Document:

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                                                                   EXHIBIT 10.13

                      SUBSCRIPTION AND PURCHASE AGREEMENT

                                      FOR

          13,079,933 SHARES OF SERIES D CONVERTIBLE PREFERRED STOCK,

                           PAR VALUE $.001 PER SHARE

                                      OF

                               Phase2Media, Inc.

                           (a Delaware corporation)

     SUBSCRIPTION AND PURCHASE AGREEMENT (the "Agreement") dated as of the
19/th/ day of January, 2000, by and between Phase2Media, Inc., (f/k/a CKG
Media.com, Inc. d/b/a Phase2Media) a Delaware corporation having offices at 420
Lexington Avenue, New York, New York 10170 (the "Company"), and the Investors
listed on Schedule I attached hereto, as same may be amended at any
"Supplemental Closing" (as that term is defined in Section 1 below)
(collectively, the "Investors" and each individual a "Investor").

                             W I T N E S S E T H:
                             -------------------

     WHEREAS, the Investors and the Company have arranged for this Agreement
(the "Agreement") to provide for the subscription and, if such subscription as
set forth in this Agreement is accepted by the Company, the purchase by the
Investors, on the terms and subject to the conditions set forth in this
Agreement, of an aggregate of Thirteen Million Seventy Nine Thousand Nine
Hundred and Thirty Three (13,079,933) shares of the Company's newly authorized
Series D Convertible Preferred Stock, par value $.001 per share (the "Series D
Preferred Stock") of the Company;

     WHEREAS, on the basis of the representations and warranties, and subject to
the terms and conditions set forth herein, the Investors desire to subscribe for
and purchase the Series D Preferred Stock and the Company desires to cause to be
sold to each Investor, the number of shares of Series D Preferred Stock set
forth opposite each such Investor's name on Schedule I annexed hereto;

     WHEREAS, the Series D Preferred Stock sold in accordance with this
Agreement, upon the execution of this Agreement, shall not be registered
securities under federal or state securities laws or quoted or listed for
trading on any securities exchange, organized market or quotation system at the
time of acquisition hereunder; and
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     WHEREAS, in reliance upon certain representations made by the Company and
the Investors herein, the transactions contemplated by this Agreement are such
that the offer and sale of Series D Preferred Stock hereunder will be exempt
from registration under applicable federal and state securities laws pursuant to
exemptions made available under such laws.

     NOW, THEREFORE, for and in consideration of the premises, and the mutual
representations, warranties, covenants and agreements set forth herein, and for
other good and valuable consideration, receipt of which is hereby acknowledged,
the parties hereto agree as follows:

     1.   Subscription for Purchase of Series D Preferred Stock.  On the basis
          -----------------------------------------------------
of the representations, warranties, covenants and agreements, and subject to the
terms and conditions set forth herein, upon the "Initial Closing" hereof (as
that term is defined in Section 2(a) below) the Company agrees to sell,
transfer, convey and deliver to the Investors, and each of the Investors agrees
to purchase, acquire and accept delivery of the number of shares of the Series D
Preferred Stock set forth opposite each such Investor's name on Schedule I
attached hereto.  As full and total consideration for the purchase by the
Investors of an aggregate of up to Thirteen Million Seventy Nine Thousand Nine
Hundred and Thirty Three (13,079,933) shares of Series D Preferred Stock the
Investors shall pay to the Company an aggregate purchase price of up to Twenty
Million ($20,000,000) Dollars and no less than Sixteen Million ($16,000,000)
Dollars (the "Purchase Price"); provided, however, that up to Four Million
($4,000,000) Dollars worth of Series D Preferred Stock that otherwise would be
subscribed for and purchased by the Investors at the Initial Closing may be
subscribed for and purchased by the Investors at any time in one or more
closings within twenty (20) days subsequent to the Initial Closing (each a
"Supplemental Closing") in accordance with the provisions of Section 2(a) below.

     2.   Initial Closing and Supplemental Closings.
          -----------------------------------------

          (a) The initial closing of the purchase of the Series D Preferred
Stock contemplated by this Agreement shall occur on or about January 19, 2000,
at the offices Zukerman Gore & Brandeis, LLP, 900 Third Avenue, New York, New
York 10022 or at such other mutually convenient time or at such other mutually
convenient place as agreed upon by the parties (the "Initial Closing").  The
date on which the Initial Closing takes place is sometimes hereinafter referred
to as the "Initial Closing Date".  Unless otherwise expressly set forth herein
to the contrary, the term "Closing" shall include the Initial Closing and any
Supplemental Closings, and the term "Closing Date" shall include the Initial
Closing Date and the date of any Supplemental Closing.  At each Closing, the
Investors shall deliver the Purchase Price, or the applicable portion thereof,
to the Company, in certified funds or by wire transfer, and the Company shall
deliver to each Investor a certificate or certificates representing the
correspondingly appropriate number of shares of Series D Preferred Stock in such
amounts as set forth opposite each Investor's name on Schedule I annexed hereto
and in such denominations as requested by each Investor.

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          (b) All certificates representing the Series D Preferred Stock shall
bear the restrictive legend referred to in Section 6 below.

     3.   Representations, Warranties and Covenants of the Investor.  In
          ---------------------------------------------------------
connection with this Agreement, each of the undersigned Investors, as to itself
only, hereby represents, warrants and covenants to the Company, as of the date
on which such Investor actually participates in a Closing hereunder, as follows,
all of which representations, warranties and covenants shall be deemed to be of
the essence hereof:

          (a) Investment Intent.  The Investor represents and warrants that
              -----------------
the Series D Preferred Stock being purchased is being purchased or acquired
solely for the Investor's own account, for investment purposes only and not with
a view towards the distribution to others. The Investor acknowledges,
understands and appreciates that the shares of Series D Preferred Stock have not
been registered under the Securities Act of 1933, as amended (the "Securities
Act") by reason of a claimed exemption under the provisions of such Securities
Act which depends, in large part, upon the Investor's representations as to
investment intention, investor status and related and other matters set forth
herein. The Investor understands that, in the view of the United States
Securities and Exchange Commission (the "SEC"), among other things, a purchase
with a present intent to distribute would represent a purchase and acquisition
with an intent inconsistent with its representation to the Company, and the SEC
might regard such a transfer as a deferred sale for which the registration
exemption is not available. The Investor agrees and consents to the placement of
a legend on the certificate(s) representing the Series D Preferred Stock
purchased and acquired hereunder, stating that such shares of Series D Preferred
Stock have not been registered under the Securities Act or applicable state
securities laws. Such legend shall be removed promptly following such time as a
registration statement under the Securities Act covering any such shares of
Series D Preferred Stock is declared effective by the SEC.

          (b) Certain Risks.  That (i) the Series D Preferred Stock represents
              -------------
equity securities in a private corporate entity that has an accumulated deficit,
(ii) no return on investment, whether through distributions, appreciation,
transferability or otherwise, and no performance by, through or of the Company,
has been promised, assured, represented or warranted by the Company, or by any
director, officer, employee, agent or representative thereof; (iii) neither the
shares of Series D Preferred Stock subscribed for under this Agreement, nor the
shares of the Company's common stock, par value $.001 per share (the "Common
Stock") and Class A common stock, par value $.001 per share (the "Class A Common
Stock") into which the Series D Preferred Stock is convertible (the Common Stock
and Class A Common Stock into which the Series D Preferred Stock is convertible,
collectively, the "Conversion Shares") (x) are registered under applicable
federal or state securities laws, and thus may not be sold, conveyed, assigned
or transferred unless registered under such laws or unless an exemption from
registration is available under such laws, as more fully described below, or (y)
are quoted, traded, listed for trading or quotation on any organized market or
quotation system, and there is therefore no present public or other market for
such shares of Series D Preferred Stock or Conversion

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Shares, and there have not been any representations made by the Company to the
Investor that the Series D Preferred Stock or the Conversion Shares ever will be
quoted, traded or listed for trading or quotation on any organized market or
quotation system or that there ever will be a public market for the Series D
Preferred Stock or the Common Stock or the Class A Common Stock; and (iv) that
the purchase of Series D Preferred Stock is a speculative investment, involving
a degree of risk, and is suitable only for a person or entity of adequate
financial means who has no need for liquidity in this investment in that, among
other things, (x) such person or entity may not be able to liquidate their
investment in the event of an emergency or otherwise, (y) transferability is
limited, and (z) in the event of a dissolution or otherwise, such person or
entity could sustain a complete loss of their entire investment.

          (c) Sophisticated Investor.  That (i) the Investor has adequate means
              ----------------------
of providing for the Investor's current financial needs and possible
contingencies and has no need for liquidity of the Investor's investment in the
Series D Preferred Stock; (ii) Investor is able to bear the economic risks
inherent in an investment in the Series D Preferred Stock and that an important
consideration bearing on Investor's ability to bear the economic risk of the
purchase of the Series D Preferred Stock is whether the Investor can afford a
complete loss of the Investor's investment in the Series D Preferred Stock and
the undersigned Investor represents and warrants that the Investor can afford
such a complete loss; and (iii) the Investor has such knowledge and experience
in business, financial, investment and banking matters (including, but not
limited to investments in restricted, non-listed and non-registered securities)
that the Investor is capable of evaluating the merits, risks and advisability of
an investment in the Series D Preferred Stock.

          (d) Accredited Investor.  That the Investor is an "accredited
              -------------------
investor," as such term is defined in Rule 501 of Regulation D promulgated under
the Securities Act.

          (e) Documents, Information and Access.  That (i) the Investor's
              ---------------------------------
decision to purchase the Series D Preferred Stock is not based on any
promotional, marketing or sales materials, and (ii) Investor and its
representatives have been afforded, prior to purchase thereof, the opportunity
to ask questions of, and to receive answers from, the Company and its
management, and has had access to all documents and information which the
Investor deems material to an investment decision with respect to the purchase
of the Series D Preferred Stock hereunder.

          (f) No Registration, Review or Approval.  The Investor acknowledges
              -----------------------------------
and understands that the limited private offering and sale of the Series D
Preferred Stock pursuant to this Agreement has not been reviewed or approved by
the SEC or by any state securities commission, authority or agency, and that the
limited private offering and sale of the Series D Preferred Stock is not
registered under the Securities Act or under the securities or "blue sky" laws,
rules or regulations of any state.  The Investor acknowledges, understands and
agrees that the Series D Preferred Stock is being offered and sold hereunder
pursuant to (i) a private placement exemption to the registration provisions of
the Securities Act pursuant to Section 4(2)

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of such Securities Act, and (ii) a similar exemption to the registration
provisions of applicable state securities laws.

          (g) Transfer Restrictions.  That the Investor will not transfer any
              ---------------------
Series D Preferred Stock purchased under this Agreement unless such Series D
Preferred Stock is registered under the Securities Act and under any applicable
state securities or "blue sky" laws (collectively, the "Securities Laws"), or
unless an exemption is available under such Securities Laws, and that the
Company may, if it chooses, where an exemption from registration is claimed by
such Investor, condition any transfer of Series D Preferred Stock out of the
Investor's name on an opinion of the Company's counsel or of the Investor's
counsel that is reasonably acceptable to the Company, to the effect that the
proposed transfer is being effected in accordance with, and does not violate, an
applicable exemption from registration under the Securities Laws.

