason of acceleration  of maturity of the  Indebtedness
evidenced hereby or otherwise, shall the amount paid or agreed to be paid to any
Lender for the use or the  forbearance of the  Indebtedness  incurred  hereunder
exceed the maximum  permissible  under  applicable  law. As used herein the term
"applicable  law" shall mean the law in effect as of the date hereof;  provided,
however,  that in the  event  there is a change in the law  which  results  in a
higher  permissible  rate of interest,  then this Agreement and the Notes issued
hereunder  shall be governed by such new law as of its  effective  date. In this
regard  it is  expressly  agreed  that it is the  intent of the  Borrowers,  the
Lenders and the  Administrative  Agent in execution,  delivery and acceptance of
this  Agreement to contract in strict  compliance  with the laws of the State of
New York from time to time in  effect.  If under any  circumstances  whatsoever,
fulfillment of any provision  hereof or of any of the Loan Documents at the time
performance of such provision shall be due shall involve transcending the limits
of such  validity  prescribed  by  applicable  law,  then the  obligation  to be
fulfilled shall automatically be reduced to the limits of such validity,  and if
under or from any circumstance whatsoever the Administrative Agent or any Lender
should ever receive as interest any amount which would exceed the highest lawful
rate,  such amount  which would be  excessive  interest  shall be applied to the
reduction of the principal  balance  evidenced by the Notes issued hereunder and
not to the  payment of  interest.  This  provision  shall  control  every  other
provision of all agreements between and among any Borrowers, any Guarantors, any
other Loan Party, the Administrative Agent and the Lenders.

     SECTION 2.8 Fees.

     (a) Closing  Fees.  The  Borrowers  will pay on the  Effective  Date to the
Administrative  Agent for the  Account of the Lenders a closing fee equal to one
quarter of one percent (1/4%) of the Revolving Credit Facility.

     (b)  Letter  of  Credit  Fees.   (i)  The   Borrowers   shall  pay  to  the
Administrative  Agent  for  the  account  of  each  Revolving  Credit  Lender  a
commission, payable in arrears quarterly on the last Business Day of each March,
June,  September and December,  commencing  June 30, 2001


                                     - 35 -
<PAGE>

and on the earliest to occur of the full  drawing,  expiration,  termination  or
cancellation  of  any  such  Letter  of  Credit  and  on  the  Revolving  Credit
Termination Date, on such Lender's Pro Rata Share of the average daily aggregate
Available  Amount during such quarter of all Letters of Credit  outstanding from
time to time at the rate per annum equal to the Applicable Margin then in effect
under the Revolving Credit Facility.

          (ii) In addition to the  foregoing  fees  described in (i) above,  the
     Borrowers  shall pay to the Issuing Bank,  for its own account,  (x) on the
     Available Amount of each Letter of Credit outstanding,  a fronting fee, for
     the  period  from the date of  issuance  of such  Letter  of  Credit to and
     including the termination  thereof,  computed at the rate of one quarter of
     one  percent  (1/4%) per annum,  payable in arrears  quarterly  on the last
     Business Day of each March,  June,  September and December of each year and
     on the  date  of  termination  thereof  and (y)  transfer  fees  and  other
     customary   fees  and   charges  in   connection   with  the   issuance  or
     administration  of each  Letter of Credit as the  Borrower  and the Issuing
     Bank shall agree.

     (c)   Administrative   Agent's  Fees.  The  Borrowers   shall  pay  to  the
Administrative  Agent for its own account  such fees as may from time to time be
agreed between the Borrower and the Administrative Agent.

     SECTION 2.9 Increased Costs, Etc.

     (a) If, after the date hereof, due to (i) the introduction or effectiveness
of, any change in, or any change in the interpretation of any law or regulation,
or (ii) the  compliance  with any  guideline or request from any central bank or
other  governmental  authority  (whether or not having the force of law),  there
shall be any  increase in the cost to any Lender Party of agreeing to make or of
making, funding or maintaining Prime Rate Advances or of agreeing to issue or of
issuing or maintaining  Letters of Credit or of agreeing to make or of making or
maintaining  Letter of Credit  Advances  (excluding for purposes of this Section
2.9 any such  increased  costs  resulting  from (x) Taxes or Other  Taxes (as to
which  Section  2.11 shall  govern)  and (y) changes in the basis of taxation of
overall  net  income or  overall  gross  income by the  United  States or by the
foreign  jurisdiction  or state  under the laws of which  such  Lender  Party is
organized or has its  Applicable  Lending  Office or any  political  subdivision
thereof),  then the Borrowers shall either (i) from time to time, upon demand by
such Lender Party (with a copy of such demand to the Administrative  Agent), pay
to the  Administrative  Agent for the  account of such Lender  Party  additional
amounts  sufficient to compensate  such Lender Party for such  increased cost or
(ii) repay in full the outstanding  principal balance of such affected Advances,
together with all interest accrued and unpaid thereon; provided, however, that a
Lender Party claiming additional amounts under this Section 2.9(a) agrees to use
best  efforts  (consistent  with its  internal  policy and legal and  regulatory
restrictions) to designate a different  Applicable  Lending Office if the making
of such a  designation  would  avoid the need for, or reduce the amount of, such
increased  cost that may  thereafter  accrue  and would not,  in the  reasonable
judgment of such  Lender  Party,  be  otherwise  disadvantageous  to such Lender
Party. A certificate as to the amount of such increased  cost,  submitted to the
Borrowers  by such  Lender  Party,  shall  be  conclusive  and  binding  for all
purposes, absent manifest error.

     (b) If, after the date hereof, due to (i) the introduction or effectiveness
of, any change in, or any change in the interpretation of, any law or regulation
or (ii) the  compliance  with any


                                     - 36 -
<PAGE>

guideline  or request  from any  central  bank or other  governmental  authority
(whether  or not having the force of law),  there  shall be any  increase in the
amount of capital required or reasonably expected to be maintained by any Lender
Party or any corporation  controlling  such Lender Party as a result of or based
upon the existence of such Lender Party's commitment to lend or to issue Letters
of Credit  hereunder  and other  commitments  of such  type or the  issuance  or
maintenance of the Letters of Credit (or similar contingent obligations),  then,
upon  demand  by  such  Lender  Party  (with  a  copy  of  such  demand  to  the
Administrative  Agent), the Borrowers shall pay to the Administrative  Agent for
the account of such Lender Party,  from time to time as reasonably  specified by
such Lender Party, additional amounts sufficient to compensate such Lender Party
in the  light of such  circumstances,  to the  extent  that  such  Lender  Party
reasonably  determines such increase in capital to be allocable to the existence
of such  Lender  Party's  commitment  to  lend or to  issue  Letters  of  Credit
hereunder  or to the  issuance  or  maintenance  of any  Letters  of  Credit.  A
certificate  as to such amounts  submitted to the Borrowers by such Lender Party
shall be conclusive and binding for all purposes, absent manifest error.

     SECTION 2.10 Payments and Computations.

     (a) The  Borrowers  shall make each payment  hereunder and under the Notes,
irrespective  of any right of  counterclaim  or  set-off  (except  as  otherwise
provided in Section 2.14),  not later than 11:00 A.M. (New York time) on the day
when due in U.S.  dollars  to the  Administrative  Agent  at the  Administrative
Agent's  Account  in same day funds.  The  Administrative  Agent  will  promptly
thereafter  cause  like  funds  to be  distributed  (i) if such  payment  by the
Borrowers is in respect of  principal,  interest,  commitment  fees or any other
Obligation  then payable  hereunder  and under the Notes to more than one Lender
Party,  to such Lender  Parties for the account of their  respective  Applicable
Lending  Offices  ratably in  accordance  with the  amounts  of such  respective
Obligations  then payable to such Lender Parties and (ii) if such payment by the
Borrowers is in respect of any Obligation  then payable  hereunder to one Lender
Party, to such Lender Party for the account of its Applicable Lending Office, in
each case to be applied in accordance with the terms of this Agreement. Upon its
acceptance  of an Assignment  and  Acceptance  and recording of the  information
contained  therein in the Register  pursuant to Section 11.7(d),  from and after
the effective date of such Assignment and Acceptance,  the Administrative  Agent
shall make all payments hereunder and under the Notes in respect of the interest
assigned  thereby to the Lender Party  assignee  thereunder,  and the parties to
such Assignment and Acceptance  shall make all  appropriate  adjustments in such
payments for periods prior to such effective date directly between themselves.

     (b) If the  Administrative  Agent  receives  funds for  application  to the
Obligations  under the Loan  Documents  under  circumstances  for which the Loan
Documents do not specify the Advances or the Facility to which, or the manner in
which, such funds are to be applied, the Administrative Agent may, but shall not
be obligated to, elect to distribute  such funds to each Lender Party ratably in
accordance with such Lender Party's  proportionate share of the principal amount
of all  outstanding  Advances and the Available  Amount of all Letters of Credit
then outstanding in repayment or prepayment of such of the outstanding  Advances
or other  Obligations  owed to such Lender Party,  and for  application  to such
principal installments, as the Administrative Agent shall direct.


                                     - 37 -
<PAGE>

     (c) The Borrowers  hereby authorize each Lender Party, if and to the extent
payment owed to such Lender Party is not made when due hereunder or, in the case
of a Lender,  under the Note held by such  Lender,  to charge  from time to time
against any or all of the Borrowers'  accounts with such Lender Party any amount
so due.

     (d) All  computations  of interest,  fees and Letter of Credit  commissions
shall be made by the Administrative Agent on the basis of a year of 360 days, in
each case for the actual number of days  (including  the first day but excluding
the  last  day)  occurring  in the  period  for  which  such  interest,  fees or
commissions are payable;  provided,  however,  that interest on Prime Rate Loans
shall be computed on the basis of a year of 365 days. Each  determination by the
Administrative  Agent of an interest rate, fee or commission  hereunder shall be
conclusive and binding for all purposes, absent manifest error.

     (e) Whenever any payment hereunder or under the Notes shall be stated to be
due on a day other than a Business  Day,  such payment shall be made on the next
succeeding  Business  Day,  and such  extension  of time  shall in such  case be
included in the  computation  of payment of interest or  commitment  fee, as the
case may be.

     (f) Unless the  Administrative  Agent shall have  received  notice from the
Borrowers  prior to the date on which any  payment  is due to any  Lender  Party
hereunder   that  the  Borrowers  will  not  make  such  payment  in  full,  the
Administrative  Agent may assume that the  Borrowers  have made such  payment in
full to the Administrative  Agent on such date and the Administrative Agent may,
in reliance upon such  assumption,  cause to be  distributed to each such Lender
Party on such due date an amount equal to the amount then due such Lender Party.
If and to the extent the  Borrowers  shall not have so made such payment in full
to  the  Administrative  Agent,  each  such  Lender  Party  shall  repay  to the
Administrative  Agent forthwith on demand such amount distributed to such Lender
Party together with interest thereon,  for each day from the date such amount is
distributed  to such Lender  Party until the date such Lender  Party repays such
amount to the Administrative Agent, at the Federal Funds Rate.

     SECTION 2.11 Taxes.

     (a) Any and all  payments  by the  Borrowers  hereunder  or under the Notes
shall be made,  in accordance  with Section 2.10,  free and clear of and without
deduction for any and all present or future taxes, levies, imposts,  deductions,
charges or withholdings, and all liabilities with respect thereto, excluding, in
the case of each Lender  Party and the  Administrative  Agent,  net income taxes
that are imposed by the United States and net income taxes (or  franchise  taxes
imposed  in  lieu  thereof)  that  are  imposed  on  such  Lender  Party  or the
Administrative  Agent by the  state or  foreign  jurisdiction  under the laws of
which  such  Lender  Party or the  Administrative  Agent (as the case may be) is
organized or any political  subdivision  thereof and, in the case of each Lender
Party,  net income taxes (or  franchise  taxes imposed in lieu thereof) that are
imposed on such Lender Party by the state or foreign jurisdiction of such Lender
Party's Applicable Lending Office or any political subdivision thereof (all such
non-excluded  taxes,  levies,  imposts,  deductions,  charges,  withholdings and
liabilities  in  respect  of  payments   hereunder  or  under  the  Notes  being
hereinafter  referred to as "Taxes").  If the Borrowers shall be required by law
to deduct any Taxes from or in respect of any sum payable hereunder or under any
Note to any Lender Party or the Administrative  Agent, (i) the sum payable shall
be increased  as may be


                                     - 38 -
<PAGE>

necessary  so that after making all required  deductions  (including  deductions
applicable to additional sums payable under this Section 2.11) such Lender Party
or the Administrative Agent (as the case may be) receives an amount equal to the
sum it would have received had no such  deductions been made, (ii) the Borrowers
shall make such  deductions  and (iii) the  Borrowers  shall pay the full amount
deducted to the relevant  taxation  authority or other  authority in  accordance
with  applicable  law.

     (b) In  addition,  the  Borrowers  shall pay any  present or future  stamp,
documentary,  excise,  property or similar  taxes,  charges or levies that arise
from any  payment  made  hereunder  or under  the  Notes or from the  execution,
delivery or  registration  of,  performing  under, or otherwise with respect to,
this Agreement or the Notes (hereinafter referred to as "Other Taxes").

     (c) The Borrowers shall indemnify each Lender Party and the  Administrative
Agent for the full amount of Taxes and Other  Taxes,  and for the full amount of
taxes imposed by any  jurisdiction  on amounts  payable under this Section 2.11,
imposed on or paid by such Lender Party or the Administrative Agent (as the case
may be) and any liability (including  penalties,  additions to tax, interest and
expenses) arising therefrom or with respect thereto,  except with respect to any
Lender  Party  or the  Administrative  Agent,  as the  case  may be,  for such a
liability arising from such Lender Party's or the Administrative Agent's, as the
case may be, willful misconduct or gross negligence.  This indemnification shall
be made within  thirty (30) days from the date on which such Lender Party or the
Administrative  Agent,  as the case may be, makes written  demand  specifying in
reasonable detail the basis therefor.

     (d) Within  thirty  (30) days after the date of any  payment of Taxes,  the
Borrowers shall furnish to the Administrative  Agent, at its address referred to
in Section 11.2, the original  receipt of payment thereof or a certified copy of
such receipt.  In the case of any payment  hereunder or under the Notes by or on
behalf of the Borrowers  through an account or branch  outside the United States
or by or on  behalf  of the  Borrowers  by a payor  that is not a United  States
person, if the Borrowers determine that no Taxes are payable in respect thereof,
the  Borrowers  shall  furnish,  or shall  cause such payor to  furnish,  to the
Administrative  Agent, at such address,  an opinion of counsel acceptable to the
Administrative  Agent  stating  that such  payment  is exempt  from  Taxes.  For
purposes of this  subsection (d) and subsection  (e), the terms "United  States"
and "United States person" shall have the meanings  specified in Section 7701 of
the Internal Revenue Code.

     (e) Each Lender Party  organized  under the laws of a jurisdiction  outside
the United States  shall,  on or prior to the date of its execution and delivery
of this Agreement in the case of each Initial Lender or Initial Issuing Bank, as
the case may be, and on the date of the Assignment  and  Acceptance  pursuant to
which it became a Lender Party in the case of each other Lender Party,  and from
time  to time  thereafter  as  requested  in  writing  by the  Borrowers  or the
Administrative  Agent (but only so long  thereafter as such Lender Party remains
lawfully  able  to do so),  provide  each of the  Administrative  Agent  and the
Borrowers with two (2) original  Internal Revenue Service forms 1001 or 4224, as
appropriate,  or any successor or other form prescribed by the Internal  Revenue
Service,  certifying  that such  Lender is exempt  from or entitled to a reduced
rate of United States  withholding tax on payments pursuant to this Agreement or
the Notes. If the forms provided by a Lender Party at the time such Lender Party
first becomes a party to this Agreement  indicates or such Lender Party is later
subject  to a United


                                     - 39 -
<PAGE>

States interest withholding tax rate in excess of zero,  withholding tax at such
rate shall be considered  excluded from Taxes unless and until such Lender Party
provides the appropriate  form certifying that a lesser rate applies,  whereupon
withholding tax at such lesser rate only shall be considered excluded from Taxes
for periods governed by such form;  provided,  however,  that, if at the date of
the Assignment  and Acceptance  pursuant to which a Lender Party becomes a party
to this  Agreement,  the Lender Party  assignor  was entitled to payments  under
subsection  (a) in  respect of United  States  withholding  tax with  respect to
interest paid at such date,  then, to such extent,  the term Taxes shall include
(in  addition  to  withholding  taxes that may be imposed in the future or other
amounts  otherwise  includable in Taxes) United States  withholding tax, if any,
applicable  with respect to the Lender Party  assignee on such date. If any form
or document  referred to in this  subsection  (e)  requires  the  disclosure  of
information,  other than  information  necessary  to compute the tax payable and
information required on the date hereof by Internal Revenue Service form 1001 or
4224, that the Lender Party reasonably considers to be confidential,  the Lender
Party shall give notice  thereof to the  Borrowers and shall not be obligated to
include in such form or document such confidential information.

     (f) For any  period  with  respect  to which a Lender  Party has  failed to
provide the Borrowers  with the  appropriate  form  described in subsection  (e)
(other than if such failure is due to a change in law  occurring  after the date
on which a form originally was required to be provided or if such form otherwise
is not required under  subsection  (e)), such Lender Party shall not be entitled
to indemnification  under subsection (a) or (c) with respect to Taxes imposed by
the United States by reason of such failure;  provided,  however,  that should a
Lender  Party become  subject to Taxes  because of its failure to deliver a form
required  hereunder,  the  Borrowers  shall take such steps as such Lender Party
shall reasonably request to assist such Lender Party to recover such Taxes.

     SECTION 2.12 Sharing of Payments,  Etc.

     If  any  Lender  Party  shall  obtain  at any  time  any  payment  (whether
voluntary,  involuntary,  through  the  exercise  of any  right of  set-off,  or
otherwise)  (i) on account of  Obligations  due and payable to such Lender Party
hereunder  or under  the  Notes at such  time in  excess  of its  ratable  share
(according  to the  proportion  of (x) the  amount of such  Obligations  due and
payable to such  Lender  Party at such time to (y) the  aggregate  amount of the
Obligations due and payable to all Lender Parties  hereunder and under the Notes
at such time) of payments on account of the  Obligations  due and payable to all
Lender  Parties  hereunder  or under the Notes at such time  obtained by all the
Lender Parties at such time or (ii) on account of Obligations owing (but not due
and payable) to such Lender Party  hereunder and under the Notes at such time in
excess of its ratable share  (according  to the  proportion of (x) the amount of
such  Obligations  owing to such Lender Party at such time to (y) the  aggregate
amount of the Obligations  owing (but not due and payable) to all Lender Parties
hereunder  and under the  Notes at such  time) of  payments  on  account  of the
Obligations  owing (but not due and payable) to all Lender Parties hereunder and
under the Notes at such time obtained by all of the Lender Parties at such time,
such Lender Party shall  forthwith  purchase from the other Lender  Parties such
participations  in the Obligations due and payable or owing to them, as the case
may be, as shall be necessary to cause such purchasing Lender Party to share the
excess payment ratably with each of them; provided,  however, that if all or any
portion of such excess  payment is  thereafter  recovered  from such  purchasing
Lender Party,  such purchase from each other Lender Party shall be rescinded and
each such other  Lender  Party shall repay to the  purchasing  Lender  Party the
purchase price to the extent of such Lender Party's ratable share  (according to
the



                                     - 40 -
<PAGE>

proportion  of (x) the  purchase  price  paid to such  Lender  Party  to (y) the
aggregate  purchase price paid to all Lender Parties) of such recovery  together
with an amount equal to such Lender  Party's  ratable  share  (according  to the
proportion of (x) the amount of such other Lender Party's required  repayment to
(y) the total amount of such required repayments to the purchasing Lender Party)
of any interest or other amount paid or payable by the  purchasing  Lender Party
in respect of the total amount so recovered.

The  Borrowers  agree that any Lender Party so purchasing a  participation  from
another  Lender Party  pursuant to this Section 2.12 may, to the fullest  extent
permitted  by law,  exercise all its rights of payment  (including  the right of
set-off)  with  respect to such  participation  as fully as if such Lender Party
were the direct creditor of the Borrowers in the amount of such participation.

     SECTION  2.13  Use of  Proceeds.

     The proceeds of the  Advances and the  issuances of Letters of Credit shall
be available,  and the  Borrowers  shall use such proceeds and Letters of Credit
for general corporate  purposes and working capital needs of Borrowers and their
subsidiaries.

     SECTION 2.14 Defaulting Lenders.

     (a) In the event  that,  at any one time,  (i) any Lender  Party shall be a
Defaulting Lender,  (ii) such Defaulting Lender shall owe a Defaulted Advance to
the  Borrowers  and (iii) the  Borrowers  shall be  required to make any payment
hereunder  or under  any  other  Loan  Document  to or for the  account  of such
Defaulting Lender,  then the Borrowers may, so long as no Default shall occur or
be  continuing  at such time and to the fullest  extent  permitted by applicable
law, set off and  otherwise  apply the  obligation of the Borrowers to make such
payment to or for the account of such  Defaulting  Lender against the obligation
of such Defaulting Lender to make such Defaulted Advance.  In the event that, on
any date, the Borrowers  shall so set off and otherwise  apply its obligation to
make any such payment against the obligation of such  Defaulting  Lender to make
any such  Defaulted  Advance on or prior to such date, the amount so set off and
otherwise  applied by the Borrowers  shall  constitute  for all purposes of this
Agreement and the other Loan Documents an Advance by such Defaulting Lender made
on the date under the  Facility  pursuant  to which such  Defaulted  Advance was
originally  required to have been made  pursuant to Section  2.1.  Such  Advance
shall be a Prime Rate Advance and shall be considered,  for all purposes of this
Agreement,  to comprise  part of the  Borrowing  in  connection  with which such
Defaulted Advance was originally  required to have been made pursuant to Section
2.1.  The  Borrowers  shall  notify  the  Administrative  Agent  at any time the
Borrowers  exercise their right of set-off  pursuant to this  subsection (a) and
shall set forth in such  notice  (i) the name of the  Defaulting  Lender and the
Defaulted  Advance  required to be made by such  Defaulting  Lender and (ii) the
amount  set off and  otherwise  applied in  respect  of such  Defaulted  Advance
pursuant to this subsection (a). Any portion of such payment otherwise  required
to be made by the  Borrowers  to or for the  account of such  Defaulting  Lender
which is paid by the  Borrowers,  after giving  effect to the amount set off and
otherwise  applied by the Borrowers  pursuant to this  subsection  (a), shall be
applied by the  Administrative  Agent as specified in  subsection  (b) or (c) of
this Section 2.14.

     (b) In the event  that,  at any one time,  (i) any Lender  Party shall be a
Defaulting  Lender,  (ii) such Defaulting Lender shall owe a Defaulted Amount to
the  Administrative  Agent or any of the  other  Lender  Parties  and  (iii) the
Borrowers  shall make any payment  hereunder or under any other Loan Document to
the  Administrative  Agent for the account of such Defaulting


                                     - 41 -
<PAGE>

Lender,  then the  Administrative  Agent may, on its behalf or on behalf of such
other Lender  Parties and to the fullest  extent  permitted by  applicable  law,
apply at such time the amount so paid by the  Borrowers to or for the account of
such  Defaulting  Lender to the  payment  of each such  Defaulted  Amount to the
extent  required  to  pay  such  Defaulted   Amount.   In  the  event  that  the
Administrative  Agent  shall so apply any such amount to the payment of any such
Defaulted Amount on any date, the amount so applied by the Administrative  Agent
shall  constitute  for  all  purposes  of this  Agreement  and  the  other  Loan
Documents,  payment,  to such extent, of such Defaulted Amount on such date. Any
such  amount so applied by the  Administrative  Agent  shall be  retained by the
Administrative  Agent or distributed by the  Administrative  Agent to such other
Lender  Parties,  ratably in  accordance  with the  respective  portions of such
Defaulted  Amounts  payable  at such time to the  Administrative  Agent and such
other  Lender  Parties  and, if the amount of such  payment made by the Borrower
shall at such time be  insufficient  to pay all Defaulted  Amounts owing at such
time to the Administrative  Agent and the other Lender Parties, in the following
order of priority:

          (i) first, to the  Administrative  Agent for any Defaulted Amount then
     owing to the Administrative Agent; and

          (ii)  second,  to the Lender  Parties for any  Defaulted  Amounts then
     owing to such Lender  Parties,  ratably in accordance  with such respective
     Defaulted Amounts then owing to such Lender Parties.

Any  portion  of such  amount  paid by the  Borrowers  for the  account  of such
Defaulting  Lender  remaining,  after giving effect to the amount applied by the
Administrative  Agent pursuant to this  subsection  (b), shall be applied by the
Administrative Agent as specified in subsection (c) of this Section 2.14.

     (c) In the event  that,  at any one time,  (i) any Lender  Party shall be a
Defaulting Lender, (ii) such Defaulting Lender shall not owe a Defaulted Advance
or a Defaulted Amount and (iii) the Borrowers,  the Administrative  Agent or any
other Lender Party shall be required to pay or distribute  any amount  hereunder
or under  any other  Loan  Document  to or for the  account  of such  Defaulting
Lender,  then the  Borrowers or such other Lender Party shall pay such amount to
the Administrative Agent to be held by the Administrative  Agent, to the fullest
extent permitted by applicable law, in escrow or the Administrative Agent shall,
to the fullest  extent  permitted by applicable  law, hold in escrow such amount
otherwise held by it. Any funds held by the Administrative Agent in escrow under
this subsection (c) shall be deposited by the Administrative Agent in an account
with Fleet, in the name and under the control of the  Administrative  Agent, but
subject to the provisions of this subsection  (c). The terms  applicable to such
account,  including  the rate of  interest  payable  with  respect to the credit
balance  of such  account  from time to time,  shall be Fleet's  standard  terms
applicable to escrow accounts  maintained with it. Any interest credited to such
account  from time to time shall be held by the  Administrative  Agent in escrow
under, and applied by the  Administrative  Agent from time to time in accordance
with the provisions of, this subsection (c). The Administrative  Agent shall, to
the fullest  extent  permitted  by  applicable  law,  apply all funds so held in
escrow from time to time to the extent  necessary to make any Advances  required
to be made by such  Defaulting  Lender  and to pay any  amount  payable  by such
Defaulting   Lender  hereunder  and  under  the  other  Loan  Documents  to  the
Administrative  Agent or any other Lender  Party,  as and when such  Advances


                                     - 42 -
<PAGE>

or amounts are  required to be made or paid and, if the amount so held in escrow
shall at any time be  insufficient to make and pay all such Advances and amounts
required to be made or paid at such time, in the following order of priority:

          (i) first,  to the  Administrative  Agent for any amount  then due and
     payable by such Defaulting Lender to the Administrative Agent hereunder;

          (ii) second, to the Lender Parties for any amount then due and payable
     by such  Defaulting  Lender to such Lender  Parties  hereunder,  ratably in
     accordance with such respective amounts then due and payable to such Lender
     Parties; and

          (iii) third, to the Borrowers for any Advance then required to be made
     by such  Defaulting  Lender  pursuant to a  Commitment  of such  Defaulting
     Lender.

