SECURITY AGREEMENT

     This Security Agreement is made and entered into as of December 30, 1998 by
and among Audio Book Club, Inc., a Florida  corporation  ("ABC"),  Classic Radio
Holding  Corp.,  a  Delaware  corporation  and  wholly-owned  subsidiary  of ABC
("Holding Corp"),  and Classic Radio Acquisition  Corp., a Delaware  Corporation
and an  indirect  wholly-owned  subsidiary  of  ABC  ("Acquisition  Corp.",  and
together with ABC and Holding Corp., the  "Companies"),  each with its principal
office at 20 Community Place, Morristown, New Jersey 07962, on the one hand, and
Norton Herrick, an individual with an address at 2295 Corporate Boulevard,  N.W.
, Suite 222, P.O. Box 5010, Boca Raton,  Florida 33431 (the "Secured Party"), on
the other hand. The Companies and the Secured Party are collectively referred to
hereinafter as the "Parties".

                              W I T N E S S E T H:

     WHEREAS,  ABC has issued to the  Secured  Party its 9%  Convertible  Senior
Subordinated  Promissory  Note Due December 31, 2004 in the principal  amount of
$15,000,000  (the "Note") and Holding Corp. and Acquisition  Corp. have executed
and delivered to Secured Party that certain Subsidiary  Guaranty dated as of the
date hereof (the  "Guaranty")  whereby Holding Corp. and Acquisition  Corp. have
guaranteed all obligations of ABC under the Note;

     WHEREAS, pursuant to the terms of that certain Plan and Agreement of Merger
and  Supplemental  Agreement  each dated as of December  11,  1998 (the  "Merger
Agreement"),  Radio Spirits, Inc. ("RSI"), an Illinois corporation  wholly-owned
by Carl Amari  ("Amari")  has been merged  with and into  Holding  Corp.  and in
partial consideration  therefor ABC has entered into a Put Agreement dated as of
December 11, 1998 with Amari (the "Put Agreement") providing Amari with


<PAGE>



certain "put" rights with respect to shares of ABC's common stock, no par value,
issued pursuant to the terms of the Merger Agreement (the "ABC Shares"); and

     WHEREAS,  the  Companies  have  granted a security  interest  to Amari (the
"Amari  Security  Interest")  in their  right,  title and interest in and to the
assets of Holding  Corp.  that were  acquired in the merger with RSI, as well as
the assets of  Acquisition  Corp.  that were acquired from Buffalo  Productions,
Inc., an Illinois corporation wholly-owned by Amari, and the fifty (50%) percent
interest in a Joint Venture with Dick Brescia Associates which was acquired from
Amari,  which assets are set forth on Schedule 1 attached  hereto (the  "Classic
Radio Assets").

     WHEREAS,  as an  inducement  to the Secured Party to purchase the Note from
ABC, the Companies have agreed to grant to the Secured Party a security interest
in their  right,  title and  interest in and to the Classic  Radio Assets on the
terms set forth herein.

     NOW,  THEREFORE,  in  consideration of the foregoing and upon the terms and
conditions hereinafter set forth, the Parties agree as follows:

     1. Grant of Security Interests in Collateral.

          To secure the Companies'  prompt payment when due of all principal and
     interest and all other amounts  payable under the Note and the Guaranty and
     performance of all other  obligations  of the Companies  under the Note and
     the  Guaranty  (collectively,  the  "Obligations")  and for $1.00 and other
     consideration,  receipt  of which is  hereby  acknowledged,  the  Companies
     hereby  grant  to the  Secured  Party a  continuing  second  lien  security
     interest  (the "Second  Lien") in all present  Classic Radio Assets and all
     accretions   thereto  and   products,   proceeds   and   replacements   and
     substitutions  thereof,  including  but  not  limited  to  the  assets  and
     properties  described on Schedule 1 attached hereto (the  "Collateral")  to
     the  extent  of the  Obligations.  The  Second  Lien  shall be  junior  and
     subordinate   to  the  security   interests  of  Fleet  National  Bank,  as
     administrative agent, and the



