<PAGE>

                          PLATINUM ENTERTAINMENT, INC.

                              EMPLOYMENT AGREEMENT


     This Agreement ("AGREEMENT"), is made and entered into as of the 1st day of
June, 1997 (the "EFFECTIVE DATE"), by and between Platinum Entertainment, Inc.,
a Delaware corporation (the "COMPANY"), and Douglas C. Laux (the "EXECUTIVE").

     WHEREAS, the Company wishes to employ Executive as an executive employee,
and Executive wishes to be employed by the Company as an executive employee, all
upon the terms and conditions set forth herein;

     NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:


1.   EMPLOYMENT OF EXECUTIVE:

     As of the Effective Date, the Company hereby engages and employs Executive
in an executive capacity as the Company's Chief Financial Officer and Executive
hereby accepts such employment and agrees to act as an employee of the Company
in accordance with the terms of employment hereinafter specified ("EXECUTIVE
EMPLOYMENT").


2.   TERM OF EXECUTIVE EMPLOYMENT:

     The period of Executive Employment shall begin on the Effective Date for a
three year term (the "EMPLOYMENT PERIOD"); provided, however, unless the Company
or the Executive shall notify the other of its intent not to extend the
Employment Period at least six months prior to the end of the Employment Period
(including any extensions of the initial term thereof), the Employment Period
shall automatically be extended for one additional year.


3.   DUTIES:

     Executive shall be employed by Company as the Company's Chief Financial
Officer.  In such capacity, Executive shall have supervision and control over,
and responsibility for, the finance and accounting management and operation of
the Company, and shall have such other powers and duties as the Board of
Directors of the Company may from time to time prescribe; provided that, such
powers and duties are consistent with the Executive's then present duties and
with his position as the Company's senior executive officer in charge of the
financial management of the Company.

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     Nothing contained herein shall be construed so as to prohibit Executive
from performing such other or additional duties or responsibilities, and
exercising such other or additional authority in furtherance of the goals of the
Company, as the Executive and the Board of Directors of the Company shall from
time to time agree upon.

     Executive shall devote substantially all of his business time and attention
to appropriately and efficiently discharge his duties and responsibilities as
herein set forth.  If Executive so discharges his duties he may engage in other
business and civic activities, in addition to those relating to the Company's
business, if such activities are not otherwise prohibited by the terms of this
Agreement.

     During Executive's employment hereunder, Executive shall not be required to
relocate his principal residence from his current location as a result of the
Company moving its principal executive offices or the Executive's office to an
address greater than twenty (20) miles away from the Company's principal
executive offices (or the Executive's office) at the Effective Date and shall
not be required to perform services which could make the continuance of
Executive's principal residence in such location unreasonably difficult or
inconvenient for Executive except to the extent that the performance of such
services (and travel) is commensurate with Executive's duties specified
hereunder.


4.   EXECUTIVE SALARY AND COMPENSATION:

     (a)  BASE SALARY.  During the Employment Period the Company shall pay or
cause to be paid to Executive an initial base salary ("BASE SALARY") at an
annual rate of $300,000 per year, payable to Executive on a periodic basis in
accordance with the Company's then current executive salary payment practice;
provided, however, that the installments may not be made less frequently than on
a monthly basis.  Such base salary shall be subject to review in accordance with
the Company's normal practice for executive salary review from time to time in
effect, and will not be reduced without the prior written consent of Executive.

     (b)  INCENTIVE COMPENSATION.  Executive shall be entitled during the
Employment Period to participate in the bonus program established by the
Compensation Committee of the Company's Board of Directors (the "BONUS
PROGRAM").  Pursuant to the Bonus Program, the bonus payable to Executive in
each fiscal year shall be equal to the sum of (i) a base bonus equal to 25% of
base salary for such fiscal year (the "BASE BONUS"); provided, however, that the
base bonus shall be payable only if the Company's revenues for such fiscal year
are greater than or equal to 125% of revenues for the previous fiscal year and
(ii) an additional bonus (the "ADDITIONAL BONUS") equal to the product of (A)
base salary for such fiscal year and (B) the amount obtained by dividing (x) the
amount by which revenues for such fiscal year exceed revenues for the previous
fiscal year by (y) revenues for the previous fiscal year; provided, however,
that the additional bonus shall be payable only if (1) the Company achieves
earnings before interest, taxes, depreciation and amortization ("EBITDA") in
such fiscal year greater than or equal to the plan approved by the Board of
Directors for such fiscal year and (2) the

