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                       SILICON VALLEY FINANCIAL SERVICES
                       A Division of Silicon Valley Bank
                               3003 Tasman Drive
                            Santa Clara, Ca. 95054
                      (408) 654-1000 - Fax (408) 980-6410

                              FACTORING AGREEMENT

     This Factoring Agreement (the "Agreement") is made on this NINETEENTH day
of SEPTEMBER, 1997, by and between Silicon Valley Financial Services (a division
of Silicon Valley Bank) ("Buyer") having a place of business at  the address
specified above and SOUND SOURCE INTERACTIVE, INC., a DELAWARE corporation,
("Seller") having its principal place of business and chief executive office at

     Street Address:    26115 Mureau Ste. B
               City:    Calabasas
             County:    Los Angeles
              State:    California
           Zip code:    91302
                Fax:    818/878-0007

1.  DEFINITIONS.  When used herein, the following terms shall have the following
meanings.

    1.1. "Account Balance" shall mean, on any given day, the gross amount of all
Purchased Receivables unpaid on that day.

    1.2.  "Account Debtor" shall have the meaning set forth in the California
Uniform Commercial Code and shall include any person liable on any Purchased
Receivable, including without limitation, any guarantor of the Purchased
Receivable and any issuer of a letter of credit or banker's acceptance.

    1.3.  "Adjustments" shall mean all discounts, allowances, returns, disputes,
counterclaims, offsets, defenses, rights of recoupment, rights of return,
warranty claims, or short payments, asserted by or on behalf of any Account
Debtor with respect to any Purchased Receivable.

    1.4. "Administrative Fee" shall have the meaning as set forth in Section 3.3
hereof.

    1.5.  "Advance" shall have the meaning set forth in Section 2.2 hereof.

    1.6.  "Collateral" shall have the meaning set forth in Section 8 hereof.

    1.7.  "Collections" shall mean all good funds received  by Buyer from or on
behalf of an Account Debtor with respect to Purchased Receivables.

    1.8   "Compliance Certificate" shall  mean a certificate, in a form provided
by  Buyer to Seller, which  contains the certification of the chief  financial
officer of Seller that, among other things, the
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representations and warranties set forth in this Agreement are true and correct
as of the date such  certificate is delivered.

    1.9. "Event of Default" shall have the meaning set forth in Section 9
hereof.

    1.10.  "Finance Charges" shall have the meaning set forth in Section 3.2
hereof.

    1.11.  "Invoice Transmittal" shall mean a writing signed by an authorized
representative of Seller which accurately identifies the receivables which
Buyer, at its election, may purchase, and includes for each such receivable the
correct amount owed by the Account Debtor, the name and address of the Account
Debtor, the invoice number, the invoice date and the account code.

    1.12.  "Obligations" shall mean all advances, financial accommodations,
liabilities, obligations, covenants and duties owing, arising, due or payable by
Seller to Buyer of any kind or nature, present or future, arising under or in
connection with this Agreement or under any other document, instrument or
agreement, whether or not evidenced by any note, guarantee or other instrument,
whether arising on account or by overdraft, whether direct or indirect
(including those acquired by assignment) absolute or contingent, primary or
secondary, due or to become due, now owing or hereafter arising, and however
acquired; including, without limitation, all Advances, Finance Charges,
Administrative Fees, interest, Repurchase Amounts, fees, expenses,  professional
fees and  attorneys' fees and any other sums chargeable to Seller hereunder or
otherwise.

    1.13.  "Purchased Receivables" shall mean all those accounts,  receivables,
chattel paper, instruments, contract rights, documents, general intangibles,
letters of credit, drafts, bankers acceptances, and rights to payment, and all
proceeds thereof (all of the foregoing being referred to as "receivables"),
arising out of the invoices and other agreements identified on or delivered with
any Invoice Transmittal delivered by Seller to Buyer which Buyer elects to
purchase and for which Buyer makes an Advance.

    1.14.  "Refund" shall have the meaning set forth in Section 3.5 hereof.
  
    1.15.  "Reserve" shall have the meaning set forth in Section 2.4 hereof.
    
    1.16.  "Repurchase Amount" shall have the meaning set forth in Section 4.2
hereof.
    
    1.17.  "Reconciliation Date" shall mean the last calendar day of each
Reconciliation Period.
    
    1.18.  "Reconciliation Period" shall mean each calendar month of every year.

2.  PURCHASE AND SALE OF RECEIVABLES.

    2.1.  OFFER TO SELL RECEIVABLES.  During the term hereof, and provided that
there does not then exist any Event of Default or any event that with notice,
lapse of time or otherwise would constitute an Event of Default, Seller may
request that Buyer purchase receivables and Buyer may, in its sole discretion,
elect to purchase receivables.  Seller shall deliver to Buyer an Invoice
Transmittal with respect to any receivable for which a request for purchase is
made.  An authorized representative of Seller shall sign each Invoice
Transmittal delivered to Buyer.  Buyer shall be entitled to rely on all the
information provided by Seller to Buyer on or with the Invoice Transmittal and
to rely on the signature on any Invoice Transmittal as an authorized signature
of Seller.

    2.2.  ACCEPTANCE OF RECEIVABLES.  Buyer shall have no obligation to purchase
any receivable listed on an Invoice Transmittal.  Buyer may exercise its sole
discretion in approving the credit of each Account Debtor before buying any
receivable.  Upon acceptance by Buyer of all or any of the receivables described
on any Invoice Transmittal, Buyer shall pay to Seller 85 (%) percent of the face
                                                      ------
amount of each receivable Buyer desires to purchase.  Such payment shall be the
"Advance" with respect to such receivable.  Buyer may, from time to time, in its
sole discretion, change the percentage of the Advance.  Upon Buyer's acceptance
of the receivable and payment to Seller of the Advance, the receivable shall
become a "Purchased Receivable."  It shall be a condition to each  Advance  that
(i) all of  the representations and warranties  set forth in Section  6 of this
Agreement  be true and correct on and as of the date of the related Invoice
Transmittal and on  and as of the date of such  Advance as though made at and as
of each such date, and  (ii) no Event of Default or any event or condition that
with notice, lapse of time or otherwise would constitute an Event of Default
shall have occurred and be continuing, or would result from such Advance.
Notwithstanding the foregoing, in no event shall the aggregate amount of all
Purchased Receivables outstanding at any time exceed ONE MILLION FIVE HUNDRED
THOUSAND AND NO/100 **** Dollars ($1,500,000.00).
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    2.3.  EFFECTIVENESS OF SALE TO BUYER.  Effective upon Buyer's payment of an
Advance, and for and in consideration therefor and in consideration of the
covenants of this Agreement, Seller hereby absolutely sells, transfers and
assigns to Buyer, all of Seller's right, title and interest in and to each
Purchased Receivable and all monies due or which may become due on or with
respect to such Purchased Receivable.  Buyer shall be the absolute owner of each
Purchased Receivable.  Buyer shall have, with respect to any goods related to
the Purchased Receivable, all the rights and remedies of an unpaid seller under
the California Uniform Commercial Code and other applicable law, including the
rights of replevin, claim and delivery, reclamation and stoppage in transit.