                                      -2-
<PAGE>



     lenders under the Credit Agreement dated as of the date hereof (as amended,
     modified or supplemented from time to time, the "Credit  Agreement") by and
     among ABC,  Fleet National Bank, as  administrative  agent,  and such other
     lenders  from time to time  party to the  Credit  Agreement,  (the  "Senior
     Obligations",  which term shall include, without limitation, all principal,
     interest (including post-petition), fees, costs and expenses whether or not
     currently contemplated),  and senior and prior in all respects to the Amari
     Security  Interest.  Persons at any time having or  acquiring  any right or
     interest in any of the Senior Obligations shall hereafter be referred to as
     the "Senior Parties".  Notwithstanding the foregoing, the Second Lien shall
     not be  subordinate  to  any  other  security  interest  in the  Collateral
     hereafter  granted  by the  Companies  other  than to the  Senior  Parties,
     including,  without  limitation,  any security  interest granted to selling
     third parties in consideration for the sale of assets or securities of such
     selling third  parties to one of the  Companies or in  connection  with the
     merger  or  consolidation  of  another  company  with  and  into one of the
     Companies.  Subject to the provisions of the Note and the Credit Agreement,
     the Companies shall be free to sell the Collateral  (excluding the proceeds
     thereof) in the ordinary course of business without restriction. However, a
     sale in the  ordinary  course of  business  does not  include a transfer in
     partial or total satisfaction of a debt or any bulk sale.

     2. Subordination of Lien.

          (a)  Limitation on Exercise of Certain  Rights Upon Default.  Upon the
     occurrence  of any Event of Default  (as  hereinafter  defined)  hereunder,
     prior to the payment and  satisfaction  in full of the Senior  Obligations,
     the Secured  Party shall take no action with respect to the  Collateral  or
     exercise  any rights as a secured  party,  including,  without  limitation,
     giving notice of foreclosure  or effecting  foreclosure or giving notice to
     obligors with respect to the  Collateral,  unless (i) authorized in writing
     by the  Senior  Parties  holding  a  majority  in  dollar  amount of Senior



                                      -3-
<PAGE>



     Obligations,  or (ii) one or more of the  Senior  Parties  has  declared  a
     default  against one or more of the  Companies  with  respect to the Senior
     Obligations  and has initiated an action(s)  with respect to some or all of
     the Collateral.  The Secured Party agrees not to oppose,  interfere with or
     otherwise  attempt to prevent the Senior Parties from enforcing their liens
     and security  interests  in the  Collateral  or otherwise  realizing on the
     Collateral. So long as any of the Senior Obligations shall remain unpaid to
     Senior Parties,  Senior Parties may at all times, in their sole discretion,
     subject  to the  provisions  of the  Senior  Obligations  and the  Security
     Agreement securing the Senior Obligations,  exercise any and all powers and
     rights, including,  without limitation, the right to foreclose or otherwise
     realize upon the Collateral,  that Senior Parties now have or hereafter may
     acquire  with  respect  to any of the  Collateral,  whether or not in their
     possession,  nor shall any of the Senior  Parties have any liability to the
     Secured Party for any action taken or failure to act with respect to any of
     such Collateral in their possession  beyond the exercise of reasonable care
     to assure the safe custody thereof.

          In connection therewith, the Secured Party hereby irrevocably appoints
     Fleet National  Bank,  and its successors and assigns,  on behalf of itself
     and the other Senior Parties,  as Secured  Party's lawful  attorney-in-fact
     with full power and authority  for it and in its name to make,  execute and
     acknowledge,   publish,   file,   record   and  swear  to  the   execution,
     acknowledgment,  filing and/or recordation,  as applicable,  of any and all
     documents,   including,   without   limitation,   Uniform  Commercial  Code
     termination statements, real estate mortgage satisfactions and stock powers
     relating  to the  security  interest  of the  Secured  Party,  all as Fleet
     National Bank (and its  successors  and assigns),  in its sole  discretion,
     shall deem necessary, appropriate and/or advisable following the occurrence
     of a default and acceleration of any of the Senior Obligations with respect
     to the enforcement  and  administration  of the Senior  Obligations and the
     furtherance  of the  collection  thereof;  provided,  however,  that  Fleet
     National Bank (and its successors and assigns) shall take no