                                       -2-

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Company's earnings per share in such year are greater than or equal to those
projected by the Company's primary outside analyst, as adjusted for material
events occurring during such year.  It is hereby acknowledged that as of the
date of this agreement, EBITDA is internally projected to be $16.0 million for
the fiscal year ending May 31, 1998 and earnings per share are projected at
$0.80 per share (assuming a June 1, 1997 acquisition of the music business of K-
tel International, Inc. (the "K-tel Acquisition")) and that such projections,
for purposes of calculating the additional bonus, shall be adjusted by the
Compensation Committee to reflect the actual closing date of the K-tel
Acquisition.  Notwithstanding anything to the contrary contained herein,
Executive's total bonus in any fiscal year shall not exceed 100% of Executive's
base salary for such year.  If Executive's employment is terminated effective at
any time other than the end of the Company's fiscal year, the final awards under
the Bonus Program will be made by the Company's independent accountant or
accounting firm based upon the most recent unaudited financial statements of the
Company for the month end immediately prior to the effective date of
termination.

     If Executive is entitled to receive severance payments pursuant to Section
7 of this Agreement, then for purposes of such Section, the amount of Bonus
Program compensation and base salary which is payable on an annualized basis as
severance shall be equal to the greatest annual amount paid under each of the
Bonus Program and as base salary, respectively, to Executive during any 12 month
period during the 36 month period preceding termination of Executive's
employment with the Company.

     (c)  WITHHOLDING OF CERTAIN TAXES.  All compensation referred to in
Sections 4(a) and 4(b) of this Agreement is stated in terms of gross  amount, it
being understood that the Company will be required to withhold from such gross
amount deductions for federal, state and local income taxes (if any), F.I.C.A.,
unemployment compensation taxes and the like.

     (d)  FRINGE BENEFITS.  During the Employment Period, the Company shall
provide, in addition to benefits available to company employees generally, the
following fringe benefits to Executive: (i) MEDICAL AND DENTAL INSURANCE, the
Company shall provide Executive and Executives's immediate family, including
spouse and children, if any, at the Company's expense, with comprehensive
medical and dental insurance coverage similar to that provided to other
executive officers of the Company; (ii) LIFE INSURANCE, the Company shall
provide Executive, at the Company's expense, a term policy or policies of life
insurance insuring the life of Executive for the benefit of person(s) designated
from time to time by Executive, and such life insurance policy or policies shall
be in the amount of one million dollars ($1,000,000); (iii) DISABILITY
INSURANCE, the Company shall provide Executive, at the Company's expense, with
comprehensive short and long term disability insurance in an amount which the
Company determines is reasonably commensurate with Executive's compensation
contemplated hereunder, including, without limitation, Executive's base salary,
Bonus Program compensation, fringe benefits and the like; (iv) CLUBS;
PROFESSIONAL ORGANIZATIONS, the Company shall pay the annual dues and
assessments for the Executive's membership in one club selected by Executive
(whether social, professional, athletic, golf or otherwise) not in excess of
$425 per month.

                                       -3-

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5.   EXPENSES:

     The Company shall pay or reimburse Executive in accordance with the
Company's policy for all expenses reasonably incurred by Executive during the
period of Executive's employment, in connection with the performance of
Executive's duties under this Agreement, including, without limitation, travel
and entertainment expenses.  As the Company may reasonably request, Executive
shall provide to the Company documentation or supporting information relating to
the expenses for which Executive seeks reimbursement.


6.   TERMINATION OF EXECUTIVE EMPLOYMENT BY THE COMPANY FOR GOOD CAUSE:

     Subject to its obligation under Section 7, the Company shall have the
option to terminate Executive's employment with or without cause, for any reason
whatsoever, including without limitation, Disability (as hereinafter defined) by
providing written Notice of Termination (as defined below) to Executive and such
termination shall be effective 10 days after the giving of said written notice.

     If Executive is terminated for Good Cause (as defined below), then Company
shall pay to Executive all such compensation owing through the date of
termination.

     For purposes of this Agreement, the termination of the Executive's
employment hereunder shall be deemed to have been for Good Cause only if the
termination of the Executive's employment shall have been the result of (a) an
act or acts of dishonesty by Executive which the Board of Directors reasonably
believes constitute a felony which result directly or indirectly in gain to or
personal enrichment of the Executive at the Company's expense, (b) an act or
acts by Executive which the Board of Directors reasonably believes constitute a
felony and as a result of which the continued employment of Executive by the
Company will have an adverse effect on the Company's business, or (c) the
Executive willfully engaging in one or more acts, or willfully omitting to act,
which is demonstrably and materially damaging to the Company or any of its
subsidiaries.