          (h) Reliance.  The Investor understands, acknowledges and appreciates
              --------
that the Company is relying upon all of the representations, warranties,
covenants, understandings, acknowledgments and agreements contained in this
Agreement in determining whether to accept this subscription, sell and issue the
Series D Preferred Stock to the Investor.

          (i) Accuracy of Representations and Warranties.  That all of the
              ------------------------------------------
representations, warranties, understandings and acknowledgments that the
Investor has made herein are true and correct in all material respects as of the
date of execution hereof, and that the Investor will perform and comply fully in
all material respects with all covenants and agreements set forth herein, and
the Investor covenants and agrees that until the acceptance of this Agreement by
the Company, the Investor shall inform the Company immediately in writing of any
changes in any of the representations or warranties provided or contained
herein.

          (j) Survival.  Investor expressly acknowledges and agrees that all of
              --------
its representations, warranties and covenants set forth in this Agreement shall
be of the essence hereof and shall survive the execution, delivery and Closing
of this Agreement, the sale and purchase of the Series D Preferred Stock.

     4.   Representations and Warranties of the Company.  In order to induce
          ---------------------------------------------
each Investor to enter into this Agreement and to purchase the Series D
Preferred Stock, the Company hereby represents and warrants to each Investor, as
of the date each such Investor actually participates in a Closing hereunder, as
follows:

          (a) Corporate Power and Authority.  The stockholders of the Company
              -----------------------------
are, prior to the sales and issuances contemplated hereby, the lawful,
beneficial and record owners of the shares of the Company's Common Stock, Class
A Common Stock, Series A redeemable preferred stock, Series B convertible
preferred stock and Series C convertible preferred stock, as set forth on

Schedule 4(d) annexed hereto, which represents all of the issued and outstanding
-------------
shares of capital stock of the Company and such stockholders own such shares
free and clear of all liens, encumbrances, restrictions and claims of every
kind, except as set forth on Schedule
                             --------

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4(a). The Company has the full legal right, power and authority to enter into
----
this Agreement, the Second Amended and Restated Securityholders' Agreement dated
as of the date hereof by and among the Company, the Investors and certain of the
stockholders of the Company (the "Amended Securityholders' Agreement") and the
Second Amended and Restated Registration Rights Agreement dated as of the date
hereof by and among the Company, and the persons listed on Schedule 1, Schedule
2 and Schedule 3 thereto (the "Amended Registration Rights Agreement". The
Company further has the full right, power and authority to issue and sell the
shares of Series D Preferred Stock pursuant to this Agreement and to issue the
Conversion Shares issuable upon conversion of the Series D Preferred Stock in
accordance with the terms of the Certificate of Designations, Preferences and
Rights of the Series D Preferred Stock (the "Series D Certificate of
Designations") and the delivery to Investors of the Series D Preferred Stock
pursuant to the provisions of this Agreement will transfer to the Investors
valid title thereto, free and clear of all liens, encumbrances, restrictions and
claims of every kind except as set forth on Schedule 4(a). The Company also has
                                            -------------
the full legal right, power and authority to increase the number of shares of
Common Stock reserved for issuance under its Long Term Equity Compensation Plan
(the "Plan") and to amend the Certificate of Designations, Preferences and
Rights of each of its Series B convertible preferred stock and Series C
convertible preferred stock. This Agreement and the Amended Securityholders'
Agreement, the Amended Registration Rights Agreement and the Series D
Certificate of Designations are collectively referred to herein as the
"Transaction Documents".

          (b) Authorization and Noncontravention.  Each Transaction Document has
              ----------------------------------
been duly and validly authorized, executed and delivered by the Company and
constitutes a valid and legally binding agreement of the Company, enforceable in
accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general applicability relating to
or affecting creditors' rights and to general equity principles.  Each of the
Series D Certificate of Designations and the action to increase the number of
shares of Common Stock reserved for issuance under the Plan has been duly and
validly authorized by all necessary corporate action and the Series D
Certificate of Designations has been duly filed with the Secretary of State of
the State of Delaware and is in full force and effect.  The execution and
delivery by the Company of each Transaction Document and the other agreements
and instruments, to be executed and delivered by them in connection herewith do
not and the consummation of the transactions contemplated hereby and thereby
will not: (i) violate any provision of the Certificate of Incorporation or By-
Laws of the Company; (ii) except as set forth on Schedule 4(b), violate any
                                                 -------------
provision of, or result in the termination or acceleration of, or default under,
or entitle any party to accelerate (whether after the filing of notice or lapse
of time or both) any obligation under, or result in the creation or imposition
of any lien, charge, pledge, security interest or other encumbrance upon any of
the assets of the Company pursuant to any provision of any mortgage, lien,
lease, agreement, license, or instrument, or violate any law, regulation, order,
arbitration award, judgment or decree to which the Company is a party or by
which its property is bound; (iii) violate or conflict with, or create a default
under, any other material restriction of any kind or character to which the
Company is subject; (iv) require any governmental consent, authorization,
filing, approval, or exemption, except as may be required

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by Regulation D promulgated under the Securities Act; or (v) violate any consent
decree or requirement to which the Company is subject.

          (c) Existence and Good Standing.  The Company is a corporation duly
              ---------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware.  The Company has the power to own its property and to carry on its
business as it is now being conducted.  The Company is duly qualified to do
business and is in good standing in the jurisdictions listed on Schedule 4(c),
                                                                -------------
which are the only jurisdictions in which the character or location of the
properties owned or leased by the Company or the nature of the business
conducted by the Company makes such qualification necessary, except where the
failure to qualify individually or in the aggregate will not have a material
adverse effect on the business of the Company.

          (d) Capital Stock.
              -------------

              (i)   A description of the authorized capital stock of the
Company, together with the number of shares of each class outstanding, the names
of each of the holders of such shares and the number of shares held by each
stockholder as of the Closing Date, is set forth on Schedule 4(d) hereto. All of
                                                    -------------
such shares of capital stock of the Company have been duly authorized, validly
issued, are fully paid and nonassessable and were issued in compliance with all
applicable federal and state securities laws. No securities directly or
indirectly convertible into or exchangeable for any of the capital stock of the
Company, and no options, warrants, rights, calls or commitments relating to such
shares or other such securities, are outstanding, except as reflected on
Schedule 4(d) hereto.  Except as set forth in the Amended Registration Rights
-------------
Agreement, or as set forth on Schedule 4(d), the Company is not under any
                              -------------
contractual obligation to register under the Securities Act any of its presently
outstanding securities or any securities which it may hereafter issue.

              (ii)  As of the Closing, the Company shall not be subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its capital stock and the Company shall not have any
outstanding warrants, options, or other rights to acquire its capital stock,
except as set forth on Schedule 4(d).
                       -------------

              (iii) As of the Closing Date, the Company will have amended its
Certificate of Incorporation such that a sufficient number of shares of
authorized but unissued Common Stock, Class A Common Stock and Preferred Stock
will have been reserved by appropriate corporate action in connection with the
prospective conversion of the Series D Preferred Stock into Common Stock or
Class A Common Stock and in connection with the increased number of shares of
Common Stock reserved for issuance under the Plan. The issuance of the
Conversion Shares upon conversion of the Series D Preferred Stock will not
require any further corporate action by the stockholders or directors of the
Company, nor will it be subject to preemptive rights of any present or future
stockholders of the Company, nor will it conflict with

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any provision of any agreement to which the Company is a party or by which it or
its assets are bound.

          (e) Valid Issuance of Securities; No Personal Liability.  When
              ---------------------------------------------------
delivered in accordance with the terms hereof for the consideration expressed
herein, the Series D Preferred Stock (and the Conversion Shares issuable upon
conversion of the Series D Preferred Stock) will be duly and validly issued, the
Series D Preferred Stock (and the Conversion Shares issuable upon conversion of
the Series D Preferred Stock) will be fully paid, non-assessable and free of
preemptive rights, and, when executed and delivered by the Company, each of this
Agreement, and the Series D Preferred Stock will constitute valid and legally
binding obligations of the Company, enforceable in accordance with their
respective terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other law affecting creditors' rights
generally and of general principles of equity (regardless of whether considered
in a proceeding at law or in equity).  Based in part upon the representations of
the Investors in this Agreement, the Series D Preferred Stock will be issued in
compliance with all applicable federal and state securities laws and the offer,
sale and issuance of the Series D Preferred Stock will constitute transactions
exempt from the registration requirements of Section 5 of the Securities Act.
The Investors, upon purchase of the Series D Preferred Stock will not be subject
to personal liability by reason of being a holder of the Series D Preferred
Stock.

          (f) Subsidiaries and Investments.  The Company has no (and has never
              ----------------------------
had any) subsidiaries and does not own, directly or indirectly, any capital
stock or other equity or ownership or proprietary interest in any corporation,
partnership, association, trust, joint venture or other entity.

          (g) Financial Statements and No Material Changes.
              --------------------------------------------

              (i)   The Company has heretofore furnished the Investors with a
true, correct and complete unaudited balance sheet of the Company and the
related statements of income and retained earnings as of November 30, 1999
prepared by the Company. (The balance sheet of the Company as at November 30,
1999 is hereinafter referred to as the "Balance Sheet" and such date is
hereinafter referred to as the "Balance Sheet Date"). The Balance Sheet fairly
presents in all material respects the financial condition of the Company at the
date thereof and, except as indicated therein, reflects all known or asserted
material claims against and all material debts and liabilities of the Company,
fixed or contingent, as at the date thereof, and, except as noted therein, was
prepared in conformity with GAAP consistently applied throughout the periods
involved and the related statements of income and retained earnings fairly
present in all material respects the results of the operations of the Company
and the changes in its financial position for the period indicated, except as
specified therein, and, except as noted therein, were prepared in conformity
with GAAP consistently applied throughout the periods involved.

              (ii)  Except as specified in Schedule 4(g), since the Balance
                                            -------------
Sheet Date there has been (i) no material adverse change in the assets or
liabilities, or in the business

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(present or anticipated) or condition, financial or otherwise, or in the results
of operations of the Company; and to the best knowledge, information and belief
of the Company, no fact or condition (not of general knowledge) exists or is
contemplated or threatened which might cause such a change in the future.

