PROMISSORY NOTE

90,000.00                                               Dated as of July 1, 1998

      SECTION 1. General.

      1.1 PARADISE MUSIC & ENTERTAINMENT, INC., having an address at 53 West
23rd Street, New York, New York 10010 (referred to as the "Maker"), for value
received, hereby promises to pay on or before the first anniversary of this
Promissory Note (the "Maturity Date"), THOMAS EDELMAN, (hereinafter referred to
as the "Holder" or "Payee"), or order, the principal amount of the outstanding
balance of this Promissory Note together with interest on the unpaid balance of
the principal amount hereof from time to time outstanding at the rate of one
percent (1%) per month on the Maturity Date. Such interest shall accrue from the
date hereof until the obligation of the Maker with respect to this Promissory
Note shall be fully discharged, and be paid monthly commencing November 1, 1998,
in arrears. Interest hereon shall be computed on the basis of a 360-day year.
All payments of principal and interest on this Promissory Note shall be in such
coin or currency of the United States of America as at the time of payment shall
be legal tender for payment of public and private debts.

      1.2 The Maker shall have the right at any time, on ten (10) days' written
notice, to prepay the whole (or at any time and from time to time to prepay any
part) of the unpaid principal amount of this Promissory Note, without premium or
penalty; provided, however, that interest on the principal amount hereof to be
so prepaid accrued to the date of such prepayment shall be paid concurrently
therewith.

      SECTION 2. Mandatory Prepayment; Conversion.

      2.1 Mandatory Prepayment. At any time after the Maker has received at
least $600,000.00 in gross proceeds from a financing or financings (the "Initial
Financing"), Maker shall promptly pay to the Holder of this Promissory Note the
greater of (a) $45,000 in principal, or (b) the remaining principal balance
hereof, in either case, together with any accrued and unpaid interest thereon
through the date of such prepayment.

      2.2 Conversion. At any time that the Maker undertakes a private offering
of its debt or equity securities (whether in one transaction or a series of
transactions which together comprise an integrated securities offering,
including the Initial Financing) (the "Private Placement"), the Holder of this
Promissory Note may, at any time and from time to time, upon written notice,
convert the unpaid principal amount of this Promissory Note together with all
interest accrued thereon, into securities having terms, rights, preferences and
priorities that are in all respects equivalent to those securities sold in the
Private Placement. If the Company shall at any time by subdivision, combination
or reclassification of securities or otherwise, change any of the securities
into which this Promissory Note is convertible into a different number, the
conversion price shall be adjusted accordingly. In the event that the Company
merges with or into another corporation, the conversion price immediately prior
to the merger shall remain unchanged and this Promissory Note shall be
convertible into the equivalent securities of the surviving corporation based
upon the conversion price.

      The holder of this Promissory Note may, at any time and from time to time,
upon written notice, convert the unpaid principal amount of this Promissory Note
together with all interest accrued thereon into shares of the Company's Common
Stock at the price per share of $2 7/8ths per share. If the Company shall at any
time by subdivision, combination or reclassification of securities or otherwise,
change any of


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the securities into which this Promissory Note is convertible into a different
number, the conversion price shall be adjusted accordingly. In the event that
the Company merges with or into another corporation, the conversion price
immediately prior to the merger shall remain unchanged and this Promissory Note
shall be convertible into shares of Common Stock of the surviving corporation
based upon the conversion price.

      SECTION 3. Non-Negotiability of Promissory Note.

      This Promissory Note shall not be transferred, assigned, conveyed or
negotiated by the Holder without the consent of the Maker, such consent not to
be unreasonably withheld

      SECTION 4. Events of Default and Remedies.