     For purposes of this Agreement, Notice of Termination shall mean delivery
to Executive of a copy of a resolution duly adopted by the affirmative vote of
not less than a majority of the entire membership of the Company's Board of
Directors at a meeting of the Board of Directors (after reasonable notice has
been delivered to Executive and reasonable opportunity has been provided for
Executive, together with Executive's counsel, to be heard before the Board of
Directors prior to such vote).

                                       -4-

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7.   TERMINATION OF EXECUTIVE EMPLOYMENT WITHOUT GOOD CAUSE, BY EXECUTIVE FOR
     GOOD REASON OR AS A RESULT OF DISABILITY:

     The Executive may terminate the Executive's employment by the Company for
"Good Reason" (as defined below) at any time unless prior to giving his notice,
Executive shall have received a Notice of Termination for Good Cause.


     If Executive (i) is terminated for any reason other than Good Cause, (ii)
is terminated as a result of Executive's Disability, (iii) terminates his
employment for Good Reason (as defined below), or (iv) is notified by the
Company of its intent not to extend the Employment Period (as defined in Section
2, above), then the Company shall continue to pay to Executive, as severance
compensation, all compensation payable including base salary, payments under the
Bonus Program, fringe benefits and the like, (x) if the termination occurs
pursuant to clause (i), (ii) or (iii) of this paragraph, for a period beginning
on the date of Executive's termination and ending on the date which is the later
of (A) the end of the Employment Period and (B) the first anniversary of the
date of Executive's termination and (y) if the termination occurs pursuant to
clause (iv) of this paragraph, for a period beginning on the date of Executive's
termination and ending on the first anniversary of the end of the Employment
Period (the "Severance Payout Period").

     In lieu of regular payments due under the preceding paragraph, Executive
shall be entitled to receive, upon Executive's written election, a lump sum
payment equal to the present value of the stream of monthly payments for the
Severance Payout Period, in which each monthly payment is 1/12 of the greatest
amount paid to Executive under the Bonus Program during any trailing 12 month
period in the 36 months prior to Executive's election hereunder.  Executive may
also similarly elect to receive a lump sum payment equal to the present value of
the base salary under Section 4(a) hereof for the balance of the severance
compensation and an amount equal to the present value of the fringe benefits
remaining to be paid for the balance of the Severance Payout Period based upon
the Company's expenses for providing the fringe benefits pursuant to
Section 4(d) hereof during the Company's most recently completed fiscal year.
For purposes of this computation, present value shall be calculated on the basis
of the prime rate of interest announced by the Company's principal bank, or if
it has no such bank, published in THE WALL STREET JOURNAL, on the date of
Executive's election to receive the lump sum payments provided for herein.

     For purposes of this Agreement, "Good Reason" shall mean, so long as the
Executive has not been guilty of the conduct giving rise to the right to
terminate the Executive for Good Cause, (i) a breach by the Company of this
Agreement in any material respect if such breach is not cured by the Company
within thirty (30) days after notice setting forth in reasonable detail the
facts and circumstances claimed to provide the basis of such noncompliance has
been given by the Executive to the Company, (ii) the failure to elect the
Executive to the office of Chief Financial Officer of the Company, the removal
of the Executive from such position or the assignment to the Executive of any
additional duties or responsibilities or a reduction in Executive's duties or
responsibilities which, in either case, are inconsistent with those customarily
associated with such

                                       -5-

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position, except in connection with the termination of his employment on account
of his death or disability or for Good Cause, (iii) a relocation by the Company
of the Executive's place of employment as described in Section 3 hereof, (iv)
any purported termination of the Executive's employment which is not effected
pursuant to a Notice of Termination satisfying the requirements set forth above
(and for purposes of this Agreement no such purported termination shall be
effective), or (v) the occurrence of a "change in control" of the Company.  For
purposes of this Agreement, a "change in control" of the Company shall be deemed
to have occurred on the first of any of the following dates:

          (1)  The acquisition by any individual, entity or group (within the
               meaning of Section 13(d)(3) or 14(d)(2) of the Securities
               Exchange Act of 1934, as amended (the "Exchange Act")) (a
               "Person") of beneficial ownership (within the meaning of Rule
               13d-3 promulgated under the Exchange Act) of twenty percent (20%)
               or more of either (A) the then-outstanding shares of common stock
               of the Company (the "Outstanding Company Common Stock") or (B)
               the combined voting power of the then-outstanding voting
               securities of the Company entitled to vote generally in the
               election of directors (the "Outstanding Company Voting
               Securities"); provided, however, that for purposes of this
               subsection (1), the following acquisitions shall not constitute a
               Change of Control: (A) any acquisition directly from the Company
               other than in connection with the acquisition by the Company or
               its affiliates of a business, (B) any acquisition by the Company,
               (C) any acquisition by any employee benefit plan (or related
               trust) sponsored or maintained by the Company or any corporation
               controlled by the Company, (D) any acquisition by a lender to the
               Company pursuant to a debt restructuring of the Company, or (E)
               any acquisition by any corporation pursuant to a transaction
               which complies with clauses (A), (B) and (C) of subsection (3)
               below;

          (2)  Individuals who, as of the date hereof, constitute the Board (the
               "Incumbent Board") cease for any reason to constitute at least a
               majority of the Board; provided, however, that any individual
               becoming a director subsequent to the date hereof whose election,
               or nomination for election by the Company's shareholders, was
               approved by a vote of at least a majority of the directors then
               comprising the Incumbent Board shall be considered as though such
               individual were a member of the Incumbent Board, but excluding,
               for this purpose, any such individual whose initial assumption of
               office occurs as a result of an actual or threatened election
               contest with respect to the election or removal of directors or
               other actual or threatened solicitation of proxies or consents by
               or on behalf of a Person other than the Board;

          (3)  Consummation of a reorganization, merger or consolidation of the
               Company or any direct or indirect subsidiary of the Company or
               sale or


                                       -6-

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               other disposition of all or substantially all of the assets of
               the Company (a "Business Combination"), in each case, unless,
               following such Business Combination, (A) all or substantially all
               of the individuals and entities who were the beneficial owners,
               respectively, of the Outstanding Company Common Stock and
               Outstanding Company Voting Securities immediately prior to such
               Business Combination beneficially own, directly or indirectly,
               more than sixty percent (60%) of, respectively, the then-
               outstanding shares of common stock and the combined voting power
               of the then-outstanding voting securities entitled to vote
               generally in the election of directors, as the case may be, of
               the corporation resulting from such Business Combination (which
               shall include for these purposes, without limitation, a
               corporation which as a result of such transaction owns the
               Company or all or substantially all of the Company's assets
               either directly or through one or more subsidiaries) in
               substantially the same proportions as their ownership,
               immediately prior to such Business Combination, of the
               Outstanding Company Common Stock and Outstanding Company Voting
               Securities, as the case may be, (B) no Person (excluding any
               corporation resulting from such Business Combination or any
               employee benefit plan (or related trust) of the Company or such
               corporation resulting from such Business Combination and any
               Person beneficially owning, immediately prior to such Business
               Combination, directly or indirectly, 20% or more of the
               Outstanding Common Stock or Outstanding Voting Securities, as the
               case may be) beneficially owns, directly or indirectly, twenty
               percent (20%) or more of, respectively, the then-outstanding
               shares of common stock of the corporation resulting from such
               Business Combination, or the combined voting power of the then
               outstanding voting securities of such corporation entitled to
               vote generally in the election of directors and (C) at least a
               majority of the members of the board of directors of the
               corporation resulting from such Business Combination were members
               of the Incumbent Board at the time of the execution of the
               initial agreement, or of the action of the Board, providing for
               such Business Combination; or

          (4)  Approval by the shareholders of the Company of a complete
               liquidation or dissolution of the Company other than to a
               corporation which would satisfy the requirements of clauses (A),
               (B) and (C) of Subsection (3) above, assuming for this purpose
               that such liquidation or dissolution was a Business Combination.

8.   DEATH OR DISABILITY OF THE EXECUTIVE:

     Executive's employment shall automatically terminate upon the death of the
Executive and, at the option of the Company as determined by the Board of
Directors, upon the Disability (as hereinafter defined) of Executive.
"Disability," as used herein, shall be deemed to have

                                       -7-

<PAGE>

occurred whenever the Board determines that in its judgment Executive has
suffered physical or mental illness, injury or infirmity of such a nature,
degree or effect as to render Executive, for a significant period of time,
substantially unable to perform his duties as delineated in paragraph 3 hereof.