In the event that any Lender Party that is a  Defaulting  Lender  shall,  at any
time,  cease to be a  Defaulting  Lender,  any funds held by the  Administrative
Agent in  escrow  at such  time  with  respect  to such  Lender  Party  shall be
distributed by the Administrative Agent to such Lender Party and applied by such
Lender  Party to the  Obligations  owing to such Lender Party at such time under
this Agreement and the other Loan Documents in such manner as the Administrative
Agent shall reasonably direct.

     (d) The rights and remedies against a Defaulting  Lender under this Section
2.14 are in addition to other rights and remedies  that the  Borrowers  may have
against such  Defaulting  Lender with respect to any Defaulted  Advance and that
the  Administrative  Agent or any Lender Party may have against such  Defaulting
Lender with respect to any Defaulted Amount.

                                   ARTICLE 3

                              CONDITIONS OF LENDING

     SECTION  3.1  Conditions   Precedent  to  Extension  of  Revolving   Credit
Termination  Date. The obligation of each Lender to extend the Revolving  Credit
Termination  Date on the terms provided herein is subject to the satisfaction of
each of the  following  conditions  precedent  before or  concurrently  with the
Effective Date:

     (a) The Administrative Agent shall have received on or before the Effective
Date the following,  each dated such day (unless otherwise  specified),  in form
and substance  satisfactory to the Administrative  Agent and the Lenders, and in
sufficient copies, for each Lender Party:

          (i) The Notes payable to the order of the Lenders duly executed by the
     Borrowers.

          (ii) A  security  agreement  in  substantially  the form of  Exhibit E
     (together with each other security agreement  delivered pursuant to Section
     5.13, in each case as amended, supplemented or otherwise modified from time
     to time in accordance with its terms,  each a "Security  Agreement"),  duly
     executed by the Borrowers and each Guarantor, together with:


                                     - 43 -
<PAGE>

               (A) proper, duly executed financing statements (or assignments or
          amendments   thereto)  under  the  Uniform   Commercial  Code  of  all
          jurisdictions  that the  Administrative  Agent may deem  necessary  or
          desirable in order to perfect or continue  perfection  and protect the
          first priority Liens and security interests created under the Security
          Agreement, covering the Collateral described in the Security Agreement
          which are able to be perfected by filing;

               (B)  evidence  of the  completion  of all  other  recordings  and
          filings  of or  with  respect  to  the  Security  Agreement  that  the
          Administrative  Agent  may deem  necessary  or  desirable  in order to
          perfect and protect the Liens created thereby;

               (C)  evidence  of the  insurance  required  by the  terms  of the
          Security Agreement;

               (D) copies of the Assigned Agreements, if any, referred to in the
          Security Agreement, together with a consent (to the extent required by
          the   Administrative   Agent)  to  such   assignments,   if  any,   in
          substantially  the form of Exhibit C to the Security  Agreement,  duly
          executed  by each  party to such  Assigned  Agreements  other than the
          applicable Borrower;

               (E)  certificates  representing the Pledged Shares referred to in
          the Security  Agreement,  accompanied by undated stock powers executed
          in blank and irrevocable proxies;

               (F) a  duly  executed  note  assignment  agreement  in  form  and
          substance  satisfactory  to  the  Administrative  Agent  (as  amended,
          modified  and  supplemented  from time to time,  the "Note  Assignment
          Agreement")  covering (and together with) all intercompany  notes made
          by the  Borrowers'  Subsidiaries  payable  to the  Borrowers  and duly
          endorsed to the Administrative Agent;

               (G) evidence that all other action that the Administrative  Agent
          may deem necessary or desirable in order to perfect the first priority
          liens and security  interests created under the Security Agreement has
          been taken.

          (iii) An intellectual property security agreement in substantially the
     form of Exhibit G hereto  (together with each other  intellectual  property
     security  agreement  delivered  pursuant to Section  5.13,  in each case as
     amended, supplemented or otherwise modified from time to time in accordance
     with its terms, each an "Intellectual Property "Security Agreement"),  duly
     executed by the Borrowers and each  Guarantor,  together with evidence that
     all action that the Administrative Agent may deem necessary or desirable in
     order to  perfect  and  protect  the  first  priority  Liens  and  security
     interests created under the Intellectual  Property  Security  Agreement has
     been taken.

          (iv) A  guaranty  in  substantially  the form of  Exhibit H hereto (as
     hereafter amended,  supplemented or otherwise modified from time to time in
     accordance with its terms, whether one or more, the "Subsidiary Guaranty"),
     duly  executed by each  Domestic  Subsidiary  of the  Borrowers  other than
     Inactive  Subsidiaries,  provided,  that each such  Inactive  Subsidiary is


                                     - 44 -
<PAGE>

     dissolved  or merged  into  MediaBay  within  thirty  (30)  days  after the
     Effective  Date  (or  sixty  (60)  days  with  respect  to any  corporation
     organized  under  the  laws  of the  state  of New  York)  and  that a duly
     certified copy of each  applicable  certificate of dissolution or merger is
     delivered to Administrative Agent.

          (v) For each  Borrower,  (i) a true and correct copy of the charter of
     such Borrower and each amendment  thereto,  (ii) a true and correct copy of
     the  by-laws  of such  Borrower  and  (iii)  resolutions  of the  Board  of
     Directors  of such  Borrower  approving  this  Agreement,  the  Notes,  the
     Huntingdon  Financing  Documents,  the Huntingdon Secured Subordinated Debt
     Documents  and each other Loan Document to which it is or is to be a party,
     and of all  documents  evidencing  other  necessary  corporate  action  and
     governmental  and other third party  approvals and  consents,  if any, with
     respect to this Agreement,  the Notes, the Huntingdon  Financing Documents,
     the  Huntingdon  Secured  Subordinated  Debt  Documents and each other Loan
     Document,  each  certified  as of the  Effective  Date by  such  Borrower's
     corporate  secretary or an  assistant  secretary as being in full force and
     effect without any modification or amendment.

          (vi) For each  Borrower,  a copy of a certificate  of the Secretary of
     State of the  jurisdiction of its  incorporation,  dated within twenty (20)
     Business Days of the Effective  Date,  listing the charter of such Borrower
     and each amendment  thereto on file in its office and  certifying  that (A)
     such amendments are the only amendments to such Borrower's  charter on file
     in its office,  (B) to the extent  obtainable,  that such Borrower has paid
     all franchise  taxes to the date of such  certificate and (C) such Borrower
     is duly incorporated and in good standing or existing,  as the case may be,
     under the laws of the State of the jurisdiction of its incorporation.

          (vii) [Intentionally Left Blank]

          (viii) A certificate  of each Loan Party signed on behalf of such Loan
     Party by a Responsible  Officer and the Secretary or an Assistant Secretary
     of such Loan Party,  dated the Effective Date (the  statements made in such
     certificate  shall be true on and as of the Effective Date),  certifying as
     to (and  attaching  in the case of (A)):  (A)  resolutions  of the Board of
     Directors  of such Loan Party  approving  this  Agreement,  the Notes,  the
     Subsidiary Guaranty,  the Huntingdon  Financing  Documents,  the Huntingdon
     Secured  Subordinated  Debt Documents and each other Loan Document to which
     it is or is to be a party, and of all documents  evidencing other necessary
     corporate  action and  governmental  and other  third party  approvals  and
     consents, if any, with respect to this Agreement, the Notes, the Huntingdon
     Financing Documents, the Huntingdon Secured Subordinated Debt Documents and
     each other Loan Document,  (B) the due  incorporation  and good standing of
     such  Loan  Party  as  a  corporation  organized  under  the  laws  of  the
     jurisdiction  of its  incorporation,  and the absence of any proceeding for
     the  dissolution or  liquidation  of such Loan Party,  (C) the truth of the
     representations  and  warranties  contained in the Loan Documents as though
     made on and as of the Effective  Date except for such  representations  and
     warranties that expressly  relate to an earlier date and except for changes
     in the ordinary  course of business  none of which  individually  or in the
     aggregate  could  reasonably be expected to have a Material  Adverse Effect
     and (D) after  giving  effect to this  Agreement,  the absence of any event
     occurring and  continuing,  or resulting from the amendment and restatement
     of the Prior Credit  Agreement,  that  constitutes a Default or an Event of
     Default.


                                     - 45 -
<PAGE>

          (ix) A certificate of the Secretary or an Assistant  Secretary of each
     Loan Party certifying the names and true signatures of the officers of such
     Loan Party  authorized to sign this Agreement,  the Notes,  each other Loan
     Document to which they are or are to be parties and the other  documents to
     be delivered hereunder and thereunder.

          (x) Such financial, business and other information regarding each Loan
     Party as any of the Lenders shall have reasonably requested.

          (xi)  Evidence  that the  Huntingdon  Financing  Debt has been made on
     terms  and  conditions  satisfactory  to the  Lenders  and that an  advance
     thereunder, in the amount of $2,500,000, has been made to MediaBay.

          (xii) A certified copy of the Huntingdon Financing Documents.

          (xiii) A certified copy of the Huntingdon  Secured  Subordinated  Loan
     Documents.

          (xiv) The Lenders and lenders of the  Huntingdon  Financing Debt shall
     have executed the Huntingdon  Financing  Intercreditor  Agreement dated the
     date hereof in form and substance satisfactory to the Required Lenders.

          (xv) The Lenders and lenders of the  Huntingdon  Secured  Subordinated
     Loan shall have executed the Huntingdon Secured Subordinated  Intercreditor
     Agreement  dated the date hereof in form and substance  satisfactory to the
     Required Lenders.

          (xvi) Evidence that the holders of all outstanding Senior Subordinated
     Debt have consented to the Transaction,  the Huntingdon  Financing Debt and
     the Huntingdon Secured Subordinated Loan.

          (xvii) A copy of a  certificate  of the Secretary of State of Florida,
     dated within twenty (20) Business Days of the Effective  Date,  listing the
     charter of Huntingdon and each amendment  thereto on file in its office and
     certifying that (A) such amendments are the only amendments to Huntingdon's
     charter  on file in its  office,  (B) to the extent  obtainable,  that such
     Huntingdon has paid all franchise taxes to the date of such certificate and
     (C) Huntingdon is duly  incorporated  and in good standing or existing,  as
     the case may be, under the laws of the State of Florida.

          (xviii) A certificate  of the  Secretary or an Assistant  Secretary of
     Huntingdon  certifying  the names and true  signatures  of the  officers of
     Huntingdon authorized to sign each Loan Document to which it is a party and
     the other documents to be delivered hereunder and thereunder.

          (xix) A fee  letter  of even  date  herewith  (the  "ING Fee  Letter")
     between  Borrowers  and ING setting forth the agency fees to be paid to ING
     thereunder at the times specified for payment therein.

     (b) Perfection of Liens.  All Uniform  Commercial Code and other filing and
recording  fees and taxes shall have been paid or duly  provided  for. All Liens
granted to the


                                     - 46 -
<PAGE>

Administrative Agent with respect to the Collateral are valid and effective and,
upon  the  filing  of  the  duly  executed  Uniform  Commercial  Code  financing
statements  (or  similar  filings  required  by the  applicable  statutes of any
jurisdiction  in which the  Administrative  Agent is being granted a Lien by any
Loan  Party),  will be  perfected  and of first  priority,  except as  otherwise
permitted  under this Agreement and except for compliance with the Assignment of
Claims Act of 1940, as amended,  with respect to  Receivables  where the account
debtor  is  the  United  States  of  America  or  any   department,   agency  or
instrumentality thereof. All certificates representing capital stock included in
the Collateral shall have been delivered to the Administrative  Agent (with duly
executed  stock powers,  as  appropriate)  and all  instruments  included in the
Collateral shall have been delivered to the Administrative  Agent (duly endorsed
to the Administrative Agent).

     (c) The Lenders  shall be  satisfied  that all  Surviving  Debt shall be on
terms and conditions satisfactory to the Lenders.

     (d)  There  shall  have  occurred  no  change  in the  business,  condition
(financial or otherwise),  results of  operations,  performance or properties of
the Borrowers and their Subsidiaries, taken as a whole, since December 31, 2000,
that could  reasonably be expected to result in a Material  Adverse Effect,  and
there shall have  occurred no change in the  business,  condition  (financial or
otherwise).

     (e) Other than the Disclosed Litigation, there shall exist no action, suit,
investigation,  litigation or  proceeding  pending or threatened in any court or
before any  arbitrator or  governmental  or regulatory  agency or authority that
could reasonably be expected to have a Material Adverse Effect,  and there shall
have been no Material  Adverse Effect in the status,  or financial effect on the
Borrowers or their  Subsidiaries  as a whole,  of the Disclosed  Litigation from
that described on Schedule 4.9.

     (f) All  governmental  and third party consents and approvals  necessary in
connection with any aspect of the  Transaction,  the Huntingdon  Financing Debt,
the  Huntingdon  Secured  Subordinated  Debt and the  Senior  Subordinated  Debt
(including, but not limited to, a letter of consent from the Nasdaq Stock Market
indicating  its consent to the  issuance of the Series A  Convertible  Preferred
Stock  of  MediaBay  which  shall  be  issuable  pursuant  to the  terms  of the
Huntingdon  Financing  Documents,   the  Huntingdon  Secured  Subordinated  Debt
Documents and the Senior  Subordinated  Debt Documents) shall have been obtained
(without  the  imposition  of any  conditions  that  are not  acceptable  to the
Lenders) and shall remain in effect;  all applicable  waiting periods shall have
expired without any adverse action being taken by any competent  authority;  and
no law or  regulation  shall be  applicable  in the judgment of the Lenders that
restrains,  prevents or imposes materially adverse conditions upon any aspect of
the Facilities.

     (g) After giving effect to this Agreement,  there shall exist no Default or
Event of Default under any of the Loan Documents, and all legal matters incident
to  this  Agreement  shall  be  reasonably   satisfactory  to  counsel  for  the
Administrative Agent.

     (h) All accrued  reasonable fees and expenses of the  Administrative  Agent
under the Prior  Credit  Agreement,  the  Administrative  Agent and the  Lenders
(including the fees and expenses of counsel for the Administrative Agent and the
Lenders  under the Prior  Credit


                                     - 47 -
<PAGE>

Agreement,  the  Administrative  Agent and the Lenders and local counsel for the
Administrative Agent) shall have been paid.

     (i) The Administrative Agent shall be reasonably satisfied with the amount,
types  and  terms  and  conditions  of  all  insurance  maintained  by  or to be
maintained by MediaBay and its Subsidiaries,  and the Administrative Agent shall
have received,  as deemed necessary in its sole discretion,  endorsements naming
the  Administrative  Agent,  on  behalf  of the  Lenders,  as loss  payee  or an
additional insured, as applicable, under all insurance policies to be maintained
with respect to the properties of MediaBay and its Subsidiaries forming any part
of the  Lenders'  Collateral  under the  Security  Agreement  and the other Loan
Documents and Collateral Documents.

     (j)  The  Administrative  Agent  shall  have  received  duly  executed  and
delivered  counterparts  of landlord  waivers from all  landlords  and leasehold
mortgage  holders and bailee  letters  from all  warehousemen  and bailees  with
respect to any Inventory  located at a location that is not owned by a Borrower,
as deemed necessary or desirable in the Administrative  Agent's sole discretion,
to preserve or  otherwise  in respect of the  Administrative  Agent's  rights in
Collateral.  The Administrative  Agent shall also have received such bank agency
and/or lockbox  agreements,  third party consents,  intercreditor  agreements or
other agreements, as deemed necessary or desirable in the Administrative Agent's
sole  discretion,  to preserve  or  otherwise  in respect of the  Administrative
Agent's rights in the Collateral.

     (k) The  Administrative  Agent shall have  received  such other  approvals,
opinions  or  documents  as any  Lender  through  the  Administrative  Agent may
reasonably  request,  and all legal matters  incident to such Borrowing shall be
satisfactory to counsel for the Administrative Agent.

     (l) The Administrative Agent shall have received  satisfactory  opinions of
counsel for the Borrowers and the  Guarantors  and local and special  counsel to
the  extent  reasonably  requested  by  the  Administrative  Agent,  as  to  the
Transaction.

     SECTION 3.2  Conditions  Precedent  to Each  Borrowing  and  Issuance.

     The obligation of each appropriate  Lender to make an Advance (other than a
Letter of Credit  Advance made by the Issuing Bank or a Revolving  Credit Lender
pursuant to Section  2.3(c),  and the  obligation of the Issuing Bank to issue a
Letter of Credit  (including the initial issuance  thereof) or renew a Letter of
Credit and the right of the  Borrowers  to request the  issuance or renewal of a
Letter of Credit, shall each be subject to the further conditions precedent that
on the date of each such Borrowing or issuance or renewal:

     (a) Each of the conditions  precedent listed in Section 3.1 shall have been
satisfied or waived in accordance with this Agreement.

     (b) The following  statements  shall be true and the  Administrative  Agent
shall  have  received  a  certificate  signed by a duly  authorized  Responsible
Officer of each of the  Borrowers,  dated the date of such Borrowing or issuance
or renewal,  stating  that (and each of the giving of the  applicable  Notice of
Borrowing,  or Notice of Issuance or Notice of Renewal and the acceptance by the
Borrowers of the proceeds of a Borrowing or of a Letter of Credit or the


                                     - 48 -
<PAGE>

renewal of a Letter of Credit shall constitute a representation  and warranty by
the  Borrowers  that  both on the  date of such  notice  and on the date of such
Borrowing or issuance or renewal such statements are true):

          (i) the representations and warranties contained in each Loan Document
     are correct on and as of such date,  before and after giving effect to such
     Borrowing  or issuance or renewal and to the  application  of the  proceeds
     therefrom,  as  though  made  on and  as of  such  date  (except  for  such
     representations and warranties that expressly relate to an earlier date and
     except  for  changes  in the  ordinary  course  of  business  which are not
     prohibited  hereunder  and none of which  individually  or in the aggregate
     would reasonably be expected to have a Material Adverse Effect); and

          (ii) no event has  occurred  and is  continuing,  or would result from
     such  Borrowing  or  issuance  or  renewal or from the  application  of the
     proceeds therefrom, that constitutes a Default or an Event of Default.

     (c) The  Administrative  Agent shall have  received  such other  approvals,
opinions or documents as any appropriate Lender through the Administrative Agent
may  reasonably  request,  and all legal matters  incident to such  Borrowing or
issuance  of such  Letter of Credit  shall be  satisfactory  to counsel  for the
Administrative Agent.

     SECTION 3.3  Determinations  Under Section 3.1.

     For purposes of determining  compliance  with the  conditions  specified in
Section  3.1,  each Lender  shall be deemed to have  consented  to,  approved or
accepted  or to be  satisfied  with  each  document  or  other  matter  required
thereunder to be consented to or approved by or acceptable  or  satisfactory  to
the Lenders unless an officer of the  Administrative  Agent  responsible for the
transactions  contemplated  by the Loan  Documents  shall have received  written
notice from such Lender prior to the  Effective  Date  specifying  its objection
thereto.

                                   ARTICLE 4

                 REPRESENTATIONS AND WARRANTIES OF THE BORROWERS

     Each Borrower, jointly and severally, represents and warrants as follows:

     SECTION  4.1  Organization.

     Each Loan Party (a) is a corporation  duly organized,  validly existing and
in good standing under the laws of the jurisdiction of its incorporation, (b) is
duly  qualified  and in good  standing  as a foreign  corporation  in each other
jurisdiction  in which it owns or leases property or in which the conduct of its
business requires it to so qualify or be licensed except where the failure to so
qualify or be  licensed  could not  reasonably  be  expected  to have a Material
Adverse  Effect  and  (c)  has  all  requisite  corporate  power  and  authority
(including,  without limitation,  all governmental  licenses,  permits and other
approvals)  to own or  lease  and  operate  its  properties  and to carry on its
business as now conducted and as proposed to be conducted.

     SECTION 4.2  Subsidiaries.

     Set forth on Schedule  4.2 hereto is a complete  and  accurate  list of the
Borrowers and all Subsidiaries of each Loan Party, showing as of the date hereof
(and


                                     - 49 -
<PAGE>

updated on a quarterly basis to reflect changes  permitted under this Agreement)
(i) the jurisdiction of its  incorporation or formation,  (ii) the jurisdictions
in which such Loan Party is duly  qualified  and in good  standing  as a foreign
corporation or Person, (iii) the number of shares of each class of capital stock
or other equity interests authorized, and the number outstanding, and as to each
of them  that is a legal  entity  other  than a  corporation  (but not a natural
person), and the record owners (other than shares of such Borrower publicly held
other than by  Affiliates) of such equity  interests,  and the percentage of the
outstanding  shares or other  interests  of each such class owned  (directly  or
indirectly)  by such  Loan  Party and the  number  of shares or other  interests
covered by all outstanding options,  warrants,  rights of conversion or purchase
and similar rights.  All of the outstanding  capital stock or other interests of
all of such Borrower and each of such  Subsidiaries has been validly issued,  is
fully paid and  non-assessable  and is owned by such Loan Party  (except for the
publicly owned stock of such Borrower) or one or more of its  Subsidiaries  free
and clear of all Liens, except those created under the Collateral Documents.

     SECTION 4.3 Corporate  Power,  Authorization.

     The  execution,  delivery  and  performance  by  each  Loan  Party  of this
Agreement,  the Notes, and each other Loan Document to which it is or is to be a
party,  and the  consummation of the  Transaction,  are within such Loan Party's
corporate powers,  have been duly authorized by all necessary  corporate action,
and do not (a) contravene such Loan Party's  charter or bylaws,  (b) violate any
law (including,  without limitation, the Securities Act of 1933, as amended, the
Securities  Exchange Act of 1934, as amended,  and the Racketeer  Influenced and
Corrupt Organizations Chapter of the Organized Crime Control Act of 1970), rule,
regulation (including, without limitation,  Regulation T, U or X of the Board of
Governors of the Federal Reserve System),  order,  writ,  judgment,  injunction,
decree, determination or award, (c) conflict with or result in the breach of, or
constitute a default under, any material  contract,  loan agreement,  indenture,
mortgage, deed of trust, lease or other material instrument or agreement binding
on or  affecting  any  Loan  Party,  any of  its  Subsidiaries  or any of  their
respective  properties  where the  conflict,  breach or  default  relates  to an
instrument,   agreement  or  other  document   involving  assets,   revenues  or
liabilities in excess of $250,000  individually  or $500,000 in the aggregate or
otherwise could reasonably be expected to have a Material Adverse Effect, or (d)
except  for the Liens  created  under  the  Collateral  Documents,  result in or
require the  creation or  imposition  of any Lien upon or with respect to any of
the  properties of any Loan Party or any of its  Subsidiaries.  No Loan Party or
any of its  Subsidiaries  is in  violation  of any such law,  rule,  regulation,
order, writ, judgment,  injunction,  decree, determination or award or in breach
of any such contract, loan agreement,  indenture, mortgage, deed of trust, lease
or other  instrument  or  agreement,  the  violation  or breach  of which  could
reasonably be expected to have a Material Adverse Effect.

     SECTION 4.4  Governmental  Authorizations,  Approvals.

     No authorization or approval or other action by, and no notice to or filing
with, any governmental  authority or regulatory body or any other third party is
or was  required for (a) the due  execution,  delivery,  recordation,  filing or
performance  by any Loan  Party of this  Agreement,  the  Notes,  any other Loan
Document  to  which it is or is to be a party,  or for the  consummation  of the
Transaction, (b) the grant by any Loan Party of the Liens granted by it pursuant
to the  Collateral  Documents,  (c) the  perfection or  maintenance of the Liens
created  by the  Collateral  Documents  (including  the  first  priority  nature
thereof)  which  Liens are able to be  perfected  by  filings  or the  taking of
possession  with  respect  to the  Collateral  or such  other  actions as may be
required by the Administrative Agent and


                                     - 50 -
<PAGE>

agreed upon by the Borrowers or (d) the exercise by the Administrative  Agent or
any Lender  Party of its rights  under the Loan  Documents  or the  remedies  in
respect of the Collateral pursuant to the Collateral  Documents,  except for the
authorizations,  approvals, actions, notices and filings listed on Schedule 4.4,
all of which have been duly obtained, taken, given or made and are in full force
and effect, except for such actions regarding the perfection of certain items of
Collateral not required to be taken by the Administrative  Agent or except where
the  failure to  receive  any  authorizations,  approvals,  actions,  notices or
filings  under  instruments,   agreements  or  other  documents  relates  to  an
instrument,   agreement  or  other  document   involving  assets,   revenues  or
liabilities in excess of $250,000 individually,  or $500,000 in the aggregate or
otherwise would not be reasonably likely to have a Material Adverse Effect.  All
applicable  waiting  periods in  connection  with the  Transaction  have expired
without any action  having been taken by any  competent  authority  restraining,
preventing or imposing materially adverse conditions upon the Transaction or the
rights of the Loan Parties or their Subsidiaries freely to transfer or otherwise
dispose  of, or to create any Lien on,  any  properties  now owned or  hereafter
acquired by any of them.

     SECTION 4.5 Due  Execution,  Validity,  Enforceability.