          (h) Title to Properties; Encumbrances.  Except as set forth on
              ---------------------------------
Schedule 4(h) attached hereto and except for properties and assets reflected in
-------------
the Balance Sheet or acquired since the Balance Sheet Date which have been sold
or otherwise disposed of in the ordinary course of business, the Company has,
and on the Closing Date, will have, good, valid and marketable title to (a) all
of its properties and assets (real and personal, tangible and intangible),
including, without limitation, all of the properties and assets reflected in the
Balance Sheet, except as indicated in the notes thereto or in a Schedule to this
Agreement, and (b) all of the properties and assets purchased by the Company
since the Balance Sheet Date; in each case subject to no encumbrance, lien,
charge or other restriction of any kind or character, except for (i) liens
reflected in the Balance Sheet or in a Schedule to this Agreement, (ii) liens
consisting of zoning or planning restrictions, easements, permits and other
restrictions or limitations on the use of real property or irregularities in
title thereto which do not materially detract from the value of, or impair the
use of, such property by the Company in the operation of its business, and (iii)
liens for current taxes, assessments or governmental charges or levies on
property not yet due and delinquent and liens of carriers, warehousemen, vendors
and materialmen incurred in the ordinary course of business securing sums not
yet due and payable (liens of the type described in clauses (i), (ii) and (iii)
above are hereinafter sometimes referred to as "Permitted Liens").  Such
properties and assets are sufficient to enable the Company to carry out its
business as presently conducted and as proposed to be conducted.   The Company
has all franchises, permits, licenses, and any other similar authority necessary
for the conduct of its business as now being conducted or proposed to be
conducted, the lack of which could materially and adversely affect the business,
properties, prospects, or financial condition of the Company.  The Company is
not in default in any material respect under any of such franchises, permits,
licenses, or other similar authority.

          (i) Leases.  Schedule 4(i) attached hereto contains an accurate and
              ------   -------------
complete list of all leases to which the Company is a party (as lessee or
lessor).  Each lease set forth on Schedule 4(i) (or required to be set forth on
                                  -------------
Schedule 4(i)) is in full force and effect; all rents and additional rents due
-------------
to date on each such lease have been paid; in each case, the lessee has been in
possession since the commencement of the original term of such lease and, to its
knowledge, is not in material default thereunder; and there exists no event of
default or event, occurrence, condition or act (including the purchase of the
Series D Preferred Stock, or any of the conditions precedent hereunder) which,
with the giving of notice, the lapse of time or the happening of any further
event or condition, would become a material default under such lease.  The
Company is not currently in default of any of the terms or conditions under any
such lease in any material respect, and, to the best knowledge, information and
belief of the Company, all of the covenants to be performed by any other party
under any such lease have been fully performed.  The property leased by the
Company is in a state of good maintenance and repair.

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          (j) Material Contracts.  Except as set forth on Schedule 4(j) attached
              ------------------                          ---------
hereto, the Company is not bound by (a) any agreement, contract or commitment
relating to the employment of any person by the Company, or any bonus, deferred
compensation, pension, profit sharing, stock option, employee stock purchase,
retirement or other employee benefit plan, or arrangement or any collective
bargaining agreement or any other contract with any labor union or severance
agreements, programs, policies or arrangements, (b) any agreement, indenture or
other instrument which contains restrictions with respect to payment of
dividends or any other distribution in respect of its capital stock, (c) any
agreement, contract or commitment relating to capital expenditures not yet made,
which involves $50,000 or more and was not entered into the ordinary course of
business, (d) any loan or advance to, or investment in, any individual,
partnership, limited liability company, joint venture, corporation, trust,
unincorporated organization, government or other entity (each a "Person") or any
agreement, contract or commitment relating to the making of any such loan,
advance or investment which involves $50,000 or more, (e) any guarantee or other
contingent liability in respect of any indebtedness or obligation of any Person
(other than the endorsement of negotiable instruments for collection in the
ordinary course of business), (f) any employment agreement or other contract for
the employment of any officer or employee providing for annual compensation in
excess of $100,000 except for the Employment Agreement, dated as of August 16,
1999, between the Company and Richard E. Glassberg, or any management service,
consulting or any other similar type of contract, unless entered into or
incurred in the ordinary course of business and not involving compensation in
excess of $100,000, (g) any agreement, contract or commitment limiting the
freedom of the Company to engage in any line of business or to compete with any
Person, (h) any bank debt, loan, credit or other financing arrangement, (i)
except as otherwise disclosed in this Agreement or a Schedule or Exhibit annexed
hereto, any agreement, contract or commitment not entered into in the ordinary
course of business which involves $50,000 or more and is not cancelable without
penalty within 30 days, (j) any contract or group of related contracts with the
same party or group of affiliated parties the performance of which involves (or
is reasonably expected to involve) consideration in excess of $50,000 during any
twelve month period, (k) any assignment, license, indemnification or other
agreement with respect to the Proprietary Rights (as defined in Section 4(v)
below) or other intangible property, (l) any agreement under which the Company
has granted any Person any rights related to the registration of securities
under the Securities Act (including, without limitation, demand or piggyback
registration rights), (m) any sales, distribution or franchise agreement, or (n)
any other agreement which is material to its operation and business prospects.
Each contract or agreement set forth on Schedule 4(j) (or required to be set
                                        -------------
forth on Schedule 4(j)) has been, or simultaneously upon the execution and
         -------------
delivery hereof will be, executed and delivered and is (or will be) valid,
binding, and enforceable in accordance with its terms and is in full force and
effect; and there exists no material default or event of default or event,
occurrence, condition or act (including the purchase of the Series D Preferred
Stock or any of the conditions precedent hereunder) which, with the giving of
notice, the lapse of time or the happening of any further event or condition,
would become a material default or event of default thereunder. The Company is
not currently in default of any of the terms or conditions of any contract or
agreement set forth on Schedule 4(j)
                       -------------

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(or required to be set forth on Schedule 4(j)) in any respect, which would, in
                                -------------
the aggregate, have a material adverse effect on such party.

          (k) Restrictive Documents.  Except as set forth on Schedule 4(k)
              ---------------------                          -------------
attached hereto, the Company is not subject to, or a party to, any charter, by-
law, mortgage, lien, lease, license, permit, agreement, contract, instrument,
law, rule, ordinance, regulation, order, judgment or decree, or any other
restriction of any kind or character, which materially and adversely affects the
business (present or anticipated) or condition of the Company, financial or
otherwise, or any of its assets taken as a whole, or which would prevent
consummation of the transactions contemplated by this Agreement, compliance by
the Company with the terms, conditions and provisions hereof or the continued
operation of the Company's business after the date hereof or the Closing Date on
substantially the same basis as heretofore operated or which would restrict the
ability of the Company to acquire any property or conduct business in any area.

          (l) Litigation.  Except as set forth on Schedule 4(l) attached hereto,
              ----------                          -------------
there is no action, suit, proceeding at law or in equity, arbitration or
administrative or other proceeding by or before or any investigation by any
governmental or other instrumentality or agency, pending, or, to the best
knowledge, information and belief of the Company, threatened, against or
affecting the Company, or any of its properties or rights; and the Company does
not know of any valid basis for any such action, proceeding or investigation.
The foregoing includes, without limitation, actions pending or threatened
involving the prior employment of any of the Company's officers, employees or
consultants, their use in connection with the Company's business of any
information or techniques allegedly proprietary to any of their former
employers, or their obligations under any agreements with prior employers.
There are no actions, suits, proceedings or investigations by the Company
currently pending against any third party, at law or in equity, or before or by
any governmental department, commission, board, bureau, agency or
instrumentality (including, without limitation, any actions, suits, proceedings
or investigations with respect to the transactions contemplated by this
Agreement).  The Company is not subject to any arbitration proceedings under
collective bargaining agreements or otherwise or any governmental investigations
or inquiries.  Except as set forth on Schedule 4(l), the Company is not party or
                                      -------------
subject to any judgment, order, writ, injunction, or decree entered in any
lawsuit or proceeding which may affect its operations, business practices,
present or anticipated, or ability to acquire any property or conduct business.

          (m) Taxes.  Except as set forth on Schedule 4(m):
              -----                          -------------

              (i)    All taxes and assessments, including, without limitation,
income, property, sales, use, franchise, value added, employees' income
withholding and social security taxes and import duties, including interest and
penalties thereon, imposed by the United States or by any foreign country or by
any state, municipality, subdivision or instrumentality of the United States or
of any foreign country, or by any other taxing authority, for which the Company
may be liable in respect of all periods prior to the Closing Date (including
taxes in respect of tax periods ending on the Closing Date and taxes in respect
of tax periods ending after the Closing Date to

                                       11
<PAGE>

the extent attributable to the portion of that period which ends on the Closing
Date), either have been paid when due or will be paid when due. All tax returns
required to be filed through the date hereof (and the Closing Date), including,
without limitation, information returns, have been (or will be), accurately
prepared in all material respects, and have also been duly and timely filed and
all deposits and payments required by law to be made by the Company, including
with respect to employees' withholding taxes, have been duly made in accordance
with all applicable laws.

              (ii)   There are no tax sharing agreements or arrangements or tax
indemnity agreements between the Company and any other person.

              (iii)  The Company has never been an includable corporation in any
affiliated group of corporations within the meaning of Section 1504 of the
Internal Revenue Code of 1986, as amended (the "Code") (or any similar provision
of state or other tax law).

              (iv)   The Company has not filed a consent pursuant to the
collapsible corporation provisions of section 341(f) of the Code (or any similar
provision of state or other tax law) or agreed to have section 341(f)(2) of the
Code or any similar provision of state or other tax law) apply to any
disposition of any asset owned by the Company.

              (v)    All taxes arising from the transactions described in this
Agreement and payable by the Company, if any, will be paid by the Company.

          (n) Liabilities.  The Company does not have any outstanding material
              -----------
obligations, claims, liabilities or indebtedness, contingent or otherwise,
except as set forth in the Balance Sheet or referred to in the footnotes
thereto, other than liabilities incurred subsequent to the Balance Sheet Date in
the ordinary course of business, and, except as set forth on Schedule 4(n), not
                                                             -------------
involving borrowings by the Company.  The Company maintains a standard system of
accounting in accordance with GAAP.  The Company's financial reserves reflected
in the Balance Sheet are adequate to cover claims already incurred and
reasonably expected to be incurred and the Company's provisions for taxes as set
forth in the Balance Sheet are adequate and accurate for taxes due and accrued.
Except as set forth on Schedule 4(n), the Company is not in default in respect
                       -------------
of the terms or conditions of any indebtedness.

          (o) Compliance with Laws.   Except as set forth on Schedule 4(o), the
              --------------------                           -------------
Company is in compliance in all material respects with all applicable laws,
regulations, orders, judgments and decrees.  Neither the Company nor, to the
best of the Company's knowledge, has any employee of the Company has at any time
made any payments for improper or unlawful political contributions or made any
bribes, kickback payments or other illegal payments.

          (p) Accounts Receivable.  The amount of all accounts receivable,
              -------------------
unbilled invoices and other debts due or recorded in the records and books of
account of the Company as being due to it at the Closing Date (less the amount
of any provision or reserve therefor made in

                                       12
<PAGE>

the records and books of account of the Company) constitute valid and
enforceable claims that have arisen only from bona fide transactions in the
ordinary course of business and none of such accounts receivable or other debts
is or will, to the best knowledge of the Company, at the Closing Date be subject
to any counterclaim or set-off except to the extent of any such provision or
reserve, and there are no known, contingent or asserted claims, or refusals to
pay against any such receivables or debts. There has been no material adverse
change since the Balance Sheet Date in the amount of accounts receivable or
other debts due the Company or the allowances with respect thereto, or accounts
payable of the Company from that reflected in the Balance Sheet.