                                      -4-
<PAGE>



     action  with  respect to the  termination  of the  Secured  Party's  rights
     hereunder  without prior  notification  to the Secured  Party.  The Secured
     Party hereby ratifies and confirms any and all acts or omissions that Fleet
     National  Bank (and its  successors  and  assigns) may take or fail to take
     with respect to the  administration  and/or enforcement of the Second Lien,
     and hereby remises, releases and forever discharges Senior Parties from any
     and all claims in connection therewith, except those claims that arise as a
     result of the negligence of Senior Parties. The foregoing power of attorney
     is coupled with an interest and is  irrevocable.  The  foregoing  rights of
     Fleet  National Bank (and its  successors  and  assigns),  on behalf of the
     Senior Parties, shall include the right to release and terminate any or all
     of the Second Lien, given in connection with a sale or other disposition of
     all  or  any  portion  of the  Collateral  to  which  Senior  Parties  have
     consented.  The Secured Party shall on the date hereof  execute and deliver
     to Fleet National Bank (or its successors or assigns),  on behalf of itself
     and  the  other  Senior  Parties,  releases  and  Uniform  Commercial  Code
     termination  instruments,  satisfactory  in form and  substance  to  Senior
     Parties,  releasing and  terminating  in full the Second Lien,  which Fleet
     National Bank (or its successors or assigns) shall hold in escrow on behalf
     of itself and the other  Senior  Parties,  and shall be entitled to release
     from escrow and file, record or otherwise cause to become effective, in the
     exercise of any of its rights under this subparagraph  2(a). The net amount
     received  by Senior  Parties as a result of their  exercise of any of their
     rights  under  this  subparagraph  2(a)  as  proceeds  of  the  payment  or
     collection  of the  proceeds  of the  Second  Lien  shall be applied to the
     Senior  Obligations  then, or thereafter to become,  due and the excess, if
     any, shall be remitted to the Secured Party.

          (b) Additional Rights of the Senior Parties. Without the consent of or
     notice to the  Secured  Party,  the Senior  Parties (or any of them) at any
     time and from time to time in their sole and  absolute  discretion  may (i)
     amend or supplement any document or instrument  executed



                                      -5-
<PAGE>



     by any one or more of the Companies or any  subsidiary  in connection  with
     the Senior  Obligations;  (ii) demand and receive a security interest in or
     other lien upon any property or assets of any one or more of the  Companies
     or any  subsidiary  to secure the Senior  Obligations  and sell,  exchange,
     release or otherwise deal with any property pledged or mortgaged to secure,
     or howsoever securing,  the Senior  Obligations;  (iii) exercise or refrain
     from  exercising  any and all  powers  and  rights in respect of the Senior
     Obligations  against any one or more of the  Companies,  any  subsidiary or
     others (including the Secured Party); and (iv) apply any sums by whomsoever
     or however  realized to the Senior  Obligations in any order elected by the
     Senior Parties.

          (c)  Continued  Effectiveness  of this  Agreement.  The  terms of this
     Agreement,  the  subordination  effected  hereby,  and the rights of Senior
     Parties, and the obligations of the Secured Party arising hereunder,  shall
     not be  affected,  modified  or impaired in any manner or to any extent by:
     (i)  any  amendment  or  modification  of or  supplement  to any  documents
     evidencing  any of the  Senior  Obligations  or the  rights of the  Secured
     Party, or any instrument or document executed or delivered  pursuant to any
     of  such  documents  other  than  this  Agreement;  (ii)  the  validity  or
     enforceability of any of such documents; (iii) any exercise or non-exercise
     of any right, power or remedy under or in respect of the Senior Obligations
     or any of such instruments or documents  referred to in clause (i) above or
     in respect of any of the properties or assets now or hereafter constituting
     the  Collateral,  whether or not the Secured Party shall have had notice or
     knowledge  of  any of the  foregoing  and  whether  or  not it  shall  have
     consented  thereto.  All references to "Senior Parties"  hereunder shall be
     deemed to refer to Senior Parties or any of their successors or assigns, or
     any other person or entity which  hereafter  may hold all or any portion of
     the Senior Obligations, including, without limitation, any person or entity
     that  makes any loan,  advance or other  extension  of credit to any of the
     Companies the proceeds of which are used,  directly or  indirectly,



                                      -6-
<PAGE>



     to pay  all or any  portion  of  indebtedness  that,  at the  time  of such
     payment,  constitutes Senior Obligations hereunder, and any such successor,
     assign or other  person or entity  shall be entitled to have the benefit of
     and enforce this Agreement,  as fully as if it were the signatory hereto in
     the place of "Senior  Parties",  without the  necessity of the execution or
     delivery of any other instrument or document.