    2.4.  ESTABLISHMENT OF A RESERVE.  Upon the purchase by Buyer of each
Purchased Receivable, Buyer shall establish a reserve.  The reserve shall be the
amount by which the face amount of the Purchased Receivable exceeds the Advance
on that Purchased Receivable (the "Reserve"); provided, the Reserve with respect
to all Purchased Receivables outstanding at any one time shall be an amount not
less than 15 (%) percent of the Account Balance at that time and may be set at a
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higher percentage at Buyer's sole discretion.  The reserve shall be a book
balance maintained on the records of Buyer and shall not be a segregated fund.

3.  COLLECTIONS, CHARGES AND REMITTANCES.

    3.1. COLLECTIONS. Upon receipt by Buyer of Collections, Buyer shall promptly
credit such Collections to Seller's Account Balance on a daily basis; provided,
that if Seller is in default under this Agreement, Buyer shall apply all
Collections to Seller's Obligations hereunder in such order and manner as Buyer
may determine. If an item of collection is not honored or Buyer does not receive
good funds for any reason, the amount shall be included in the Account Balance
as if the Collections had not been received and Finance Charges under Section
3.2 shall accrue thereon.

    3.2. FINANCE CHARGES. On each Reconciliation Date Seller shall pay to Buyer
a finance charge in an amount equal to 1.75 (%) percent per month of the average
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daily Account Balance outstanding during the applicable Reconciliation Period
(the "Finance Charges"). Buyer shall deduct the accrued Finance Charges from the
Reserve as set forth in Section 3.5 below.

    3.3.  ADMINISTRATIVE FEE.  On each Reconciliation Date Seller shall pay to
Buyer an Administrative Fee equal to .50 (%) percent of the face amount of each
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Purchased Receivable first purchased during that Reconciliation Period (the
"Administrative Fee").  Buyer shall deduct the Administrative Fee from the
Reserve as set forth in Section 3.5 below.

    3.4.  ACCOUNTING.  Buyer shall prepare and send to Seller after the close of
business for each Reconciliation Period, an accounting  of the transactions for
that Reconciliation Period, including the amount of all Purchased Receivables,
all Collections, Adjustments, Finance Charges, and the Administrative Fee.  The
accounting shall be deemed correct and conclusive unless Seller makes written
objection to Buyer within thirty (30) days after the Buyer mails the accounting
to Seller.

  3.5.  REFUND TO SELLER.  Provided that there does not then exist an Event of
Default or any event or condition that with notice, lapse of time or otherwise
would constitute an Event of Default, Buyer shall refund to Seller by check
after the Reconciliation Date, the amount, if any, which Buyer owes to Seller at
the end of the Reconciliation Period according to the accounting prepared by
Buyer for that Reconciliation Period (the "Refund").  The Refund shall be an
amount equal to:

     (A) (1)  The Reserve as of the beginning of that Reconciliation Period,
              PLUS
         (2)  the Reserve created for each Purchased Receivable purchased during
              that Reconciliation Period, MINUS
     (B) The total for that Reconciliation Period of:
         (1)  the Administrative Fee;
         (2)  Finance Charges;
         (3)  Adjustments;
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         (4)  Repurchase Amounts, to the extent Buyer has agreed to accept
              payment thereof by deduction from the Refund;
         (5)  the Reserve for the Account Balance as of the first day of the
              following Reconciliation Period in the minimum percentage set
              forth in Section 2.4 hereof; and
         (6)  all amounts due, including professional fees and expenses, as set
              forth in Section 12 for which oral or written demand has been made
              by Buyer to Seller during that Reconciliation Period to the extent
              Buyer has agreed to accept payment thereof by deduction from the
              Refund.

In the event the formula set forth in this Section 3.5 results in an amount due
to Buyer from Seller, Seller shall make such payment in the same manner as set
forth in Section 4.3 hereof for repurchases.  If the formula set forth in this
Section 3.5 results in an amount due to Seller from Buyer, Buyer shall make such
payment by check, subject to Buyer's rights under Section 4.3 and Buyer's rights
of offset and recoupment.

4.  RECOURSE AND REPURCHASE OBLIGATIONS.

    4.1.  RECOURSE.  Buyer's acquisition of Purchased Receivables from Seller
shall be with full recourse against Seller.  In the event the Obligations exceed
the amount of Purchased Receivables and Collateral, Seller shall be liable for
any deficiency.

    4.2.  SELLER'S AGREEMENT TO REPURCHASE.  Seller agrees to pay to Buyer on
demand, the full face amount, or any unpaid portion, of any Purchased
Receivable:
          (A)  which remains unpaid ninety (90) calendar days after the invoice
               date; or

          (B)  which is owed by any Account Debtor who has filed, or has had
               filed against it, any bankruptcy case, assignment for the benefit
               of creditors, receivership, or insolvency proceeding or who has
               become insolvent (as defined in the United States Bankruptcy
               Code) or who is generally not paying its debts as such debts
               become due; or
          (C)  with respect to which there has been any breach of warranty or
               representation set forth in Section 6 hereof or any breach of any
               covenant contained in this Agreement; or
          (D)  with respect to which the Account Debtor asserts any discount,
               allowance, return, dispute, counterclaim, offset, defense, right
               of recoupment, right of return, warranty claim, or short payment;
               together with all reasonable attorneys' and professional fees and
               expenses and all court costs incurred by Buyer in collecting such
               Purchased Receivable and/or enforcing its rights under, or
               collecting amounts owed by Seller in connection with, this
               Agreement (collectively, the "Repurchase Amount").

    4.3.  SELLER'S PAYMENT OF THE REPURCHASE AMOUNT OR OTHER AMOUNTS DUE BUYER.
When any Repurchase Amount or other amount owing to Buyer becomes due, Buyer
shall inform Seller of the manner of payment which may be any one or more of the
following in Buyer's sole discretion:  (a)  in cash immediately upon demand
therefor; (b)  by delivery of substitute invoices and an Invoice Transmittal
acceptable to Buyer which shall thereupon become Purchased Receivables; (c)  by
adjustment to the Reserve pursuant to Section 3.5 hereof; (d)  by deduction from
or offset against the Refund that would otherwise be due and payable to Seller;
(e) by deduction from or offset against  the amount that otherwise would be
forwarded to Seller in respect of any further Advances that may be made by
Buyer; or (f)  by any combination of the foregoing as Buyer may from time to
time choose.