9.   GROSS UP FOR PARACHUTE PAYMENTS:

     If any payments or benefits received by the Executive upon his termination
of employment pursuant to this Agreement or any Company compensation plans
(including, by way of example but not limitation, any stock, stock option or
restricted stock plans or grants) (the "PAYMENTS") will be subject to the tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the
"IRC") (the "EXCISE TAX") (or any similar tax that may hereafter be imposed by
the IRC), the Company shall pay to the Executive an additional amount (the
"GROSS-UP PAYMENT"), such that the net amount received by him, after deduction
of any Excise Tax on the Payments and any federal income tax and Excise Tax upon
the payment provided for by this subsection, shall be equal to the Payments.
For purposes of determining whether any of the Payments will be subject to the
Excise Tax and the amount of such Excise Tax, (A) all Payments shall be treated
as "parachute payments" within the meaning of Section 280G(b)(2) of the IRC, and
all "excess parachute payments" within the meaning of Section 280G(b)(1) shall
be treated as subject to the Excise Tax, unless in the opinion of the Company's
independent auditors (the "ACCOUNTING FIRM"), such Payments (in whole or in
part) do not constitute parachute payments, or such excess parachute payments
(in whole or in part) represent reasonable compensation for services actually
rendered within the meaning of Section 280G(b)(4) of the IRC in excess of the
base amount within the meaning of Section 280G(b)(3) of the IRC, allocable to
such reasonable compensation, or are otherwise not subject to the Excise Tax,
(B) the amount of the Payments which shall be treated as subject to the Excise
Tax shall be equal to the lesser of (1) the total amount of the Payments or (2)
the amount of excess parachute payments within the meaning of Section 280G(b)(1)
(after applying clause (A), above), and (C) the value of any non-cash benefits
or any deferred payment or benefit shall be determined by the Accounting Firm in
accordance with the principles of Sections 280G(d)(3) and (4) of the IRC.  For
purposes of determining the amount of the Gross-Up Payment, the Executive shall
be deemed to pay federal income taxes at the highest marginal rate of federal
income taxation applicable to individuals in the calendar year in which the
Gross-Up Payment is to be made.  A Gross-Up Payment shall be made not later than
the fifth day, or as soon thereafter as the Company deems practicable, following
the date the Executive becomes subject to payment of the Excise Tax.  In the
event that the Excise Tax is determined to exceed the amount determined by the
Accounting Firm, the Company shall make an additional Gross-up Payment in
respect of the additional amount (plus any interest and penalties payable with
respect to such excess) at the time that the amount of such excess is finally
determined.

     In the event that the Excise Tax is determined to be less than the amount
determined by the Accounting Firm, the Executive shall repay to the Company at
the time that the amount of such reduction in Excise Tax is finally refunded to
or otherwise realized as a benefit by

                                       -8-

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Executive, the portion of the Gross-up Payment that would not have been paid,
plus interest on the amount of such repayment at the rate provided in Section
1274(b)(2)(B) of the Code.

     The Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that would require payment by the Company of the Gross-
Up Payment.  If the Company elects to contest such claim, the Executive shall:

               (i)  give the Company any information reasonably requested by the
                    Company relating to such claim,

               (ii) take such action to contest such claim as the Company (or
                    its counsel) shall reasonably request, and

              (iii) cooperate with the Company in good faith in order to
                    effectively contest such claim.

The Company shall bear and pay directly all costs and expenses (including
additional interest and penalties) incurred in connection with such contest and
shall indemnify and hold the Executive harmless, on an after-tax basis, for any
Excise Tax or income tax (including interest and penalties with respect thereto)
imposed as a result of such contest, and the Executive agrees to prosecute such
contest to a determination as the Company shall determine; provided, however,
the Company shall advance the amount of any payment pending the contest to the
Executive and shall indemnify the Executive with respect to any taxes (including
penalties and interest, if any) which may be imposed in connection with the
advance of such funds.


10.  MITIGATION OF AMOUNTS PAYABLE UNDER SECTION 7:

     The Executive shall not be required to mitigate the amount of any payment
provided for pursuant to Section 7 of this Agreement by seeking other employment
or otherwise, and, further, any payment or benefit to be provided to Executive
pursuant to this Agreement shall not be reduced by any compensation or other
amount earned or collected by Executive at any time before or after the
termination of Executive Employment hereunder.