          (d) Reinstatement.  The provisions of this Section 2 shall continue to
     be  effective  or be  reinstated,  as the case  may be,  if at any time any
     payment of any of the Senior  Obligations is rescinded or must otherwise be
     returned  by any Senior  Party to any one or more of the  Companies  or any
     subsidiary upon the insolvency,  bankruptcy or reorganization of any one or
     more of the Companies or such  subsidiary or otherwise,  all as though such
     payment had not been made.

          (e)  Amendments.  No  amendment,  supplement or  modification  to this
     Agreement may be made without consent of all of the Senior Parties.

          (f) Reliance; Enforcement. Senior Parties have relied hereon and it is
     intended  by all  parties  that the  Senior  Parties  shall be third  party
     beneficiaries  and are entitled  directly to enforce their rights hereunder
     as if a party hereto.

          (g) Right to Payment. The Secured Party agrees that the Senior Parties
     are entitled to all payments  from the  Collateral  and all proceeds of the
     Collateral  prior to payment thereof to the Secured Party and Secured Party
     agrees that until all Senior  Obligations  are paid in full,  Secured Party
     shall  not  knowingly  receive,  accept or retain  any  direct or  indirect
     payment from the  Collateral  or the proceeds  thereof and if Secured Party
     receives  any such  payment at any time prior to the payment in full of the
     Senior Obligations (including, without limitation, any obligations accruing
     after any bankruptcy, insolvency or similar proceeding involving any of the
     Companies),



                                      -7-
<PAGE>



     the Secured Party will  promptly upon written  request by any of the Senior
     Parties  deliver such  payment (or funds in the amount of such  payment) to
     the Senior Parties.

          (h)  Subordination.  The  subordination  set forth above is applicable
     irrespective  of the time or order of  attachment or perfection of any lien
     or security interest referred to herein, the time or order of filing of any
     financing  statement,  the  acquisition of purchase money or other priority
     with respect to any such lien or security interest or the time of giving of
     the failure to give notice of the acquisition or expected  acquisition of a
     purchase money or other security interest.

          (i) Intercreditor  Agreement.  The terms of this Agreement are subject
     to the terms and conditions of an  Intercreditor  Agreement dated as of the
     date hereof between Fleet National  Bank, as  administrative  agent for the
     Senior Lenders and the Secured Party (the  "Intercreditor  Agreement").  In
     the event of any conflict between the terms of this Section 2 and the terms
     of the Intercreditor  Agreement,  the terms of the Intercreditor  Agreement
     shall govern.

     3.  Location of  Collateral;  Location of Books and Records.  The Companies
warrant and covenant that the  Collateral  and the books and records  concerning
the  Collateral  are and shall be kept at the  locations set forth on Schedule 2
attached  hereto,  which may be amended from  time-to-time by the Companies upon
ten (10) days advance prior written notice to the Secured Party.

     4.  Title.

     Except for (i) the security  interest  hereby granted and (ii) interests of
the Senior Parties in the Collateral, the Companies have and at all times during
the term hereof will retain full title to the Collateral,  free and clear of any
lien, security interest, encumbrance, or claim, 



                                      -8-
<PAGE>



and the Companies  will, at their cost and expense,  defend any action which may
affect the Secured Party's security interest in, or the Companies' title to, the
Collateral.

     5.  Financing Statement.

     The Companies  shall  simultaneously  execute and file all necessary  UCC-1
financing  statements  in favor of the  Secured  Party in order for the  Secured
Party to perfect and  continue  its  security  interest in the  Collateral,  the
Companies and will pay (or reimburse  Secured Party for) the cost of filing fees
for filing the same and will further  execute all other  instruments or take all
further  actions  reasonably  deemed  necessary  by the  Secured  Party  for the
perfection and  continuation of its security  interest in the Collateral and pay
(or reimburse Secured Party for) the cost of filing fees for filing the same.