    4.4.  SELLER'S AGREEMENT TO REPURCHASE ALL PURCHASED RECEIVABLES.  Upon and
after the occurrence of an Event of Default, Seller shall, upon Buyer's demand
(or, in the case of  an Event of Default under Section 9(B), immediately without
notice or demand from Buyer) repurchase all the Purchased Receivables then
outstanding , or such portion thereof as Buyer may demand.  Such demand may, at
Buyer's option, include and Seller shall pay to Buyer immediately upon demand,
cash in an amount equal to the Advance with respect to each Purchased Receivable
then outstanding together with all accrued Finance Charges, Adjustments,
Administrative Fees, attorney's and professional fees, court costs and expenses
as provided for herein, and any other Obligations.  Upon receipt of payment in
full of the Obligations, Buyer shall immediately instruct Account Debtors to pay
Seller directly, and return to Seller any Refund due to Seller.  For the purpose
of calculating any Refund due under this Section only, the Reconciliation Date
shall be deemed to be the date Buyer receives payment in good funds of all the
Obligations as provided in this Section 4.4.
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5.  POWER OF ATTORNEY.  Seller does hereby irrevocably appoint Buyer and its
successors and assigns as Seller's true and lawful attorney in fact, and hereby
authorizes Buyer, regardless of whether there has been an Event of Default, (a)
to sell, assign, transfer, pledge, compromise, or discharge the whole or any
part of the Purchased Receivables; (b)  to demand, collect, receive, sue, and
give releases to any Account Debtor for the monies due or which may become due
upon or with respect to the Purchased Receivables and to compromise, prosecute,
or defend any action, claim, case or proceeding relating to the Purchased
Receivables, including the filing of a claim or the voting of such claims in any
bankruptcy case, all in Buyer's name or Seller's name, as Buyer may choose; (c)
to prepare, file and sign Seller's name on any notice, claim, assignment,
demand, draft, or notice of or satisfaction of lien or mechanics' lien or
similar document with respect to Purchased Receivables; (d)  to notify all
Account Debtors with respect to the Purchased Receivables to pay Buyer directly;
(e)  to receive, open, and dispose of all mail addressed to Seller for the
purpose of collecting the Purchased Receivables; (f)  to endorse Seller's name
on any checks or other forms of payment on the Purchased Receivables;  (g) to
execute on behalf of Seller any and all instruments, documents, financing
statements and the like to perfect Buyer's interests in the Purchased
Receivables and Collateral; and (h)  to do all acts and things necessary or
expedient, in furtherance of any such purposes.  If Buyer receives a check or
item which is payment for both a Purchased Receivable and another receivable,
the funds shall first be applied to the Purchased Receivable and, so long as
there does not exist an Event of Default or an event that with notice, lapse of
time or otherwise would constitute an Event of Default, the excess shall be
remitted to Seller.  Upon the occurrence and continuation of an Event of
Default, all of the power of attorney rights granted by Seller to Buyer
hereunder shall be applicable with respect to all Purchased Receivables and all
Collateral.

6.  REPRESENTATIONS, WARRANTIES AND COVENANTS.

    6.1. RECEIVABLES' WARRANTIES, REPRESENTATIONS AND COVENANTS. To induce Buyer
to buy receivables and to render its services to Seller, and with full knowledge
that the truth and accuracy of the following are being relied upon by the Buyer
in determining whether to accept receivables as Purchased Receivables, Seller
represents, warrants, covenants and agrees, with respect to each Invoice
Transmittal delivered to Buyer and each receivable described therein, that:
         (A) Seller is the absolute owner of each receivable set forth in the
         Invoice Transmittal and has full legal right to sell, transfer and
         assign such receivables;
         (B) The correct amount of each receivable is as set forth in the
         Invoice Transmittal and is not in dispute;
         (C) The payment of each receivable is not contingent upon the
         fulfillment of any obligation or contract, past or future and any and
         all obligations required of the Seller have been fulfilled as of the
         date of the Invoice Transmittal;
         (D) Each receivable set forth on the Invoice Transmittal is based on an
         actual sale and delivery of goods and/or services actually rendered, is
         presently due and owing to Seller, is not past due or in default, has
         not been previously sold, assigned, transferred, or pledged, and is
         free of any and all liens, security interests and encumbrances other
         than liens, security interests or encumbrances in favor of Buyer or any
         other division or affiliate of Silicon Valley Bank;
         (E) There are no defenses, offsets, or counterclaims against any of the
         receivables, and no agreement has been made under which the Account
         Debtor may claim any deduction or discount, except as otherwise stated
         in the Invoice Transmittal;
         (F) Each Purchased Receivable shall be the property of the Buyer and
         shall be collected by Buyer, but if for any reason it should be paid to
         Seller, Seller shall promptly notify Buyer of such payment, shall hold
         any checks, drafts, or monies so received in trust for the benefit of
         Buyer, and shall promptly transfer and deliver the same to the Buyer;
         (G) Buyer shall have the right of endorsement, and also the right to
         require endorsement by Seller, on all payments received in connection
         with each Purchased Receivable and any proceeds of Collateral;
         (H) Seller, and to Seller's best knowledge, each Account Debtor set
         forth in the Invoice Transmittal, are and shall remain solvent as that
         term is defined in the United States Bankruptcy Code and
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         the California Uniform Commercial Code, and no such Account Debtor has
         filed or had filed against it a voluntary or involuntary petition for
         relief under the United States Bankruptcy Code;
         (I) Each Account Debtor named on the Invoice Transmittal will not
         object to the payment for, or the quality or the quantity of the
         subject matter of, the receivable and is liable for the amount set
         forth on the Invoice Transmittal;
         (J) Each Account Debtor shall promptly be notified, after acceptance by
         Buyer, that the Purchased Receivable has been transferred to and is
         payable to Buyer, and Seller shall not take or permit any action to
         countermand such notification; and
         (K) All receivables forwarded to and accepted by Buyer after the date
         hereof, and thereby becoming Purchased Receivables, shall comply with
         each and every one of the foregoing representations, warranties,
         covenants and agreements referred to above in this Section 6.1.
 
    6.2. ADDITIONAL WARRANTIES, REPRESENTATIONS AND COVENANTS.  In addition to
the foregoing warranties, representations and covenants, to induce Buyer to buy
receivables and to render its services to Seller, Seller hereby represents,
warrants, covenants and agrees that:
         (A) Seller will not assign, transfer, sell, or grant , or permit any
         lien or security interest in any Purchased Receivables or Collateral to
         or in favor of any other party, without Buyer's prior written consent;
         (B) The Seller's name, form of organization, chief executive office,
         and the place where the records concerning all Purchased Receivables
         Collateral are kept is set forth at the beginning of this Agreement,
         Collateral is located only at the location set forth in the beginning
         of this Agreement, or, if located at any additional location, as set
         forth on a schedule attached to this Agreement, and Seller will give
         Buyer at least thirty (30) days prior written notice if such name,
         organization, chief executive office or other locations of Collateral
         or records concerning Purchased Receivables or Collateral is changed or
         added and shall execute any documents necessary to perfect Buyer's
         interest in the Purchased Receivables and the Collateral.
         (C) Seller shall (i) pay all of its normal gross payroll for employees,
         and all federal and state taxes, as and when due, including without
         limitation all payroll and withholding taxes and state sales taxes;
         (ii) deliver at any time and from time to time at Buyer's request,
         evidence satisfactory to Buyer that all such amounts have been paid to
         the proper taxing authorities; and (iii) if requested by Buyer, pay its
         payroll and related taxes through a bank or an independent payroll
         service acceptable to Buyer.
         (D) Seller has not, as of the time Seller delivers to Buyer an Invoice
         Transmittal, or as of the time Seller accepts any Advance from Buyer,
         filed a voluntary petition for relief under the United States
         Bankruptcy Code or had filed against it an involuntary petition for
         relief;
         (E) If Seller owns, holds or has any interest in, any copyrights
         (whether registered, or unregistered), patents or trademarks, and
         licenses of any of the foregoing, such interest has been disclosed to
         Buyer and is specifically listed and identified on a schedule to this
         Agreement, and Seller shall immediately notify Buyer if Seller
         hereafter obtains any interest in any additional copyrights, patents,
         trademarks or licenses that are significant in value or are material to
         the conduct of its business; and
         (F) Seller shall provide Buyer with a Compliance Certificate (i) on a
         quarterly basis to be received by Buyer no later than the fifth
         calendar day following each calendar quarter, and; (ii) on a more
         frequent or other basis if and as requested by Buyer.