      4.1 The entire principal amount of this Promissory Note together with all
accrued interest hereon, at the option of the Holder hereof exercised by written
notice to the Maker at its address then in effect or as set forth herein, shall
forthwith become and be due and payable if any one or more of the following
events (herein called "Events of Default") shall have occurred (for any reason
whatsoever and whether such happening shall be voluntary or involuntary or come
about or be effected by operational law or pursuant to or in compliance with any
judgment, decree or order of any court or any order, rule or regulation of any
administration or governmental body) and be continuing at the time of such
notice, that is to say:

            (a) if default shall be made in the due and punctual payment of the
principal or interest of this Promissory Note when and as the same shall become
due and payable, whether on the Maturity Date, by acceleration or otherwise, and
such default shall have continued for a period of fifteen (15) days. During any
period in which the Maker is in default pursuant to this subsection (a),
additional interest shall accrue at the penalty rate of one and one-half percent
per (1 1/2%) month on the entire unpaid principal amount and accrued interest. A
default under this Note can only be cured by a (i) waiver on the part of the
Holder, or (ii) by paying the full unpaid principal amount, together with all
accrued unpaid interest (including penalty interest) on this Note;

            (b) if the Maker shall: (i) admit in writing its inability to pay
its debts generally as they become due; (ii) file a petition in bankruptcy or a
petition to take advantage of any insolvency act; (iii) make an assignment for
the benefit of creditors; (iv) consent to the appointment of a receiver of
itself or of the whole or any substantial part of its property; (v) have a
petition in bankruptcy filed against it, be adjudicated a bankrupt; or (vi) file
a petition or answer seeking reorganization or arrangement under the Federal
bankruptcy laws or any other applicable lay or statute of the Unites States of
America or any State, district or territory thereof;

            (c) if a court of competent jurisdiction shall enter, except at the
direct or indirect request of the Holder of this Promissory Note, an order,
judgment, or decree appointing, without the consent of the Maker, a receiver of
the Maker of the whole or any substantial part of its property, or approving a
petition filed against it seeking reorganization or arrangement of the Maker
under the Federal bankruptcy laws or any other applicable law or statute of the
United States of America or any State, district or territory thereof, and such
order, judgment or decree shall not vacated or set aside or stayed within
seventy-five (75) days from the date of entry thereof; or


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            (d) if, under the provisions of any other law for the relief or aid
of debtors, any court of competent jurisdiction shall assume custody or control
of the Maker's assets or of the whole or any substantial part of its property
and such custody or control shall not be terminated or stayed within
seventy-five (75) days from the date of assumption of such custody or control.

      4.2 In the case any one or more of the Events of Default specified is
Section 5.1 hereof shall have occurred and be continuing, the Holder of this
Promissory Note may proceed to protect and enforce its rights either by suit in
equity and/or by action at law, whether for the specific performance of any
covenant or agreement contained in this Promissory Note, or the Holder of this
Promissory Note may proceed to enforce the payment of all sums due upon this
Promissory Note or to enforce any other legal or equitable right of the Holder
of this Promissory Note.

      4.3 No remedy herein conferred upon the Holder is intended to be exclusive
of any other remedy and each and every such remedy shall be cumulative and shall
be in addition to every other remedy given hereunder or now or hereafter
existing at law or in equity or by statute or otherwise.

      4.4 No course of dealing between the Maker and the Holder or any delay on
the part of the Holder hereof in exercising any rights hereunder shall operate
as a waiver of any rights of the Holder hereof.

      SECTION 5. Section Headings.

      The Section headings contained herein are for the purpose of convenience
of reference only and are not intended to define or limit the contents of any
such Section.

      SECTION 6. Severability.

      In the event that one or more of the provisions of this Promissory Note
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 provisions of this Promissory Note, but his Promissory Note shall
construed as if such invalid, illegal or unenforceable provision had never been
contained herein.

      SECTION 7. Governing Law.

      This Promissory Note shall be governed by and construed in accordance with
the laws of the State of New York applicable to agreements made and to be
performed entirely within such State. The Maker and Payee hereby consent to the
jurisdiction of the Federal and State Courts in and for the State of New York.

PARADISE MUSIC & ENTERTAINMENT, INC.


By /s/ John Loeffler
   --------------------------------
     John Loeffler, President & CEO


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