11.  MISCELLANEOUS:

     (a)  NOTICES.  Any notice or other communication required or permitted
hereunder shall be in writing and shall be deemed given when delivered in person
to the following addresses:

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<PAGE>

               (i)  if to the Company, to:

                    Platinum Entertainment, Inc.
                    2001 Butterfield Road, Suite 1400
                    Downers Grove, IL  60515

                    with a copy to:

                    Katten Muchin & Zavis
                    525 West Monroe Street
                    Suite 1600
                    Chicago, Illinois 60661-3693
                    Attention:     Matthew S. Brown, Esq.

               (ii) if to Executive to:

                    Douglas C. Laux
                    c/o Platinum Entertainment, Inc.
                    2001 Butterfield Road, Suite 1400
                    Downers Grove, IL  60515

Any party may change its address for notice hereunder by notice to the other
party hereto.

     (b)  GOVERNING LAW.  The parties agree that this Agreement shall be
construed and governed in accordance with the laws of the State of Illinois
applicable to agreements made and to be performed entirely within such state.

     (c)  BINDING EFFECT.  This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, legal representatives,
executors, administrators, successors and assigns.  Any Successor will
automatically succeed to the obligations of the Company under this Agreement,
including the obligations set forth in Section 7 of this Agreement; provided
that, the Company shall remain liable under this Agreement in such event.

     (d)  COUNTERPARTS.  This Agreement may be executed simultaneously in one or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

     (e)  ENTIRE AGREEMENT.  This Agreement represents the entire agreement and
understanding of the parties hereto with respect to the matters set forth
herein.  This Agreement supersedes all prior negotiations, discussions,
correspondence, communications, understandings and agreements between the
parties, written or oral, relating to the subject matter of this Agreement.
This Agreement, may be amended, superseded, cancelled, renewed, or extended and
the terms hereof may be waived, only by a written instrument signed by the
parties hereto or, in the case of a waiver, by the party waiving compliance.

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<PAGE>

     (f)  WAIVERS.  No delay on the part of any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof.  Nor shall any
waiver on the part of any party of any such right, power or privilege hereunder,
nor any single or partial exercise of any right, power or privilege hereunder,
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege hereunder.

     (g)  HEADINGS.  The headings in this Agreement are inserted for convenience
only and are not to be considered in the interpretation or construction of the
provisions hereof.

     (h)  ARBITRATION.  Except for any claim or dispute which gives rise or
could give rise to equitable relief under this Agreement, at the request of the
Executive any disagreement, dispute, controversy or claim arising out of or
relating to this Agreement or the breach hereof shall be settled exclusively and
finally by arbitration.  The arbitration shall be conducted in accordance with
such rules and before such arbitrator as the parties shall agree and if they
fail to so agree within 15 days after demand for arbitration, such arbitration
shall be conducted in accordance with the Commercial Arbitration Rules of the
American Arbitration Association (hereinafter referred to as "AAA RULES").  Such
arbitration shall be conducted in Chicago, Illinois, or in such other city as
the parties to the dispute may designate by mutual consent.  The arbitral
tribunal shall consist of three arbitrators (or such lesser number as may be
agreed upon by the parties) selected according to the procedure set forth in the
AAA Rules in effect on the date hereof and the arbitrators shall be empowered to
order any remedy which is appropriate to the proceedings and issues presented to
them.  The chairman of the arbitral tribunal shall be appointed by the American
Arbitration Association from among the three arbitrators so selected.  Any party
to a decision rendered in such arbitration proceedings may seek an order
enforcing the same by any court having jurisdiction.

     (i)  NO STRICT CONSTRUCTION.  The language used in this Agreement will be
deemed to be the language chosen by the Executive and the Company to express
their mutual intent, and no rule of strict construction will be applied against
the Executive or the Company.

     (j)  LEGAL EXPENSES.  The Executive shall be entitled to recover any
expenses for attorney's fees and disbursements incurred by him in connection
with enforcing his rights under this Agreement.

                                      -11-


<PAGE>

     IN WITNESS WHEREOF, the Company and Executive have signed this Agreement as
of the day and year written above.

                              PLATINUM ENTERTAINMENT, INC.


                              By: /s/ Steven Devick
                                 ---------------------------------------------
                                   Its: CEO
                                       ---------------------------------------


                              /s/ Douglas C. Laux
                              ------------------------------------------------
                              Douglas C. Laux

                                      -12-