7.  ADJUSTMENTS.  In the event of a breach of any of the representations,
warranties, or covenants set forth in Section 6.1, or in the event any
Adjustment or dispute is asserted by any Account Debtor, Seller shall promptly
advise Buyer and shall, subject to the Buyer's approval, resolve such disputes
and advise Buyer of any adjustments.  Unless the disputed Purchased Receivable
is repurchased by Seller and the full Repurchase Amount is paid, Buyer shall
remain the absolute owner of any Purchased Receivable which is subject to
Adjustment or repurchase under Section 4.2 hereof, and any rejected, returned,
or recovered personal property, with the right to take possession thereof at any
time.  If such possession is not taken by Buyer, Seller is to resell it for
Buyer's account at Seller's expense with the proceeds made payable to Buyer.
While Seller retains possession of said returned goods, Seller shall segregate
said goods and mark them "property of Silicon Valley Financial Services."
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8.  SECURITY INTEREST.  To secure  the prompt payment and performance to Buyer
of all of the Obligations, Seller hereby grants to Buyer a continuing lien upon
and security interest in all  of Seller's now existing or hereafter arising
rights and interest in the following , whether now owned or existing or
hereafter created, acquired, or arising, and wherever located (collectively, the
"Collateral"):
    (A) All accounts, receivables, contract rights, chattel paper, instruments,
    documents, letters of credit, bankers acceptances, drafts, checks, cash,
    securities, and general intangibles (including, without limitation, all
    claims, causes of action, deposit accounts, guaranties, rights in and claims
    under insurance policies (including rights to premium refunds), rights to
    tax refunds, copyrights, patents, trademarks, rights in and under license
    agreements, and all other intellectual property);
    (B) All inventory, including Seller's rights to any returned or rejected
    goods, with respect to which Buyer shall have all the rights of any unpaid
    seller, including the rights of replevin, claim and delivery, reclamation,
    and stoppage in transit;
    (C ) All monies, refunds and other amounts due Seller, including, without
    limitation, amounts due Seller under this Agreement (including Seller's
    right of offset and recoupment);
    (D) All equipment, machinery, furniture, furnishings, fixtures, tools,
    supplies and motor vehicles;
    (E) All farm products, crops, timber, minerals and the like (including oil
    and gas);
    (F) All accessions to, substitutions for, and replacements of, all of the
    foregoing;
    (G)  All books and records pertaining to all of the foregoing; and
    (H) All proceeds of the foregoing, whether due to voluntary or involuntary
    disposition, including insurance proceeds.

     Seller is not authorized to sell, assign, transfer or otherwise convey any
Collateral without Buyer's prior  written consent, except for the sale of
finished inventory in the Seller's usual  course of business.  Seller agrees to
sign UCC financing statements, in a form acceptable to Buyer, and any other
instruments and documents requested by Buyer to evidence , perfect, or protect
the interests  of Buyer in the Collateral.  Seller agrees to deliver to Buyer
the originals of all instruments, chattel paper and documents evidencing or
related to Purchased Receivables and Collateral.

9.  DEFAULT.  The occurrence of any one or more of the following shall
constitute an Event of Default hereunder.
    (A)  Seller fails to pay any amount owed to Buyer as and when due;
    (B) There shall be commenced by or against Seller any voluntary or
    involuntary case under the United States Bankruptcy Code, or any assignment
    for the benefit of creditors, or appointment of a receiver or custodian for
    any of its assets;
    (C) Seller shall become insolvent in that its debts are greater than the
    fair value of its assets, or Seller is generally not paying its debts as
    they become due or is left with unreasonably small capital;
    (D) Any involuntary lien, garnishment, attachment or the like is issued
    against or attaches to the Purchased Receivables or any Collateral;
    (E) Seller shall breach any covenant, agreement, warranty, or representation
    set forth herein, and the same is not cured to Buyer's satisfaction within
    ten (10) days after Buyer has given Seller oral or written notice thereof;
    provided, that if such breach is incapable of being cured it shall
    constitute an immediate default hereunder;
    (F) Seller is not in compliance with, or otherwise is in default under, any
    term of any document, instrument or agreement evidencing a debt, obligation
    or liability of any kind or character of Seller, now or hereafter existing,
    in favor of Buyer or any division or affiliate of Silicon Valley Bank,
    regardless of whether such debt, obligation or liability is direct or
    indirect, primary or secondary, joint, several or joint and several, or
    fixed or contingent, together with any and all renewals and extensions of
    such debts, obligations and liabilities, or any part thereof;
    (G) An event of default shall occur under any guaranty executed by any
    guarantor of the Obligations of Seller to Buyer under this Agreement, or any
    material provision of any such guaranty shall for any reason cease to be
    valid or enforceable or any such guaranty shall be repudiated or terminated,
    including by operation of law;
    (H) A default or event of default shall occur under any agreement between
    Seller and any creditor of Seller that has entered into a subordination
    agreement with Buyer; or

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    (I) Any creditor that has entered into a subordination agreement with Buyer
    shall breach any of the terms of or not comply with such subordination
    agreement.

10.  REMEDIES UPON DEFAULT.  Upon the occurrence of an Event of Default, (1)
without implying any obligation to buy receivables, Buyer may cease buying
receivables or extending any financial accommodations to Seller;  (2)  all or a
portion of the Obligations shall be, at the option of and upon demand by Buyer,
or with respect to an Event of Default described in Section 9(B), automatically
and without notice or demand, due and payable in full; and (3) Buyer shall have
and may exercise all the rights and remedies under this Agreement and under
applicable law, including the rights and remedies of a secured party under the
California Uniform Commercial Code, all the power of attorney rights described
in Section 5 with respect to all Collateral, and the right to collect, dispose
of, sell, lease, use, and realize upon all Purchased Receivables and all
Collateral in any commercial reasonable manner.  Seller and Buyer agree that any
notice of sale required to be given to Seller shall be deemed to be reasonable
if given five (5) days prior to the date on or after which the sale may be held.
In the event that the Obligations are accelerated hereunder, Seller shall
repurchase all of the Purchased Receivables as set forth in Section 4.4.

11.  ACCRUAL OF INTEREST.  If any amount owed by Seller hereunder is not paid
when due, including, without limitation, amounts due under Section 3.5,
Repurchase Amounts, amounts due under Section 12, and any other Obligations,
such amounts shall bear interest at a per annum rate equal to the per annum rate
of the Finance Charges until the earlier of (i) payment in good funds or (ii)
entry of a final judgment thereof, at which time the principal amount of any
money judgment remaining unsatisfied shall accrue interest at the highest rate
allowed by applicable law.