          (q) Employees; Employee Benefit Plans.  No employee or consultant of
              ---------------------------------
the Company has any agreement or contract, written or oral, except as described
on Schedule 4(q) regarding such person's employment or consultancy with the
   -------------
Company.  To the best of the Company's knowledge, no employee of the Company nor
any consultant with whom the Company has contracted is in violation of any term
of any employment contract, non-disclosure agreement or any other similar
contract or agreement relating to the relationship of such employee or
consultant with the Company, any former employer or any other party.  No
employee of the Company has been granted the right to continued employment by
the Company or to any material compensation following termination of employment
with the Company except as set out on Schedule 4(q) hereto.  The Company is not
                                      -------------
aware that any officer or key employee, or that any group of key employees,
intends to terminate their employment with the Company, nor does the Company
have a present intention to terminate the employment of any officer, key
employee or group of key employees.  Set forth on Schedule 4(q) attached hereto
                                                  -------------
is an accurate and complete list of all employee benefit plans ("Employee
Benefit Plans") within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended, and the rules and regulations
thereunder ("ERISA"), whether or not any such Employee Benefit Plans are
otherwise exempt from the provisions of ERISA, established, maintained or
contributed to by the Company.  All such Employee Benefit Plans are fully funded
and are and at all times have been in compliance in all material respects with
applicable law, including the provisions of ERISA.

          (r) No Changes Since Balance Sheet Date.  Since the Balance Sheet
              -----------------------------------
Date, except as expressly contemplated hereby or as disclosed in a Schedule or
Exhibit hereto, the Company has not (a) incurred any liability or obligation of
any nature (whether accrued, absolute, contingent or otherwise), except in the
ordinary course of business, or paid any material obligation or liability, other
than current liabilities paid in the ordinary course of business, (b) permitted
any of its assets to be subjected to any mortgage, pledge, lien, security
interest, encumbrance, restriction or charge of any kind (other than Permitted
Liens), (c) sold, transferred or otherwise disposed of any assets, including
without limitation, any Proprietary Rights, except in the ordinary course of
business, (d) made any capital expenditure or commitment therefor, except in the
ordinary course of business, (e) declared or paid any dividend or made any
distribution, in cash or other property, on any shares of its capital stock, or
redeemed, purchased or otherwise acquired any shares of its capital stock or any
option, warrant or other right to purchase or acquire any such shares, (f) made
any bonus or profit sharing distribution or payment

                                       13
<PAGE>

of any kind, (g) increased its indebtedness for borrowed money or made any loan
to any Person, (h) written off as uncollectible any notes or accounts
receivable, except write-offs in the ordinary course of business charged to
applicable reserves, none of which individually or in the aggregate would have a
material adverse effect to the Company or suffered any damage, destruction or
casualty loss exceeding $50,000 in the aggregate, (i) granted any increase in
the rate of wages, salaries, bonuses or other remuneration of any executive
employee or other employees, (j) cancelled or waived any claims or rights of
substantial value, (k) made any change in any method of accounting or audit
practice, (l) otherwise conducted its business or entered into any transaction,
except in the ordinary course of business, or (m) agreed, whether or not in
writing, to do any of the foregoing. Since the Balance Sheet Date there has been
no material adverse change in the financial condition, operating results,
assets, operations, business, prospects, employee relations or customer or
supplier relations of the Company.

          (s) Disclosure.  None of this Agreement, the financial statements
              ----------
referred to in Section 4(g) hereof (including the footnotes thereto), any
Schedule, Exhibit or certificate attached hereto or delivered in accordance with
the terms hereof or any document or statement in writing which has been supplied
by the Company or by any of its directors or officers in connection with the
transactions contemplated by this Agreement contains any untrue statement of a
material fact, or omits any statement of a material fact necessary in order to
make the statements contained herein or therein not misleading in light of the
circumstances under which made.  There is no fact (presently understood as such
and not of general knowledge) known to the Company which materially and
adversely affects the business, present or anticipated, or financial condition
of the Company or its properties or assets which has not been set forth in this
Agreement, the financial statements referred to in Section 4(g) hereof
(including the footnotes thereto), any Schedule, Exhibit or certificate attached
hereto or delivered in accordance with the terms hereof or any document or
statement in writing which has been supplied by or on behalf of the Company or
by any of its directors or officers in connection with the transactions
contemplated by this Agreement.

          (t) Broker's or Finder's Fees.  No agent, broker, person or firm
              -------------------------
acting on behalf of the Company is, or will be, entitled to any commission or
broker's or finder's fees from any of the parties hereto, or from any Person
controlling, controlled by or under common control with any of the parties
hereto, in connection with any of the transactions contemplated by this
Agreement.  Company agrees to indemnify and hold the Investors harmless with
respect to the foregoing.

          (u) Environmental Matters.  The Company has been and is in material
              ---------------------
compliance with all provisions of all pollution control laws; hazardous waste
generation, storage, disposal, transportation, handling and cleanup laws; other
environmental protection laws; occupational safety and health standards laws;
and all rules, standards, regulations, permits, license requirements and
authorizations required by or related to such laws (collectively "Environmental
and Safety Laws"), and has obtained all permits, licenses and other
authorizations required thereunder.  No proceeding or investigation is pending
or, to its

                                       14
<PAGE>

knowledge, threatened, alleging or to the effect that the Company has violated
or is in violation of or bears any liability pursuant to any such law, rule,
standard, regulation, permit, license or authorization or any related common law
theory. The Company is not, and has not been, subject to or bound by any order,
decree or otherwise relating to any of the foregoing. To its knowledge, no
underground storage tanks, asbestos containing material, or PCB-containing
materials or equipment is present at any property owned or occupied by the
Company. Without limiting the generality of the foregoing, no facts, events or
conditions relating to the past or present properties or operations of the
Company will, to the Company's knowledge, prevent, hinder or limit continued
compliance with Environmental and Safety Laws or give rise to any liabilities
(contingent or otherwise) or corrective, investigatory or remedial obligations
pursuant to Environmental and Safety Laws, including, without limitation,
obligations or liabilities relating to onsite or offsite hazardous substance
releases, personal injury, property damage or natural resources damage.

          (v) Proprietary Rights.  Schedule 4(v) contains a complete and
              ------------------   -------------
accurate list of all (a) pending patent applications and applications for
registrations of other intellectual property rights filed by or on behalf of the
Company, (b) material unregistered trade names and corporate names owned or used
by the Company and (c) material unregistered trademarks, service marks,
copyrights, mask works and computer software owned or used by the Company
(together the "Proprietary Rights").  Schedule 4(v) also contains a complete and
                                      -------------
accurate list of all licenses and other rights granted by the Company to any
third party or by any third party to the Company with respect to any Proprietary
Rights.  The Company exclusively owns, free and clear of liens or encumbrances,
all rights, title and interests to, or has sufficient rights to use pursuant to
a valid license, all Proprietary Rights listed on Schedule 4(v) without conflict
                                                  -------------
with or infringement of the rights of others.  The Company believes that the
Proprietary Rights are all the rights necessary for the operation of the
businesses of the Company as presently conducted and as presently proposed to be
conducted.  To the best of the Company's knowledge, there is no loss or
expiration of any Proprietary Right threatened, pending or reasonably
foreseeable.  The Company has taken all reasonably necessary actions to maintain
and protect the Proprietary Rights which it owns and uses. Except as set forth
on Schedule 4(v), as of the date hereof,(i) there have been no claims made
   -------------
against the Company asserting the invalidity, misuse or unenforceability of any
Proprietary Rights, and, to the best of the Company's knowledge, there are no
grounds for the same, (ii) the Company has not received a notice of conflict
with the asserted rights of others within the last five years, (iii) the conduct
of the Company's business has not misappropriated or infringed, to the Company's
knowledge, and does not misappropriate or infringe any Proprietary Rights of
other Persons, nor would any future conduct as presently contemplated infringe
any Proprietary Rights of other Persons and (iv) to the best of the Company's
knowledge, the Proprietary Rights owned by or licensed to the Company have not
been infringed or misappropriated by other Persons.

          (w) Related-Party Transactions.  No consultant, employee, officer,
              --------------------------
director or stockholder of the Company or member of such person's immediate
family is indebted to the Company, nor is the Company indebted (or committed to
make loans or extend or guarantee

                                       15
<PAGE>

credit) to any of them. None of such persons has any direct or indirect
ownership interest in any firm or corporation with which the Company is
affiliated or with which the Company has a business relationship, or any firm or
corporation that competes with the Company, except that consultants, employees,
officers, directors or stockholders of the Company and members of their
immediate families may own less than 5% of the outstanding stock in a publicly
traded company that may compete with the Company. No member of the immediate
family of any employee, officer, or director of the Company is directly or
indirectly interested in any material contract, commitment, undertaking or
transaction with the Company.

          (x)  Insurance.  The Company has insurance policies in effect covering
               ---------
the risks associated with its businesses and properties which are of such
character and in such amounts as are customarily maintained by similarly
situated entities engaged in the same or similar businesses.

          (y)  Filing of 83(b) Elections.   Each officer of the Company that has
               -------------------------
received securities of the Company subject to the right of repurchase by the
Company in Section 5.1 of the Amended Securityholders' Agreement has duly and
timely filed an election pursuant to Section 83(b) of the Internal Revenue Code
with respect to such securities.

          (z)  Exemption from Registration.  The Company represents and warrants
               ---------------------------
that, based in part upon the Investor's representations and warranties set forth
herein, the offer and sale of the Series D Preferred Stock to the Investors in
accordance with the terms and provisions of this Agreement is being effected in
accordance with the Securities Act and applicable state securities laws pursuant
to (i) a private placement exemption to the registration provisions of the
Securities Act pursuant to Section 4(2) of such Securities Act, and (ii) a
similar exemption to the registration provisions of applicable state securities
laws.

          (aa) Year 2000 Compliance.  (i)  Each system comprised of software,
               --------------------
hardware, databases or embedded control systems (microprocessor controlled or
controlled by any robotic or other device) (collectively, a "System") that
constitutes any material part of, or is used in connection with the use,
operation or enjoyment of, any material tangible or intangible asset or real
property of the Company (a "Material Company Operation") will not, to the best
of the Company's knowledge and belief, be materially adversely affected by the
advent of the year 2000, the advent of the twenty-first century or the
transition from the twentieth century through the year 2000 and into the twenty-
first century ("Year 2000 Compliant").  The Company has no reason to believe
that it may incur material expenses arising from or relating to the failure of
any of its Systems with respect to a Material Company Operation as a result of
the advent of the year 2000, the advent of the twenty-first century or the
transition from the twentieth century through the year 2000 and into the twenty-
first century.  To the best of the Company's knowledge and belief, each System
of the Company relating to a Material Company Operation is able to accurately
process date data, including, but not limited to, calculating, comparing and
sequencing from, into and between the twentieth century (through year 1999), the
year 2000 and the twenty-first century, including leap year calculations.