     6.  Representations and Warranties of the Companies.

     The Companies hereby jointly and severally  represent and warrant that this
Security  Agreement is a valid and binding  obligation  of the  Companies and is
enforceable in accordance with its terms.  The execution and delivery hereof has
been duly  authorized  by the Board of Directors of each of the  Companies,  and
neither the execution nor  performance of this Security  Agreement will conflict
with any other agreement to which the Companies are a party or by which they are
bound.

     7.  Term.

     This  Agreement  commenced on the date first set forth above and shall only
terminate upon the earlier of (i)  termination  of the Amari Security  Interest,
and (ii) the fulfillment or expiration of all of the Obligations. Such period is
the "Term." Upon a  termination  of this  Agreement  and the  security  interest
granted to the Secured Party hereunder,  Secured Party shall execute and deliver
to the  Companies  UCC-3  termination  statements  and all  other  documents  or



                                      -9-
<PAGE>



instruments and take all further action necessary to release the Second Lien and
all of Secured Party's rights in the Collateral.

     8.  Change of Place of Business.

     Company will provide ten (10) days  advance  written  notice to the Secured
Party in the event of any change of any of the  Companies'  principal  places of
business, or places where the Collateral and records concerning same are kept.

     9.  Default.

     The  Companies  shall be in default  under this  Security  Agreement on the
happening and during the  continuance of one or more of the events or conditions
defined as an Event of Default in the Note (each an "Event of Default").

     10. Remedies.

          (a)  Subject  to  the  provisions  of  Paragraph  2  above,  upon  the
     occurrence  of an  Event of  Default,  the  Secured  Party  shall  give the
     Companies  and the Senior  Parties if such Event of Default is  continuing,
     ten (10) days prior  written  notice of occurrence of such Event of Default
     and an  opportunity  to cure such  default  within such ten (10) day notice
     period (to the extent such Event of Default is curable).  If the  Companies
     fail to cure such Event of Default  within  such ten (10) day  period,  the
     Secured  Party  shall have and may  exercise  all rights and  remedies of a
     secured party after default under the Uniform Commercial Code (the "Code"),
     at law, in equity or otherwise,  with respect to the  Collateral,  all such
     rights  and  remedies  being  cumulative,  not  exclusive  and  enforceable
     alternatively,   successively  or  concurrently;  provided,  however,  that
     notwithstanding  the foregoing,  the Secured Party shall not take any steps
     to take  possession  of, or to  liquidate,  any  Collateral  without  first
     complying with the provisions of Paragraph 2(a).



                                      -10-
<PAGE>



          (b) Subject to the provisions of Paragraph 2 above,  the Secured Party
     shall  apply the cash  proceeds  actually  received  from any sale or other
     disposition of the  Collateral (i) to the reasonable  expenses of retaking,
     holding,  preparing for sale, selling,  leasing and the like, to reasonable
     attorneys'  fees and all  legal,  travel  and other  expenses  which may be
     incurred by the Secured Party in attempting to collect the  Obligations  or
     enforce this  Security  Agreement or in the  prosecution  or defense of any
     action  or  proceeding  related  to the  subject  matter  of this  Security
     Agreement;  and then (ii) pay to the Secured Party the entire unpaid amount
     of the  Obligations.  The  Companies  shall remain  liable and will pay the
     Secured Party on demand any deficiency remaining on the Obligations and the
     balance of any expenses unpaid, with any surplus to be paid to ABC, subject
     to any  duty of the  Secured  Party  imposed  by law to the  holder  of any
     subordinate security interest in the Collateral known to the Secured Party.