12.   FEES, COSTS AND EXPENSES; INDEMNIFICATION.  The Seller will pay to Buyer
immediately upon demand all  fees, costs and expenses  (including  fees  of
attorneys and professionals and their costs and expenses )  that Buyer incurs or
may  from time to time impose  in connection with any of the following:  (a)
preparing, negotiating , administering, and enforcing this Agreement  or any
other agreement executed in connection herewith,  including any amendments,
waivers or consents in connection with any of the foregoing,  (b) any litigation
or dispute (whether instituted by Buyer, Seller or any other person) in any way
relating to the Purchased Receivables, the Collateral, this Agreement or any
other agreement executed in connection herewith or therewith, (d) enforcing any
rights against Seller or any guarantor, or any Account Debtor, (e) protecting or
enforcing its interest in the Purchased Receivables or the Collateral, (f)
collecting the Purchased Receivables and the  Obligations, and  (g) the
representation of Buyer in connection with any bankruptcy case or insolvency
proceeding involving Seller, any Purchased Receivable, the Collateral, any
Account Debtor, or any guarantor.  Seller shall indemnify and hold Buyer
harmless from and against any and all claims, actions, damages, costs, expenses,
and liabilities of any nature whatsoever arising in connection with any of the
foregoing.

13.  SEVERABILITY, WAIVER, AND CHOICE OF LAW.  In the event that any provision
of this Agreement is deemed invalid by reason of law, this Agreement  will be
construed as not containing such provision and the remainder of the Agreement
shall remain in full force and effect.  Buyer retains all of its rights, even if
it makes an Advance after a default.  If Buyer waives a default, it may enforce
a later default.  Any consent or waiver under, or amendment of, this Agreement
must be in writing.   Nothing contained herein, or any action taken or not taken
by Buyer at any time, shall be construed at any time to be indicative of any
obligation or willingness on the part of Buyer to amend this Agreement or to
grant to Seller any waivers or consents.  This Agreement has been transmitted by
Seller to Buyer at Buyer's office in the State of California and has been
executed and accepted by Buyer in the State of California.  This Agreement shall
be governed by and interpreted in accordance with the internal laws of the State
of California.

14.    ACCOUNT COLLECTION SERVICES.  Certain Account Debtors may require or
prefer that all of Seller's receivables be paid to the same address and/or
party, or Seller and Buyer may agree that all receivables with respect to
certain Account Debtors be paid to one party.  In such event Buyer and Seller
may agree that Buyer shall collect all receivables whether owned by Seller or
Buyer and (provided that there does not then exist an Event of Default or event
that with notice, lapse or time or otherwise would constitute an Event of
Default, and subject to Buyer's rights in the Collateral) Buyer agrees to remit
to Seller the amount of the
<PAGE>
 
receivables collections it receives with respect to receivables other than
Purchased Receivables.  It is understood and agreed by Seller that this Section
does not impose any affirmative duty on Buyer to do any act other than to turn
over such amounts.  All such receivables and collections are Collateral and in
the event of Seller's default hereunder,  Buyer shall have no duty to remit
collections of Collateral and may apply such collections to the obligations
hereunder and Buyer shall have the rights of a secured party under the
California Uniform Commercial Code.

15.  NOTICES.  All notices shall be given to Buyer and Seller at the addresses
or faxes set forth on the first page of this Agreement and shall be deemed to
have been delivered and received: (a)  if mailed, three (3) calendar days after
deposited in the United States mail, first class, postage pre-paid, (b)  one (1)
calendar day after deposit with an overnight mail or messenger service; or (c)
on the same date of  confirmed transmission if sent by hand delivery, telecopy,
telefax or telex.

16.  JURY TRIAL.  SELLER AND BUYER EACH HEREBY (a) WAIVE THEIR RESPECTIVE RIGHTS
TO A JURY TRIAL ON ANY CLAIM OR ACTION ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT, ANY RELATED AGREEMENTS, OR ANY OF THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY; (b) RECOGNIZE AND AGREE THAT THE FOREGOING WAIVER CONSTITUTES
A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS AGREEMENT; AND (c) REPRESENT AND
WARRANT THAT IT HAS REVIEWED THIS WAIVER, HAS DETERMINED FOR ITSELF THE
NECESSITY TO REVIEW THE SAME WITH ITS LEGAL COUNSEL, AND KNOWINGLY AND
VOLUNTARILY WAIVES ALL RIGHTS TO A JURY TRIAL.

17.  TERM AND TERMINATION.  The term of this Agreement shall be for one (1) year
from the date hereof, and from year to year thereafter unless terminated in
writing by Buyer or Seller.  Seller and Buyer shall each have the right to
terminate this Agreement at any time.  Notwithstanding the foregoing, any
termination of this Agreement shall not affect  Buyer's security interest in the
Collateral and Buyer's ownership of the Purchased Receivables, and this
Agreement shall continue to be effective, and Buyer's rights and remedies
hereunder shall survive such termination, until all transactions entered into
and Obligations incurred hereunder or in connection herewith have been completed
and satisfied in full.

18.  TITLES AND SECTION HEADINGS.  The titles and section headings used herein
are for convenience only and shall not be used in interpreting this Agreement.
<PAGE>
 
19.  OTHER AGREEMENTS.  The terms and provisions of this Agreement shall not
adversely affect the rights of Buyer or any other division or affiliate of
Silicon Valley Bank under any other document, instrument or agreement.  The
terms of such other documents, instruments and agreements shall remain in full
force and effect notwithstanding the execution of this Agreement.  In the event
of a conflict between any provision of this Agreement and any provision of any
other document, instrument or agreement between Seller on the one hand, and
Buyer or any other division or affiliate of Silicon Valley Bank on the other
hand, Buyer shall determine in its sole discretion which provision shall apply.
Seller acknowledges specifically that any security agreements, liens and/or
security interests currently securing payment of any obligations of Seller owing
to Buyer or any other division or affiliate of Silicon Valley Bank also secure
Seller's obligations under this Agreement, and are valid and subsisting and are
not adversely affected by execution of this Agreement.  Seller further
acknowledges that (a) any collateral under other outstanding security
agreements or other documents between Seller and Buyer or any other division or
affiliate of Silicon Valley Bank secures the obligations of Seller under this
Agreement and (b) a default by Seller under this Agreement constitutes a
default under other outstanding agreements between Seller and Buyer or any other
division or affiliate of Silicon Valley Bank.

  IN WITNESS WHEREOF, Seller and Buyer have executed this Agreement on the day
and year above written.

SELLER:  SOUND SOURCE INTERACTIVE, INC.