     This  Agreement and each of the Notes and each other Loan Document has been
or when delivered  hereunder will have been, duly executed and delivered by each
Loan Party  thereto.  This  Agreement  and each of the Notes and each other Loan
Document  has been or when  delivered  hereunder  will be, the legal,  valid and
binding  obligation of each Loan Party  thereto,  enforceable  against such Loan
Party in accordance  with its terms,  except (a) as such  enforceability  may be
limited by  applicable  bankruptcy,  insolvency,  reorganization,  moratorium or
similar laws affecting the enforcement of creditors'  rights  generally,  except
that such laws shall not materially interfere with the practical  realization of
the  benefits of the  Security  Documents  or the  security  interests  or Liens
created thereby except for (i) possible delay,  (ii) situations  which may arise
under  Chapter 11 of the  Bankruptcy  Code,  and (iii)  equitable  orders of the
Bankruptcy  Court, and (b) to the extent that such  enforceability is subject to
general  principles  of  equity  (regardless  of  whether  such  enforcement  is
considered in a proceeding in equity or at law).

     SECTION 4.6  Financial  Statements.

     The   Borrowers   have   delivered  or  at  Closing  will  deliver  to  the
Administrative  Agent (i) the balance sheets of the Borrowers as at December 31,
2000,  and the related  statements  of income and cash flows for the fiscal year
then ended.  The financial  statements  of the Borrowers and their  Subsidiaries
referred to above have been duly certified by the Chief Financial Officer of the
applicable  Borrower,  copies of which have been furnished to each Lender Party,
present fairly the  Consolidated  (and, with respect to the balance sheets dated
December 31, 2000, consolidating) financial condition of the Borrowers and their
Subsidiaries  as at such date and the  Consolidated  (and,  with  respect to the
statements  of income dated  December 31,  2000,  consolidating)  results of the
operations of the Borrowers and their  Subsidiaries for the period ended on such
date,  all in accordance  with GAAP applied on a consistent  basis,  and,  since
September 30, 2000,  there has been no change that could  reasonably be expected
to have a Material Adverse Effect on the Borrowers and their Subsidiaries or, to
its knowledge,  material  adverse effect on the business,  financial  condition,
results of operations, performance, reasonably foreseeable business prospects or
properties taken as a whole.

     SECTION 4.7 Inactive  Subsidiaries.

     Each of the Subsidiaries set forth on Schedule 4.7 conducts no business and
has no material assets or liabilities.


                                     - 51 -
<PAGE>

     SECTION 4.8  Accurate  Information.

     None of the information, exhibits or reports furnished by any Loan Party to
the  Administrative  Agent  or any  Lender  Party  in  connection  with the Loan
Documents or pursuant to the terms of the Loan  Documents  contained  any untrue
statement  of a  material  historical  fact  or  omitted  to  state  a  material
historical  fact necessary to make the statements  made therein not  misleading,
provided that with regard to any  forward-looking  statements  contained in such
documents or information,  exhibits or reports, such forward-looking  statements
are based on assumptions  that were reasonable as of the time at which they were
made.

     SECTION 4.9 Litigation.

     Other  than the  litigation  disclosed  on  Schedule  4.9  (the  "Disclosed
Litigation"), there is no action, suit, investigation,  litigation or proceeding
affecting  the  Borrowers,  any  other  Loan  Party or any of  their  respective
Subsidiaries,  including,  without limitation, any Environmental Action, pending
or, to its  knowledge,  threatened  before  any  court,  governmental  agency or
arbitrator that could  reasonably be expected to have a Material Adverse Effect,
and  there has been no change in the  status,  or  financial  effect on any Loan
Party  or  any of  its  Subsidiaries,  of the  Disclosed  Litigation  from  that
described on Schedule 4.9 that could  reasonably  be expected to have a Material
Adverse Effect.

     SECTION 4.10  Regulation  U.

     Neither the Borrowers nor any other Loan Party nor any of their  respective
Subsidiaries  is engaged in the business of extending  credit for the purpose of
purchasing or carrying Margin Stock.

     SECTION 4.11 ERISA.

     (a) Except as set forth on Schedule 4.11 hereto,  neither the Borrowers nor
any  of  their  ERISA  Affiliates  maintains  or has  maintained  any  Plans  or
Multiemployer  Plans. Set forth on Schedule 4.11 is a complete and accurate list
of all Welfare Plans and all defined  contribution plans in respect of which any
Loan Party could have liability.

     (b) Except as set forth in the financial  statements referred to in Section
4.6 and in Article 7, neither the  Borrowers,  any of the other Loan Parties nor
any of their respective  Subsidiaries has any material liability with respect to
"expected post retirement benefit  obligations"  within the meaning of Statement
of Financial Accounting Standards No. 106.

     SECTION 4.12 Casualty.

     Neither the  business  nor the  properties  of any Loan Party or any of its
Subsidiaries are affected by any fire, explosion,  accident,  strike, lockout or
other labor dispute, drought, storm, hail, earthquake, embargo, act of God or of
the public enemy or other  casualty  (whether or not covered by insurance)  that
could reasonably be expected to have a Material Adverse Effect.

     SECTION 4.13 Environmental Matters.

     (a) The  operations  and  properties  of each  Loan  Party  and each of its
Subsidiaries   comply  in  all  known  material  respects  with  all  applicable
Environmental Laws and Environmental Permits, all known past non-compliance with
such  Environmental  Laws and  Environmental  Permits has been resolved  without
ongoing  obligations or costs, and no circumstances  exist that could reasonably
be expected to (i) form the basis of an  Environmental


                                     - 52 -
<PAGE>

Action  against  any  Loan  Party  or any of its  Subsidiaries  or any of  their
properties that could  reasonably be expected to have a Material  Adverse Effect
or (ii) cause any such  property to be subject to any material  restrictions  on
ownership, occupancy, use or transferability under any Environmental Law.

     (b) Except as disclosed in the environmental  assessment  reports listed on
Schedule 4.13 hereto, (i) none of the properties  currently or formerly owned or
operated by any Loan Party or any of its  Subsidiaries is listed or proposed for
listing on the NPL or on the CERCLIS or any  analogous  foreign,  state or local
list or is adjacent to any such property;  (ii) there are no and, to the best of
its knowledge,  never have been any underground or aboveground  storage tanks or
any  surface  impoundments,  septic  tanks,  pits,  sumps  or  lagoons  in which
Hazardous  Materials  are  being  or,  to the best of its  knowledge,  have been
treated,  stored or disposed on any property  currently owned or operated by any
Loan  Party or any of its  Subsidiaries  or on any  property  formerly  owned or
operated  by any  Loan  Party  or any of its  Subsidiaries;  (iii)  there  is no
asbestos or  asbestos-containing  material on any  property  currently  owned or
operated  by any Loan  Party  or any of its  Subsidiaries;  and  (iv)  Hazardous
Materials  have not been  released,  discharged  or disposed of on any  property
currently owned or operated by any Loan Party or any of its Subsidiaries, or any
property   formerly  owned  or  operated  by  any  Loan  Party  or  any  of  its
Subsidiaries.

     (c) Except as disclosed in the environmental  assessment  reports listed on
Schedule 4.13, no Loan Party nor any of its  Subsidiaries  is undertaking or has
not  completed,   either   individually  or  together  with  other   potentially
responsible  parties,  any investigation or assessment or Remedial,  Response or
Removal  action  relating  to any actual or  threatened  release,  discharge  or
disposal of  Hazardous  Materials  at any site,  location or  operation,  either
voluntarily or pursuant to the order of any governmental or regulatory authority
or the  requirements  of any  Environmental  Law;  and all  Hazardous  Materials
generated,  used, treated,  handled or stored at, or transported to or from, any
property  currently  owned  or  operated  by  any  Loan  Party  or  any  of  its
Subsidiaries or any property formerly owned or operated by any Loan Party or any
of its Subsidiaries have been disposed of in a manner not reasonably expected to
result in material liability to any Loan Party or any of its Subsidiaries.

     SECTION 4.14 Restrictive Agreements.

     Except  as set  forth  on  Schedule  4.14,  no  Loan  Party  nor any of its
Subsidiaries is a party to any indenture,  loan or credit agreement or any lease
or other  agreement  or  instrument  or  subject  to any  charter  or  corporate
restriction that could reasonably be expected to have a Material Adverse Effect.

     SECTION 4.15 Priority of Liens.

     The  Collateral  Documents,  together  with all filings and delivery to the
Administrative  Agent  or its  agent of  instruments  requiring  possession  for
perfection create in favor of the Administrative  Agent, for the ratable benefit
of the Lenders,  a valid and perfected first priority  security  interest in the
Collateral  which  security  interest is able to be  perfected by filings or the
taking  of  possession  with  respect  to  the  Collateral,  to the  extent  the
Administrative Agent actually takes such possession, securing the payment of the
Obligations, and all filings and other actions necessary or reasonably desirable
to perfect and protect such security interest as requested by the Administrative
Agent have been duly taken. The Loan Parties are the legal and beneficial owners
of the Collateral free and clear of any Lien,


                                     - 53 -
<PAGE>

except for the liens and security interests created or expressly permitted under
the Loan Documents.

     SECTION 4.16 Taxes.

     (a) Each Loan Party and each of its  Subsidiaries  has filed, has caused to
be filed or has been  included in all tax  returns  (Federal,  state,  local and
foreign)  required to be filed and has paid all taxes  shown  thereon to be due,
together with applicable interest and penalties.

     (b) Set forth on  Schedule  4.16 is a complete  and  accurate  list of each
taxable year of each Loan Party and each of its  Subsidiaries  for which Federal
income  tax  returns  have  been  filed  and for  which  the  expiration  of the
applicable  statute of limitations for assessment or collection has not occurred
by reason of extension or otherwise (an "Open Year").

     (c) There is no unpaid  amount of  adjustments  to the  Federal  income tax
liability  of each  Loan  Party  and each of its  Subsidiaries  proposed  by the
Internal  Revenue  Service to the  Borrowers or any of their  Subsidiaries  with
respect  to Open  Years.  No issues  have been  raised by the  Internal  Revenue
Service to the  Borrower or any of their  Subsidiaries  in respect of Open Years
that, in the aggregate,  could reasonably be expected to have a Material Adverse
Effect.

     (d)  There is no unpaid  amount  of  adjustments  to the  state,  local and
foreign tax liability of each Loan Party and each of its  Subsidiaries  proposed
by any state,  local or foreign  taxing  authorities  to the Borrowers or any of
their  Subsidiaries  (other than  amounts  arising from  adjustments  to Federal
income tax returns).  No issues have been raised by such taxing  authorities  to
such Borrower or any of its Subsidiaries that, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect.

     SECTION 4.17 Compliance with Securities Laws.

     No Loan Party and none of any Loan Party's  Subsidiaries  is an "investment
company," or an "affiliated person" of, or "promoter" or "principal underwriter"
for,  an  "investment  company,"  as such terms are  defined  in the  Investment
Company Act of 1940,  as amended.  Neither the making of any  Advances,  nor the
issuance  of any  Letters of Credit,  nor the  application  of the  proceeds  or
repayment  thereof by the Borrowers,  nor the  consummation of the  Transaction,
will violate any  provision of such Act or any rule,  regulation or order of the
Securities  and Exchange  Commission  thereunder or any takeover,  disclosure or
other federal,  state or foreign  securities law or Regulations T, U or X of the
Federal  Reserve  Board.  The Borrowers are not subject to regulation  under any
federal,  state or foreign  statute or  regulation  which  limits its ability to
incur Debt.

     SECTION 4.18 [Intentionally Left Blank.]

     SECTION 4.19 Debt.

     (a) Set forth on Schedule  4.19(a) is a complete and  accurate  list of all
Debt of the Borrowers and their  Subsidiaries  the principal amount of each such
Debt which is greater than $250,000  (the  "Existing  Debt"),  showing as of the
date hereof  immediately  before giving effect to the Transactions the principal
amount outstanding thereunder and the maturity date thereof.


                                     - 54 -
<PAGE>

     (b) Set forth on Schedule  4.19(b) is a complete and  accurate  list of all
Debt of the Borrowers and their  Subsidiaries  the principal amount of each such
Debt which is greater than $100,000,  which Debt shall remain  outstanding after
giving effect to the Transaction (the "Surviving Debt"),  showing as of the date
hereof the principal amount  outstanding  thereunder,  the maturity date thereof
and the amortization schedule therefor.

     SECTION 4.20 No Defaults, Compliance with Laws.

     (a)  Except as set  forth on  Schedule  4.20  hereto,  no Loan  Party is in
default  under  any  agreement,  ordinance,   resolution,  decree,  bond,  note,
indenture,  order or judgment to which it is a party or by which it is bound, or
any other agreement or other instrument by which any of the properties or assets
owned by it or used in the conduct of its  business is affected,  which  default
would be  reasonably  likely to have a Material  Adverse  Effect,  except to the
extent  that any such  default  in  respect  of an  order or  judgment  is being
contested in good faith and by proper proceedings and adequate reserves and does
not otherwise constitute an Event of Default under this Agreement.

     (b) Each Loan Party has complied and is in  compliance in all respects with
all applicable laws, rules, ordinances, regulations, resolutions, orders, writs,
decrees  and  other  similar   documents  and  instruments  of  all  courts  and
governmental authorities, bureaus and agencies, domestic and foreign, including,
without limitation,  any Regulatory  Authority and all applicable  provisions of
the  Americans  with  Disabilities  Act  (42  U.S.C.  ss.  12101-12213)  and the
regulations   issued   thereunder   and  all  applicable   Environmental   Laws,
non-compliance  with  which  could  reasonably  be  expected  to have a Material
Adverse Effect.

     SECTION 4.21 Owned Real Property.

     Set forth on  Schedule  4.21 is a complete  and  accurate  list of all real
property owned by any Loan Party or any of its Subsidiaries or in which any Loan
Party has an  interest as a contract  vendee,  showing as of the date hereof the
street address,  county or other relevant jurisdiction,  state, record owner and
book and estimated  fair value thereof.  Such Loan Party or such  Subsidiary has
good, marketable and insurable fee simple title to such real property,  free and
clear of all Liens,  other  than  Permitted  Real  Property  Encumbrances.  Each
Mortgage  creates,  as  security  for the  obligations  purported  to be secured
thereby, a valid and enforceable  perfected security interest in and Lien on all
of the  Mortgaged  Property (and will create a valid and  enforceable  perfected
security  interest in and Lien on all fixtures and improvements  related to such
Mortgaged  Property and affixed or added thereto on or after the Effective Date)
in favor of the  Administrative  Agent (or such other trustees that may be named
therein)  for the benefit of the Secured  Parties,  superior to and prior to the
rights of all third Persons  (except that the security  interest  created in the
Mortgaged  Property may be subject to the Permitted  Real Property  Encumbrances
related  thereto)  and subject to no other  Liens  (other  than  Permitted  Real
Property Encumbrances).

     SECTION 4.22 Leased Real Property.

     Set forth on Schedule 4.22 is a complete and accurate list of all leases of
real  property  under  which any Loan  Party or any of its  Subsidiaries  is the
lessee,  showing  as of the date  hereof  the  street  address,  county or other
relevant jurisdiction,  state, lessor, lessee, expiration date and annual rental
cost thereof.  To the best knowledge of each Loan Party,  each such lease is the
legal,  valid and  binding  obligation  of the lessor  thereof,  enforceable  in
accordance with its terms, except (a) as such enforceability may be limited by


                                     - 55 -
<PAGE>

applicable bankruptcy,  insolvency,  reorganization,  moratorium or similar laws
affecting the enforcement of creditors' rights generally,  and (b) to the extent
that such  enforceability is subject to general principles of equity (regardless
of whether such enforcement is considered in a proceeding in equity or at law).

     SECTION 4.23 Material  Contracts.

     Set forth on Schedule  4.23 is a complete and accurate list of all Material
Contracts  of each  Loan  Party  and  its  Subsidiaries.  Except  as  could  not
reasonably  be expected to have a Material  Adverse  Effect,  each such Material
Contract has been duly authorized, executed and delivered by each Loan Party and
its  Subsidiaries,  as the case may be, and any other parties  thereto,  has not
been amended or otherwise  modified,  is in full force and effect and is binding
upon and enforceable  against each Loan Party and its Subsidiaries,  as the case
may be, and any other parties thereto in accordance  with its terms,  except (a)
as such  enforceability  may be limited by  applicable  bankruptcy,  insolvency,
reorganization,   moratorium  or  similar  laws  affecting  the  enforcement  of
creditors' rights generally,  and (b) to the extent that such  enforceability is
subject to general  principles of equity (regardless of whether such enforcement
is  considered  in a proceeding  in equity or at law).  There exists no material
default  under  any  Material   Contract  by  the  Borrowers  or  any  of  their
Subsidiaries  party thereto and, to the best knowledge of each Loan Party, there
exists no default under any Material Contract by any other party thereto.

     SECTION  4.24  Investments.

     Set  forth  on  Schedule  4.24  is a  complete  and  accurate  list  of all
Investments  in  excess  of  $250,000  held  by  any  Loan  Party  or any of its
Subsidiaries,  showing as of the date hereof the  amount,  obligor or issuer and
maturity, if any, thereof.

     SECTION  4.25  Intellectual  Property.

     Set forth on Schedule  4.25 is a complete and accurate list of all patents,
trademarks,  trade names,  service marks and  copyrights,  and all  applications
therefor  and  material  licenses  thereof,  of each  Loan  Party  or any of its
Subsidiaries,   showing  as  of  the  date  hereof  the  jurisdiction  in  which
registered, the registration number, the date of registration and the expiration
date.  Each Loan  Party and each of their  respective  Subsidiaries  owns or has
rights to use all patents,  trademarks,  trade names, service marks,  copyrights
and other  intellectual  property  necessary  to conduct its  business as now or
heretofore  conducted  by it or proposed to be  conducted by it. Each Loan Party
and each of their  respective  Subsidiaries  conducts  its  business and affairs
without infringement of or interference with any patent, trademark,  trade name,
service  mark,  copyright  or other  intellectual  property of any other  Person
except for  infringements or interferences  that would have an immaterial effect
on the  Borrower  and its  Subsidiaries  taken as a whole or on the  rights  and
remedies of the Lender Parties and the  Administrative  Agent.  The Intellectual
Property  Security  Agreement,  together  with all  filings  and  other  actions
required to be taken in  connection  therewith,  creates,  as  security  for the
obligations  purported to be secured thereby, a valid and enforceable  perfected
security  interest in and Lien on all of the Collateral  purported to be covered
thereby in favor of the  Administrative  Agent for the  benefit  of the  Secured
Parties,  superior  to and prior to the rights of all third  Persons  except for
Permitted Liens.

     SECTION  4.26 Fees.

     No  broker's  or  finder's  fees  or  commissions  or any  similar  fees or
commissions  will be payable by any Loan Party or any of its  Subsidiaries  with
respect  to the  incurrence  and  maintenance  of  the  Obligations,  any  other
transaction  contemplated  by the Loan  Documents  or any  services  rendered in
connection with any such transactions. The Borrowers


                                     - 56 -
<PAGE>

hereby covenant and agree to indemnify the Administrative  Agent and each Lender
Party against and hold the  Administrative  Agent and each Lender Party harmless
from any claim,  demand or liability  for  broker's or finder's  fees or similar
fees or commissions.

     SECTION 4.27 Government Consents for Conduct of Business.

     (a) Except as set forth on  Schedule  4.4,  each Loan Party has,  and is in
good  standing  with respect to, all  approvals,  permits,  licenses,  consents,
authorizations,  franchises,  certificates,  and  inspections  of all Regulatory
Agencies  and are  otherwise  necessary  for a Loan Party to continue to conduct
business  and own,  use,  operate,  and  maintain  its  property  and  assets as
heretofore  conducted,  owned,  used,  operated,  and maintained  which,  if not
obtained  (whether  directly  or by  lawful  and  effective  assignment)  or not
maintained  in good  standing,  could  reasonably be expected to have a Material
Adverse  Effect.  No such approval,  permit,  license,  consent,  authorization,
franchise,  or  certificate  is  conditioned  or limited  any more so than as is
generally the case with respect to Persons  engaged in the same or similar lines
of  business.  Each such  approval,  permit,  license,  consent,  authorization,
franchise,  or certificate  was duly and validly  granted or issued,  is in full
force and effect, and neither has been, nor, to the knowledge of any Loan Party,
has been threatened to be, amended,  modified,  suspended,  rescinded,  revoked,
forfeited,  or assigned.  Further, to its knowledge, no condition(s) exist(s) or
event(s) has (have) occurred that, with the giving of notice or lapse of time or
both,  could  result in the  amendment,  modification,  suspension,  rescission,
revocation,  forfeiture,  or non-renewal of any such approval,  permit, license,
consent, authorization, franchise, or certificate.

                                   ARTICLE 5

                              AFFIRMATIVE COVENANTS

     While any of the  Commitments is outstanding  and, in the event any Advance
remains outstanding, so long as any Borrower or any other Loan Party is indebted
to any of the Lender Parties or the  Administrative  Agent under any of the Loan
Documents,  any Letter of Credit is outstanding and until payment in full of the
Notes and full and complete  performance of all of its other obligations arising
hereunder, each Borrower shall:

     SECTION 5.1 Compliance with Law.

     Comply,  and cause  each of its  Subsidiaries  to comply,  in all  material
respects,  with  all  applicable  laws,  rules,  regulations  and  orders,  such
compliance to include,  without  limitation,  compliance  with ERISA;  provided,
however,  that the  Borrowers  and their  Subsidiaries  shall not be required to
comply with any such laws,  rules,  regulation and orders to the extent that its
obligation to do so is being  contested in good faith and by proper  proceedings
and  adequate   reserves  are  being   maintained   in   connection   with  such
circumstances.

     SECTION 5.2 Payment of Taxes, Etc.

     Timely pay and discharge,  and cause each of its Subsidiaries to timely pay
and discharge,  (a) all taxes,  assessments and  governmental  charges or levies
imposed upon it or upon its property and (b) all lawful  claims that, if unpaid,
might  by law  become a Lien  upon its  property;  provided,  however,  that the
Borrowers and their  Subsidiaries  shall not be required to pay or discharge any
such tax, assessment,  charge or claim that is being contested in good faith and
by proper proceedings and as to which appropriate reserves are being


                                     - 57 -
<PAGE>

maintained,  unless  and  until any Lien  resulting  therefrom  attaches  to its
property  and  becomes  enforceable  against  the  Borrowers  or  any  of  their
Subsidiaries.

     SECTION 5.3 Compliance with  Environmental  Laws.

     Comply,  and  cause  each of its  Subsidiaries  and all  lessees  and other
Persons  operating  or  occupying  its  properties  to comply,  in all  material
respects,  with all applicable  Environmental  Laws and  Environmental  Permits;
obtain  and renew and cause  each of its  Subsidiaries  to obtain  and renew all
Environmental  Permits  reasonably  necessary for its operations and properties;
and conduct,  and cause each of its Subsidiaries to conduct,  any investigation,
study,  sampling  and testing,  and  undertake  any  Removal,  Remedial or other
Response  action  necessary to remove and clean up all Hazardous  Materials from
any of its properties,  in accordance with the requirements of all Environmental
Laws; provided,  however, that the Borrowers and their Subsidiaries shall not be
required to comply with any such  Environmental  Law or Environmental  Permit or
undertake any such cleanup, Removal,  Remedial,  Response or other action to the
extent  that its  obligation  to do so is being  contested  in good faith and by
proper  proceedings  and  adequate  reserves  as  reasonably  determined  by the
Administrative Agent are being maintained with respect to such circumstances.

     SECTION 5.4 Preparation of Environmental  Reports.

     The Borrowers  agree that the  Administrative  Agent may,  upon  reasonable
prior notice,  from time to time (but in any event no more  frequently than once
every  two  years)  in its  reasonable  discretion,  retain,  at the  Borrowers'
expense, an independent  professional  consultant to prepare  environmental site
assessment  reports for the  Borrowers  or any of their  Subsidiaries  and/or to
review  any  report  relating  to  Hazardous  Materials  prepared  by or for the
Borrowers  and,  upon  a  reasonable  belief  that  any  Borrower  or any of its
Subsidiaries  has  breached  any  covenant  or  representation  with  respect to
environmental   matters  or  that  there  has  been  a  material   violation  of
Environmental   Laws  by  any   Borrower  or  one  of  its   Subsidiaries,   the
Administrative  Agent may  conduct its own  investigation  of such matter at any
facility or property currently owned,  leased,  operated or used by any Borrower
or one  of  its  Subsidiaries  and  the  Borrowers  agree  to  use  commercially
reasonable  efforts  to  obtain  permission  for  the   Administrative   Agent's
professional  consultant to conduct its own  investigation of any such matter at
any  facility  or property  previously  owned,  leased,  operated or used by any
Borrower or one of its Subsidiaries. The Borrowers and their Subsidiaries hereby
grant to the Administrative  Agent, its employees,  consultants and contractors,
the right to enter into or onto the  facilities or properties  currently  owned,
leased,  operated or used by any Borrower or its  Subsidiaries  upon  reasonable
notice to the  Borrowers to perform  such  assessments  on such  property as are
reasonably  necessary to conduct such a review  and/or  investigation.  Any such
investigation  of any such  facility  or  property  shall be  conducted,  unless
otherwise agreed to by the Borrowers and the Administrative Agent, during normal
business hours and, to the extent reasonably practicable,  shall be conducted so
as not to interfere  with the ongoing  operations at any facility or property or
to cause any damage or loss to any facility or property.  The  Borrowers and the
Administrative  Agent  hereby  acknowledge  and  agree  that any  report  of any
investigation  conducted  at the  request  of the  Administrative  Agent will be
obtained and shall be used by the  Administrative  Agent and Lender  Parties for
the  purpose of internal  credit  decisions  to monitor and police the  Advances
and/or protect the Administrative Agent's and Lender Parties' security interests
in the Collateral. The Administrative Agent agrees to deliver a copy of any such
report to the Borrowers with the  understanding  that the Borrowers  acknowledge
and agree that (i) the Borrowers will indemnify


                                     - 58 -
<PAGE>

and hold harmless the Administrative Agent and each Lender Party from any costs,
losses or  liabilities  relating  to the  Borrowers'  use of or reliance on such
report and (ii) neither the Administrative  Agent nor any Lender Party makes any
representation or warranty with respect to such report.

     SECTION 5.5 Maintenance of Insurance.