                                       16
<PAGE>

              (i)    The Company has no reason to believe that any vendor of the
Company whose products or services are material to the Company's operations will
not continue to furnish its products or services to the Company without
interruption or material delay, on and after January 1, 2000.

     5.   Conditions to Closing.
          ---------------------

          (a) The obligations of the Company to consummate the transactions
contemplated by this Agreement on one or more Closing Dates is conditioned upon
satisfaction, on or prior to each Closing Date, of each of the following
conditions:

              (i)    The Investors and all other necessary parties to the
Amended Securityholders' Agreement shall have properly and validly executed the
Amended Securityholders' Agreement.

              (ii)   The Investors and all of the other parties to the Amended
Registration Rights Agreement shall have properly and validly executed the
Amended Registration Rights Agreement.

              (iii)  Receipt by the Company, by certified official bank check or
wire transfer, of the Purchase Price, or the appropriate portion thereof.

              (iv)   The Company shall have filed an amendment to the
Certificate of Designations, Preferences and Rights of each of its Series B
convertible preferred stock and Series C convertible preferred stock, in each
instance amending the voting provisions of each such Series of convertible
preferred stock to provide for the voting of such preferred securities on an as-
converted to Common Stock basis with respect to all matters that are subject to
the approval of the Company's common stockholders.

          (b) The obligations of the Investors to consummate the transactions
contemplated by this Agreement on one or more Closing Dates is conditioned upon
satisfaction, on or prior to each Closing Date, of each of the following
conditions:

              (i)    The Company and all of the other necessary parties to the
Amended Securityholders' Agreement shall have entered into the Amended
Securityholders' Agreement and all actions required to be taken thereunder have
been taken, including but not limited to authorizing an increase in the number
of directors from seven (7) to eight (8) and appointing the Series D Designee
(as such term is defined in the Amended Securityholders' Agreement) to the
Board.

              (ii)   The Company and all of the other parties to the Amended
Registration Rights Agreement shall have entered into the Amended Registration
Rights Agreement.

                                       17
<PAGE>

              (iii)  The Company shall have taken all necessary actions to
increase the size of its Plan to provide for the issuance of an additional One
Million Seven Hundred Fifty Nine Thousand Seven Hundred and Thirty Three
(1,759,733) shares of Common Stock thereunder.

              (iv)   The Company shall have amended its Certificate of
Incorporation to increase its authorized capital such that it shall have a
sufficient number of shares of authorized but unissued Common Stock, Class A
Common Stock and preferred stock, and the Company shall have delivered evidence
of same to the Investors.

              (v)    The Company shall have delivered to each of the Investors a
certificate or certificates representing the Series D Preferred Stock actually
purchased by each such Investor in such denominations as requested by the
Investor.

              (vi)   The Company shall have filed with the Secretary of State of
the State of Delaware the Series D Certificate of Designations and shall have
delivered evidence of same to the Investors.

              (vii)  The Company shall have reimbursed GE Capital Equity
Investments, Inc. for its actual documented costs, including attorneys' fees and
disbursements actually incurred, in connection with the negotiation, preparation
and delivery of the Transaction Documents in an amount not to exceed Forty
Thousand ($40,000) Dollars.

              (viii) The Investor shall have received an opinion of Company's
counsel, Zukerman Gore & Brandeis, LLP, in the form annexed hereto as Exhibit
                                                                      -------
5(viii).
-------
              (ix)   The Company shall use the proceeds from the sale of the
Series D Preferred Stock in accordance with the provisions of Section 8(1)
below.

              (x)    The representations and warranties of the Company contained
in this Agreement or in any Exhibit or Schedule attached hereto shall be true,
complete and correct on and as of the Closing Date with the same effect as
though such representations and warranties had been made on and as of such date,
and the Company shall have delivered to the Investors a certificate, dated the
Closing Date, executed by the Company's Chief Executive Officer, to such effect.

              (xi)   No action or proceeding shall have been instituted or, to
the best knowledge, information and belief of the Company, threatened before a
court or other government body or by any public authority to restrain or
prohibit any of the transactions contemplated hereby, and the Company shall have
delivered to the Investors a certificate, dated the Closing Date, executed by
the Company's Chief Executive Officer, to such effect.

                                       18
<PAGE>

              (xii)  All governmental and other consents, filings and approvals,
if any, necessary to permit the consummation of the transactions contemplated by
this Agreement shall have been received.

              (xiii) The Series D Preferred Stock to be issued and sold by the
Company and to be acquired by the Investors shall be (and the Conversion Shares
issuable upon conversion of the Series D Preferred will be upon issuance by the
Company and acquisition by the Investors) duly authorized and validly issued to
the Investors, free and clear of all liens, encumbrances, restrictions and
claims of every kind. The Investors shall have each received properly completed
stock certificate(s) representing the shares of the Series D Preferred Stock
being purchased by the Investors on the Closing Date.

              (xiv)  The Company shall have delivered to the Investors (a)
copies of the Company's Certificate of Incorporation, including all amendments
thereto, certified by the Secretary of State of the State of Delaware, (b)
certified copies of the Series D Certificate of Designations, certified by the
Secretary of State of the State of Delaware, as having been filed on or before
the Closing Date, (c) a certificate from the Secretary of State of the State of
Delaware to the effect that the Company is in good standing or subsisting in
such State and listing all charter documents of the Company on file, (d) a
certificate from the Secretary of State or other appropriate official in each
State in which the Company is qualified to do business to the effect that the
Company is in good standing in such State, (e) a certificate as to the tax
status of the Company from the appropriate official in its jurisdiction of
incorporation and each State in which the Company is qualified to do business
and (f) a copy of the By-laws and the Certificate of Incorporation of the
Company certified by the Secretary of the Company as being true, complete and
correct and in effect on the Closing Date, after giving effect to the filing
described in Section 5(b) (iv) and 5(b)(vi) hereof, and accompanied by a copy of
the adopting resolutions authorizing the Series D Certificate of Designations
and approving the stock issuance contemplated thereby.

              (xv)   Prior to each of the Closing Dates, there shall be no
material adverse change in the assets or liabilities, the business (present or
anticipated), or condition, financial or otherwise, or in the results of
operations, of the Company since the Balance Sheet Date and the Company shall
have delivered to the Investors a certificate, dated the Closing Date, to such
effect.

              (xvi)  All of the agreements of the Company to be performed on or
before the Closing Date pursuant to the terms hereof or the terms of any Exhibit
hereto, shall have been duly performed, and the Company shall have delivered to
the Investors a certificate, dated as of the Closing Date, to such effect.

              (xvii) All proceedings to be taken in connection with the
transactions contemplated by this Agreement and all documents incident thereto
shall be reasonably satisfactory in form and substance to the Investors and
their counsel, and the Investors shall have received copies of all such
documents and other evidences as they or their counsel may

                                       19
<PAGE>

reasonably request in order to establish the consummation of such transactions.

     6.   Series D Preferred Stock Legends.  The Investor represents and
          --------------------------------
warrants that it has read, considered and understood the legend, referred to in
Section 7.1 of the Amended Securityholders' Agreement, shall be placed on all of
the certificates representing the Series D Preferred Stock and on all Conversion
Shares issuable upon conversion of the Series D Preferred Stock.

     7.   Indemnification.
          ---------------

          (a) The Company agrees to indemnify and hold each Investor and each of
their respective partners, officers, directors, members, employees, counsel,
accountants, agents, successors and assigns (collectively, an "Indemnified
Party") harmless from damages, liabilities, losses, costs or expenses
(including, without limitation, reasonable counsel fees and expenses) suffered
or paid, directly or indirectly, as a result of or arising out of (i) the
failure of any respective representation or warranty made by the Company in this
Agreement or in any Schedule or Exhibit attached hereto to be true, complete and
correct in all material respects as of the date of this Agreement and as of the
Closing Date or (ii) a breach of the covenant set forth in Section 8(l) below.
Notwithstanding anything contained in this Agreement to the contrary, (i) the
indemnification provided to each Indemnified Party herein shall be limited to
the "Original Conversion Price" (as that term is defined in the Series D
Certificate of Designation) based on the Indemnified Party's cost basis in the
number of shares of Series D Preferred Stock held by such an Indemnified Party
on the date any such indemnification payments are due hereunder, less any
amounts received by such Indemnified Party as a result of either (x)
distributions on any securities of the Company held by the Indemnified Party,
and (y) any proceeds received by such Indemnified Party upon such Indemnified
Party's conversion and/or sale of any securities of the Company in excess of the
Indemnified Party's basis in any such securities converted and/or sold, and
(iii) the indemnification provided for in this Section 7 with respect to each
Indemnified Party shall expire three (3) years from the Closing Date of each
such Indemnified Party's purchase of its shares of Series D Preferred Stock
hereunder.

          (b) If any action, suit, proceeding or investigation is commenced, as
to which an Indemnified Party proposes to demand indemnification, it shall
notify the Company with reasonable promptness; provided, however, that any
                                               --------  -------
failure by an Indemnified Party to notify the Company shall not relieve the
Company from its obligations hereunder, except to the extent that the Company
shall have been materially prejudiced in its ability to defend the action, suit,
proceedings or investigation for which such indemnification is sought by reason
of such failure. Except as set forth below, an Indemnified Party shall not have
the right to retain counsel of its own choice, and the Company shall pay the
reasonable fees, reasonable expenses and reasonable disbursements of counsel
selected by the Company; and such counsel shall to the extent consistent with
its professional responsibilities cooperate with the Company and any counsel
designated by the Company.

                                       20
<PAGE>

     In the event the Company does not assume or fails to conduct in a diligent
manner the defense of any claim or litigation resulting therefrom, (a) the
Indemnified Party may defend, using its own counsel, against such claim or
litigation, in such manner as it deems appropriate, including, but not limited
to, settling such claim or litigation, after giving notice of the same to the
Company, on such terms as the Indemnified Party may deem appropriate, and (b)
the Company shall be entitled to participate in (but not control) the defense of
such action, with its counsel and at its own expense.  The Company shall pay the
reasonable fees, reasonable expenses and reasonable disbursements of counsel
selected by an Indemnified Party in the circumstances described in the previous
sentence.  If the Company thereafter seeks to question the manner in which the
Indemnified Party defended such third party claim or the amount or nature of any
such settlement, the Company shall have the burden to prove by a preponderance
of the evidence that the Indemnified Party did not defend or settle such third
party claim in a reasonably prudent manner.

     The Company shall be liable for any settlement of any claim against an
Indemnified Party made with the Company's written consent or made in connection
with the circumstances described in the first sentence of the previous
paragraph.  The Company shall not, without prior written consent of an
Indemnified Party, which consent shall not be unreasonably withheld or delayed,
settle or compromise any claim, or permit a default or consent to the entry of
any judgment in respect thereof.