     11. Notices.  All notices and other  communications  hereunder  shall be in
writing  and shall be deemed  given if  delivered  personally  or by  commercial
messenger or courier service,  or mailed by registered or certified mail (return
receipt  requested)  or sent via  facsimile  (with  acknowledgment  of  complete
transmission)  to the  parties  at the  following  addresses  (or at such  other
address for a party as shall be specified by like notice):

                             if to the Companies, to:

                             Audio Book Club, Inc.
                             20 Community Place
                             P.O. Box 2346
                             Morristown, NJ 07962-2346
                             Attn: Chief Financial Officer
                             Telephone No.: 973-539-9528
                             Facsimile No.: 973-539-1273

                             with a copy to:



                                      -11-
<PAGE>



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

                             If to the Secured Party, to:

                             Mr. Norton Herrick
                             2295 Corporate Blvd., N.W.
                             Suite 222
                             P.O. Box 5010
                             Boca Raton, FL 33431
                             Telephone No.: 561-241-9880
                             Facsimile No.: 561-241-9887

                             with a copy to:

                             Olshan Grundman Frome Rosenzweig & Wolosky LLP
                             505 Park Avenue
                             New York, New York 10022
                             Attention: Steven Wolosky, Esq.
                             Telephone No.: (212) 753-7200
                             Facsimile No.: (212) 980-7177

     12. Miscellaneous Provisions.

          (a) Parties  Bound.  This Security  Agreement  shall be binding on and
     inure to the benefit of the Parties and their respective heirs,  executors,
     administrators,  legal representatives,  successors,  assigns, subsidiaries
     and affiliates.

          (b)  Legal  Construction.  In case  any one or more of the  provisions
     contained  in this  Security  Agreement  shall for any reason be held to be
     invalid,  illegal,  or  unenforceable  in  any  respect,  such  invalidity,
     illegality, or unenforceability shall not affect any other provision hereof
     and this Security Agreement shall be construed as if such invalid, illegal,
     or unenforceable provision had never been contained herein. Notwithstanding
     anything to the contrary herein,  nothing contained in this Agreement shall
     be deemed to restrict, limit, modify, impair,



                                      -12-
<PAGE>



     impede or otherwise affect in any manner any of Secured Party's  (including
     all of his heirs, executors, successors and assigns) rights in, to or under
     the Note, it being expressly  understood that Secured Party may enforce all
     of his rights in, to and under the Note without regard to the terms hereof.
     This  Agreement  shall  solely and  exclusively  relate to Secured  Party's
     rights  in and  to the  Collateral,  and  shall  not  extend  to any  other
     contractual rights he may have.

          (c) Prior Agreements  Superseded.  This Agreement constitutes the sole
     and  only  agreement  of the  Parties  hereto,  and  supersedes  any  prior
     understandings   or  written  or  oral  agreements   between  the  parties,
     respecting the subject matter hereof.

          (d) GOVERNING LAW. THIS  AGREEMENT  SHALL BE CONSTRUED AND ENFORCED IN
     ACCORDANCE  WITH,  AND THE RIGHTS OF THE PARTIES  SHALL BE GOVERNED BY, THE
     LAW OF THE STATE OF NEW YORK EXCLUDING CHOICE-OF-LAW  PRINCIPLES OF THE LAW
     OF  SUCH  STATE  THAT  WOULD  REQUIRE  THE  APPLICATION  OF THE  LAWS  OF A
     JURISDICTION OTHER THAN SUCH STATE



                                      -13-
<PAGE>



     IN WITNESS WHEREOF,  the undersigned have executed this Security  Agreement
as of the date first above written.

                                AUDIO BOOK CLUB, INC.

                                By:  /s/ JOHN LEVY
                                   ----------------------------------------
                                      Name: John Levy
                                      Title: Executive Vice President
                                      and Chief Financial Officer

                                CLASSIC RADIO HOLDING CORP.

                                By:  /s/ JOHN LEVY
                                   ----------------------------------------
                                      Name: John Levy
                                      Title: Executive Vice President
                                      and Chief Financial Officer

                                CLASSIC RADIO ACQUISITION CORP.