     (a) Maintain,  and cause each of their Subsidiaries to maintain,  insurance
with  responsible  and reputable  insurance  companies or  associations  in such
amounts and covering  such risks as is usually  carried by companies  engaged in
similar  businesses and owning  similar  properties in the same general areas in
which such Borrower or such Subsidiary operates  including,  without limitation,
the policies described on Schedule 5.5 (or other policies  comparable  thereto);
(b) file with the  Administrative  Agent upon its request a detailed list of the
insurance  then in effect,  stating the names of the  insurance  companies,  the
amounts and rates of the insurance,  the dates of the expiration thereof and the
properties  and risks  covered  thereby;  and (c) deliver to the  Administrative
Agent,  in form and  substance  reasonably  satisfactory  to the  Administrative
Agent,  endorsements  to (A) all  "all-risk"  and casualty and (if any) business
interruption  insurance naming the Administrative Agent, on behalf of itself and
the Lenders, as loss payee if permitted thereunder (or assignee,  in the case of
business  interruption  insurance,  if any)  insuring in the case of  "all-risk"
against loss or damage by fire, lightening, windstorm, explosion, hail, tornado,
and if to the extent in a flood hazard area, a flood insurance  policy,  and (B)
all general  liability and other liability  policies  naming the  Administrative
Agent, on behalf of itself and the Lenders,  as additional  insured if permitted
thereunder,  and providing, in any event, that such insurance policies shall not
be  canceled  without  thirty  (30) days' prior  written  notice  thereof by the
respective  insurer  to the  Administrative  Agent  and shall  contain  standard
non-contributory  mortgagee  clause  endorsement in favor of the  Administrative
Agent with respect to hazard insurance coverage.

     SECTION 5.6 Preservation of Corporate  Existence,  Etc.

     Except as otherwise  expressly permitted in the Loan Documents preserve and
maintain,  and cause each of its  Subsidiaries  to preserve  and  maintain,  its
existence,  legal  structure,  legal name, and to the extent necessary for it to
conduct  its  business,  rights  (charter  and  statutory)  permits,   licenses,
approvals, privileges and franchises, provided, that, MediaBay shall be required
to dissolve or to merge each Inactive  Subsidiary  into MediaBay or another Loan
Party,  with MediaBay or such other Loan Party being the surviving  corporation,
within thirty (30) days after the  Effective  Date (or sixty (60) days after the
Effective Date with respect to any  corporation  organized under the laws of the
state of New York).

     SECTION 5.7 Rights.

     (a) At any  reasonable  time and from time to time during  normal  business
hours, upon reasonable notice,  permit the  Administrative  Agent, or, after the
occurrence of a Default,  the Lender Parties,  or any agents or  representatives
thereof,  to examine and make copies of and abstracts from the records and books
of account of and visit the properties of the Borrowers and their  Subsidiaries,
and to discuss the affairs,  finances and accounts of the Borrowers and any such
Subsidiaries with any of their officers or directors.

     (b) Permit the  Administrative  Agent and the Lender  Parties to conduct at
Borrowers'  expense such  commercial  finance  examinations,  appraisals  and/or
Collateral audits of the


                                     - 59 -
<PAGE>

Borrowers and their Subsidiaries during each calendar year as the Administrative
Agent may  reasonably  request  during  normal  business  hours and so as not to
interfere with the ongoing operations of the Borrower and its Subsidiaries.

     SECTION 5.8 Keeping of Books.

     Keep, and cause each of its  Subsidiaries  to keep,  proper books of record
and account,  in which full and correct  entries  shall be made of all financial
transactions and the assets and business of the Borrowers and each Subsidiary in
accordance with GAAP.

     SECTION 5.9  Maintenance of  Properties,  Etc.

     Maintain and preserve,  and cause each of its  Subsidiaries to maintain and
preserve,  all of its properties that are reasonably necessary in the conduct of
its  business  in good  working  order  and  condition,  ordinary  wear and tear
excepted and except for insured casualty losses on such properties.

     SECTION 5.10  Compliance  with Terms of  Leaseholds.  Make all payments and
otherwise  perform all  obligations in respect of all leases of real property to
which the Borrowers or any of their Subsidiaries is a party, keep such leases in
full force and effect and not allow such leases to lapse or be terminated or any
rights  to  renew  such  leases  to  be  forfeited   or  canceled,   notify  the
Administrative Agent of any default by any party with respect to such leases and
cooperate  with  the  Administrative  Agent  in all  respects  to cure  any such
default,  and cause each of its Subsidiaries to do so except, in any case, where
the  failure  to do so,  either  individually  or in the  aggregate,  could  not
reasonably be expected to have a Material Adverse Effect.

     SECTION 5.11 Performance of Material  Contracts.

     Perform  and  observe,  and cause each of its  Subsidiaries  to perform and
observe,  all of the material terms and provisions of each Material  Contract to
be performed or observed by it, maintain,  and cause each of its Subsidiaries to
maintain, each such Material Contract in full force and effect, and enforce, and
cause each of its  Subsidiaries  to  enforce,  each such  Material  Contract  in
accordance  with its  terms,  except  where  the  failure  to do so would not be
reasonably likely to have a Material Adverse Effect and except where its failure
to do so is being contested in good faith and by proper proceedings.

     SECTION 5.12 Transactions with Affiliates.

     Notwithstanding  anything in this Agreement to the contrary,  except as set
forth in Schedule 5.12 hereto,  conduct,  and cause each of its  Subsidiaries to
conduct, all transactions  otherwise permitted under the Loan Documents with any
of their  Affiliates on terms that are fair and reasonable and no less favorable
to the  Borrowers  or such  Subsidiary  than it  would  obtain  in a  comparable
arms-length transaction with a Person not an Affiliate;  provided, however, that
this Section 5.12 shall not be deemed to prohibit any intercompany  transactions
solely between such Borrower and its  Wholly-Owned  Subsidiaries  carried out in
the ordinary course of business,  subject, however, to any applicable provisions
of Article 6, and shall not be deemed to prohibit the transactions  contemplated
by the  Senior  Subordinated  Debt  Documents  as in effect on the date  hereof,
including the Warrants (as defined therein).

     SECTION 5.13 Agreement to Grant Additional Security.

     (a)  Promptly,  and  in  any  event  within  thirty  (30)  days  after  the
acquisition of assets of the type that would have constituted  Collateral at the
date hereof and investments of the type that


                                     - 60 -
<PAGE>

would have  constituted  Collateral on the date hereof (other than assets with a
fair market  value of less than  $50,000),  including  the capital  stock of any
direct or indirect Subsidiary of each Borrower,  notify the Administrative Agent
of the acquisition of such assets or investments  and, to the extent not already
Collateral in which the  Administrative  Agent has a perfected security interest
pursuant to the Collateral  Documents,  such assets and investments  will become
additional Collateral hereunder to the extent the Administrative Agent deems the
pledge  of  such  assets  practicable  (the  "Additional  Collateral"),  and the
Borrower will, and will cause each of its direct and indirect  Subsidiaries  to,
take all  necessary  action,  including  the  filing  of  appropriate  financing
statements  under the  provisions of the UCC,  applicable  foreign,  domestic or
local laws,  rules or  regulations  in each of the offices  where such filing is
necessary or appropriate to grant  Administrative Agent a perfected Lien in such
Collateral  (or  comparable  interest  under  foreign law in the case of foreign
Collateral)  pursuant  to and to the  full  extent  required  by the  Collateral
Documents and this Agreement.

     (b)  Promptly,  and in any event no later  than  thirty  (30) days  after a
request with respect thereto,  cause each of such Borrower's direct and indirect
Subsidiaries  (except such as the  Administrative  Agent shall exempt) to become
party to, or to execute and deliver, a Subsidiary  Guaranty,  guarantying to the
Administrative Agent and the Lenders the prompt payment, when and as due, of all
Obligations  of the  Loan  Parties  under  the  Loan  Documents,  including  all
obligations under any hedging agreements.

     (c)  Promptly,  and in any event no later  than  thirty  (30) days  after a
request with respect thereto,  cause each Guarantor created or established after
the date hereof to grant to the Administrative Agent, for the ratable benefit of
the Lenders,  a first priority Lien on all property (tangible and intangible) of
such Guarantor,  including,  without limitation, all of the capital stock of any
of  its  Domestic  Subsidiaries  and  65%  of the  stock  of any of its  Foreign
Subsidiaries,  upon terms similar to those set forth in the Collateral Documents
and otherwise  satisfactory in form and substance to the  Administrative  Agent.
The Borrowers shall cause each Guarantor,  at its own expense, to become a party
to a Security Agreement, an Intellectual Property Security Agreement, a Mortgage
and any other Collateral  Document and to execute,  acknowledge and deliver,  or
cause the execution,  acknowledgment  and delivery of, and thereafter  register,
file  or  record  in  any  appropriate  governmental  office,  any  document  or
instrument  reasonably  deemed  by  Administrative  Agent  to  be  necessary  or
desirable  for the creation and  perfection of the  foregoing  Liens  (including
legal opinion, title insurance, consents, corporate documents and any additional
or substitute security agreements or mortgages or deeds of trust). The Borrowers
will cause each such Guarantor to take all actions  requested by  Administrative
Agent (including,  without limitation, the filing of UCC-1's) in connection with
the granting of such security interests.

     (d)  Promptly,  and in any event not later  than  thirty  (30) days after a
request  with  respect  thereto,  (i)  deliver to the  Administrative  Agent the
original  of all  instruments,  documents  and  chattel  paper,  and  all  other
Collateral of which the Administrative  Agent determines it should have physical
possession  in order to perfect its security  interest  therein,  duly  pledged,
endorsed or assigned  to the  Administrative  Agent  without  restriction;  (ii)
obtain landlord waivers,  in form and substance  reasonably  satisfactory to the
Administrative Agent, with respect to any Inventory or other tangible Collateral
located at a location that is not owned by such Borrower or a Subsidiary;  (iii)
deliver to the  Administrative  Agent warehouse receipts covering


                                     - 61 -
<PAGE>

any portion of the Inventory or other  Collateral  located in warehouses and for
which  warehouse  receipts  are  issued;  (iv) when an Event of Default  exists,
transfer Inventory to locations  designated by the Administrative  Agent; (v) if
any Collateral is at any time in the possession or control of any  warehousemen,
bailee or any Borrower's agents or processors,  notify the Administrative  Agent
thereof and notify such person of the  Administrative  Agent's security interest
in such Collateral and obtain a bailee letter, in form and substance  reasonably
satisfactory  to the  Administrative  Agent,  from such person and instruct such
person  to hold all  such  Collateral  for the  Administrative  Agent's  account
subject  to the  Administrative  Agent's  instructions;  (vi) if at any time any
Inventory or other  Collateral  is located on any real  property of any Borrower
which is subject to a mortgage or other Lien, obtain a mortgagee waiver, in form
and substance  reasonably  satisfactory to the  Administrative  Agent,  from the
holder of each mortgage or other Lien on such real property;  and (vii) take all
such other actions and obtain all such other  agreements  as the  Administrative
Agent may reasonably deem necessary or desirable in respect of any Collateral.

     (e) The security  interests required to be granted pursuant to this Section
shall be granted pursuant to the Collateral  Documents or, in the Administrative
Agent's  discretion,   such  other  security   documentation   (which  shall  be
substantially similar to the Collateral Documents already executed and delivered
by the Borrowers and the  Guarantors) as is reasonably  satisfactory in form and
substance to Administrative  Agent (the "Additional  Collateral  Documents") and
shall constitute valid and enforceable perfected security interests prior to the
rights of all third Persons and subject to no other Liens except Liens permitted
under Section 6.1. The  Additional  Collateral  Documents and other  instruments
related  thereto  shall be duly  recorded  or filed in such  manner  and in such
places and at such times as are required by law to establish,  perfect, preserve
and protect the Liens, in favor of Administrative  Agent, for the benefit of the
Lender Parties, granted pursuant to the Additional Collateral Documents and, all
taxes,  fees and other charges payable in connection  therewith shall be paid in
full by the  Borrowers.  At the time of the execution and delivery of Additional
Collateral   Documents,   the   Borrowers   shall  cause  to  be   delivered  to
Administrative  Agent such  agreements,  opinions of counsel,  and other related
documents  as may be  reasonably  requested by the  Administrative  Agent or the
Required Lenders to assure themselves that this Section has been complied with.

     SECTION  5.14  Borrower's  Account.  Within  thirty  (30)  days  after  the
Effective Date  Borrowers'  Account will have been  relocated to  Administrative
Agent or its affiliate or Borrowers  will have entered into a tri-party  blocked
account agreement,  in form and substance  satisfactory to Administrative Agent,
with Administrative Agent and Fleet National Bank.

                                   ARTICLE 6

                               NEGATIVE COVENANTS

     While any of the  Commitments is outstanding  and, in the event any Advance
remains outstanding, so long as any Borrower or any other Loan Party is indebted
to any of the Lender Parties or the  Administrative  Agent under any of the Loan
Documents,  any Letter of Credit is outstanding and until payment in full of the
Notes and full and complete  performance of all of its other obligations arising
hereunder,  each Borrower  covenants that it will not, at any time, and


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<PAGE>

will not permit any Loan Party to do,  agree to do or permit to be done,  any of
the following without the prior written consent of the Required Lenders:

     SECTION 6.1 Liens, Etc. Create, incur, assume or suffer to exist, or permit
any of its Subsidiaries to create, incur, assume or suffer to exist, any Lien on
or with respect to any of its  properties of any character  (including,  without
limitation,  accounts  receivable,  Inventory and other Collateral)  whether now
owned or hereafter  acquired,  or sign or file or suffer to exist, or permit any
of its  Subsidiaries  to sign or file or  suffer to  exist,  under  the  Uniform
Commercial Code or any other statute of any jurisdiction,  a financing statement
that names any  Borrower  or any of their  Subsidiaries  as  debtor,  or sign or
suffer to exist,  or permit any of its  Subsidiaries to sign or suffer to exist,
any security agreement authorizing any secured party thereunder to file any such
financing statement, or assign, or permit any of its Subsidiaries to assign, any
accounts  or  other  right  to  receive  income,  excluding,  however,  from the
operation of the foregoing restrictions the following:

          (a) Liens created under the Loan Documents;

          (b) Permitted Liens;

          (c) Liens  existing  on the date  hereof  and  described  on  Schedule
     6.1(c);

          (d)  Purchase  money  Liens  securing  Debt  permitted  under  Section
     6.2(c)(i) upon real property or Equipment  acquired or held by any Borrower
     or any of its Subsidiaries in the ordinary course of business to secure the
     purchase  price of such  real  property  or  Equipment  or to  secure  Debt
     incurred solely for the purpose of financing the acquisition,  construction
     or improvement of any such real property or Equipment to be subject to such
     Liens, or Liens existing on any such real property or Equipment at the time
     of acquisition  (other than any such Liens created in contemplation of such
     acquisition that do not secure the purchase price), or extensions, renewals
     or  replacements  of any of the foregoing for the same or a lesser  amount;
     provided,  however, that no such Lien shall extend to or cover any property
     other than the real property or Equipment  being  acquired,  constructed or
     improved, and no such extension,  renewal or replacement shall extend to or
     cover any  property  not  theretofore  subject to the Lien being  extended,
     renewed or replaced;

          (e) Liens  arising in connection  with  Capitalized  Leases  permitted
     under Section  6.2(c)(i) or true operating leases;  provided,  that no such
     Lien shall extend to or cover any  Collateral  or any assets other than the
     assets subject to such Capitalized  Leases or operating leases, as the case
     may be;

          (f) (i) Liens created under the Radio  Spirits  Subordinated  Security
     Agreement; and

               (ii) Liens on the same assets as described  under  clause  (f)(i)
          granted to secure the Senior  Subordinated  Debt but only on terms and
          conditions satisfactory to the Administrative Agent as acknowledged in
          writing;  provided that said Liens shall in any event be  co-terminous
          with the Liens  referred to in clause  (f)(i)  above and the holder of
          such Liens  shall have no rights to vote as a secured  creditor in any
          proceeding of the type described in Section 9.6.


                                     - 63 -
<PAGE>

               (g) The  replacement,  extension or renewal of any Lien permitted
          by  clauses  (a)  through  (f)  above  upon  or in the  same  property
          theretofore  subject  thereto  in  connection  with  the  replacement,
          extension or renewal (without  increase in the amount or any change in
          any direct or contingent obligor) of the Debt secured thereby.

     SECTION 6.2 Debt.

     Create, incur, assume or suffer to exist, or permit any of its Subsidiaries
to create, incur, assume or suffer to exist, any Debt other than:


          (a) In the case of the Borrowers,  Debt incurred  pursuant to the Loan
     Documents;

          (b) In the case of MediaBay,  debt owed to any Wholly-Owned Subsidiary
     of  MediaBay,  and in the  case  of any  of the  Subsidiaries  of  MediaBay
     (including Radio Spirits and Audio Book Club),  Debt owed to MediaBay or to
     a Wholly-Owned Subsidiary of MediaBay; provided, that all such Debt owed by
     any  Subsidiary to MediaBay shall be evidenced by a promissory  note,  such
     promissory  note shall be pledged to the  Administrative  Agent pursuant to
     the terms of the  Security  Agreement  or such other  document  (including,
     without limitation, the Note Assignment Agreement) and, in the case of Debt
     owed by any Subsidiary,  there shall be no  restrictions  whatsoever on the
     ability of such Subsidiary to repay such Debt; and

          (c) In the case of the Borrowers and any of their Subsidiaries:

               (i) Debt (A) secured by Liens permitted by Section 6.1(d) and (B)
          Capitalized  Leases,  collectively  not to  exceed  in  the  aggregate
          $500,000 at any time outstanding;

               (ii)  endorsement  of  negotiable   instruments  for  deposit  or
          collection or similar transactions in the ordinary course of business;

               (iii) the Surviving Debt;

               (iv) Senior  Subordinated  Debt,  provided that (A) principal and
          interest shall be payable or paid by MediaBay only in accordance  with
          the terms and conditions of the applicable Subordinated Debt Documents
          and  subject  to Section  6.19  hereof and (B) the  Borrower  may,  as
          required by the Senior Subordinated Debt Documents, cause its existing
          Subsidiaries  and any  Subsidiaries  of the Company  hereafter  formed
          and/or  acquired by the Company (or any  Subsidiary of the Company) to
          issue guaranties of MediaBay Obligations under the Senior Subordinated
          Debt,  which   guaranties  shall  be  substantially   similar  to  the
          Subsidiary  Guaranty issued  pursuant to this  Agreement,  except that
          such  guaranties  will  be  subordinated  to the  Obligations  of such
          Subsidiaries under the Subsidiary  Guaranty or Guaranties issued or to
          be issued  under  this  Agreement  consistent  with the  subordination
          provisions  set  forth in the  Convertible  Senior  Subordinated  Note
          included  in  the  Senior   Subordinated   Debt,   will  guaranty  the
          Obligations  of MediaBay  under such Note and otherwise be in form and
          substance reasonably  satisfactory to the Administrative Agent and the
          holder of such Note;

               (v)  Subordinated  Debt,  notwithstanding  any other provision of
          this Section 6.2.

               (vi)  any  Debt  extending  the  maturity  of,  or  refunding  or
          refinancing, in whole or in part, the Debt referred to in this Section
          6.2(c),  provided that (A) the principal amount of


                                     - 64 -
<PAGE>

          such Debt shall not be increased  above the principal  amount  thereof
          outstanding  immediately  prior to the  refinancing and the direct and
          contingent  obligors  shall  not  be  changed,  as a  result  of or in
          connection with such extension, refunding or refinancing,  except that
          any  Subsidiary  of the Company in existence at, or formed or acquired
          by the Company (or any  Subsidiary of the Company)  subsequent to, the
          date of any of such  extension  of the  maturity  of, or  refunding or
          refinancing,  in whole or in part,  of the Senior  Subordinated  Debt,
          shall be permitted to guarantee such Debt as so extended,  refunded or
          refinanced,  to the same extent as such  Subsidiaries are permitted to
          guarantee  such Debt  pursuant to Section  6.2(c)(iv)  hereof,  and no
          prepayment  premium  or  penalty  of any  kind  shall be  incurred  in
          connection  therewith,  and the terms thereof are no less favorable to
          any Borrower or the Lender Parties or the Administrative Agent (except
          as and to the extent set forth in respect of Senior  Subordinated Debt
          under  clause  (vi)(B)  below)  than  the  terms  of the  refunded  or
          refinanced  Debt and the fees,  expenses  and other  costs  associated
          therewith are reasonably acceptable to the Administrative Agent in the
          exercise of its reasonable discretion; (B) no amendment,  modification
          or supplement  to the terms of any Debt or any  refinanced or refunded
          Debt shall be made except if and to the extent permitted under Section
          6.13, but  amendments and  modifications  to any  replacement  for the
          Senior  Subordinated Debt which are not inconsistent with the terms of
          Section  6.13(b)  shall be deemed  acceptable  to the  Lenders and the
          Administrative Agent; and (C) with respect to the first refinancing of
          the Senior  Subordinated  Debt that exists on the Effective  Date, the
          principal  amount of the replacement Debt shall at least equal the sum
          of  (i)  the  principal   amount  then   outstanding  of  such  Senior
          Subordinated Debt which is refinanced and (ii) the fees,  expenses and
          other costs payable by MediaBay or its Subsidiaries in connection with
          such refinancing;

               (vii) the Huntingdon  Financing Debt, provided that principal and
          interest shall be payable or paid by MediaBay only in accordance  with
          the terms and conditions of the applicable Subordinated Debt Documents
          and subject to Section 6.20 hereof;

               (viii) the Huntingdon Secured  Subordinated  Loan,  provided that
          principal  and interest  shall be payable or paid by MediaBay  only in
          accordance   with  the  terms  and   conditions   of  the   applicable
          Subordinated Debt Documents and subject to Section 6.19 hereof; and

               (ix) up to $500,000 in  additional  senior  secured  indebtedness
          provided by Huntingdon or Norton Herrick,  his family or affiliates on
          the same terms and conditions  applicable to the Huntingdon  Financing
          Debt  provided  that the holders of such senior  secured  indebtedness
          execute an intercreditor  agreement in form and substance satisfactory
          to the Lenders and provided  further that principal and interest shall
          be payable or paid by MediaBay only in  accordance  with the terms and
          conditions of the applicable  Subordinated  Debt Documents and subject
          to Section 6.20 hereof.

     SECTION 6.3 Accounts Payable.

     No accounts payable of any Borrower or any of its Subsidiaries arising from
the purchase of property or services,  including, without limitation,  Inventory
acquired for resale shall be outstanding  for longer than 180 days from the date
of  incurrence,  except (a)  accounts  for which the vendor has entered  into an
agreement with the  applicable  Loan Party to extend the payment date thereof or
(b) accounts payable that are subject to good faith dispute by the Borrower.


                                     - 65 -
<PAGE>

     SECTION 6.4 Fundamental Changes.

     (a) Merge into or consolidate with any Person or permit any Person to merge
into it, or permit any of its  Subsidiaries  to do so, except that so long as no
Default or Event of Default shall have occurred and be continuing and so long as
no  Default  or  Event of  Default  would  result  therefrom,  (A)  Wholly-Owned
Subsidiaries of any Borrower may make Permitted Acquisitions; (B) any Subsidiary
of any  Borrower  may  consolidate  with  or  merge  into  any  Borrower  or any
Wholly-Owned  Subsidiary of any Borrower if such  Borrower or such  Wholly-Owned
Subsidiary  will be the  surviving  corporation;  (C) any  Subsidiary  may sell,
lease,  transfer,  contribute or otherwise dispose of its assets, in whole or in
part, to any Borrower or any other Wholly-Owned  Subsidiary of any Borrower, and
may,  following any such  disposition in whole,  liquidate and dissolve and such
Borrower may transfer, contribute or otherwise dispose of its assets in whole or
in part to any  Wholly-Owned  Subsidiary of any Borrower;  (D) MediaBay may on a
single  occasion  transfer  any  or  all  of  its  accounts  receivable  to  its
Wholly-Owned Subsidiary,  ABC Investment Corp., and such Subsidiary may transfer
any or all of its accounts  receivable  to MediaBay (in each case subject to the
continuing  existence of the Administrative  Agent's perfected security interest
therein) and (E) a merger of any Borrower with and into a newly-formed  Delaware
Wholly-Owned  Subsidiary  of such  Borrower  for the sole purpose of effecting a
reincorporation of such Borrower in Delaware,  provided that the Borrowers shall
have given the  Administrative  Agent not less than ten (10) Business Days prior
written  notice and prior to  effecting  such  Merger  Borrowers  shall take all
actions, if any, reasonably required by the Administrative Agent to preserve the
Administrative  Agent's security interest in the Collateral and all other rights
and  remedies  of the  Lenders  and the  Administrative  Agent  under  the  Loan
Documents or otherwise then existing by law;

     (b) Except as otherwise expressly permitted herein,  liquidate,  wind-up or
dissolve  itself (or suffer  any  liquidation  or  dissolution),  convey,  sell,
assign,  lease,  transfer  or  otherwise  dispose  of (or agree to do any of the
foregoing at any future time) all or substantially all of its property, business
or assets, or permit any of its Subsidiaries to do any of the foregoing;

     (c) Except as otherwise expressly  permitted herein,  acquire or permit any
Subsidiary  to acquire  all or  substantially  all of the assets or any  capital
stock of any other  Person,  except that (A)  Wholly-Owned  Subsidiaries  of any
Borrower  may  consummate  Permitted  Acquisitions  and (B) any  Borrower or any
Wholly-Owned  Subsidiary  of any Borrower may acquire any asset  permitted to be
sold, leased, transferred,  contributed or otherwise disposed of by any Borrower
or any of its Subsidiaries pursuant to Section 6.4(a)(C).

     SECTION 6.5 Sales, Etc. of Assets.