     Each party agrees to cooperate fully with the other, such cooperation to
include, without limitation, attendance at depositions and the provision of
relevant documents as may be reasonably requested by the other parties, provided
that the Company will reimburse the Indemnified Party for all of its out-of-
pocket expenses incurred in connection with such cooperation by the Indemnified
Party.

          (c) In order to provide for just and equitable contribution, if a
claim for indemnification pursuant to these indemnification provisions is made
but it is found in a final judgment by a court of competent jurisdiction (not
subject to further appeal) that such indemnification may not be enforced in such
case, even though the express provisions hereof provide for indemnification in
such case, then the Company (as applicable), on the one hand, and an Indemnified
Party, on the other, shall contribute to the losses, claims, damages,
obligations, penalties, judgments, awards, liabilities, costs and expenses to
which the indemnified persons may be subject in accordance with the relative
benefits received by the Company (as the case may be), on the one hand, and an
Indemnified Party, on the other hand, in connection with the statements, acts or
omissions which resulted in expenses and the relevant equitable considerations
shall also be considered.  No person found liable for a fraudulent
misrepresentation shall be entitled to contribution from any person who is not
also found liable for such fraudulent misrepresentation.

                                       21
<PAGE>

     8.   Miscellaneous.
          -------------

          (a) Preservation of Confidential Information.  Except as otherwise
              ----------------------------------------
required by law, the Investors shall keep confidential any and all non-public
information obtained from the Company concerning the Company's properties,
operations and business (unless readily ascertainable from public or published
information or trade sources) until the same ceases to be non-public (or becomes
so ascertainable).

          (b) Amendment; Waiver.  This Agreement shall not be changed, modified
              -----------------
or amended in any respect except by the mutual written agreement of the parties
hereto.  Any provision of this Agreement may be waived in writing by the party
which is entitled to the benefits thereof.  No waiver of any provision of this
Agreement shall be deemed to or shall constitute a waiver of any other provision
hereof (whether or not similar), nor shall any such waiver constitute a
continuing waiver.

          (c) Binding Effect; Assignment.   This Agreement may not be
              --------------------------
transferred, assigned, pledged or hypothecated by and party hereto, other than
by operation of law.  This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and assigns.

          (d) Governing Law; Venue, Jurisdiction and Litigation Costs.  This
              -------------------------------------------------------
Agreement and its validity, construction and performance shall be governed in
all respects by the internal laws of the State of New York without giving effect
to such State's conflicts of laws provisions.  Each of the Company and each of
the Investors expressly irrevocably consent to the jurisdiction and venue of the
federal courts located in the State of New York, County of New York.  The
prevailing party or parties in any such litigation shall be entitled to receive
from the losing party or parties all costs and expenses, including reasonable
counsel fees, incurred by the prevailing party or parties.

          (e) Severability.  Any term or provision of this Agreement which is
              ------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction
only, be ineffective only to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof affecting the validity or
enforceability of such provision in any other jurisdiction.

          (f) Headings.  The captions, headings and titles preceding the text of
              --------
each or any Section, subsection or paragraph hereof are for convenience of
reference only and shall not effect the construction, meaning or interpretation
of this Agreement or any term or provisions hereof.

          (g) Counterparts.  This Agreement may be executed in one or more
              ------------
original or facsimile counterparts, each of which shall be deemed an original
and all of which shall be considered one and the same agreement, binding on all
of the parties hereto, notwithstanding that all parties are not signatories to
the same counterpart.  Upon delivery of an executed counterpart

                                       22
<PAGE>

by the undersigned Investors to the Company, which in turn is executed and
delivered by the Company, this Agreement shall be binding as one original
agreement between the Investor and the Company.

          (h) Transfer Taxes.  Each party hereto shall pay all such sales,
              --------------
transfer, use, gross receipts, registration and similar taxes arising out of or
in connection with the transactions contemplated by this Agreement
(collectively, the "Transfer Taxes") as are payable by such party under
applicable law, and the Company shall pay the cost of any documentary stock
transfer stamps, if any, to be affixed to the certificates representing the
Series D Preferred Stock.

          (i) Entire Agreement.  The Transaction Documents merge and supersede
              ----------------
any and all prior agreements, understandings, discussions, assurances, promises,
representations or warranties among the parties with respect to the subject
matter thereof, and contains the entire agreement among the parties with respect
to the subject matter set forth therein.

          (j) Authority; Enforceability.  Each of the undersigned Investors is
              -------------------------
duly authorized to enter into this Agreement and to perform its obligations
hereunder.  Upon the execution and delivery of this Agreement by each of the
undersigned Investors, this Agreement shall be enforceable against each of the
undersigned Investors in accordance with its terms.

          (k) Notices.  Except as otherwise specified herein to the contrary,
              -------
all notices, requests, demands and other communications required or desired to
be given hereunder shall only be effective if given in writing by hand, by
certified or registered mail, return receipt requested, postage prepaid, or by
U.S. express mail service, or by private overnight mail service (e.g. Federal
Express), or by facsimile transmission.  Any such notice shall be deemed to have
been given (a) on the business day actually received if given by hand or
facsimile transmission, (b) on the business day immediately subsequent to
mailing, if sent by U.S. express mail service or private overnight mail service,
or (c) three (3) business days following the mailing thereof, if mailed by
certified or registered mail, postage prepaid, return receipt requested, and all
such notices shall be sent to the following addresses (or to such other address
or addresses as a party may have advised the other in the manner provided in
this Section 8(k)):

          If to the Company:

               Mr. Richard Glassberg
               Phase2Media, Inc.
               420 Lexington Avenue
               New York, NY 10170
               Facsimile no. (917) 368-7227

                                       23
<PAGE>

          with copies simultaneously by like means to:

               Clifford A. Brandeis, Esq.
               Zukerman Gore & Brandeis, LLP
               900 Third Avenue
               New York, NY  10022
               Facsimile no. (212) 223-6433

          If to the Investors, notice shall be given to all parties set forth in
Section 7.5 of the Amended Securityholders' Agreement.

          (l) Use of Proceeds.   The Company covenants and agrees that it shall
              ----------------
use the proceeds from the sale of the Series D Preferred Stock for general
working capital purposes, including but not limited to expansion of its sales
force, and to pay the expenses in connection with the transaction contemplated
by the Transaction Documents, including but not limited to the fees set forth in
Section 5(vii) above.

          (m) No Third Party Beneficiaries.  This Agreement and the rights,
              ----------------------------
benefits, privileges, interests, duties and obligations contained or referred to
herein shall be solely for the benefit of the parties hereto and no third party
shall have any rights or benefits hereunder as a third party beneficiary or
otherwise hereunder.

          (n) Publicity.  Except as otherwise required by law, none of the
              ---------
parties hereto shall issue any press release or make any other public statement,
in each case relating to, connected with or arising out of this Agreement or the
matters contained herein.  Any statement so issued or made shall require the
reasonable prior approval of the other parties hereto as to the contents and the
manner of presentation and publication thereof.

          (o) Several Representations, Warranties, Covenants, Agreements and
              --------------------------------------------------------------
Obligations.  The representations, warranties, covenants, agreements and
-----------
obligations of the Investor hereunder shall be several and not joint.

                                       24
<PAGE>

          (p) Waiver of Jury Trial.  The parties hereto waive all right to trial
              --------------------
by jury of any action, suit or proceeding brought to enforce or defend any
rights or remedies arising under or in connection with the Transaction Documents
or the transactions contemplated thereby whether grounded in tort, contract or
otherwise.

<PAGE>

     IN WITNESS WHEREOF, the Company and each of the undersigned Investors has
each duly executed this Agreement as of this 19 day of January, 2000.

                                    PHASE2MEDIA, INC.

                                    By:   /s/ Richard S. Nachmias
                                       ________________________________
                                       Name:  Richard S. Nachmias
                                       Title: CFO

                                    Investors:

                                    GE CAPITAL EQUITY INVESTMENTS,  INC.

                                    By:   /s/ Steve Smith
                                       ________________________________
                                       Name:  Steve Smith
                                       Title: Managing Director

                                    VECTOR CAPITAL II, L.P.

                                    By:  Vector Capital Partners II, LLC, as
                                         General Partner

                                          /s/ Alex Slusky
                                    ___________________________________
                                       By:    Alex Slusky
                                       Title: Managing Member

                                    VECTOR MEMBER FUND II, LP

                                    By:   /s/ Alexander R. Slusky
                                       ________________________________
                                       Name:  Alexander R. Slusky
                                       Title: Managing Member, Vector Capital
                                              Partners II, L.L.C.
                                              The General Partner of Vector
                                              Member Fund II, L.P.
<PAGE>

                                    HACHETTE FILIPACCHI INTERACTIONS S.A.

                                    By:  /s/  Herve Digne
                                       ___________________________
                                       Name:  Herve Digne
                                       Title: President

                                     /s/ Jeffrey D. Zukerman
                                    ______________________________
                                         Jeffrey D. Zukerman

                                     /s/ Nathaniel S. Gore
                                    ______________________________
                                         Nathaniel S. Gore

                                     /s/ Clifford A. Brandeis
                                    ______________________________
                                         Clifford A. Brandeis

                                     /s/ Andrew M. Chonoles
                                    ______________________________
                                         Andrew M. Chonoles

                                     /s/ Kent Baum
                                    ______________________________
                                         Kent Baum

                                     /s/ Herve Digne
                                    ______________________________
                                         Herve Digne

                                     /s/ Richard LeFurgy
                                    ______________________________
                                         Richard LeFurgy

                                     /s/ Steven Eskenazi
                                    ______________________________
                                         Steven Eskenazi

                                     /s/ Robert Petrocelli
                                    ______________________________
                                         Robert Petrocelli

                                     /s/ Louis LaTorre
                                    ______________________________
                                         Louis LaTorre

<PAGE>

                                    STV PARTNERS IX, LLC

                                    By:   /s/ Illegible
                                       ________________________________
                                       Name:  Illegible
                                       Title: General Manager

                                    P2M INVESTMENT PARTNERSHIP

                                    By: /s/ Thomas C. Janson, Jr.
                                        _______________________________
                                        Thomas C. Janson, Jr.
                                        General Partner

                                       /s/ John W. Danner
                                    _________________________________________
                                    John W. Danner as Trustee for the John W.
                                    Danner Separate Property Trust UDT 4/6/99

<PAGE>

     IN WITNESS WHEREOF, the Company and each of the undersigned Investors has
each duly executed this Agreement as of this 8 day of February, 2000.

                                    PHASE2MEDIA, INC.