                                By:  /s/ JOHN LEVY
                                   ----------------------------------------
                                      Name: John Levy
                                      Title: Executive Vice President
                                      and Chief Financial Officer


                                     /s/ NORTON HERRICK
                                ---------------------------------
                                    NORTON HERRICK



                                      -14-
<PAGE>



                                   SCHEDULE 1

                                   COLLATERAL

     The "Collateral" shall include,  without  limitation,  all right, title and
interest in and to all of the following assets and properties:

1.   All of the assets and  properties  acquired  (by way of merger)  from Radio
     Spirits,  Inc.  ("RSI"),  as described  in Section 4.7 of the  Supplemental
     Agreement  between  RSI and the Carl  Amari,  on the one hand,  and ABC and
     Holding Corp., on the other hand (the  "Supplemental  Agreement"),  entered
     into as of December 11, 1998,  including  but not limited to the assets and
     properties  described  on  Schedule  4.7  to  the  Supplemental   Agreement
     (collectively, the "RSI Assets");

2.   All of the  assets and  properties  of Buffalo  Productions,  Inc.  ("BPI")
     acquired  from BPI,  as  described  in  Section  2.1 of the Asset  Purchase
     Agreement  between BPI, on the one hand, and ABC and Acquisition  Corp., on
     the other hand,  entered  into as of December 11, 1998  (collectively,  the
     "BPI Assets"); and

3.   The fifty percent (50%)  interest in the OTR Series Joint Venture with Dick
     Brescia Associates, Inc. pursuant to the OTR Series Joint Venture Agreement
     dated January 1, 1998,  acquired by Classic Radio  Acquisition  Corp.  from
     Carl Amari pursuant to the Joint Venture  Purchase  Interest and Assignment
     Agreement entered into on December 11, 1998 (the "JV Interest").

4.   Without  limiting the generality of sections 1, 2, and 3 above,  all of the
     following  assets with respect to or arising  from the RSI Assets,  the BPI
     Assets and the JV  Interest:  (a)  accounts,  chattel  paper,  tax refunds,
     contract  rights,   leases,   leasehold   interests,   letters  of  credit,
     instruments,   documents,   documents   of  title,   patents,   copyrights,
     trademarks,  trade names,  licenses,  goodwill,  beneficial  interests  and
     general  intangibles;  (b) all goods whose sale, lease or other disposition
     have given rise to accounts  and have been  returned to or  repossessed  or
     stopped in transit;  (c) certificated and  uncertificated  securities;  (d)
     goods, including without limitation consumer goods,  machinery,  equipment,
     farm  products,  fixtures and  inventory;  (e) liens,  guaranties and other
     rights and  privileges  pertaining  to any of the  foregoing;  (f)  monies,
     reserves,  deposits,  deposit  accounts and interest or dividends  thereon,
     cash or cash  equivalents;  (g) all  accessions to the  foregoing,  and all
     litigation  proceeds  pertaining to the  foregoing  and all  substitutions,
     renewals,  improvements and replacements of and additions to the foregoing;
     (h) all books,  records and computer  records in any way relating to any of
     the  foregoing;  and  (i)  all  products  and  proceeds  of  the  foregoing
     including, without limitation,  proceeds of insurance policies insuring the
     foregoing.  The terms used herein to identify all property described in (a)
     though (i) shall have the same  meaning as are assigned to such terms as of
     the date hereof in the Illinois Uniform Commercial Code.



<PAGE>



                                   SCHEDULE 2

                             LOCATION OF COLLATERAL


1.   20 Community Place
     P.O. Box 2346
     Morristown, NJ 07962-2346

2.   974 Estes Court
     Schaumburg, IL 60193

3.   Cassette Services, Inc.
     111 North N. Hickory Ave.
     Arlington Heights, IL 60004
     Tel: 847-559-9700

4.   Cinram
     4905 Moores Mill Road
     Huntsville, AL 35811-1511
     Tel: 205-859-9042

5.   Cinram
     1600 Rich Rd
     Richmond, IN 47374

6.   Rose  Packaging & Design,  Inc.  
     6444 S. Quebec Street 
     Bldg 7, Suite 212 
     Englewood, CO 80111 
     Tel: 303-773-1003

     Rose Western
     8609 Chetle Avenue
     Santa Fe Springs, CA 90670

7.   The Audio Source, Inc.
     1850 Holste Rd
     Northbrook, Il 60062
     Tel: 847-559-9700

8.   Global Cassettes
     14804 Cave Creek Road
     Phoenix, AZ 85032
     Tel: 602-953-0527