 
By _______________________________________
Title _____________________________________



BUYER:  SILICON VALLEY FINANCIAL SERVICES
        A division of Silicon Valley Bank



By________________________________________
Title ______________________________________
<PAGE>
 
This FINANCING STATEMENT is presented for filing and will remain effective, with
certain exceptions, for five years from the date of filing, pursuant to Section
9403 of the California Uniform Commercial Code.
--------------------------------------------------------------------------------
1.  DEBTOR  (Last Name First - If An Individual)         1A.Soc Sec No or Id No.
SOUND SOURCE INTERACTIVE, INC.                           95-4264046
--------------------------------------------------------------------------------
1B.  MAILING ADDRESS                  1C.  CITY, STATE          1D.  ZIP CODE
26115 Mureau Ste. B                   Calabasas, California     91302
--------------------------------------------------------------------------------
2.  ADDITIONAL DEBTOR  (IF ANY) (Last Name First - If An Individual)

2A.Soc Sec No or Id No.

--------------------------------------------------------------------------------
2B.  MAILING ADDRESS                  2C.  CITY, STATE          2D.  ZIP CODE

--------------------------------------------------------------------------------
3.  DEBTOR'S TRADE NAMES OR STYLES (IF ANY)                     3A.  FED TAX NO.
SOUND SOURCE UMLIMITED, INC.                                    95-4264046
================================================================================
4.  SECURED PARTY                                        4A.Soc Sec No or Id No.
Name:            SILICON VALLEY BANK/SILICON 
                 VALLEY FINANCIAL SERVICES
Mailing Address: 3003 Tasman Drive, Mail Sort NC481
                 Santa Clara, California  95054
================================================================================
5.  ASSIGNEE OF SECURED PARTY                            5A.Soc Sec No or Id No.
Name:                             NONE
Mailing Address:
--------------------------------------------------------------------------------
6.  This FINANCING STATEMENT covers the following types or items of property
(include description of real property on which located and owner of record when
required by instruction 4).

Debtor hereby grants Secured Party a security interest in all of the following,
whether now owned or hereafter acquired, and wherever located, as collateral for
the payment and performance of all present and future indebtedness, liabilities,
guarantees and obligations of Debtor to Secured Party:  All "accounts," "general
intangibles," "chattel paper," "documents," "letters of credit," "instruments,"
"deposit accounts," "inventory," "farm products," "fixtures" and "equipment," as
such terms are defined in Division 9 of the California Uniform Commercial Code
in effect on the date hereof, and all other types or items of property described
on Exhibit A hereto (but this Financing Statement shall be fully effective
notwithstanding any lack of any Exhibit A).  Debtor is not authorized to sell,
transfer, or further encumber any of the foregoing collateral, except for the
sale of finished inventory in the ordinary course of business.
--------------------------------------------------------------------------------
7.    CHECK IF APPLICABLE: X-PRODUCTS OF COLLATERAL ARE ALSO COVERED.
================================================================================
SIGNATURE(S) OF DEBTOR:    DATE: October 7, 1997

SOUND SOURCE INTERACTIVE, INC.


By__________________________________
Title_______________________________

================================================
SIGNATURE(S) OF SECURED PARTY:

SILICON VALLEY BANK/SILICON VALLEY FINANCIAL
SERVICES


By__________________________________
Title_______________________________

================================================
RETURN COPY TO:

SILICON VALLEY BANK
3003 Tasman Drive Mail Sort NC481
Santa Clara, California  95054

C  | THIS SPACE FOR USE OF FILING OFFICER 
O  | (DATE, TIME, FILE NUMBER AND FILING
D  | OFFICER)
E  | 
   |
1  |
   |
2  |
   |
3  |
   |
4  |
   |
5  |
   |
6  |
   |
7  |
   |
8  |
   |
9  |
   |
0  |
   |
   |
--------------------------------------------------------------------------------
(1) FILING OFFICER COPY         Form UCC-1
<PAGE>

This FINANCING STATEMENT is presented for filing and will remain effective, with
certain exceptions, for five years from the date of filing, pursuant to Section
9403 of the California Uniform Commercial Code.
--------------------------------------------------------------------------------
1.  DEBTOR  (Last Name First - If An Individual)         1A.Soc Sec No or Id No.
SOUND SOURCE INTERACTIVE, INC.                           95-4264046
--------------------------------------------------------------------------------
1B.  MAILING ADDRESS                  1C.  CITY, STATE          1D.  ZIP CODE
26115 Mureau Ste. B                   Calabasas, California     91302
--------------------------------------------------------------------------------
2.  ADDITIONAL DEBTOR  (IF ANY) (Last Name First - If An Individual)

2A.Soc Sec No or Id No.

--------------------------------------------------------------------------------
2B.  MAILING ADDRESS                  2C.  CITY, STATE          2D.  ZIP CODE

--------------------------------------------------------------------------------
3.  DEBTOR'S TRADE NAMES OR STYLES (IF ANY)                     3A.  FED TAX NO.
SOUND SOURCE UMLIMITED, INC.                                    95-4264046
================================================================================
4.  SECURED PARTY                                        4A.Soc Sec No or Id No.
Name:            SILICON VALLEY BANK/SILICON 
                 VALLEY FINANCIAL SERVICES
Mailing Address: 3003 Tasman Drive, Mail Sort NC481
                 Santa Clara, California  95054
================================================================================
5.  ASSIGNEE OF SECURED PARTY                            5A.Soc Sec No or Id No.
Name:                             NONE
Mailing Address:
--------------------------------------------------------------------------------
6.  This FINANCING STATEMENT covers the following types or items of property
(include description of real property on which located and owner of record when
required by instruction 4).

Debtor hereby grants Secured Party a security interest in all of the following,
whether now owned or hereafter acquired, and wherever located, as collateral for
the payment and performance of all present and future indebtedness, liabilities,
guarantees and obligations of Debtor to Secured Party:  All "accounts," "general
intangibles," "chattel paper," "documents," "letters of credit," "instruments,"
"deposit accounts," "inventory," "farm products," "fixtures" and "equipment," as
such terms are defined in Division 9 of the California Uniform Commercial Code
in effect on the date hereof, and all other types or items of property described
on Exhibit A hereto (but this Financing Statement shall be fully effective
notwithstanding any lack of any Exhibit A).  Debtor is not authorized to sell,
transfer, or further encumber any of the foregoing collateral, except for the
sale of finished inventory in the ordinary course of business.
--------------------------------------------------------------------------------
7.    CHECK IF APPLICABLE: X-PRODUCTS OF COLLATERAL ARE ALSO COVERED.
================================================================================
SIGNATURE(S) OF DEBTOR:    DATE: October 7, 1997

SOUND SOURCE INTERACTIVE, INC.