                                    By:   /s/ Richard S. Nachmias
                                       ______________________________
                                       Name:  Richard S. Nachmias
                                       Title: CFO

                                    Investors:

                                    BAYVIEW 2000 I, LP

                                    By: Bayview 2000 GP, LLC

                                    By:   /s/ Dana Welch
                                       ______________________________
                                       Name:  Dana Welch
                                       Title: CAO

                                    BAYVIEW 2000 II, LP

                                    By: Bayview 2000 GP, LLC

                                    By:   /s/ Dana Welch
                                       ______________________________
                                       Name:  Dana Welch
                                       Title: CAO

                                    P2M ACQUISITION LLC

                                    By: /s/ Craig H. Solomon
                                       ______________________________
                                       Craig H. Solomon
                                       Authorized Signatory

                                       /s/ Amnon M. Landan
                                       _____________________________
                                       Amnon M. Landan

                                       /s/ Louis Ginsberg
                                       _____________________________
                                       Louis Ginsberg

                                       /s/ Louis LaTorre
                                       _____________________________
                                       Louis LaTorre

                                       29
<PAGE>

     IN WITNESS WHEREOF, the Company and each of the undersigned Investors has
each duly executed this Agreement as of this 31 day of March, 2000.

                                    PHASE2MEDIA, INC.

                                    By:   /s/ Richard S. Nachmias
                                       ________________________________
                                       Name:  Richard S. Nachmias
                                       Title: CFO

                                    Investors:

                                    CRITICAL MASS VENTURES LLC

                                    By:   /s/ John T. Pierce
                                       _______________________________
                                       Name:  John T. Pierce
                                       Title: Chief Financial Officer

                                       /s/ Anton Simunovic
                                       _______________________________
                                           Anton Simunovic

                                    READE FAMILY 1999 TRUST

                                    By:   /s/ Stephen Reade
                                       ______________________________
                                       Name:  Stephen Reade
                                       Title: Trustee

                                       /s/ William Croasdale
                                       ______________________________
                                           William Croasdale

                                      /s/ Harvey Ganot
                                      _______________________________
                                          Harvey Ganot

                                       30<PAGE>
                                                                EXHIBIT 10.14

                          LOAN AND SECURITY AGREEMENT

     This LOAN AND SECURITY AGREEMENT (this "Agreement") dated as of October 28,
1999, between SILICON VALLEY BANK, a California-chartered bank with its
principal place of business at 3003 Tasman Drive, Santa Clara, California 95054
and with a loan production office located at Wellesley Office Park, 40 William
Street, Suite 350, Wellesley, Massachusetts 02481, doing business under the name
"Silicon Valley East" ("Bank") and CKG MEDIA.COM, INC., d/b/a Phase 2 Media,
("Borrower"), provides the terms on which Bank shall lend to Borrower and
Borrower shall repay Bank. The parties agree as follows:

     1     ACCOUNTING AND OTHER TERMS
           --------------------------

     Accounting terms not defined in this Agreement shall be construed following
GAAP. Calculations and determinations must be made following GAAP. The term
"financial statements" includes the notes and schedules. The terms "including"
and "includes" always mean "including (or includes) without limitation" in this
or any Loan Document. Capitalized terms in this Agreement shall have the
meanings set forth in Section 13. This Agreement shall be construed to impart
upon Bank a duty to act reasonably at all times.

     2     LOAN AND TERMS OF PAYMENT
           -------------------------

     2.1   Credit Extensions. Borrower shall pay Bank the unpaid principal
           -----------------
amount of all Credit Extensions and interest on the unpaid principal amount of
the Credit Extensions as and when due in accordance with this Agreement.

     2.1.1 Letter of Credit.
           ----------------

           (a)   Bank shall issue or have issued (by a banking institution
acceptable to Borrower) one (1) Letter of Credit for Borrower's account not
exceeding Two Million Five Hundred Thousand Dollars ($2,500,000.00) in
substantially the form of Exhibit 2.1.1(a) hereto. The Letter of Credit shall
expire no later than 180 days after the Maturity Date provided Borrower's Letter
of Credit reimbursement obligation is secured by (a) the Guaranty or (b) cash on
terms acceptable to Bank at any time after the Maturity Date if the term of this
Agreement is not extended by Bank. The Letter of Credit shall be subject to the
terms and conditions of Bank's form of standard Application and Letter of Credit
Agreement.

           (b)   The obligation of Borrower to immediately reimburse Bank for
any drawing made under the Letter of Credit shall be absolute, unconditional and
irrevocable, and shall be performed strictly in accordance with the terms of
this Agreement and such Letter of Credit and Letter of Credit Agreement, under
all circumstances whatsoever. Borrower shall indemnify, defend, protect, and
hold Bank harmless from any loss, cost, expense or liability, including, without
limitation, reasonable attorneys' fees, arising out of or in connection with
such Letter of Credit other than claims relating the Bank's wilful failure to
comply with its obligations under the Letter of Credit.

           (c)   Borrower may request that Bank issue the Letter of Credit
payable in a currency other than United States Dollars. If a demand for payment
is made under any such Letter of Credit, Bank shall treat such demand as an draw
of the equivalent of the amount thereof (plus cable charges) in United States
currency at the then prevailing rate of exchange in San Francisco, California,
for sales of that other currency for cable transfer to the country of which it
is the currency.

     2.2   Fees. Borrower shall pay to Bank:
           ----

           (a)   Letter of Credit Fee. A fully earned, non-refundable letter of
credit fee of Twenty-Five Thousand Dollars ($25,000.00) due on the Closing Date;
and

           (b)   Bank Expenses. All Bank Expenses (including reasonable
attorneys' fees and expenses incurred through and after the Closing Date when
due.
<PAGE>

     3     CONDITIONS OF LOANS
           -------------------

     3.1   Conditions Precedent to Initial Credit Extension. The obligation of
           ------------------------------------------------
Bank to make the initial Credit Extension is subject to the condition precedent
that Bank shall have received, in form and substance satisfactory to Bank, the
following:

           (a)   this Agreement:

           (b)   a certificate of the Secretary of Borrower with respect to its
     certificate of incorporation, bylaws, incumbency and resolutions
     authorizing the execution and delivery of this Agreement;

           (c)   a certificate of Guarantor with respect to operating agreement,
     certificate of formation, incumbency and authorization to execute and
     deliver the Guaranty;

           (d)   an opinion of Borrower's counsel as to authority and
     enforceability as to the Borrower;

           (e)   guaranty by the Guarantor;

           (f)   financing statements (Forms UCC-1);

           (g)   insurance certificate;

           (h)   payment of the fees and Bank Expenses then due specified in
     Section 2.2 hereof;

           (i)   Certificates of Good Standing and Legal Existence for Borrower
     and Guarantor;

           (j)   Certificates of Foreign Qualification (if applicable) for
     Borrower and Guarantor; and

           (k)   such other documents, and completion of such other matters, as
     Bank may reasonably deem necessary or appropriate.

     4     CREATION OF SECURITY INTEREST
           -----------------------------

     4.1   Grant of Security Interest. Borrower grants Bank a continuing
           --------------------------
security interest in all presently existing and later acquired Collateral to
secure all Obligations and performance of each of Borrower's duties under the
Loan Documents. Any security interest shall be a first priority security
interest in the Collateral. Bank may place a "hold" on any deposit account
pledged as Collateral. If the Agreement is terminated, Bank's lien and security
interest in the Collateral shall continue until Borrower fully satisfies its
Obligations.

     5     REPRESENTATIONS AND WARRANTIES
           ------------------------------

     Borrower represents and warrants as follows:

     5.1   Due Organization and Authorization. Borrower and each Subsidiary is
           ----------------------------------
duly existing and in good standing in its state of formation and qualified and
licensed to do business in, and in good standing in, any state in which the
conduct of its business or its ownership of property requires that it be
qualified except where the failure to do so could not reasonably be expected to
cause a Material Adverse Change.

     The execution, delivery and performance of the Loan Documents have been
duly authorized, and do not conflict with Borrower's organizational documents,
nor constitute an event of default under any material agreement by which
Borrower is bound. Borrower is not in default under any agreement to which or by
which it is bound in which the default could reasonably be expected to cause a
Material Adverse Change.

                                       2
<PAGE>

     5.2   Collateral. Borrower has good title to the Collateral, free of Liens
           ----------
except Permitted Liens. All Inventory is in all material respects of good and
marketable quality, free from material defects.

     5.3   Litigation. Except as shown in the Schedule, there are no actions or
           ----------
proceedings pending or, to Borrower's knowledge, threatened by or against
Borrower or any Subsidiary in which an adverse decision could reasonably be
expected to cause a Material Adverse Change.

     5.4   No Material Adverse Change in Financial Statements. All consolidated
           --------------------------------------------------
financial statements for Borrower and any Subsidiary delivered to Bank fairly
present in all material respects Borrower's consolidated financial condition and
Borrower's consolidated results of operations. There has not been any material
deterioration in Borrower's consolidated financial condition since the date of
the most recent financial statements submitted to Bank.

     5.5   Solvency. Borrower is able to pay its debts (including trade debts)
           --------
as they mature.

     5.6   Regulatory Compliance. Borrower is not an "investment company" or a
           ---------------------
company "controlled" by an "investment company" under the Investment Company
Act. Borrower is not engaged as one of its important activities in extending
credit for margin stock (under Regulations T and U of the Federal Reserve Board
of Governors). Borrower has complied in all material respects with the Federal
Fair Labor Standards Act. Borrower has not violated any laws, ordinances or
rules, the violation of which could reasonably be expected to cause a Material
Adverse Change. None of Borrower's  or any Subsidiary's properties or assets has
been used by Borrower or any Subsidiary or, to the best of Borrower's knowledge,
by previous Persons, in disposing, producing, storing, treating, or transporting
any hazardous substance other than legally. Borrower and each Subsidiary has
timely filed all required tax returns and paid, or made adequate provision to
pay, all material taxes, except those being contested in good faith with
adequate reserves under GAAP. Borrower and each Subsidiary has obtained all
consents, approvals and authorizations of, made all declarations or filings
with, and given all notices to, all government authorities that are necessary to
continue its business as currently conducted except where the failure to make
such declarations, notices or filings would not reasonably be expected to result
in a Material Adverse Change.

     5.7   Subsidiaries. Borrower does not own any stock, partnership interest
           ------------
or other equity securities except for Permitted Investments.

     5.8   Full Disclosure. No representation, warranty or other statement of
           ---------------
Borrower in any certificate or written statement given to Bank contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements contained in the certificates or statements not
misleading.

     6     AFFIRMATIVE COVENANTS
           ---------------------

     Borrower shall do all of the following:

     6.1   Government Compliance. Borrower shall maintain its and all
           ---------------------
Subsidiaries' corporate existence and good standing in its jurisdiction of
incorporation and maintain qualification in each jurisdiction in which the
failure to so qualify could have a material adverse effect on Borrower's
business or operations. Borrower shall comply, and have each Subsidiary comply,
with all laws, ordinances and regulations to which it is subject, noncompliance
with which could have a material adverse effect on Borrower's business or
operations or cause a Material Adverse Change.