     Except as  otherwise  expressly  set forth in Section  6.4 with  respect to
transfers or other dispositions between any Borrower and any of its Subsidiaries
or  between or among such  Subsidiaries,  sell,  lease,  transfer  or  otherwise
dispose  of, or permit  any of its  Subsidiaries  to sell,  lease,  transfer  or
otherwise dispose of, any assets or grant any option or other right to purchase,
lease or otherwise acquire any assets, except:

          (a) Sales of Inventory in the ordinary course of business;

          (b) Sales of obsolete or surplus  Equipment or  Equipment  which is no
     longer useful in the ordinary course of business;

          (c) Sell or  liquidate  Cash  Equivalents  in the  ordinary  course of
     business;


                                     - 66 -
<PAGE>

          (d) Transactions in the ordinary course of business including, without
     limitation,  relating to rental,  lease or licensing of customer  lists and
     programs  and similar  rights to third party  users in which  revenues  are
     shared  by any  Borrower  (or one of its  Subsidiaries),  provided  that in
     respect of each of the  foregoing,  no rights in any assets of the Borrower
     or any of its Subsidiaries  shall be granted to any person that would limit
     such Borrower's rights in such assets in any materially  adverse way or the
     Administrative  Agent's  rights  with  respect  thereto  in any  materially
     adverse way or that would diminish the value of the assets to such Borrower
     or its Subsidiaries or its value as collateral to the Administrative  Agent
     in any materially adverse way.

     SECTION 6.6  Investments in Other  Persons.

     Make or hold,  or  permit  any of its  Subsidiaries  to make or  hold,  any
Investment  utilizing cash (or if not utilizing  cash, then subject to the terms
of Section 6.6(i)) in any Person other than:

          (a)  Investments  by  any  Borrower  and  its  Subsidiaries  in  their
     Subsidiaries  outstanding  on the date  hereof and  described  on  Schedule
     6.6(a);

          (b) Loans and advances to officers and other employees in the ordinary
     course of business of the Borrowers and their Subsidiaries,  outstanding as
     July 31, 2000, in an aggregate principal amount not to exceed $250,000, for
     all Borrowers taken as a whole,  provided,  that, any amount repaid on such
     loans or advances may not be relent or readvanced;

          (c)  Investments  by  any  Borrower  and  its   Subsidiaries  in  Cash
     Equivalents;

          (d)  Investments  consisting  of  intercompany  Debt  permitted  under
     Section 6.2(b);

          (e)  Investments  by any  Borrower  and its  Subsidiaries  in  deposit
     accounts  opened in the  ordinary  course of  business  and  located  at or
     assigned to the Administrative Agent;

          (f)  Investments  consisting  of accounts  receivable  in the ordinary
     course of business;

          (g)  Investments  received  in the  ordinary  course  of  business  in
     connection with the settlement of debts, including receivables, owed to any
     Borrower or its  Subsidiaries,  which debts shall not exceed  $1,000 in any
     single instance and $20,000 in the aggregate; and

          (h) Investments  utilizing Equity Interests issued by any Borrower and
     not  utilizing  cash or other  assets  of any Loan  Party,  but only on the
     following terms and conditions:

               (i) no such  Investment  would,  before  or after  giving  effect
          thereto,  conflict  with  or be  inconsistent  with  any of the  other
          provisions  of  this   Agreement   (including,   without   limitation,
          provisions  relating to Permitted  Acquisitions) or cause a Default or
          Event of Default; and

               (ii)  no  such  Investment  would  result  in  any  liability  or
          obligation  being  incurred at any time by any  Borrower or any of its
          Subsidiaries,   except  as  otherwise   expressly  permitted  by  this
          Agreement.

     SECTION 6.7  Dividends,  Etc.

     Subject to Section 6.17,  declare or pay any dividends,  purchase,  redeem,
retire, defease or otherwise acquire for value any of its capital stock or any


                                     - 67 -
<PAGE>

warrants,  rights or options to acquire  such  capital  stock,  now or hereafter
outstanding,   return  any  capital  to  its  stockholders  as  such,  make  any
distribution of assets, capital stock, warrants, rights, options, obligations or
securities to its  stockholders as such, or permit any of its Subsidiaries to do
any of the  foregoing or permit any of its  Subsidiaries  to  purchase,  redeem,
retire, defease or otherwise acquire for value any capital stock of any Borrower
or any warrants,  rights or options to acquire such capital stock or to issue or
sell any such capital stock or any  warrants,  rights or options to acquire such
capital stock, except:

          (a) The Borrowers may declare and pay dividends and make distributions
     payable  solely in Equity  Interests  of such  Borrower,  including  common
     stock,  warrants,  options and rights to purchase common stock, but only on
     the  condition  that no such  instrument  or  security  by its terms  shall
     mandate or require such  Borrower to, and no holder  thereof shall have the
     right  to  require  such  Borrower  to,  declare  or pay any  dividends  or
     distributions in respect thereof or purchase,  redeem,  retire,  defease or
     otherwise acquire for value any of its capital stock, warrants,  options or
     rights to acquire such capital stock;

          (b) A Subsidiary  of any Borrower  may declare and pay  dividends  and
     distributions  to  such  Borrower  or  to  another  Subsidiary  that  is  a
     Wholly-Owned Subsidiary of such Borrower;

          (c) The  Borrowers  may satisfy the  Acquisition  Puts,  provided that
     satisfaction  of the  Acquisition  Puts shall be subject to the  conditions
     that no Default or Event of Default then exists or would exist after giving
     effect  to  the  satisfaction  of  any  such  Acquisition   Puts,  and  the
     Administrative  Agent shall have  received a  Compliance  Certificate  duly
     executed by each of the Borrowers evidencing the Borrowers' compliance with
     the  covenants set forth in Article 8 before and after giving effect to the
     satisfaction of any Acquisition Put;

          (d) For  issuances  of stock  expressly  permitted by Section 6.18 and
     issuances of warrants to any Lender Party and for repurchases, required for
     regulatory compliance, of warrants held by financial institutions; and

          (e) For issuances of stock expressly  permitted by and pursuant to the
     terms set forth in Section 6.17(e).

     SECTION  6.8  Change in  Nature of  Business.

     Make, or permit any of its Subsidiaries to make, any material change in the
nature of its  business  as carried on at the date  hereof  except as  expressly
permitted hereby.

     SECTION 6.9 Charter Amendments.

     Amend,  or permit any of its  Subsidiaries  to amend,  its  certificate  or
articles of incorporation or bylaws if such amendment could impair the interests
or rights of the Administrative Agent or any Lender Party.

     SECTION  6.10  Accounting  Changes.

     Make or permit,  or permit any of its  Subsidiaries to make or permit,  any
change in  accounting  policies or  reporting  practices  except as described in
clauses (a), (b), (c) and (d) of the definition of Accounting Changes in Section
1.3.

     SECTION  6.11  Prepayments,  Etc. of Debt.

     (a) Prepay,  redeem,  purchase,  defease or otherwise  satisfy prior to the
scheduled  maturity  thereof in any manner,  or make any payment in violation of
any subordination terms of, any Debt, other than prepayment of the Advances in


                                     - 68 -
<PAGE>

accordance with the terms of this Agreement;  (b) amend, modify or change in any
manner any term or condition of any Existing Debt or Surviving  Debt,  except to
the extent that such benefit  inures to the benefit of the  Borrowers  and could
not  be  adverse  to the  interests  or  rights  of the  Lender  Parties  or the
Administrative  Agent,  or (c) permit any of its  Subsidiaries  to do any of the
foregoing other than to repay any Debt payable to the Borrowers.

     SECTION 6.12  Amendment,  Etc. of Material  Contracts,  Including Debt.

     (a) Cancel or terminate  any Material  Contract or consent to or accept any
cancellation  or  termination  thereof,  amend or otherwise  modify any Material
Contract or give any consent,  waiver or approval thereunder,  waive any default
under or breach of any Material  Contract or take any other action in connection
with any  Material  Contract  that  would  materially  impair  the  value of the
interests  or  rights of such  Borrower  thereunder  or that  could  impair  the
interests or rights of the  Administrative  Agent or any Lender Party (except in
an  immaterial  way and not in any event  from and after the  occurrence  of any
Default or Event of Default  hereunder) , or permit any of their Subsidiaries to
do  any of  the  foregoing;  provided  however,  that  the  Borrowers  or  their
Subsidiaries  may take any such actions if individually or in the aggregate such
actions could not reasonably be expected to have a Material Adverse Effect; or

     (b) Modify, amend or supplement:

          (i) any documentation entered into in connection with any Subordinated
     Debt or the  Huntingdon  Financing  Debt  (excluding  for  purposes of this
     clause (i) the Senior  Subordinated Debt Documents),  except as approved by
     the Administrative Agent in its sole discretion; or

          (ii) the  Senior  Subordinated  Debt  Documents  if the effect of such
     amendment, supplement or modification is to: (A) increase the interest rate
     on the  Senior  Subordinated  Debt in  excess  of  eleven  (11%)  per annum
     (provided that nothing  contained  herein shall preclude  imposition of any
     default rate of interest in the amount provided in the Senior  Subordinated
     Debt Documents), (B) accelerate or shorten the dates upon which payments of
     principal or interest are due on the Senior  Subordinated  Debt; (C) change
     the  redemption or prepayment  provisions of the Senior  Subordinated  Debt
     (other than any such change which would reduce the amount of any  scheduled
     redemption  or  prepayment  or  of  any  premium  or  interest  payable  in
     connection  therewith  or that  would  defer  the  date on  which  any such
     redemption or prepayment is otherwise  scheduled to be made); (D) make more
     restrictive any of the covenants  contained in the Senior Subordinated Debt
     Documents, or add any events of default, or modify any events of default so
     as to be  triggered  sooner  in  each  case in  comparison  with  any  such
     covenants or events of default  contained in the Senior  Subordinated  Debt
     Documents as in effect prior to such proposed amendment, except for changes
     that  individually  and in the aggregate are  immaterial  and provided that
     modifications  to  the  terms  of  replacement  Senior   Subordinated  Debt
     refinancing the Senior  Subordinated Debt existing on the Effective Date in
     regard to certain types of covenants  that are  customary for  subordinated
     debt  transactions of similar type and amount (such as financial  covenants
     identical to those contained herein but looser to such reasonable extent as
     the Required  Lenders may agree) that do not adversely affect the rights of
     the Lenders or the  Administrative  Agent in any way other than  immaterial
     ways shall be deemed acceptable to the Lenders and the Administrative Agent
     so long as copies of all  documents  relating  to such  replacement  Senior
     Subordinated Debt shall have been received by


                                     - 69 -
<PAGE>


     the  Administrative   Agent  in  sufficient  time  for  review  to  confirm
     compliance with the foregoing,  with the delivery of such  confirmation not
     to be unreasonably  withheld and the determination of approval or objection
     not to be unreasonably  delayed; (E) change any provisions of Article 3 (or
     comparable  provisions) of the Senior Subordinated Debt Documents or modify
     any of the defined terms used in such Article 3 (or comparable  provisions)
     or (F) provide for any  additional  security in respect of the  obligations
     under the Senior  Subordinated  Debt Documents,  in each case,  without the
     prior written consent of the Required Lenders or

     (c) Modify, amend,  supplement or terminate any agreements,  instruments or
documents  relating to the  incurrence  (if  consented to by the  Administrative
Agent except to the extent such consent is not required under Section 6.2(c)(vi)
of this Agreement) of any Debt or other obligations, contingent or otherwise, of
any Borrower or any Subsidiary  permitted under Section  6.2(c)(vi)  owing under
any Permitted  Acquisition documents or arising in connection with any Permitted
Acquisition other than  modifications,  amendments and/or  supplements which are
immaterial  and other than  refinancing,  in accordance  with the  provisions of
Section  6.2(c)(viii),  of up to $500,000 in  principal  amount of  indebtedness
permitted to be incurred in connection with Permitted Acquisitions in accordance
with the terms of Section 6.2(c)(vi).

     SECTION 6.13 Negative Pledge.

     Enter  into or suffer to exist,  or permit any of the  Subsidiaries  of any
Borrower  to enter  into or  suffer  to  exist,  any  agreement  prohibiting  or
conditioning  the creation or assumption of any Lien upon any of its  properties
or assets, other than as provided in the Loan Documents.

     SECTION 6.14 Partnerships, New Subsidiaries.

     (a) Become a general partner in any general or limited partnership or joint
venture or permit any of its Subsidiaries to do so, or

     (b) Create any new Subsidiary,  unless such newly created  Subsidiary shall
become a  Guarantor  pursuant  to the terms of the  Subsidiary  Guaranty  and an
additional  grantor  pursuant  to  the  terms  of  the  Security  Agreement  and
Intellectual  Property Security Agreement and all shares of the capital stock of
such Subsidiary are pledged to the Administrative Agent pursuant to the Security
Agreement.

     SECTION  6.15  Speculative  Transactions.

     Engage,  or permit any of its  Subsidiaries  to engage,  in any transaction
involving  commodity  options or futures contracts or derivatives or any similar
speculative transactions.

     SECTION 6.16 Capital Expenditures.

     Make, or permit any of its  Subsidiaries to make, any Capital  Expenditures
that would cause the  aggregate  of all such  Capital  Expenditures  made by the
Borrowers and their  Subsidiaries to exceed  $300,000,  in the aggregate for all
Borrowers taken as a whole, in any Fiscal Year of the Borrowers.

     SECTION 6.17  Issuance of Stock.

     Except as otherwise  expressly  permitted  under  Sections 6.4, 6.6 and 6.7
hereof,  the Borrowers  will not, and will not permit any of their  Subsidiaries
to, directly or indirectly, issue, sell, assign, pledge or otherwise encumber or
dispose


                                     - 70 -
<PAGE>

of any shares of capital stock or other Equity Interests of the Borrowers or any
Subsidiary of the Borrowers,  except (a) to the Borrowers or a Subsidiary of any
Borrower,  (b) to qualify  directors if required by  applicable  law, (c) as set
forth in Schedule 6.17; (d) in respect of  Acquisition  Puts in accordance  with
the summary of terms of the  Acquisition  Puts set forth on Schedule  6.17;  (e)
issuances  of  Equity  Interests  of  MediaBay  in  replacement  for the  Senior
Subordinated  Debt, the Huntingdon  Financing Debt and/or the Huntington Secured
Subordinated  Debt,  in  whole  or in  part,  in  existence  on the date of this
Agreement;  provided,  that, such Equity  Interests (i) shall be in an amount at
least equal to the sum of the principal  amount then  outstanding of such Senior
Subordinated  Debt which is  replaced  plus the fees,  expenses  and other costs
payable  by  the  Borrowers  or  their  Subsidiaries  in  connection  with  such
replacement  and (ii) do not mandate or require the  Borrower  to, and no holder
thereof  shall have the right to require any Borrower to declare or pay any cash
dividends or cash distributions in respect thereof or purchase,  redeem, retire,
defease or  otherwise  acquire  for cash any such Equity  Interests,  except for
payments of cash dividends in respect of such Equity  Interests on substantially
the same economic terms and having substantially the same economic effect as the
payments of interest on the Senior Subordinated Debt,  Huntingdon Financing Debt
or  Huntingdon  Secured  Subordinated  Debt,  as  applicable,  in  effect on the
Effective  Date and having a cash dividend not in excess of the rate of interest
and payable on dates  comparable to (or less frequently  than) the payment dates
set  forth  in the  Senior  Subordinated  Debt,  Huntingdon  Financing  Debt  or
Huntingdon Secured Subordinated Debt, as applicable,  in effect on the Effective
Date  (provided,  that,  with  respect  to  any  Equity  Interests  issued  upon
conversion  of any  Senior  Subordinated  Debt,  Huntingdon  Financing  Debt  or
Huntingdon  Secured  Subordinated  Debt held by Norton  Herrick,  his  family or
affiliates,  dividends  shall accrue,  be  paid-in-kind  or be paid in shares of
common stock until the obligations  under the Credit Agreement have been paid in
full) and subject to blockage of such payments upon substantially the same terms
as apply to such  payments  of  interest,  and (iii) do not  contain any rights,
whether or not on conversion or otherwise,  that, if exercisable or exercised on
the date of issuance  could result in a Change of Control,  or if exercisable or
exercised at any time  thereafter  could  reasonably  be expected to result in a
Change  of  Control,  and  provided  that the  amount  and terms of any fees and
expenses and other costs associated  therewith are reasonably  acceptable to the
Administrative  Agent; and (f) issuances of Equity Interests of any Borrower not
otherwise  covered by clauses (a)  through  (e) above but only on the  condition
that no such  instrument  or security by its terms shall  mandate or require any
Borrower to, and no holder  thereof shall have the right to require the Borrower
to,  (i)  declare or pay any cash  dividends  or cash  distributions  in respect
thereof or (ii) purchase,  redeem, retire, defease or otherwise acquire for cash
any of its capital  stock,  warrants,  options or rights to acquire such capital
stock or (iii)  issue  securities  in respect  thereof  which  payments of or in
respect  of  which  are  not  subordinate  to the  Obligations  under  the  Loan
Documents;  and,  provided,  further that no such Equity Interests shall contain
any rights,  whether or not on conversion or otherwise  that, if  exercisable or
exercised  on the date of issuance  could  result in a Change of Control,  or if
exercisable or exercised at any time thereafter  could reasonably be expected to
result in a Change of Control, and any references in this Agreement to permitted
issuances of Equity  Interests  shall be subject to the terms of this subsection
6.17(f).

     SECTION 6.18 Management Fees.

     Notwithstanding  any other provision  contained in this Agreement or any of
the other Loan Documents,  pay, or be or become obligated to pay, any Management
Fees  to  any  Person  or any  interest  on any  deferred  obligation  therefor,
including,


                                     - 71 -
<PAGE>

without  limitation,  to any shareholder,  director,  officer or employee of any
Borrower, or any Loan Party.

     SECTION  6.19 Senior  Subordinated  Debt  Payments.

     Make any further cash  payments  with respect to any payments of principal,
interest or otherwise due in connection with MediaBay's Senior Subordinated Debt
held by  Norton  Herrick,  his  family  or  affiliates  or the  Herrick  Secured
Subordinated Loan. Any such payments shall accrue, be paid-in-kind or be paid in
shares of common stock of MediaBay in lieu of and in full satisfaction of paying
such payments in cash until all Obligations under the Credit Agreement have been
paid in full.  So long as no  default  or  Event of  Default  under  the  Credit
Agreement  has  occurred  and is  continuing,  MediaBay  may make cash  interest
payments in connection with the Senior Subordinated Debt held by non-affiliates.
Any  or  all  of  the  Senior   Subordinated  Debt  or  the  Huntingdon  Secured
Subordinated  Debt may be converted into preferred stock and if all amortization
payments pursuant to Section 2.4(a) have been paid in full through such date and
no default or Event of Default  under the Credit  Agreement  has occurred and is
continuing,  a  dividend,  in an  amount  not to  exceed  the  rate of  interest
currently  in effect on such  Subordinated  Debt may be paid  thereon  provided,
that,  with respect to any preferred  stock issued upon conversion of any Senior
Subordinated  Debt or any  Huntingdon  Secured  Subordinated  Debt  held  Norton
Herrick, his family or affiliates, dividends shall accrue, be paid-in-kind or be
paid in shares of common  stock of MediaBay in lieu of and in full  satisfaction
of paying such payments in cash until all Obligations under the Credit Agreement
have been paid in full.

     SECTION  6.20  Huntingdon  Senior  Secured  Note  Payments.

     Make any cash  payments  with  respect  to any  prepayments  of  principal,
payments of interest or  otherwise  in  connection  with the  Huntingdon  Senior
Secured Note other than regularly  scheduled  principal  payments which shall be
payable on the same dates and in the same amounts as set forth in Section 2.4(a)
hereof.  Any such payments shall accrue, be paid-in-kind or be paid in shares of
common  stock of  MediaBay  in lieu of and in full  satisfaction  of paying such
payments in cash until all Obligations under the Credit Agreement have been paid
in full.

                                   ARTICLE 7

                             REPORTING REQUIREMENTS

     While any of the  Commitments is outstanding  and, in the event any Advance
remains outstanding, so long as any Borrower or any other Loan Party is indebted
to any of the Lender Parties or the  Administrative  Agent under any of the Loan
Documents,  any Letter of Credit is outstanding and until payment in full of the
Notes and full and complete  performance of all of its other obligations arising
hereunder,  the Borrowers shall furnish to the  Administrative  Agent and Lender
Parties:

     SECTION 7.1 Default  Notice.

     As soon as possible and in any event within five (5) Business  Days after a
Responsible  Officer of a Borrower  obtains  knowledge of the  occurrence of any
Default or any event,  development  or  occurrence  reasonably  likely to have a
Material  Adverse  Effect,  a statement of the Chief  Financial  Officer of such
Borrower setting forth details


                                     - 72 -
<PAGE>

of such Default or event,  development  or  occurrence  and the action that such
Borrower has taken and proposes to take with respect thereto.

     SECTION  7.2  Monthly  Financials.

     As soon as available  and in any event  within  thirty (30) days (or in the
case of the January  2001 and February  2001 reports  within sixty (60) days and
forty-five (45) days,  respectively)  after the end of each month which is not a
fiscal quarter end, a Consolidated  balance sheet,  statement of income and cash
flows for each month  commencing  February  2001, as of the end of such month of
the  Borrowers  and their  Subsidiaries,  and  consolidating  balance  sheet and
statements  of income of the Borrowers  and their  Subsidiaries,  for the period
commencing  at the end of the  previous  month and  ending  with the end of such
month and Consolidated  statement of income and a Consolidated statement of cash
flows of the Borrowers and their Subsidiaries,  and consolidating  statements of
income of the Borrowers and their Subsidiaries, for the period commencing at the
end of the previous  Fiscal Year and ending with the end of such month,  setting
forth  in  each  case   commencing   February  2001  in  comparative   form  the
corresponding figures for the corresponding period of the prior Fiscal Year, all
in reasonable  detail and duly certified by the chief  financial  officer of the
applicable Borrower.

     SECTION 7.3  Quarterly  Financials.

     As soon as available  and in any event within fifty (50) days after the end
of each of the first three fiscal quarters of each Fiscal Year:

          (a)  a   Consolidated   balance  sheet  of  the  Borrowers  and  their
     Subsidiaries,  and consolidating  balance sheets of the Borrowers and their
     Subsidiaries, as of the end of such quarter and a Consolidated statement of
     income and a  Consolidated  statement  of cash flows of the  Borrowers  and
     their   Subsidiaries,   and   consolidating   statements   of  income   and
     consolidating   statements   of  cash  flows  of  the   Borrower   and  its
     Subsidiaries,  for the period  commencing at the end of the previous fiscal
     quarter and ending with the end of such fiscal quarter; and

          (b) a Consolidated statement of income and a Consolidated statement of
     cash  flows of the  Borrowers  and  their  Subsidiaries  and  consolidating
     statements  of income  and  consolidating  statements  of cash flows of the
     Borrowers and their  Subsidiaries  for the period  commencing at the end of
     the  previous  Fiscal Year and ending with the end of such fiscal  quarter,
     setting forth in each case in comparative  form the  corresponding  figures
     for  the  corresponding  period  of  the  preceding  Fiscal  Year  and  the
     corresponding  figures  from the budgets for such period and for the Fiscal
     Year which includes such period,  all of the foregoing in reasonable detail
     and duly certified by the chief financial  officer of each of the Borrowers
     as having been prepared in accordance with GAAP (subject to normal year-end
     audit adjustments),  together with (i) a Compliance  Certificate  (provided
     that the  Compliance  Certificate  must be delivered in no event later than
     fifty (50) days after the end of each of the first three fiscal quarters of
     each Fiscal Year) of said officer stating,  inter alia, that no Default has
     occurred and is continuing or, if a Default has occurred and is continuing,
     a statement as to the nature thereof and the action that the Borrowers have
     taken and propose to take with respect  thereto and (ii) a schedule in form
     reasonably  satisfactory to the  Administrative  Agent of the  computations
     used  by  the  Borrowers  in  determining  compliance  with  the  financial
     covenants contained in Article 8, provided, that in the event of any change
     in GAAP used in the preparation of such financial statements, the Borrowers
     shall also provide,  if necessary for the  determination of compliance with
     Article  8,  a  statement  of  reconciliation   conforming  such  financial
     statements to GAAP; provided,  further,


                                     - 73 -
<PAGE>

     that to the extent that comparable information is set forth in a Borrower's
     quarterly  report on Form  10-Q  filed  with the  Securities  and  Exchange
     Commission for each such quarter,  delivery to the Administrative Agent and
     the Lender  Parties of such 10-Q  within the time  period  specified  above
     shall be acceptable for purposes of this Section 7.3.

     SECTION 7.4 Annual Financials.

     As soon as  available  and in any event  within one hundred five (105) days
after the end of each Fiscal  Year with  respect to all  deliveries  pursuant to
this  Section  7.4 except for the  certificate  referred  to in clause (c) below
which, in any event, shall be delivered within ninety (90) days after the end of
each  Fiscal  Year,  a copy of the  annual  audit  report  for such year for the
Borrowers and their Subsidiaries, including therein a Consolidated balance sheet
of the Borrowers and their  Subsidiaries,  and  consolidating  balance sheets of
Borrowers  and  their  Subsidiaries,  as of the end of such  Fiscal  Year  and a
Consolidated  statement of income and a Consolidated  statement of cash flows of
the Borrowers and their Subsidiaries, and consolidating statements of income and
consolidating  statements of cash flows of the Borrowers and their Subsidiaries,
for such  Fiscal  Year,  in each  case  setting  forth in  comparative  form the
corresponding  figures for the prior Fiscal Year and the  corresponding  figures
from the budget for such Fiscal Year and in each case  accompanied  (in the case
of such  Consolidated  financial  statements) by an opinion with respect to such
Consolidated  financial  statements  acceptable to the  Administrative  Agent of
Deloitte  &  Touche  or  other  independent   certified  public  accountants  of
recognized national standing reasonably  acceptable to the Administrative  Agent
together with (a) a letter of such accounting firm to the  Administrative  Agent
and  Lender  Parties  stating  that in the  course of the  regular  audit of the
business of the Borrowers and their  Subsidiaries,  which audit was conducted by
such accounting firm in accordance with generally  accepted auditing  standards,
such  accounting  firm has obtained no knowledge that a Default has occurred and
is  continuing,  or if, in the opinion of such  accounting  firm,  a Default has
occurred and is continuing, a statement as to the nature thereof, (b) a schedule
in form reasonably  satisfactory to the Administrative Agent of the computations
used by such  accountants  in  determining,  as of the end of such Fiscal  Year,
compliance  with the  covenants  contained in Article 8,  provided,  that in the
event  of  any  change  in  GAAP  used  in the  preparation  of  such  financial
statements, the Borrowers shall also provide, if necessary for the determination
of  compliance  with Article 8, a statement of  reconciliation  conforming  such
financial  statements  to GAAP  and (c) a  certificate  of the  Chief  Financial
Officer of the applicable  Borrower  stating that no Default has occurred and is
continuing  or, if a Default has occurred and is  continuing,  a statement as to
the nature  thereof and the action that such  Borrower has taken and proposes to
take with respect thereto.