By__________________________________
Title_______________________________

================================================
SIGNATURE(S) OF SECURED PARTY:

SILICON VALLEY BANK/SILICON VALLEY FINANCIAL
SERVICES


By__________________________________
Title_______________________________

================================================
RETURN COPY TO:

SILICON VALLEY BANK
3003 Tasman Drive Mail Sort NC481
Santa Clara, California  95054

C  | THIS SPACE FOR USE OF FILING OFFICER 
O  | (DATE, TIME, FILE NUMBER AND FILING
D  | OFFICER)
E  | 
   |
1  |
   |
2  |
   |
3  |
   |
4  |
   |
5  |
   |
6  |
   |
7  |
   |
8  |
   |
9  |
   |
0  |
   |
   |
--------------------------------------------------------------------------------
(2) FILING OFFICER COPY-ACKNOWLEDGMENT         Form UCC-1
<PAGE>
 
This FINANCING STATEMENT is presented for filing and will remain effective, with
certain exceptions, for five years from the date of filing, pursuant to Section
9403 of the California Uniform Commercial Code.
--------------------------------------------------------------------------------
1.  DEBTOR  (Last Name First - If An Individual)         1A.Soc Sec No or Id No.
SOUND SOURCE INTERACTIVE, INC.                           95-4264046
--------------------------------------------------------------------------------
1B.  MAILING ADDRESS                  1C.  CITY, STATE          1D.  ZIP CODE
26115 Mureau Ste. B                   Calabasas, California     91302
--------------------------------------------------------------------------------
2.  ADDITIONAL DEBTOR  (IF ANY) (Last Name First - If An Individual)

2A.Soc Sec No or Id No.

--------------------------------------------------------------------------------
2B.  MAILING ADDRESS                  2C.  CITY, STATE          2D.  ZIP CODE

--------------------------------------------------------------------------------
3.  DEBTOR'S TRADE NAMES OR STYLES (IF ANY)                     3A.  FED TAX NO.
SOUND SOURCE UMLIMITED, INC.                                    95-4264046
================================================================================
4.  SECURED PARTY                                        4A.Soc Sec No or Id No.
Name:            SILICON VALLEY BANK/SILICON 
                 VALLEY FINANCIAL SERVICES
Mailing Address: 3003 Tasman Drive, Mail Sort NC481
                 Santa Clara, California  95054
================================================================================
5.  ASSIGNEE OF SECURED PARTY                            5A.Soc Sec No or Id No.
Name:                             NONE
Mailing Address:
--------------------------------------------------------------------------------
6.  This FINANCING STATEMENT covers the following types or items of property
(include description of real property on which located and owner of record when
required by instruction 4).

Debtor hereby grants Secured Party a security interest in all of the following,
whether now owned or hereafter acquired, and wherever located, as collateral for
the payment and performance of all present and future indebtedness, liabilities,
guarantees and obligations of Debtor to Secured Party:  All "accounts," "general
intangibles," "chattel paper," "documents," "letters of credit," "instruments,"
"deposit accounts," "inventory," "farm products," "fixtures" and "equipment," as
such terms are defined in Division 9 of the California Uniform Commercial Code
in effect on the date hereof, and all other types or items of property described
on Exhibit A hereto (but this Financing Statement shall be fully effective
notwithstanding any lack of any Exhibit A).  Debtor is not authorized to sell,
transfer, or further encumber any of the foregoing collateral, except for the
sale of finished inventory in the ordinary course of business.
--------------------------------------------------------------------------------
7.    CHECK IF APPLICABLE: X-PRODUCTS OF COLLATERAL ARE ALSO COVERED.
================================================================================
SIGNATURE(S) OF DEBTOR:    DATE: October 7, 1997

SOUND SOURCE INTERACTIVE, INC.


By__________________________________
Title_______________________________

================================================
SIGNATURE(S) OF SECURED PARTY:

SILICON VALLEY BANK/SILICON VALLEY FINANCIAL
SERVICES


By__________________________________
Title_______________________________

================================================
RETURN COPY TO:

SILICON VALLEY BANK
3003 Tasman Drive Mail Sort NC481
Santa Clara, California  95054

C  | THIS SPACE FOR USE OF FILING OFFICER 
O  | (DATE, TIME, FILE NUMBER AND FILING
D  | OFFICER)
E  | 
   |
1  |
   |
2  |
   |
3  |
   |
4  |
   |
5  |
   |
6  |
   |
7  |
   |
8  |
   |
9  |
   |
0  |
   |
   |
--------------------------------------------------------------------------------
(3) FILE COPY - SECURED PARTY             Form UCC-1
<PAGE>
 
This FINANCING STATEMENT is presented for filing and will remain effective, with
certain exceptions, for five years from the date of filing, pursuant to Section
9403 of the California Uniform Commercial Code.
--------------------------------------------------------------------------------
1.  DEBTOR  (Last Name First - If An Individual)         1A.Soc Sec No or Id No.
SOUND SOURCE INTERACTIVE, INC.                           95-4264046
--------------------------------------------------------------------------------
1B.  MAILING ADDRESS                  1C.  CITY, STATE          1D.  ZIP CODE
26115 Mureau Ste. B                   Calabasas, California     91302
--------------------------------------------------------------------------------
2.  ADDITIONAL DEBTOR  (IF ANY) (Last Name First - If An Individual)

2A.Soc Sec No or Id No.

--------------------------------------------------------------------------------
2B.  MAILING ADDRESS                  2C.  CITY, STATE          2D.  ZIP CODE

--------------------------------------------------------------------------------
3.  DEBTOR'S TRADE NAMES OR STYLES (IF ANY)                     3A.  FED TAX NO.
SOUND SOURCE UMLIMITED, INC.                                    95-4264046
================================================================================
4.  SECURED PARTY                                        4A.Soc Sec No or Id No.
Name:            SILICON VALLEY BANK/SILICON 
                 VALLEY FINANCIAL SERVICES
Mailing Address: 3003 Tasman Drive, Mail Sort NC481
                 Santa Clara, California  95054
================================================================================
5.  ASSIGNEE OF SECURED PARTY                            5A.Soc Sec No or Id No.
Name:                             NONE
Mailing Address:
--------------------------------------------------------------------------------
6.  This FINANCING STATEMENT covers the following types or items of property
(include description of real property on which located and owner of record when
required by instruction 4).

Debtor hereby grants Secured Party a security interest in all of the following,
whether now owned or hereafter acquired, and wherever located, as collateral for
the payment and performance of all present and future indebtedness, liabilities,
guarantees and obligations of Debtor to Secured Party:  All "accounts," "general
intangibles," "chattel paper," "documents," "letters of credit," "instruments,"
"deposit accounts," "inventory," "farm products," "fixtures" and "equipment," as
such terms are defined in Division 9 of the California Uniform Commercial Code
in effect on the date hereof, and all other types or items of property described
on Exhibit A hereto (but this Financing Statement shall be fully effective
notwithstanding any lack of any Exhibit A).  Debtor is not authorized to sell,
transfer, or further encumber any of the foregoing collateral, except for the
sale of finished inventory in the ordinary course of business.
--------------------------------------------------------------------------------
7.    CHECK IF APPLICABLE: X-PRODUCTS OF COLLATERAL ARE ALSO COVERED.
================================================================================
SIGNATURE(S) OF DEBTOR:    DATE: October 7, 1997

SOUND SOURCE INTERACTIVE, INC.