     SECTION 7.5 ERISA Events and ERISA  Reports.

     (i) Promptly and in any event within  thirty (30) days after any Loan Party
or any ERISA  Affiliate  knows or has  reason  to know that any ERISA  Event has
occurred,  a statement of the Chief Financial Officer of the applicable Borrower
describing such ERISA Event and the action, if any, that such Loan Party or such
ERISA  Affiliate has taken and proposes to take with respect thereto and (ii) on
the date any records,  documents or other  information  must be furnished to the
PBGC with respect to any Plan pursuant to Section 4010 of ERISA,  a copy of such
records, documents and information.

     SECTION 7.6 Plan  Terminations.

     Promptly  and in any event  within ten (10)  Business  Days  after  receipt
thereof by any Loan Party or any ERISA Affiliate, copies of each notice from


                                     - 74 -
<PAGE>

the PBGC  stating  its  intention  to  terminate  any Plan or to have a  trustee
appointed to administer any Plan or  correspondence  from the PBGC indicating it
is considering termination of any Plan.

     SECTION 7.7 Actuarial  Reports.

     Promptly upon receipt thereof by any Loan Party or any ERISA  Affiliate,  a
copy of the annual  actuarial  valuation report for each Plan the funded current
liability  percentage (as defined in Section  302(d)(8)(B) of ERISA) of which is
less  than  90% or  the  unfunded  current  liability  (as  defined  in  Section
302(d)(8)(A) of ERISA) of which exceeds  $500,000.  The present value of benefit
liabilities  as of the latest  actuarial  valuation  date for such Plan (but not
prior to 12 months prior to the date hereof),  determined on the basis of a shut
down of the company in accordance with actuarial assumptions used by the PBGC in
single-employer  plan terminations,  shall not exceed the market value of assets
exclusive of any contributions due to the Plan by more than $500,000.

     SECTION 7.8 Plan Annual  Reports.

     Upon the request,  from time to time, of the Administrative Agent, promptly
and in any event  within  thirty  (30) days  after the filing  thereof  with the
Internal Revenue Service,  copies of each Schedule B (Actuarial  Information) to
the annual report (Form 5500 Series) with respect to each Plan.

     SECTION 7.9 Annual Plan  Summaries.

     As soon as available and in any event within one hundred  twenty (120) days
after the end of each Fiscal Year, an annual summary of actuarial  valuation and
other  information  with  respect  to each Plan in form,  substance  and  detail
satisfactory to the Administrative Agent.

     SECTION 7.10 Multiemployer  Plan Notices.

     Promptly  and in any event  within  five (5)  Business  Days after  receipt
thereof  by any  Loan  Party  or any  ERISA  Affiliate  from  the  sponsor  of a
Multiemployer  Plan, copies of each notice concerning,  or other  correspondence
with  respect  to,  (i) the  imposition  of  Withdrawal  Liability  by any  such
Multiemployer  Plan, (ii) the reorganization or termination,  within the meaning
of Title IV of ERISA,  of any such  Multiemployer  Plan or (iii)  the  amount of
liability  incurred,  or that may be  incurred,  by such Loan Party or any ERISA
Affiliate in connection with any event described in clause (i) or (ii).

     SECTION 7.11 Litigation.

     Promptly after the commencement  thereof,  notice of all material  actions,
suits,   investigations,   litigation  and  proceedings   before  any  court  or
governmental department,  commission,  board, bureau, agency or instrumentality,
Federal,  state,  local  or  foreign,  affecting  any  Loan  Party or any of its
Subsidiaries and, promptly after the occurrence thereof, notice of any change in
the status or the financial  effect on any Loan Party or any of its Subsidiaries
of the  Disclosed  Litigation  from that  described on Schedule 4.9 that in each
case could reasonably be expected to have a Material Adverse Effect.

     SECTION  7.12  Securities  Reports.

     Promptly  after  the  sending  or  filing  thereof,  copies  of  all  proxy
statements,  financial  statements and reports that any Loan Party or any of its
Subsidiaries sends to its stockholders,  and copies of all regular, periodic and
special reports, and all final registration  statements,  that any Loan Party or
any of its Subsidiaries files with the Securities and Exchange Commission or any
other governmental authority or with any national securities exchange.


                                     - 75 -
<PAGE>

     SECTION 7.13  Creditor  Reports.

     Promptly  after the furnishing  thereof,  copies of any statement or report
furnished to any other holder of the  securities  of any Loan Party or of any of
its  Subsidiaries  pursuant  to the  terms  of any  indenture,  loan  or  credit
agreement or similar  agreement or instrument  and not otherwise  required to be
furnished to the Lender Parties pursuant to any other clause of this Article 7.

     SECTION 7.14 Agreement  Notices.

     Promptly upon receipt  thereof,  copies of all notices,  requests and other
documents  received  by any  Loan  Party  or any of its  Subsidiaries  under  or
pursuant to any  Material  Contract or  indenture,  loan or credit  agreement or
similar agreement or instrument regarding or related to any breach or default by
any party  thereto or any event that  could  materially  impair the value of the
interests or the rights of any Loan Party or any of its Subsidiaries (other than
immaterial  interests or rights) or otherwise have a Material Adverse Effect and
copies  of any  amendment,  modification  or  waiver  of any  provisions  of any
Material Contract or indenture, loan or credit agreement or similar agreement or
indenture and, from time to time upon request by the Administrative  Agent, such
information and reports regarding the foregoing as the Administrative  Agent may
reasonably request.

     SECTION 7.15 Revenue  Agent  Reports.

     Within ten (10) days after  receipt,  copies of all Revenue  Agent  Reports
(Internal  Revenue Service Form 886), or other written proposals of the Internal
Revenue Service, that propose,  determine or otherwise set forth any adjustments
to the Federal income tax liability of the affiliated  group (within the meaning
of Section  1504(a)(1) of the Internal  Revenue Code) of which any Borrower is a
member aggregating $250,000 or more.

     SECTION 7.16  Environmental  Conditions.

     Promptly  after  the  assertion  or  occurrence  thereof,   notice  of  any
Environmental Action against or of any noncompliance by any Loan Party or any of
its Subsidiaries with any  Environmental Law or Environmental  Permit that could
reasonably be expected to have a Material Adverse Effect.

     SECTION 7.17 Real  Property.

     Upon the request,  from time to time, of the Administrative Agent, promptly
and in any event  within  thirty  (30) days  after  any such  request,  a report
supplementing Schedules 4.21 and 4.22 hereto, including an identification of all
real and leased property  disposed of by any Borrower or any of its Subsidiaries
during such Fiscal Year, a list and  description  (including the street address,
county or other relevant  jurisdiction,  state, record owner and, in the case of
leases of  property,  lessor,  lessee,  expiration  date and annual  rental cost
thereof) of all real  property  acquired or leased during such Fiscal Year and a
description of such other changes in the information  included in such Schedules
as may be necessary  for such  Schedules to remain  accurate and complete in all
respects.

     SECTION  7.18  Insurance.

     Upon the request,  from time to time, of the Administrative Agent, promptly
and in any event  within  thirty  (30) days  after  any such  request,  a report
summarizing  the insurance  coverage  (specifying  type,  amount and carrier) in
effect for each Loan Party and its  Subsidiaries  and containing such additional
information as the Administrative Agent may reasonably request.


                                     - 76 -
<PAGE>

     SECTION 7.19 Borrowing Base Reports and Certificates.

     (a) Borrowing  Base Reports.  By the close of business on each Monday,  the
Borrowers  shall  provide  to  Agent  a  Borrowing  Base  Report  providing  the
following:

          (1) Accounts receivable from retail customers at the close of business
     at the end of the prior week.

          (2) Accounts receivable from consumers at the close of business at the
     end of the most  recent  week  for  which  such  information  is  available
     adjusted by adding  accounts  receivable from consumers for each subsequent
     week and subtracting  cash receipts from consumer  accounts  receivable for
     each subsequent week.

          (3) Actual  Inventory  amounts at the end of the most  recent week for
     which such amounts are available  adjusted by adding purchases of inventory
     for each  subsequent  week and  subtracting  cost of products  sold in each
     subsequent  week.  Cost of product shall be calculated by taking 20% of the
     prior weeks gross sales.

          (4) A summary of aged retail accounts  receivable as of the end of the
     prior week.

     (b) Borrowing  Base  Certificate.  By the close of business on each Monday,
the Borrowers shall provide to Agent a Borrowing Base Certificate, substantially
in the form  delivered by MediaBay on April 4, 2000,  reflecting  information at
the  close of  business  at the end of the  prior  week  certified  by the Chief
Financial Officer of the MediaBay.

     SECTION 7.20  Management  Letters.

     As soon as available  and in any event within ten (10)  Business Days after
the  receipt  thereof,  copies of any  "management  letter"  or  similar  letter
received by any Borrower or its Board of Directors  (or any  Committee  thereof)
from its independent public accountants.

     SECTION 7.21 Permitted Acquisition  Documents.

     Within  twenty  (20)  Business  Days  following  the  consummation  of each
Permitted  Acquisition,  complete  copies  of  the  related  material  documents
evidencing  such  Permitted  Acquisition,  certified  as true and  correct by an
appropriate officer of the applicable Borrower.

     SECTION  7.22 Other  Information.

     Such other  information  respecting the business,  condition  (financial or
otherwise), operations,  performance,  properties or prospects of any Loan Party
or any of its Subsidiaries or the Collateral as the Administrative  Agent or any
Lender Party (through the Administrative Agent) may from time to time reasonably
request.

     SECTION 7.23 Cash Flow Projections.

     On every Friday, beginning on the next Friday after the Effective Date, the
Borrowers  shall  deliver a weekly cash flow  projection  for the  thirteen-week
period immediately following the delivery of such projection.

     SECTION  7.24  Receivables  Report.

     For Retail  Receivables,  as soon as  available  and in any event  within 5
Business days after the end of the month,  an aged summary  accounts  receivable
trial  balance by customer  shall be provided.  For  Receivables  arising out of
sales directly to consumers,  a one page aged Receivables summary taken from the
detail records by


                                     - 77 -
<PAGE>

customer  shall be provided as soon as  available  but in no event later than 30
days from the end of the previous month.

     SECTION 7.25 Periodic  Audit.

     After  the  Effective  Date,  one  periodic  audit of the  Receivables  and
Inventory may be conducted by Agent or Lenders, in their sole discretion.  Based
on the  results of such  audit,  Agent  expressly  reserves  the  right,  in its
reasonable discretion and after consultation with the Borrowers,  to adjust, (i)
the definitions of each of Eligible  Receivables and Eligible Inventory and (ii)
the  percentage of each of Eligible  Receivables  and Eligible  Inventory  which
shall be included in the Borrowing  Base  provided,  however,  in no event shall
such  percentages  be reduced to less than 50% and 30%  respectively.  Borrowers
shall be  responsible  for the  expenses,  fees and costs  incurred  by Agent or
Lenders in connection with such audit in an amount not to exceed $15,000.

                                   ARTICLE 8

                               FINANCIAL COVENANTS

     While any of the  Commitments is outstanding  and, in the event any Advance
remains outstanding, so long as any Borrower or any other Loan Party is indebted
to any of the Lender Parties or the  Administrative  Agent under any of the Loan
Documents,  any Letter of Credit is outstanding and until payment in full of the
Notes and full and complete  performance of all of its other obligations arising
hereunder, MediaBay shall:

     SECTION 8.1 Minimum EBITDA.

     Maintain  on  a  Consolidated  basis  with  respect  to  MediaBay  and  its
Subsidiaries  as of the end of each fiscal  period of  MediaBay  set forth below
EBITDA at not less than the respective amounts set forth below evidence of which
shall be  delivered  to  Administrative  Agent within 30 days of the end of such
period:

<TABLE>
<CAPTION>
                    Period                                      Minimum EBITDA
                    ------                                      --------------
<S>      <C>                                          <C>
(a)      For the period beginning on                 -$1,100,000 (i.e., a negative amount)
         January 1, 2001 and ending on
         March 31, 2001

(b)      For the period beginning on                 -$600,000 (i.e., a negative amount)
         January 1, 2001 and ending on
         June 30, 2001

(c)      For the period beginning on                 -$500,000 (i.e., a negative amount)
         January 1, 2001 and ending on
         September 30, 2001

(d)      For the period beginning on                 $1,500,000
         January 1, 2001 and ending on
         December 31, 2001

(e)      For the period beginning on                 $1,200,000
         January 1, 2001 and ending on
         March 31, 2002

(f)      For the period beginning on                 $2,000,000
         January 1, 2001 and ending on
         June 30, 2002
</TABLE>


                                     - 78 -
<PAGE>

                                   ARTICLE 9

                                EVENTS OF DEFAULT

     If  any  of  the  following  ("Events  of  Default")  shall  occur  and  be
continuing:

     SECTION 9.1 Payment.

     (a) The  Borrowers  shall fail to pay any principal of any Advance when the
same shall  become due and  payable or (b) the  Borrowers  shall fail to pay any
interest on any Advance,  or any Loan Party shall fail to make any other payment
under any Loan  Document,  in each case under this  clause (b) within  three (3)
Business Days after the same becomes due and payable; or

     SECTION 9.2 Representations and Warranties.

     Any  representation  or  warranty  made by any  Loan  Party  (or any of its
officers) under or in connection with any Loan Document shall prove to have been
incorrect in any material respect when made or confirmed; or

     SECTION  9.3  Certain  Covenants.

     Any  Borrower  shall  fail to  perform or  observe  any term,  covenant  or
agreement  contained  in Section  2.13,  5.5,  5.6,  5.7, or 5.13,  Article 6 or
Article 8 and such failure shall,  if caused by a violation of the provisions of
Section  6.1(b),  (d) or (e), 6.6, 6.13,  6.15, 6.16 and if able to be remedied,
remain unremedied for fifteen (15) days after the date of such failure; or

     SECTION 9.4 Other Covenants.

     Any Loan Party shall fail to perform any other term,  covenant or agreement
contained in any Loan Document or other  documents  executed or delivered to any
of the Lenders in connection  with this Agreement on its part to be performed or
observed if such failure shall remain  unremedied for thirty (30) days after the
earlier of the date on which (a) a Responsible Officer of any Loan Party becomes
aware of such failure or (b) written notice thereof shall have been given to the
Borrowers by the Administrative Agent or any Lender Party; or

     SECTION 9.5 Other Defaults.

     Any Loan Party or any of its  Subsidiaries  shall fail to pay any principal
of,  premium or interest on or any other  amount  payable in respect of any Debt
that is  outstanding  in a  principal  or notional  amount of at least  $500,000
either  individually  or  in  the  aggregate  (but  excluding  Debt  outstanding
hereunder) of such Loan Party or such  Subsidiary (as the case may be), when the
same  becomes due and payable  after any  applicable  grace  period  (whether by
scheduled maturity, required prepayment,  acceleration, demand or otherwise); or
any other event  shall occur or  condition  shall exist under any  agreement  or
instrument  relating to any such Debt,  in each case if the effect of such event
or condition is to accelerate, or to permit the acceleration of, the maturity of
such Debt or otherwise to cause, or to permit the holder thereof to cause,  such
Debt to mature;  or any such Debt  shall be  declared  to be due and  payable or
required to be prepaid or redeemed (other than by a regularly scheduled required
prepayment or redemption), purchased or defeased, or an offer to prepay, redeem,
purchase or defease  such Debt shall be required to be made,  in each case prior
to the stated maturity thereof; or


                                     - 79 -
<PAGE>

     SECTION 9.6  Bankruptcy,  Etc.

     Any Loan Party or any of its Subsidiaries shall generally not pay its debts
as such debts  become due, or shall  admit in writing its  inability  to pay its
debts  generally,  or  shall  make a  general  assignment  for  the  benefit  of
creditors; or any proceeding shall be instituted by or against any Loan Party or
any of its  Subsidiaries  seeking to adjudicate  it a bankrupt or insolvent,  or
seeking  liquidation,  winding  up,  reorganization,   arrangement,  adjustment,
protection,  relief, or composition of it or its debts under any law relating to
bankruptcy,  insolvency or reorganization  or relief of debtors,  or seeking the
entry of an order for relief or the appointment of a receiver,  trustee or other
similar  official for it or for any substantial part of its property and, in the
case of any such  proceeding  instituted  against it (but not  instituted by it)
that is being  diligently  contested  by it in good faith,  any such  proceeding
shall remain  undismissed  or unstayed for a period of sixty (60) days or any of
the actions sought in such proceeding (including,  without limitation, the entry
of an order for relief  against,  or the  appointment  of a  receiver,  trustee,
custodian  or other  similar  official  for, it or any  substantial  part of its
property) shall occur, or any Loan Party or any of its  Subsidiaries  shall take
any  corporate  action to  authorize  any of the actions set forth above in this
Section 9.6; or

     SECTION 9.7 Judgments.

     (a) Any  judgment  or order  for the  payment  of money in  excess  of Five
Hundred Thousand ($500,000) Dollars individually or in the aggregate (other than
such a  judgment  or order  which is fully  covered by  insurance  for which the
appropriate  insurer  has  acknowledged  responsibility  in  writing)  shall  be
rendered  against any Loan Party or any of its  Subsidiaries and (i) enforcement
proceedings  shall have been  commenced  by any creditor  upon such  judgment or
order and (ii) there shall be a period of fifteen (15)  consecutive  days during
which a stay of  enforcement  of such judgment or order,  by reason of a pending
appeal or otherwise, shall not be in effect; or

     (b) Any  non-monetary  judgment or order shall be rendered against any Loan
Party or any of its  Subsidiaries  that is reasonably  likely to have a Material
Adverse Effect; or

     SECTION 9.8 Loan  Documents.

     Any material  provision of any Loan Document after  delivery  thereof shall
for any reason cease to be valid and binding on or enforceable  against any Loan
Party which is party to it, or any such Loan Party shall so state in writing; or

     SECTION 9.9 Liens.

     Any Collateral  Document after delivery thereof,  together with all filings
and other required perfection actions taken in connection  therewith,  shall for
any reason cease to or otherwise not create a valid and perfected first priority
lien on and security interest in the Collateral  purported to be covered thereby
(other  than  non-perfection  of  Liens on  specific  collateral  as  identified
expressly  in  the  Security   Agreement  or  Intellectual   Property   Security
Agreement);  or any Event of Default shall have occurred under the Radio Spirits
Subordinated Security Agreement or the Senior Subordinated Security Agreement or
the secured party under either  thereof shall have taken any action in violation
of the  terms  thereof;  or the  bailee  under any  bailee  letter  relating  to
inventory  of any Loan Party shall take any action in respect of such  inventory
having  a  value  of   $500,000  or  more  that  could   adversely   affect  the
Administrative  Agent's rights in collateral  covered thereby in a material way;
or

     SECTION 9.10 Change of Control.

     Any Change of Control shall occur; or


                                     - 80 -
<PAGE>

     SECTION 9.11 ERISA Events.

     (a) Any ERISA Event shall have  occurred with respect to a Plan and the sum
(determined  as of the date of  occurrence  of the last such ERISA Event) of the
Insufficiency of such Plan and the Insufficiency of any and all other Plans with
respect  to which an ERISA  Event  shall  have  occurred  and then exist (or the
liability  of the Loan  Parties and the ERISA  Affiliates  related to such ERISA
Events) exceeds $500,000; or

     (b) Any Loan Party or any ERISA  Affiliate  shall have been notified by the
sponsor of a  Multiemployer  Plan that it has incurred  Withdrawal  Liability to
such  Multiemployer  Plan in an  amount  that,  when  aggregated  with all other
amounts required to be paid to  Multiemployer  Plans by the Loan Parties and the
ERISA  Affiliates as  Withdrawal  Liability  (determined  as of the date of such
notification),  exceeds  $500,000 or  requires  payments  exceeding  300,000 per
annum; or

     (c) Any Loan Party or any ERISA  Affiliate  shall have been notified by the
sponsor  of  a   Multiemployer   Plan  that  such   Multiemployer   Plan  is  in
reorganization or is being terminated,  within the meaning of Title IV of ERISA,
and as a result of such  reorganization  or  termination  the  aggregate  annual
contributions of the Loan Parties and the ERISA Affiliates to all  Multiemployer
Plans that are then in  reorganization  or being terminated have been or will be
increased over the amounts  contributed to such Multiemployer Plans for the plan
years of such Multiemployer  Plans immediately  preceding the plan year in which
such reorganization or termination occurs by an amount exceeding $300,000; or

     SECTION  9.12  Subordination   Provisions.

     The subordination  provisions contained in any instrument pursuant to which
the  Subordinated  Debt permitted under Section  6.2(c)(iv) is created or in any
instrument  evidencing such Subordinated Debt shall cease, for any reason, to be
in full force and effect or  enforceable  in accordance  with their terms (other
than as the  result  of  payment  or  prepayment  in  accordance  with the terms
hereof); or

     SECTION  9.13  Management.

     Norton Herrick shall cease for any reason  whatsoever,  including,  without
limitation,  death or disability (as such disability  shall be determined in the
sole and absolute judgment of the  Administrative  Agent) to be and continuously
perform the duties of Chairman of MediaBay or, if such cessation  shall occur as
a result of the death or such  disability,  neither (i) Michael Herrick nor (ii)
another successor  reasonably  satisfactory to the  Administrative  Agent, shall
have  become  and shall have  commenced  to perform  the duties of  Chairman  of
MediaBay within thirty (30) days after such cessation;  provided,  however, that
if Michael Herrick or another such reasonably  satisfactory successor shall have
been so elected and shall have commenced  performance of such duties within such
period, the name of Michael Herrick or such other successor, as the case may be,
shall be deemed  to have  been  inserted  in place of  Norton  Herrick,  in this
Section 9.13;

     SECTION 9.14 Borrowing Base Deficiency.

     Any Borrowing Base  Deficiency  shall occur and be continuing  which is not
eliminated by the Borrowers'  prepayment  within seven (7) Business Days of then
outstanding  Revolving Credit Advances in an amount sufficient to eliminate such
Borrowing Base Deficiency; or


                                     - 81 -
<PAGE>

     SECTION 9.15 Note Escrow Agreement.

     The Huntingdon Senior Secured Note and the Huntingdon Secured  Subordinated
Note have not been issued  within  thirty (30) business days after the Effective
Date;

then, and in any such event, the Administrative  Agent (i) shall at the request,
or may with the consent,  of the Required  Lenders,  by notice to the Borrowers,
declare the Commitments of each appropriate Lender (other than the Commitment in
respect of Letter of Credit  Advances by the Issuing Bank or a Revolving  Credit
Lender  pursuant to Section  2.3(c)) and of the Issuing Bank to issue Letters of
Credit to be terminated,  whereupon the same shall forthwith terminate, and (ii)
shall at the request, or may with the consent,  of the Required Lenders,  (A) by
notice to the Borrowers,  declare the Notes,  all interest thereon and all other
amounts  payable  under  this  Agreement  and the  other  Loan  Documents  to be
forthwith due and payable,  whereupon the Notes,  all such interest and all such
other  amounts   shall  become  and  be  forthwith  due  and  payable,   without
presentment,  demand,  protest or further  notice of any kind,  all of which are
hereby  expressly  waived  by the  Borrowers  and (B) by  notice  to each  party
required  under the terms of any agreement in support of which a Standby  Letter
of Credit is  issued,  request  that all  Obligations  under such  agreement  be
declared  to be due and  payable;  provided,  however,  that in the  event of an
actual or deemed  entry of an order for relief with respect to any Loan Party or
any of its Subsidiaries under the Federal Bankruptcy Code, (x) the obligation of
each  Lender to make  Advances  (other  than  Letter of Credit  Advances  by the
Issuing Bank or a Revolving Credit Lender pursuant to Section 2.3(c)) and of the
Issuing Bank to issue Letters of Credit shall  automatically  be terminated  and
(y) the Notes, all such interest and all such amounts shall automatically become
and be due and payable,  without presentment,  demand,  protest or any notice of
any kind, all of which are hereby expressly waived by the Borrowers.

If  any  Event  of  Default   shall  have  occurred  and  be   continuing,   the
Administrative  Agent  may,  or shall at the  request of the  Required  Lenders,
irrespective  of whether it is taking any of the actions  described in Article 9
or otherwise,  make demand upon the Borrowers to, and forthwith upon such demand
the  Borrowers  will,  pay to the  Administrative  Agent on behalf of the Lender
Parties in same day funds at the  Administrative  Agent's  office  designated in
such demand, for deposit in the L/C Cash Collateral  Account, an amount equal to
the aggregate Available Amount of all Letters of Credit then outstanding.  If at
any time the Administrative Agent determines that any funds held in the L/C Cash
Collateral  Account are  subject to any right or claim of any Person  other than
the Administrative Agent and the Lender Parties or that the total amount of such
funds is less than the aggregate  Available Amount of all Letters of Credit, the
Borrowers will,  forthwith upon demand by the  Administrative  Agent, pay to the
Administrative  Agent,  as additional  funds to be deposited and held in the L/C
Cash  Collateral  Account,  an amount equal to the excess of (a) such  aggregate
Available  Amount over (b) the total amount of funds,  if any,  then held in the
L/C Cash Collateral Account that the Administrative  Agent determines to be free
and clear of any such right and claim.

                                   ARTICLE 10

                            THE ADMINISTRATIVE AGENT

     SECTION  10.1  Authorization  and  Action.

     (a) Each Lender Party (in its capacities as a Lender,  and/or Issuing Bank)
hereby appoints and authorizes the Administrative Agent to take


                                     - 82 -
<PAGE>

such  action as agent on its behalf and to exercise  such powers and  discretion
under  this  Agreement  and the other Loan  Documents  as are  delegated  to the
Administrative Agent by the terms hereof and thereof,  together with such powers
and discretion as are reasonably  incidental thereto.  The Administrative  Agent
shall have no duties or  responsibilities  except those  expressly  set forth in
this  Agreement  and the other  Loan  Documents  and  shall not be a trustee  or
fiduciary for any Lender Party.

     (b) As to any  matters not  expressly  provided  for by the Loan  Documents
(including,  without  limitation,  enforcement or collection of the Notes),  the
Administrative  Agent shall not be required to exercise any  discretion  or take
any action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Required  Lenders,  and such  instructions  shall be binding upon all Lender
Parties and all holders of Notes and any action taken or failure to act pursuant
thereto shall be binding on all the Lender Parties; provided,  however, that the
Administrative  Agent shall not be required to take any action that  exposes the
Administrative  Agent  to  personal  liability  or  that  is  contrary  to  this
Agreement,  any other  Loan  Document  or  applicable  law and except for action
expressly  required  by the  Administrative  Agent  hereunder  or under the Loan
Documents,  the  Administrative  Agent shall in all cases be fully  justified in
failing  or  refusing  to  act  hereunder  or  thereunder  unless  it  shall  be
indemnified  to its  satisfaction  by the  Lender  Parties  against  any and all
liability  and  expense  that may be  incurred  by it by  reason  of  taking  or
continuing to take any such action.

     SECTION 10.2 Agent's Reliance,  Etc.

     Neither the Administrative Agent nor any of its directors, officers, agents
or  employees  shall be liable for any action taken or omitted to be taken by it
or them under or in connection with the Loan Documents,  except for its or their
own gross negligence or willful misconduct. Without limitation of the generality
of the foregoing,  the Administrative Agent: (a) may treat the payee of any Note
as the holder  thereof until the  Administrative  Agent  receives and accepts an
Assignment and  Acceptance  entered into by the Lender that is the payee of such
Note, as assignor, and an Eligible Assignee, as assignee, as provided in Section
11.7; (b) may consult with legal counsel (including counsel for any Loan Party),
independent public accountants and other experts selected by it and shall not be
liable  for any  action  taken or  omitted  to be  taken in good  faith by it in
accordance with the advice of such counsel, accountants or experts; (c) makes no
warranty or  representation  to any Lender Party and shall not be responsible to
any Lender Party for recitals,  any  statements,  warranties or  representations
(whether written or oral) made in or in connection with the Loan Documents;  (d)
shall not have any duty to  ascertain  or to  inquire as to the  performance  or
observance of any of the terms,  covenants or conditions of any Loan Document on
the part of any Loan Party or to inspect the property  (including  the books and
records) of any Loan Party; (e) shall not be responsible to any Lender Party for
the due execution, legality, validity, enforceability,  genuineness, sufficiency
or value of, or the  perfection  or priority  of any lien or  security  interest
created  or  purported  to be  created  under or in  connection  with,  any Loan
Document or any other instrument or document  furnished  pursuant  thereto;  (f)
shall incur no liability under or in respect of any Loan Document by acting upon
any notice, consent, certificate or other instrument or writing (which may be by
telegram,  telecopy or telex) believed by it to be genuine and signed or sent by
or on behalf of the  proper  party or  parties;  and (g) may  employ  agents and
attorneys-in-fact  and shall not be answerable  for the negligence or misconduct
of any such agents or attorneys-in-fact selected by it with reasonable care.


                                     - 83 -
<PAGE>

     SECTION  10.3 ING and  Affiliates.

     With  respect to its  Commitments,  the  Advances  made by it and the Notes
issued to it, ING shall have the same rights and powers under the Loan Documents
as any other  Lender  Party and may  exercise the same as though it were not the
Administrative  Agent;  and the term "Lender Party" or "Lender  Parties"  shall,
unless otherwise expressly  indicated,  include ING in its individual  capacity.
ING and its affiliates may accept  deposits from,  lend money to, act as trustee
under indentures of, accept  investment  banking  engagements from and generally
engage in any kind of business with, any Loan Party, any of its Subsidiaries and
any Person who may do business  with or own  securities of any Loan Party or any
such Subsidiary and may accept fees and other consideration from any Borrower or
its Affiliates,  for services in connection with this Agreement,  the other Loan
Documents  or  otherwise,  all as if ING were not the  Administrative  Agent and
without any duty to account therefor to the Lender Parties.

     SECTION 10.4 Lender Party Credit Decision.

     Each  Lender  Party  acknowledges  that it has,  independently  and without
reliance  upon the  Administrative  Agent or any other Lender Party and based on
the financial statements referred to in Section 4.6 and such other documents and
information  as it has  deemed  appropriate,  made its own credit  analysis  and
decision to enter into this Agreement.  Each Lender Party also acknowledges that
it will, independently and without reliance upon the Administrative Agent or any
other Lender Party and based on such documents and  information as it shall deem
appropriate at the time,  continue to make its own credit decisions in taking or
not taking action under this Agreement.

     SECTION 10.5 Indemnification.

     (a) Each Lender  Party  severally  agrees to indemnify  the  Administrative
Agent (to the extent not promptly  reimbursed by the Borrowers) from and against
such Lender Party's ratable share  (determined as provided below) of any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs,  expenses or disbursements  of any kind or nature  whatsoever that may be
imposed on, incurred by, or asserted against the Administrative Agent in any way
relating  to or  arising  out of any of the Loan  Documents  or any  transaction
contemplated  hereby  and  thereby  or  any  action  taken  or  omitted  by  the
Administrative Agent under any of the Loan Documents; provided, however, that no
Lender Party shall be liable for any portion of such  liabilities,  obligations,
losses,  damages,  penalties,  actions,  judgments,  suits,  costs,  expenses or
disbursements  to the extent  resulting  from the  Administrative  Agent's gross
negligence or willful  misconduct.  Without  limitation of the  foregoing,  each
Lender Party agrees to reimburse the  Administrative  Agent promptly upon demand
for its ratable share of any costs and expenses (including,  without limitation,
fees and expenses of counsel)  payable by the  Borrowers  under Section 11.4, to
the extent that the  Administrative  Agent is not promptly  reimbursed  for such
costs and expenses by the Borrowers.

     (b) Each Lender Party  severally  agrees to indemnify  the Issuing Bank (to
the extent not  promptly  reimbursed  by the  Borrowers)  from and against  such
Lender  Party's  ratable  share  (determined  as provided  below) of any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs,  expenses or disbursements  of any kind or nature  whatsoever that may be
imposed  on,  incurred  by, or  asserted  against  the  Issuing  Bank in any way
relating to or arising out of any of the Loan  Documents  or any action taken or
omitted by the Issuing Bank under any of the Loan Documents;  provided, however,
that no  Lender  Party  shall be liable


                                     - 84 -
<PAGE>

for any portion of such liabilities,  obligations,  losses, damages,  penalties,
actions,  judgments,  suits, costs, expenses or disbursements resulting from the
Issuing Bank's gross negligence or willful misconduct. Without limitation of the
foregoing,  each Lender Party agrees to reimburse the Issuing Bank promptly upon
demand  for its  ratable  share of any costs and  expenses  (including,  without
limitation, fees and expenses of counsel) payable by the Borrowers under Section
11.4,  to the extent that the Issuing Bank is not promptly  reimbursed  for such
costs and expenses by the Borrowers.

     (c) For  purposes of  Sections  10.5(a) and  10.5(b),  the Lender  Parties'
respective  ratable  shares  of any  amount  shall be  determined,  at any time,
according  to the sum of (i) the  aggregate  principal  amount  of the  Advances
outstanding at such time and owing to the respective Lender Parties,  (ii) their
respective Pro Rata Shares of the aggregate  Available  Amount of all Letters of
Credit  outstanding at such time,  (iii) the aggregate  unused portions of their
respective  Term  Commitments  at such time,  and (iv) their  respective  Unused
Revolving  Credit  Commitments  at  such  time;  provided,  that  the  aggregate
principal amount of Letter of Credit Advances owing to the Issuing Bank shall be
considered to be owed to the Revolving Credit Lenders ratably in accordance with
their respective  Revolving Credit Commitments.  In the event that any Defaulted
Advance shall be owing by any Defaulting Lender at any time, such Lender Party's
Commitment  with respect to the Facility under which such Defaulted  Advance was
required to have been made shall be considered to be unused for purposes of this
Section 10.5 to the extent of the amount of such Defaulted Advance.  The failure
of any Lender Party to reimburse the  Administrative  Agent or the Issuing Bank,
as the case may be,  promptly  upon demand for its  ratable  share of any amount
required  to be paid by the Lender  Parties to the  Administrative  Agent or the
Issuing Bank, as the case may be, as provided herein shall not relieve any other
Lender Party of its obligation  hereunder to reimburse the Administrative  Agent
or the Issuing  Bank,  as the case may be, for its ratable share of such amount,
but no Lender  Party shall be  responsible  for the failure of any other  Lender
Party to reimburse the Administrative Agent or the Issuing Bank, as the case may
be,  for  such  other  Lender  Party's  ratable  share of such  amount.  Without
prejudice to the survival of any other agreements of any Lender Party hereunder,
the agreement  and  obligations  of each Lender Party  contained in this Section
10.5 shall  survive the  payment in full of  principal,  interest  and all other
amounts payable hereunder and under the other Loan Documents.

     SECTION 10.6 Successor  Administrative Agents.

     The  Administrative  Agent may resign as to any or all of the Facilities at
any  time by  giving  written  notice  thereof  to the  Lender  Parties  and the
Borrowers  and may be  removed as to all of the  Facilities  at any time with or
without cause by the Required Lenders. Upon any such resignation or removal, the
Required  Lenders  shall  have the right to appoint a  successor  Administrative
Agent as to such of the  Facilities  as to which  the  Administrative  Agent has
resigned or been removed. If no successor  Administrative  Agent shall have been
so appointed by the Required Lenders,  and shall have accepted such appointment,
within  thirty (30) days after the  retiring  Administrative  Agent's  giving of
notice  of  resignation  or  the  Required  Lenders'  removal  of  the  retiring
Administrative  Agent, then the retiring  Administrative Agent may, on behalf of
the Lender Parties,  appoint a successor  Administrative Agent, which shall be a
Lender which is a commercial  bank organized under the laws of the United States
or of any State  thereof  and having a combined  capital and surplus of at least
$250,000,000.  Upon the acceptance of any  appointment as  Administrative  Agent
hereunder by a successor  Administrative  Agent as to all of the  Facilities and
upon the execution and filing


                                     - 85 -
<PAGE>

or recording of such financing statements, or amendments thereto, and such other
instruments  or notices,  as may be necessary or  desirable,  or as the Required
Lenders may request, in order to continue the perfection of the Liens granted or
purported  to  be  granted  by  the   Collateral   Documents,   such   successor
Administrative  Agent  shall  succeed to and become  vested with all the rights,
powers, discretion,  privileges and duties of the retiring Administrative Agent,
and the retiring Administrative Agent shall be discharged from all of its duties
and  obligations  under this  Agreement and the other Loan  Documents.  Upon the
acceptance of any appointment as  Administrative  Agent hereunder by a successor
Administrative  Agent  as to  less  than  all of the  Facilities  and  upon  the
execution and filing or recording of such  financing  statements,  or amendments
thereto,  and  such  other  instruments  or  notices,  as  may be  necessary  or
desirable,  or as the  Required  Lenders may  request,  in order to continue the
perfection  of the Liens  granted or purported  to be granted by the  Collateral
Documents,  such  successor  Administrative  Agent  shall  succeed to and become
vested with all the rights,  powers,  discretion,  privileges  and duties of the
retiring Administrative Agent as to such Facilities,  other than with respect to
funds  transfers and other similar aspects of the  administration  of Borrowings
under such  Facilities,  issuances  of Letters  of Credit  (notwithstanding  any
resignation  as  Administrative  Agent  with  respect  to the  Letter  of Credit
Facility) and payments by the Borrowers in respect of such  Facilities,  and the
retiring   Administrative   Agent  shall  be  discharged  from  its  duties  and
obligations under this Agreement as to such Facilities, other than as aforesaid.
After any retiring  Administrative  Agent's  resignation or removal hereunder as
Administrative Agent as to all of the Facilities, the provisions of this Article
10 shall inure to its benefit as to any actions  taken or omitted to be taken by
it while it was Administrative Agent as to any Facilities under this Agreement.

     SECTION  10.7  Events of  Default.

     The  Administrative  Agent  shall not be deemed  to have  knowledge  of the
occurrence of a Default (other than the  non-payment of principal of or interest
on Loans) unless the  Administrative  Agent has received notice from a Lender or
the Borrowers  specifying such Default and stating that such notice is a "Notice
of Default".  In the event that the Administrative  Agent receives such a notice
of the  occurrence  of a Default,  the  Administrative  Agent  shall give notice
thereof  to the  Lenders  (and  shall  give  each  Lender  notice  of each  such
non-payment). The Administrative Agent shall (subject to Section 10.1(b) hereof)
take such  action  with  respect  to such  Default as shall be  directed  by the
Required Lenders.

                                   ARTICLE 11

                                  MISCELLANEOUS

     SECTION 11.1  Amendments,  Etc.

     No amendment or waiver of any  provision of this  Agreement or the Notes or
any  other  Loan  Document,  nor  consent  to any  departure  by  the  Borrowers
therefrom,  shall in any event be effective  unless the same shall be in writing
and signed (or, in the case of the  Collateral  Documents,  consented to) by the
Required Lenders and Revolving Credit Lenders holding 100% (or if there are more
than two (2)  Lenders,  greater  than  50%) of the  aggregate  Revolving  Credit
Commitments,  and then such  waiver or consent  shall be  effective  only in the
specific  instance  and for the  specific  purpose  for which  given;  provided,
however,  that (a) no amendment,  waiver or consent shall, unless in writing and
signed by all of the Lenders (other than any Lender Party that is, at such time,
a  Defaulting  Lender),  do any of the  following  at any time:  (i)  change the
percentage of (A) the Commitments,  (B) the aggregate unpaid principal amount of
the Advances or (C) the aggregate Available Amount of outstanding


                                     - 86 -
<PAGE>

Letters of Credit that,  in each case,  shall be required for the Lenders or any
of them to take any action  hereunder;  (ii) release all or substantially all of
the Collateral in any  transaction or series of related  transactions  or permit
the  creation,  incurrence,  assumption or existence of any Lien on any material
portion of the Collateral in any  transaction or series of related  transactions
to secure any  liabilities or obligations  other than  Obligations  owing to the
Secured  Parties under the Loan  Documents;  (iii) release any of the Guarantors
from their Subsidiary  Guaranty;  (iv) amend this Section 11.1 or the definition
of Required  Lenders;  or (v) limit the liability of any Loan Party under any of
the Loan  Documents and (b) no  amendment,  waiver or consent  shall,  unless in
writing and signed by the Required Lenders and each Lender that has a Commitment
under the Revolving  Credit  Facility if affected by such  amendment,  waiver or
consent,  (i) increase the  Commitments of such Lender or subject such Lender to
any  additional  obligations,  (ii) reduce the principal of, or interest on, the
Notes held by such Lender or any fees or other amounts payable hereunder to such
Lender, (iii) change any date fixed for any payment of principal of, or interest
on, the Notes held by such Lender or any fees or other amounts payable hereunder
to such Lender or (iv) change the order of  application  of any  prepayment  set
forth  in  Section  2.6 in any  manner  that  materially  affects  such  Lender;
provided, further, that no amendment, waiver or consent shall, unless in writing
and signed by the Issuing  Bank,  in addition to the Lenders  required  above to
take such action,  affect the rights or  obligations of the Issuing Bank, as the
case may be, under this  Agreement  or any other Loan  Document;  and  provided,
further,  that no  amendment,  waiver or consent  shall,  unless in writing  and
signed by the Administrative  Agent in addition to the Lenders required above to
take such action,  affect the rights or duties of the Administrative Agent under
this Agreement or any other Loan Document.

     SECTION 11.2 Notices Etc.

     All notices and other  communications  provided for  hereunder  shall be in
writing  (including  telegraphic,  telecopy or telex  communication) and mailed,
telegraphed,  telecopied, telexed or delivered, by overnight courier services or
personally served,

               (a) if to any Borrower:

                   c/o MediaBay, Inc.
                   2 Ridgedale Avenue - Suite 300
                   Cedar Knolls, New Jersey 07929
                   Attention:  Mr. Norton Herrick
                               Chairman
                   Telephone No.: (973) 539-9528
                   Facsimile No.:   (973) 539-1273

                   with a copy to:

                          Blank Rome Tenzer Greenblatt LLP
                          405 Lexington Avenue
                          New York, New York  10174
                          Attention:   Robert J. Mittman, Esq.
                          Telephone No.: (212) 885-5555
                          Facsimile No.:   (212) 885-5001


                                     - 87 -
<PAGE>

               (b) if to the Administrative Agent:

                        ING (U.S.) Capital LLC
                        1325 Avenue of the Americas
                        New York, New York  10019
                        Attention:  Chief Credit Officer
                        Telephone No.: (212) 409-1814
                        Facsimile No.:   (212) 409-5845

                with copies to:

                        ING (U.S.) Capital LLC
                        Atlanta Office
                        200 Galleria Parkway - Suite 950
                        Atlanta, Georgia 30339
                        Attention :  John Lanier
                        Telephone No.: (770) 984-4508
                        Facsimile No.: (770) 951-1005

                and


                        Winston & Strawn
                        200 Park Avenue
                        New York, New York 10166
                        Attention: Robert Ericson, Esq.
                        Telephone No.: (212) 294-6741
                        Facsimile No.:  (212) 294-4700

               (c) if to any Lender or the Issuing Bank, at its Domestic Lending
          Office specified opposite its name on Schedule I attached hereto.

               (d) if to any other Lender Party, at its Domestic  Lending Office
          specified in the Assignment and Acceptance pursuant to which it became
          a Lender Party;

or, as to any Borrower or the  Administrative  Agent,  at such other  address as
shall be designated by such party in a written  notice to the other parties and,
as to each other party,  at such other  address as shall be  designated  by such
party in a written  notice to the Borrowers and the  Administrative  Agent.  All
such notices and communications shall, (i) when mailed by certified mail, return
receipt  requested,  be  effective  three  (3) days  after  mailing,  (ii)  when
telegraphed,  telecopied or telexed be effective  upon delivery to the telegraph
company,   upon  transmission  by  telecopier  or  upon  confirmation  by  telex
answerback,  (iii) when delivered in person,  be effective when  delivered,  and
(iv) when  delivered by overnight  courier,  be effective  two (2) Business Days
after  delivery  to the courier  properly  addressed,  except  that  notices and
communications to the Administrative  Agent pursuant to Article 2, 3 or 10 shall
not be  effective  until  received  by the  Administrative  Agent.  Delivery  by
telecopier of an executed counterpart of this Agreement,  the Notes or any other
Loan Document or of any Exhibit  hereto or thereto or of any amendment


                                     - 88 -
<PAGE>

or waiver of any  provision  thereof  shall be as  effective  as  delivery  of a
manually executed counterpart thereof.

     SECTION 11.3 No Waiver; Remedies;  Counterclaims.

     No failure on the part of any Lender Party or the  Administrative  Agent to
exercise,  and no delay in exercising,  any right hereunder or under any Note or
under any other Loan Document shall operate as a waiver  thereof,  nor shall any
single or  partial  exercise  of any such  right  preclude  any other or further
exercise  thereof  or the  exercise  of any other  right.  The  remedies  herein
provided are cumulative and not exclusive of any remedies  provided by law or in
equity.  The due payment and  performance  of the  Obligations  shall be without
regard to any  counterclaim,  right of offset or any other claim whatsoever that
any  Borrower  or other Loan  Party may have  against  any  Lender  Party or the
Administrative  Agent and without  regard to any other  obligation of any nature
whatsoever  that any Lender  Party or the  Administrative  Agent may have to any
Borrower or Loan Party, and no such  counterclaim or offset shall be asserted by
any Borrower (unless such counterclaim or offset would, under applicable law, be
permanently and  irrevocably  lost if not brought in such action) in any action,
suit or proceeding  instituted by any Lender Party or the  Administrative  Agent
for payment or performance of the Obligations.

     SECTION 11.4 Costs and Expenses.

     (a) Each Borrower,  jointly and severally,  agrees to pay on demand (i) all
reasonable costs and expenses of the Lenders in connection with the preparation,
execution,  delivery,  administration,  modification  and  amendment of the Loan
Documents  (including,  without  limitation,  (A) all  reasonable due diligence,
collateral  review,  syndication  (including  printing,  distribution  and  bank
meetings),  transportation,  computer, duplication, appraisal, audit, insurance,
consultant,  search,  filing and recording  fees and expenses,  (B) the fees and
expenses of counsel for the Lenders with respect thereto, including advising the
Lenders as to their rights and responsibilities,  or the perfection,  protection
or preservation  of rights or interests  under the Loan  Documents,  negotiating
with any Loan  Party or with  other  creditors  of any Loan  Party or any of its
Subsidiaries  arising out of any Default or any events or circumstances that may
give rise to a Default,  and presenting claims in or otherwise  participating in
or monitoring any bankruptcy,  insolvency or other similar proceeding  involving
creditors' rights generally and any proceeding  ancillary  thereto) and, (C) all
costs and expenses of the Administrative Agent and the Lender in connection with
the enforcement of the Loan Documents, whether in any action, suit or litigation
or any bankruptcy,  insolvency or other similar proceeding  affecting creditors'
rights  generally  or otherwise  (including,  without  limitation,  the fees and
expenses of counsel for the  Administrative  Agent and each Lender with  respect
thereto).

     (b) Each  Borrower,  jointly and  severally,)  agrees to indemnify and hold
harmless  the  Administrative  Agent,  each  Lender  Party  and  each  of  their
respective  Affiliates  and their  respective  officers,  directors,  employees,
agents and advisors (each, an "Indemnified  Party") from and against any and all
claims,   damages,   losses,   liabilities  and  expenses  (including,   without
limitation,  reasonable fees and expenses of counsel) that may be incurred by or
asserted or awarded against any  Indemnified  Party, in each case arising out of
or in connection with or by reason of, or in connection with the preparation for
a  defense  of,  any  commenced  or  threatened  investigation,   litigation  or
proceeding  arising out of, related to or in connection  with (and whether under
any  federal  securities  law or any other  statute of any  jurisdiction  or any
regulation


                                     - 89 -
<PAGE>

or  at  common)  law  or  otherwise  against  any  Indemnified  Party,  (i)  the
Transaction or any other  transaction of any Borrower or any of its Subsidiaries
or other Affiliates and any of the other  transactions  contemplated by the Loan
Documents,  (ii) any Permitted Acquisition and any other acquisition or proposed
acquisition or similar business  combination or proposed business combination by
any  Borrower  or any of its  Subsidiaries  or  other  Affiliates  of all or any
portion of the shares of capital stock or substantially  all of the property and
assets of any other Person or any acts,  practices or omissions of any Borrower,
any of its  Subsidiaries  or its agents  related  thereto,  or any  withdrawals,
termination or  cancellation  of any such proposed  transaction  for any reason,
(iii) the Facilities, the actual or proposed use of the proceeds of the Advances
or the  Letters of Credit by any  Borrower or any of its  Subsidiaries  or other
Affiliates and any of the other transactions contemplated by the Loan Documents,
or (iv) the actual or alleged presence of Hazardous Materials on any property of
any Loan Party or any of its Subsidiaries or any  Environmental  Action relating
in any way to any Loan Party or any of its Subsidiaries, in each case whether or
not such  investigation,  litigation or proceeding is brought by any Loan Party,
its directors, officers, employees,  stockholders or creditors or an Indemnified
Party or any  Indemnified  Party is otherwise a party thereto and whether or not
the  Transaction or any other  transaction  contemplated  hereby is consummated,
except to the extent such claim,  damage, loss, liability or expense is found in
a final,  non-appealable  judgment by a court of competent  jurisdiction to have
resulted from such Indemnified  Party's gross negligence or willful  misconduct.
Each  Borrower  also agrees not to assert any claim  against the  Administrative
Agent, any Lender Party or any of their respective  Affiliates,  or any of their
respective officers, directors,  employees,  attorneys and agents, on any theory
of liability, for special,  indirect,  consequential or punitive damages arising
out of or otherwise relating to the Acquisitions,  the Facilities, the actual or
proposed use of the proceeds of the Advances or the Letters of Credit,  the Loan
Documents or any of the Transaction or other transactions  contemplated thereby,
other than claims for direct, as opposed to consequential, damages.

     (c) If any Loan Party  fails to pay when due any costs,  expenses  or other
amounts payable by it under any Loan Document,  including,  without  limitation,
fees and expenses of counsel and indemnities,  such amount may be paid on behalf
of such Loan Party by the Administrative Agent, in its sole discretion.

     (d) Without  prejudice to the  survival of any other  agreement of any Loan
Party hereunder or under any other Loan Document, the agreements and obligations
of each Borrower  contained in Sections 2.9 and 2.11 and this Section 11.4 shall
survive the payment in full of principal, interest and all other amounts payable
hereunder and under any of the other Loan Documents.

     SECTION  11.5  Right of  Set-off.

     Upon (a) the occurrence and during the  continuance of any Event of Default
and (b) the making of the request or the  granting of the consent  specified  by
Article 9 to  authorize  the  Administrative  Agent to declare the Notes due and
payable  pursuant to the  provisions of Article 9, each Lender Party and each of
its  respective  Affiliates  is hereby  authorized  at any time and from time to
time, to the fullest extent permitted by law, to set off and otherwise apply any
and all deposits (general or special,  time or demand,  provisional or final) at
any time held and other  indebtedness  at any time owing by such Lender Party or
such Affiliate to or for the credit or the account of any Borrower or any of its
Subsidiaries  against  any and all of the  Obligations  of any  Borrower  now or
hereafter existing under this Agreement and the Note or


                                     - 90 -
<PAGE>

Notes (if any) held by such Lender  Party,  irrespective  of whether such Lender
Party shall have made any demand under this  Agreement or such Note or Notes and
although such obligations may be unmatured. Each Lender Party agrees promptly to
notify the  Borrowers  and the  Administrative  Agent after any such set-off and
application;  provided,  however, that the failure to give such notice shall not
affect the validity of such set-off and  application.  The rights of each Lender
Party and its respective  Affiliates under this Section are in addition to other
rights and remedies  (including,  without  limitation,  other rights of set-off)
that such Lender Party and its respective  Affiliates may have at law, in equity
or otherwise.