By__________________________________
Title_______________________________

================================================
SIGNATURE(S) OF SECURED PARTY:

SILICON VALLEY BANK/SILICON VALLEY FINANCIAL
SERVICES


By__________________________________
Title_______________________________

================================================
RETURN COPY TO:

SILICON VALLEY BANK
3003 Tasman Drive Mail Sort NC481
Santa Clara, California  95054

C  | THIS SPACE FOR USE OF FILING OFFICER 
O  | (DATE, TIME, FILE NUMBER AND FILING
D  | OFFICER)
E  | 
   |
1  |
   |
2  |
   |
3  |
   |
4  |
   |
5  |
   |
6  |
   |
7  |
   |
8  |
   |
9  |
   |
0  |
   |
   |
--------------------------------------------------------------------------------
(4) FILE COPY - DEBTOR                Form UCC-1
<PAGE>
 
                                  EXHIBIT "A"

                 TO FINANCING STATEMENT AND SECURITY AGREEMENT

This FINANCING STATEMENT and SECURITY AGREEMENT covers the following types or
items of property (in addition to, and without limiting the types of property
set forth on page 1 hereof):

A)   All accounts, receivables, contract rights, chattel paper, instruments,
     documents, letters of credit, bankers acceptances, drafts, checks, cash,
     securities, deposit accounts, and general intangibles (including, without
     limitation, all claims, causes of action, guaranties, rights in and claims
     under insurance policies (including rights to premium refunds), rights to
     tax refunds, copyrights, patents, trademarks, rights in and under license
     agreements, and all other intellectual property);

B)   All inventory, including Seller's rights to any returned or rejected goods,
     with respect to which Buyer shall have all the rights of any unpaid seller,
     including the rights of replevin, claim and delivery, reclamation, and
     stoppage in transit;

C)   All monies, refunds and other amounts due Seller, including, without
     limitation, amounts due Seller under this Agreement (including Seller's
     right of offset and recoupment);

D)   All equipment, machinery, furniture, furnishings, fixtures, tools, supplies
     and motor vehicles;

E)   All farm products, crops, timber, minerals and the like (including oil and
     gas);

F)   All accessions to, substitutions for, and replacements of, all of the
     foregoing;

G)   All books and records pertaining to all of the foregoing; and

H)   All proceeds of the foregoing, whether due to voluntary or involuntary
     disposition, including insurance proceeds.



Initials _____________________

<PAGE>
 
                       SILICON VALLEY FINANCIAL SERVICES

                       A Division of Silicon Valley Bank
                               3003 Tasman Drive
                        Santa Clara,  California 95054
                      (408) 654-1000 - Fax (408) 980-6410

                           CERTIFICATION OF OFFICERS

     The undersigned, being all the officers of SOUND SOURCE INTERACTIVE, INC.,
a Delaware corporation (the "Corporation"), hereby certify to Silicon Valley
Financial Services, a division of Silicon Valley Bank ("SVFS") that:

     1.   The correct name of the Corporation is Sound Source Interactive, Inc.,
as set forth in the Articles of Incorporation.

     2.   The Corporation was incorporated on March 8, 1990, under the laws of
the State of Delaware, and is in good standing under such laws.

     3.   The Corporation's place of business and chief executive office being
the place at which the Corporation maintains its books and records pertaining to
accounts, accounts receivables, contract rights, chattel paper, general
intangibles, instruments, documents, inventory, and equipment, is located at:
 
          26115 Mureau Ste. B
          Calabasas, California 91302

     4.   The Corporation has other places of business at the following
addressees:

          None

     5.   There is no provision in the Certificate of Incorporation, Articles of
Incorporation, or Bylaws of the Corporation, or in the laws of the State of its
incorporation, requiring any vote or consent of shareholders to authorize the
sale of receivables or the grant of a security interest in any assets of the
Corporation. Such power is vested exclusively in the Corporation's Board of
Directors.
 
     6.   The officers of the Corporation, and their respective titles and
signatures are as follows:

          PRESIDENT:

                ----------------------------------------------
                                  (Signature)
 

          VICE PRESIDENT:
 
                ----------------------------------------------
                                  (Signature)


          SECRETARY:

                ----------------------------------------------
                                  (Signature)


          TREASURER:

                ----------------------------------------------
                                  (Signature) 

<PAGE>
 

          OTHER OFFICER:
          TITLE:

                   ---------------------------------------------------------
                                           (Signature)
 

     7.   Except as indicated in this paragraph 7, each of the officers listed
in paragraph 6 has signatory powers with respect to all the Corporation's
transactions with SVFS. Explanation of exceptions:

     8.   The undersigned shall give SVFS prompt written notice of any change or
amendment with respect to any of the foregoing. Until such written notice is
received by SVFS, SVFS shall be entitled to rely upon the foregoing in all
respects.

     IN WITNESS WHEREOF, the undersigned have executed this Certification of
Officers on September 19, 1997.
            ------------------


PRESIDENT:
                   ---------------------------------------------------------


VICE PRESIDENT:
                   ---------------------------------------------------------


SECRETARY:
                   ---------------------------------------------------------


TREASURER:
                   ---------------------------------------------------------

<PAGE>
 
                       Silicon Valley Financial Services

                       A Division of Silicon Valley Bank
                               3003 Tasman Drive
                         Santa Clara, California 95054
                      (408) 654-1000 - Fax (408) 980-6410

                     SECRETARY'S CERTIFICATE OF RESOLUTION

     The undersigned, as Secretary of Sound Source Interactive, Inc., a Delaware
corporation (the "Corporation"), hereby certifies to Silicon Valley Financial
Services that at a meeting duly convened at which a quorum was present the
following resolutions were adopted by the Board of Directors of the Corporation
and that such resolutions have not been modified, amended, or rescinded in any
respect and are in full force and effect as of today's date.

     RESOLVED, that this corporation be and hereby is authorized to sell this
corporation's accounts receivable to Silicon Valley Financial Services, a
division of Silicon Valley Bank, and to grant Silicon Valley Financial Services
a security interest in this corporation's assets, including, without limitation,
accounts, accounts receivable, contract rights, chattel paper, general
intangibles, instruments, documents, letters of credit, drafts, inventory and
equipment, presently owned or hereafter acquired and proceeds and products of
the foregoing (the "Collateral," as defined in the Factoring Agreement).

     RESOLVED, that this corporation be and hereby is authorized and directed to
execute and deliver certain agreements in connection with the sale of
receivables, and granting of security interests in the Collateral to Silicon
Valley Financial Services including, without limitations, a Factoring Agreement
and UCC-1 financing statement.

     RESOLVED, that the following named officers of this corporation
("Authorized Officers") be, and any of them hereby are, authorized, empowered,
and directed to execute and deliver to Silicon Valley Financial Services on
behalf of this corporation all such further agreements and instruments as may be
deemed necessary or advisable in order to fully effectuate the purposes and
intent of the foregoing resolutions.

    Print Names of Authorized Officers:                      Title:

-------------------------------------------     -------------------------------

-------------------------------------------     -------------------------------

-------------------------------------------     -------------------------------

-------------------------------------------     -------------------------------

-------------------------------------------     -------------------------------

-------------------------------------------     -------------------------------

 
     RESOLVED, that the Secretary or Assistant Secretary of this corporation be,
and hereby is authorized, empowered and directed to certify to the passage of
the foregoing resolutions under the seal of this corporation.

     IN WITNESS WHEREOF, the undersigned has duly executed this Certificate this
Nineteenth day