     SECTION 11.6 Binding Effect.

     This Agreement  shall become  effective when it shall have been executed by
each Borrower and the  Administrative  Agent and when the  Administrative  Agent
shall have been  notified by each  Initial  Lender and the Initial  Issuing Bank
that each such Initial  Lender and the Initial  Issuing Bank has executed it and
thereafter shall be binding upon and inure to the benefit of each Borrower,  the
Administrative  Agent and each Lender Party and their respective  successors and
assigns,  except that no Borrower  shall not have the right to assign any of its
rights hereunder or any interest herein without the prior written consent of the
Lender Parties.

     SECTION 11.7 Assignments and Participations.

     (a) Each  Lender  may  assign to one or more  Eligible  Assignees  all or a
portion of its rights and obligations under this Agreement  (including,  without
limitation,  all or a portion of its  Commitment  or  Commitments,  the Advances
owing to it and the  Note or  Notes  held by it);  provided,  however,  that (i)
without the prior  written  consent of the  Administrative  Agent  (which may be
withheld for any reason) each such assignment  shall be of a uniform,  and not a
varying,  percentage of all rights and obligations  under and in respect of each
of the  Facilities  on a pro rata basis with  respect to each  Facility,  and no
Facility may be assigned in full or in part without a contemporaneous assignment
to the same assignee of each of the other Facilities, (ii) except in the case of
an  assignment to a Person that,  immediately  prior to such  assignment,  was a
Lender or an assignment of all of a Lender's rights and  obligations  under this
Agreement,  the amount of the Commitment of the assigning  Lender being assigned
pursuant to each such  assignment  (determined  as of the date of the Assignment
and Acceptance with respect to such  assignment)  shall in no event be less than
$5,000,000,  (iii) no such  assignments  shall be  permitted  without  the prior
consent of the Administrative Agent (which may be withheld for any reason) until
the Administrative Agent shall have notified the Lender Parties that syndication
of the Commitments hereunder has been completed, but in any event not later than
90 days following the Effective Date, (iv) no such assignment shall be permitted
if,  immediately after giving effect thereto,  any Borrower would be required to
make payments to or on behalf of the assignee  Lender Party  pursuant to Section
2.9(a)  or (b) and the  assignor  Lender  Party  was  not,  at the  time of such
assignment,  entitled to receive any payment  pursuant to Section 2.9(a) or (b),
and (v) the  parties to each such  assignment  shall  execute and deliver to the
Administrative  Agent,  for its  acceptance  and recording in the  Register,  an
Assignment  and  Acceptance,  together  with any Note or Notes  subject  to such
assignment and a processing and recordation fee of $3,500.

     (b) Upon such execution, delivery, acceptance and recording, from and after
the effective date specified in such Assignment and Acceptance, (x) the assignee
thereunder  shall  be a  party  hereto  and,  to  the  extent  that  rights  and
obligations  hereunder have been assigned to it


                                     - 91 -
<PAGE>

pursuant to such Assignment and Acceptance, have the rights and obligations of a
Lender or  Issuing  Bank,  as the case may be,  hereunder  and (y) the Lender or
Issuing  Bank  assignor   thereunder  shall,  to  the  extent  that  rights  and
obligations  hereunder have been assigned by it pursuant to such  Assignment and
Acceptance,  relinquish  its rights and be released from its  obligations  under
this Agreement (and, in the case of an Assignment and Acceptance covering all or
the  remaining  portion of an assigning  Lender's or Issuing  Bank's  rights and
obligations under this Agreement,  such Lender or Issuing Bank shall cease to be
a party hereto).

     (c) By executing and  delivering an Assignment and  Acceptance,  the Lender
Party assignor  thereunder and the assignee thereunder confirm to and agree with
each other and the other parties  hereto as follows:  (i) other than as provided
in such  Assignment  and  Acceptance,  such  assigning  Lender  Party  makes  no
representation  or warranty  and assumes no  responsibility  with respect to any
statements,  warranties or  representations  made in or in connection  with this
Agreement  or any other Loan  Document  or the  execution,  legality,  validity,
enforceability,  genuineness,  sufficiency  or value  of, or the  perfection  or
priority of any lien or security  interest  created or  purported  to be created
under or in connection  with,  this  Agreement or any other Loan Document or any
other  instrument or document  furnished  pursuant hereto or thereto;  (ii) such
assigning  Lender  Party  makes no  representation  or  warranty  and assumes no
responsibility  with respect to the  financial  condition of any Borrower or any
other Loan Party or the  performance  or  observance by any Loan Party of any of
its  obligations  under any Loan  Document or any other  instrument  or document
furnished pursuant thereto;  (iii) such assignee confirms that it has received a
copy of  this  Agreement,  together  with  copies  of the  financial  statements
referred to in Section 4.6 and such other  documents and  information  as it has
deemed  appropriate  to make its own credit  analysis and decision to enter into
such  Assignment  and  Acceptance;  (iv) such assignee will,  independently  and
without reliance upon the  Administrative  Agent, such assigning Lender Party or
any other Lender Party and based on such  documents and  information as it shall
deem  appropriate  at the time,  continue  to make its own credit  decisions  in
taking or not taking action under this  Agreement;  (v) such  assignee  confirms
that it is an Eligible Assignee;  (vi) such assignee appoints and authorizes the
Administrative  Agent to take such action as agent on its behalf and to exercise
such powers and discretion  under this Agreement and the other Loan Documents as
are  delegated  to the  Administrative  Agent by the terms  hereof and  thereof,
together with such powers and discretion as are reasonably  incidental  thereto;
and (vii) such  assignee  agrees that it will perform in  accordance  with their
terms all of the  obligations  which by the terms of this Agreement are required
to be performed by it as a Lender or Issuing Bank, as the case may be.

     (d) The  Administrative  Agent shall maintain at its address referred to in
Section 11.2 a copy of each Assignment and Acceptance  delivered to and accepted
by it and a  register  for the  recordation  of the names and  addresses  of the
Lender Parties and the Commitment  under each Facility of, and principal  amount
of the  Advances  owing under each  Facility  to, each Lender Party from time to
time (the  "Register").  The entries in the  Register  shall be  conclusive  and
binding  for  all  purposes,  absent  manifest  error,  and the  Borrowers,  the
Administrative  Agent and the Lender Parties may treat each Person whose name is
recorded in the  Register as a Lender Party  hereunder  for all purposes of this
Agreement.  The Register  shall be available for  inspection by the Borrowers or
any Lender Party at any  reasonable  time and from time to time upon  reasonable
prior notice.


                                     - 92 -
<PAGE>

     (e) Upon  its  receipt  of an  Assignment  and  Acceptance  executed  by an
assigning Lender Party and an assignee,  together with any Note or Notes subject
to such assignment and the appropriate  processing and  reconciliation  fee, the
Administrative Agent shall, if such Assignment and Acceptance has been completed
and is in substantially the form of Exhibit A hereto, (i) accept such Assignment
and Acceptance,  (ii) record the information  contained  therein in the Register
and (iii)  give  prompt  notice  thereof  to the  Borrowers.  In the case of any
assignment by a Lender,  within five (5) Business Days after its receipt of such
notice,  the Borrowers,  at their own expense,  shall execute and deliver to the
Administrative Agent in exchange for the surrendered Note or Notes a new Note to
the order of such Eligible Assignee in an amount equal to the Commitment assumed
by it under a Facility  pursuant to such  Assignment and Acceptance  and, if the
assigning Lender has retained a Commitment  hereunder under such Facility, a new
Note to the order of the assigning  Lender in an amount equal to the  Commitment
retained  by it  hereunder.  Such  new Note or  Notes  shall be in an  aggregate
principal  amount equal to the aggregate  principal  amount of such  surrendered
Note or  Notes,  shall  be  dated  the  effective  date of such  Assignment  and
Acceptance and shall otherwise be in substantially the form of Exhibit B hereto.

     (f) The Issuing  Bank may assign to an Eligible  Assignee all of its rights
and obligations  under the undrawn portion of its Letter of Credit Commitment at
any  time;  provided,  however,  that (i) each  such  assignment  shall be to an
Eligible Assignee and (ii) the parties to each such assignment shall execute and
deliver to the  Administrative  Agent,  for its  acceptance and recording in the
Register,  an  Assignment  and  Acceptance,   together  with  a  processing  and
recordation fee of $3,500.

     (g) Each Lender Party may sell participations to one or more Persons (other
than any Loan Party or any of its  Affiliates)  in or to all or a portion of its
rights and obligations under this Agreement (including,  without limitation, all
or a portion of its Commitments, the Advances owing to it and the Note or Notes,
if any, held by it) at any time and from time to time and without the consent of
or notice to any Borrower or any  Guarantor;  provided,  however,  that (i) such
Lender Party's obligations under this Agreement (including,  without limitation,
its  Commitments)  shall remain  unchanged,  (ii) such Lender Party shall remain
solely  responsible  to the other  parties  hereto for the  performance  of such
obligations,  (iii) such Lender  Party shall  remain the holder of any such Note
for all purposes of this Agreement, (iv) the Borrowers, the Administrative Agent
and the other Lender  Parties  shall  continue to deal solely and directly  with
such Lender Party in connection  with such Lender Party's rights and obligations
under this Agreement and (v) no participant under any such  participation  shall
have any right to approve any  amendment,  waiver or other  modification  of any
provision of this  Agreement or any other Loan  Document,  or any consent to any
departure by any Loan Party therefrom, except to the extent that such amendment,
waiver,  modification  or consent would reduce the principal of, or interest on,
the Notes or any fees or other amounts  payable  hereunder,  in each case to the
extent subject to such participation, postpone any date fixed for any payment of
principal  of, or interest  on, the Notes or any fees or other  amounts  payable
hereunder, in each case to the extent subject to such participation,  or release
all or substantially all of the Collateral.

     (h)  Any  Lender  Party  may,  in   connection   with  any   assignment  or
participation or proposed  assignment or participation  pursuant to this Section
11.7,   disclose  to  the  assignee  or  participant  or  proposed  assignee  or
participant,  any information relating to the Borrowers


                                     - 93 -
<PAGE>

furnished  to such  Lender  Party by or on  behalf of the  Borrowers;  provided,
however,  that,  prior to any such  disclosure,  the assignee or  participant or
proposed assignee or participant shall agree to preserve the  confidentiality of
any Confidential Information received by it from such Lender Party.

     (i)  Notwithstanding  any other provision set forth in this Agreement,  any
Lender Party may at any time create a security interest in all or any portion of
its rights under this Agreement  (including,  without  limitation,  the Advances
owing to it and the Note or Notes  held by it) in favor of any  Federal  Reserve
Bank in  accordance  with  Regulation A of the Board of Governors of the Federal
Reserve System.

     SECTION 11.8 Execution in  Counterparts.

     This  Agreement  may be  executed  in any  number  of  counterparts  and by
different  parties  hereto  in  separate  counterparts,  each of  which  when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.  Delivery of an executed counterpart of a
signature page to this Agreement by telecopier shall be as effective as delivery
of a manually executed counterpart of this Agreement.

     SECTION 11.9 No Liability of the Issuing Bank.

     Each  Borrower,  jointly  and  severally,  assumes all risks of the acts or
omissions of any  beneficiary or transferee of any Letter of Credit with respect
to its use of such Letter of Credit.  Neither  the  Issuing  Bank nor any of its
officers, directors, employees or agents shall be liable or responsible for: (a)
the use that may be made of any Letter of Credit or any acts or omissions of any
beneficiary or transferee in connection therewith; (b) the validity, sufficiency
or  genuineness  of  documents,  or of any  endorsement  thereon,  even  if such
documents  should  prove  to be in any or all  respects  invalid,  insufficient,
fraudulent or forged;  (c) payment by the Issuing Bank against  presentation  of
documents  that do not comply  with the terms of a Letter of  Credit,  including
failure of any  documents  to bear any  reference  or adequate  reference to the
Letter of Credit; or (d) any other circumstances whatsoever in making or failing
to make payment under any Letter of Credit, except that the Borrowers shall have
a claim  against the Issuing  Bank,  and the Issuing Bank shall be liable to the
Borrowers, to the extent of any direct, but not consequential,  damages suffered
by the Borrowers that the Borrowers  prove were caused by (i) the Issuing Bank's
willful  misconduct  or  gross  negligence  in  determining   whether  documents
presented  under any  Letter of Credit  comply  with the terms of the  Letter of
Credit or (ii) the Issuing Bank's willful failure to make lawful payment under a
Letter  of  Credit  after the  presentation  to it of a draft  and  certificates
strictly  complying  with the terms and  conditions of the Letter of Credit.  In
furtherance and not in limitation of the foregoing,  the Issuing Bank may accept
documents that appear on their face to be in order,  without  responsibility for
further investigation, regardless of any notice or information to the contrary.

     SECTION 11.10  Confidentiality.

     Neither the  Administrative  Agent nor any Lender Party shall  disclose any
Confidential  Information  to any Person  without the consent of the  Borrowers,
other than (a) to the Administrative  Agent or to the Administrative  Agent's or
such Lender Party's Affiliates and their officers, directors,  employees, agents
and advisors and to actual or prospective  Eligible  Assignees and participants,
and then only on a  confidential  basis,  (b) as  required  by any law,  rule or
regulation  or judicial  process and (c) as  requested or required by any state,
federal or foreign  authority or examiner  regulating  banks or banking.  In the
event


                                     - 94 -
<PAGE>

of  any  required   disclosure  under  clauses  (a),  (b),  or  (c)  above,  the
Administrative  Agent  and the  other  Lender  Parties  agree to use  reasonable
efforts  to  inform  the  Borrowers  as  promptly  as  practicable  prior to the
disclosure of any such Confidential Information.

     SECTION 11.11 Survival of Agreements and Representations; Construction.

     All  agreements,  representations  and warranties made herein shall survive
the  delivery  of  this  Agreement  and the  Notes.  The  headings  used in this
Agreement  and the table of contents are for  convenience  only and shall not be
deemed to constitute a part hereof

     SECTION 11.12 Assurances.

     (a)  At  any  time  and  from  time  to  time,  upon  the  request  of  the
Administrative  Agent,  the Borrowers  and each other Loan Party shall  execute,
deliver and  acknowledge  or cause to be executed,  delivered and  acknowledged,
such further  documents and instruments and do such other acts and things as the
Administrative  Agent  may  reasonably  request  in order to  fully  effect  the
purposes of this Agreement,  the other Loan Documents and any other  agreements,
instruments  and documents  delivered  pursuant hereto or in connection with the
Loans,  including,  without  limitation,  the  execution  and  delivery  to  the
Administrative  Agent of mortgages  in form and  substance  satisfactory  to the
Administrative Agent covering all real property or interests therein acquired by
any Borrower or other Loan Party,  and all leases of real property  entered into
by any Borrower or other Loan Party as tenant or lessee,  after the date of this
Agreement,  promptly  after such  acquisition  or the entering  into of any such
lease.

     (b) Upon receipt of an affidavit of an officer of the Administrative  Agent
or any Lender as to the loss,  theft,  destruction  or mutilation of any Note or
Collateral  Document which is not of public record, and, in the case of any such
mutilation,  upon the  surrender  and  cancellation  of such Note or  Collateral
Document, the Borrowers will issue, in lieu thereof, a replacement Note or other
Collateral  Document in the same  principal  amount  thereof (in the case of any
Note) and otherwise of like tenor.

     SECTION 11.13 Severability.

     The  provisions  of this  Agreement  are  severable,  and if any  clause or
provision  hereof shall be held invalid or  unenforceable in whole or in part in
any  jurisdiction,  then such invalidity or  unenforceability  shall affect only
such clause or provision, or part thereof, in such jurisdiction and shall not in
any manner  affect such clause or  provision in any other  jurisdiction,  or any
other  clause or provision in this  Agreement in any  jurisdiction.  Each of the
covenants,  agreements and conditions contained in this Agreement is independent
and compliance by any Borrower with any of them shall not excuse  non-compliance
by any  Borrower  with  any  other.  All  covenants  hereunder  shall  be  given
independent  effect so that if a particular action or condition is not permitted
by any of such  covenants,  the fact that it would be  permitted by an exception
to, or be otherwise  within the limitations of, another covenant shall not avoid
the  occurrence  of a Default or an Event of Default if such  action is taken or
condition exists.


                                     - 95 -
<PAGE>

SECTION 11.14     JURISDICTION, ETC.

     (a) EACH OF THE  PARTIES  HERETO  HEREBY  IRREVOCABLY  AND  UNCONDITIONALLY
SUBMITS,  FOR ITSELF AND ITS PROPERTY,  TO THE NONEXCLUSIVE  JURISDICTION OF ANY
NEW YORK STATE COURT OR FEDERAL COURT OF THE UNITED STATES OF AMERICA SITTING IN
NEW YORK CITY, NEW YORK AND ANY APPELLATE COURT FROM ANY THEREOF,  IN ANY ACTION
OR PROCEEDING  ARISING OUT OF OR RELATING TO THIS  AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS TO WHICH IT IS A PARTY,  OR FOR RECOGNITION OR ENFORCEMENT OF ANY
JUDGMENT,  AND EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY
AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING  MAY BE HEARD
AND  DETERMINED IN ANY SUCH NEW YORK STATE COURT OR, TO THE EXTENT  PERMITTED BY
LAW,  IN SUCH  FEDERAL  COURT.  EACH OF THE PARTIES  HERETO  AGREES THAT A FINAL
JUDGMENT  IN ANY  SUCH  ACTION  OR  PROCEEDING  SHALL BE  CONCLUSIVE  AND MAY BE
ENFORCED IN OTHER  JURISDICTIONS  BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED  BY LAW.  NOTHING  IN THIS  AGREEMENT  SHALL  AFFECT ANY RIGHT THAT ANY
LENDER PARTY MAY OTHERWISE  HAVE TO BRING ANY ACTION OR  PROCEEDING  RELATING TO
THIS  AGREEMENT  OR  ANY OF THE  OTHER  LOAN  DOCUMENTS  IN  THE  COURTS  OF ANY
JURISDICTION.

     (b) EACH OF THE PARTIES HERETO IRREVOCABLY AND  UNCONDITIONALLY  WAIVES, TO
THE FULLEST  EXTENT IT MAY LEGALLY AND  EFFECTIVELY DO SO, ANY OBJECTION THAT IT
MAY NOW OR  HEREAFTER  HAVE TO THE  LAYING  OF  VENUE  OF ANY  SUIT,  ACTION  OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS TO WHICH IT IS A PARTY IN ANY NEW YORK STATE OR FEDERAL COURT. EACH OF
THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
LAW, THE DEFENSE OF AN  INCONVENIENT  FORUM TO THE MAINTENANCE OF SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT.

     SECTION 11.15 GOVERNING LAW. THIS  AGREEMENT,  THE NOTES AND THE OTHER LOAN
DOCUMENTS  (OTHER THAN THE  MORTGAGES  WHICH SHALL BE GOVERNED BY THE LAW OF THE
JURISDICTION  WHERE THE PROPERTY  COVERED  THEREBY IS LOCATED) SHALL BE GOVERNED
BY, AND CONSTRUED AND  INTERPRETED IN ACCORDANCE  WITH, THE LAWS OF THE STATE OF
NEW YORK WITHOUT REGARD TO ITS RULES  PERTAINING TO CONFLICTS OF LAWS OTHER THAN
GENERAL OBLIGATIONS LAW SECTION 5-1401.

     SECTION  11.16  WAIVER  OF JURY  TRIAL.  EACH OF THE  BORROWERS,  THE  LOAN
PARTIES,   THE  ADMINISTRATIVE   AGENT  AND  THE  LENDER  PARTIES   VOLUNTARILY,
INTENTIONALLY  AND IRREVOCABLY  WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING  OR  COUNTERCLAIM  (WHETHER  BASED ON  CONTRACT,  TORT OR  OTHERWISE)
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS,
THE ADVANCES OR THE ACTIONS OF THE  ADMINISTRATIVE  AGENT OR ANY LENDER PARTY IN
THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT


                                     - 96 -
<PAGE>

THEREOF.  THIS WAIVER  CONSTITUTES A MATERIAL  INDUCEMENT FOR THE LENDER PARTIES
AND THE  ADMINISTRATIVE  AGENT TO ENTER INTO THIS AGREEMENT AND TO MAKE ADVANCES
HEREUNDER.

     SECTION 11.17 FINAL AGREEMENT.

     THIS WRITTEN  AGREEMENT,  THE NOTES AND THE OTHER LOAN DOCUMENTS  REPRESENT
THE FINAL AGREEMENT  BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR,  CONTEMPORANEOUS,  OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE
ARE NO  UNWRITTEN  ORAL  AGREEMENTS  BETWEEN THE  PARTIES.  THE  PARTIES  HERETO
ACKNOWLEDGE AND AFFIRM THE STATEMENT MADE IN THE PRECEDING SENTENCE.

     SECTION 11.18 Amendment,  Restatement and Waiver.

     (a) On and  after  the date on which all of the  conditions  precedent  set
forth in Section 3.1 of this  Agreement are satisfied or waived (the  "Effective
Date"), this Agreement will automatically and without further action of any kind
amend and restate in its  entirety  the Prior  Credit  Agreement  and,  upon the
Effective  Date, the terms and provisions of the Prior Credit  Agreement  shall,
subject to this Section 11.18, be superseded  hereby;  provided,  however,  that
notwithstanding  the amendment and restatement of the Prior Credit  Agreement by
this  Agreement,  the Loan Parties shall continue to be liable to Fleet and each
Lender Party (as each such term is defined in the Prior Credit  Agreement)  with
respect to  agreements  on the part of the Loan  Parties  under the Prior Credit
Agreement to indemnify and hold Fleet (individually and as Administrative Agent)
and  such  Lender  Parties  harmless  from  and  against  all  claims,  demands,
liabilities,  damages,  losses,  costs,  charges  and  expenses  to which  Fleet
(individually  and as  Administrative  Agent)  or any such  Lender  Party may be
subject arising in connection  with any action taken,  failure to take action or
transaction  contemplated  in or under the Prior  Credit  Agreement  during  the
period that such agreement was in effect. Without limiting the generality of the
foregoing,  Sections 2.10, 2.12 and 11.4 of the Prior Credit Agreement shall not
be superseded, modified or otherwise affected by this Agreement.

     (b)  Notwithstanding  the  amendment  and  restatement  of the Prior Credit
Agreement  by this  Agreement,  the Loans  under,  and as defined  in, the Prior
Credit  Agreement  ("Continuing  Loans")  owing to the Lenders by MediaBay  will
remain  outstanding as of the date hereof, and will remain outstanding as of the
Effective  Date,  and  will  constitute  continuing  Obligations  of each of the
Borrowers hereunder and will continue to be secured by the Collateral.

     (c) The Continuing  Loans and the Liens securing  payment  thereof shall in
all respects be continuing,  and this Agreement  shall not be deemed to evidence
or result in a novation or repayment and  re-borrowing of the Continuing  Loans.
In furtherance of and without limiting the foregoing, (i) all amounts owing with
respect to the Continuing  Loans,  other than the principal amount thereof,  but
including,  accrued  interest,  fees and expenses with respect to the Continuing
Loans,  shall have been paid in accordance  with the Prior Credit


                                     - 97 -
<PAGE>


Agreement for periods  prior to the  Effective  Date and (ii) from and after the
Effective Date, the terms,  conditions,  and covenants  governing the Continuing
Loans shall be solely as set forth in this Agreement,  which shall supersede the
Prior  Credit  Agreement in its  entirety,  provided,  however,  that any bailee
letters,  landlord  waivers,  bank  agency  agreements,   insurance  loss  payee
endorsements and other like documents  evidencing the Lenders security  interest
in the Collateral  delivered in connection with the Prior Credit  Agreement,  to
the extent not  specifically  amended and  restated by the terms  hereof,  shall
remain  valid  and   enforceable  and  ING  (U.S.)  Capital  LLC,  as  successor
administrative  agent  to  Fleet  National  Bank,  shall  be  deemed  to be  the
administrative agent thereunder.

     (d) As of the date hereof,  Borrower and Guarantors  acknowledge that there
exist  Defaults and Events of Default under the Prior Credit  Agreement and each
such Default or Event of Default is set forth in the Prior Loan Default  Letter.
The  Administrative  Agent and Lenders hereby  acknowledge the existence of such
Defaults  and Events of Default  and waive such  Defaults  and Events of Default
under the Prior Credit  Agreement;  provided,  however,  that nothing  contained
herein shall  operate as a waiver with respect to any other  Default or Event of
Default other than those  expressly  enumerated in the Prior Loan Default Letter
nor does it  constitute  a waiver any  Defaults  or Events of Default  occurring
after  the date  hereof.  Upon the  effectiveness  of this  Agreement,  the Loan
Parties  represent  and  warrant  that there are no other  Defaults or Events of
Default under this Agreement or any other Loan Document.

                            [SIGNATURE PAGES FOLLOW]


                                     - 98 -
<PAGE>

     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be
executed by their respective officers thereunto duly authorized,  as of the date
first above written.


                                       MEDIABAY, INC.


                                       By:
                                           ------------------------------------

                                       Title:
                                              ---------------------------------



                                       RADIO SPIRITS, INC.


                                       By:
                                           ------------------------------------

                                       Title:
                                              ---------------------------------



                                       AUDIO BOOK CLUB, INC.



                                       By:
                                           ------------------------------------

                                       Title:
                                              ---------------------------------

                                       ING (U.S.) CAPITAL LLC,

                                       as Administrative Agent


                                       By:
                                           ------------------------------------


                                       Title:
                                              ---------------------------------


                                     - 99 -
<PAGE>

                                       LENDERS:


                                       ING (U.S.) CAPITAL LLC

                                       By:
                                           ------------------------------------


                                       Title:
                                              ---------------------------------


                                       ARK CLO 2000-1, Limited


                                       By:  PATRIARCH PARTNERS, LLC,

                                       its Collateral manager


                                           By:
                                               --------------------------------


                                           Title:
                                                 ------------------------------


                                    - 100 -