     6.2   Financial Statements, Reports, Certificates. Borrower shall deliver
to Bank: (i) as soon as available, but no later than thirty (30) days after the
last day of each month, a company prepared consolidated balance sheet and income
statement covering Borrower's consolidated operations during the period, in a
form acceptable to Bank and certified by a Responsible Officer of Borrower; (ii)
as soon as available, but no later than forty-five (45) days after the last day
of each quarter, a company prepared consolidated balance sheet and income
statement covering Guarantor's consolidated operations during the period, in a
form acceptable to Bank and certified by a Responsible Officer of Guarantor;
(iii) as soon as available, but no later than one hundred fifty (150) days after
the end of Borrower's fiscal year, audited, consolidated financial statements
prepared under GAAP, consistently applied, together with an unqualified opinion
on the financial statements from an independent certified public accounting firm
acceptable to Bank; (iv) within

                                       3
<PAGE>

five (5) days of filing, copies of all statements, reports and notices made
available to Borrower's security holders or to any holders of Subordinated Debt
and all reports on Form 10-K, 10-Q and 8-K filed with the Securities and
Exchange Commission; (v) a prompt report of any legal actions pending or
threatened against Borrower or any Subsidiary that could result in damages or
costs to Borrower or any Subsidiary of One Hundred Thousand Dollars
($100,000.00) or more; and (vi) budgets, sales projections, operating plans or
other financial information Bank reasonably requests.

     6.3  Inventory; Returns. Borrower shall keep all Inventory in good and
          ------------------
marketable condition, free from material defects. Returns and allowances between
Borrower and its account debtors shall follow Borrower's customary practices as
they exist at the Closing Date. Borrower must promptly notify Bank of all
returns, recoveries, disputes and claims that involve more than Fifty Thousand
Dollars ($50,000.00).

     6.4  Taxes. Borrower shall make, and cause each Subsidiary to make, timely
          -----
payment of all material federal, state, and local taxes or assessments unless
Borrower and/or its Subsidiary legally contests any of same, owing by Borrower
and shall deliver to Bank, on demand, appropriate certificates attesting to such
payments or contest thereof.

     6.5  Insurance. Borrower shall keep its business and the Collateral insured
          ---------
for risks and in amounts, as Bank reasonably requests. Insurance policies shall
be in a form, with companies, and in amounts that are reasonably satisfactory to
Bank. All property policies shall have a lender's loss payable endorsement
showing Bank as an additional loss payee and all liability policies shall show
the Bank as an additional insured and all policies shall provide that the
insurer must give Bank at least twenty (20) days notice before canceling its
policy. At Bank's request, Borrower shall deliver certified copies of policies
and evidence of all premium payments. Proceeds payable under any policy shall,
be payable to Borrower unless an Event of Default has occurred and is
continuing, in which event, proceeds will be then payable to the Bank on account
of the Obligations. So long as no Event of Default has occurred and is
continuing, Borrower shall have the option of applying the proceeds of any
casualty policy up to Fifty Thousand ($50,000.00) toward the replacement or
repair of destroyed or damaged property; provided that (i) any such replaced or
repaired property (a) shall be of equal or like value as the replaced or
repaired Collateral and (b) shall be deemed Collateral in which Bank has been
granted a first priority security interest and (ii) after the occurrence and
during the continuation of an Event of Default all proceeds payable under such
casualty policy shall, at the option of the Bank, be payable to Bank on account
of the Obligations.

     6.6  Further Assurances. Borrower shall execute any further instruments and
          ------------------
take further action as Bank requests to perfect or continue Bank's security
interest in the Collateral or to effect the purposes of this Agreement.

     7    NEGATIVE COVENANTS
          ------------------

     Borrower shall not do any of the following without the Bank's written
consent, which shall not be unreasonably withheld:

     7.1  Dispositions. Convey, sell, lease, transfer or otherwise dispose of
          ------------
(collectively a "Transfer"), or permit any of its Subsidiaries to Transfer, all
or any material part of its business or property, other than a Transfer (i) of
Inventory in the ordinary course of business; (ii) of exclusive or non-exclusive
licenses and similar arrangements for the use of the property of Borrower or its
Subsidiaries in the ordinary course of business; (iii) of worn-out, damaged or
obsolete Equipment; (iv) of subleased leased space to the extent necessary; or
(v) a Transfer by Borrower to a Subsidiary or vice versa provided such
Subsidiary becomes a borrower hereunder and complies with all the
representations and warranties of Borrower hereunder.

     7.2  Changes in Business, Ownership, Management or Business Locations.
          ----------------------------------------------------------------
Engage in or permit any of its Subsidiaries to engage in any business
substantially different from the businesses currently engaged in by Borrower.
Borrower shall not, without at least thirty (30) days prior written notice to
Bank, relocate its principal executive office or add any new offices or business
locations.

     7.3  Mergers or Acquisitions. Merge or consolidate, or permit any of its
          -----------------------
Subsidiaries to merge or consolidate, with any other Person, or acquire, or
permit any of its Subsidiaries to acquire, all or substantially all of the
capital stock or property of another Person (each a "Business Acquisition");
provided, however, the foregoing shall not

                                       4
<PAGE>

prohibit (i) a merger, consolidation or other combination, provided that the
surviving entity has a net worth not less than an amount equal to Borrower's net
worth on the date hereof; or (ii) any Business Acquisition by Borrower or any of
its Subsidiaries so long as (x) no Event of Default shall have occurred and be
continuing, (y) the purchase price for such Business Acquisition (if in cash or
debt), when aggregated with all other Business Acquisitions which were acquired
by cash or by debt, does not exceed Two Hundred Fifty Thousand Dollars
($250,000.00); and (z) the assets acquired shall become Collateral hereunder.

     7.4   Indebtedness. Create, incur, assume, or be liable for any
           ------------
Indebtedness, or permit any Subsidiary to do so, other than Permitted
Indebtedness.

     7.5   Encumbrance. Create, incur, or allow any Lien on any of its property,
           -----------
or assign or convey any right to receive income, including the sale of any
Accounts, or permit any of its Subsidiaries to do so, except for Permitted
Liens, or permit any Collateral not to be subject to Bank's first priority
security interest in the Collateral subject only to Permitted Liens.

     7.6   Investments; Distributions. Directly or indirectly acquire or own any
           --------------------------
Person, or make any Investment in any Person, other than Permitted Investments,
or permit any of its Subsidiaries to do so.

     7.7   Transactions with Affiliates. Directly or indirectly enter or permit
           ----------------------------
any material transaction with any Affiliate, except transactions that are in the
ordinary course of Borrower's business, on terms no less favorable to Borrower
than would be obtained in an arm's length transaction with a non-affiliated
Person.

     7.8   Compliance. Undertake as one of its important activities extending
           ----------
credit to purchase or carry margin stock, or use the proceeds of any Advance for
that purpose; fail to meet the minimum funding requirements of ERISA, permit a
Reportable Event or Prohibited Transaction, as defined in ERISA, to occur; fail
to comply with the Federal Fair Labor Standards Act or violate any other law or
regulation, if the violation could reasonably be expected to have a material
adverse effect on Borrower's business or operations or cause a Material Adverse
Change, or permit any of its Subsidiaries to do so.

     8     EVENTS OF DEFAULT
           -----------------

     Any one of the following is an Event of Default:

     8.1   Payment Default. Borrower fails to pay any of the Obligations and
           ---------------
does not cure the same within three (3) days after their due date. During the
additional period the failure to cure the default is not an Event of Default
(but no Credit Extensions shall be made during the cure period);

     8.2   Covenant Default. Borrower does not perform any obligation in Section
           ----------------
6 or violates any covenant in Section 7 or does not perform or observe any other
material term, condition or covenant in this Agreement, any Loan Documents, or
in any agreement between Borrower and Bank and as to any default under a term,
condition or covenant that can be cured, has not cured the default within ten
(10) days after it occurs, or if the default cannot be cured within ten (10)
days or cannot be cured after Borrower's attempts in the ten (10) day period,
and the default may be cured within a reasonable time, then Borrower shall have
additional time, (of not more than thirty (30) days) to attempt to cure the
default. During the additional period the failure to cure the default is not an
Event of Default (but no Credit Extensions shall be made during the cure
period);

     8.3   Material Adverse Change. A Material Adverse Change occurs;
           -----------------------

     8.4   Attachment. (i) Any material portion of Borrower's assets is
           ----------
attached, seized, levied on, or comes into possession of a trustee or receiver
and the attachment, seizure or levy is not removed in thirty (30) days; (ii)
Borrower is enjoined, restrained, or prevented by court order from conducting  a
material part of its business; (iii) a judgment or other claim becomes a Lien on
a material portion of Borrower's assets; or (iv) a notice of lien, levy, or
assessment is filed against any of Borrower's assets by any government agency
and not paid within ten (10) days after

                                       5
<PAGE>

Borrower receives notice. These are not Events of Default if stayed, paid, or if
a bond is posted pending contest by Borrower (but no Credit Extensions shall be
made during the cure period);

     8.5  Insolvency. (i) Borrower becomes insolvent; (ii) Borrower begins an
          ----------
Insolvency Proceeding; or (iii) an Insolvency Proceeding is begun against
Borrower and not dismissed or stayed within forty-five (45) days (but no Credit
Extensions shall be make before any Insolvency Proceeding is dismissed);

     8.6  Other Agreements. If there is a default in any agreement to which
          ----------------
Borrower is a party with a third party or parties resulting in a right by such
third party or parties, whether or not exercised, to accelerate the maturity of
any Indebtedness (which Indebtedness is equal to or exceeds Two Hundred Fifth
Thousand ($250,000.00)) is likely to cause a Material Adverse Change;

     8.7  Judgments. If a judgment or judgments not covered by insurance
          ---------
(exclusive of the deductible) for the payment of money in an amount,
individually or in the aggregate, of at least Two Hundred Fifty Thousand Dollars
($250,000.00) shall be rendered against Borrower and shall remain unsatisfied
and unstayed for a period of thirty (30) days (provided that no Credit
Extensions will be made prior to the satisfaction or stay of such judgment);

     8.8  Misrepresentations. If Borrower or any Person acting for Borrower
          ------------------
makes any material misrepresentation or material misstatement now or later in
any warranty or representation in this Agreement or in any communication
delivered to Bank or to induce Bank to enter this Agreement or any Loan
Document.

     8.9  Guaranty. Any guaranty of any Obligations ceases for any reason to be
          --------
in full force or any Guarantor does not perform any obligation under any
guaranty of the Obligations, or any material misrepresentation or material
misstatement exists now or later in any warranty or representation in any
guaranty of the Obligations or in any certificate delivered to Bank in
connection with the guaranty, or any circumstance described in Section (S).4,
8.5 occurs to any guarantor (except that with respect to Section 8.7, the amount
shall be modified to One Million Dollars ($1,000,000.00)).

     9    BANK'S RIGHTS AND REMEDIES
          --------------------------

     9.1  Rights and Remedies. When an Event of Default occurs and continues
          -------------------
Bank may, without notice or demand, do any or all of the following:

          (a)   Declare all Obligations immediately due and payable (but if an
     Event of Default described in Section 8.5 occurs all Obligations are
     immediately due and payable without any action by Bank);

          (b)   Stop advancing money or extending credit for Borrower's benefit
     under this Agreement or under any other agreement between Borrower and
     Bank;

          (c)   Settle or adjust disputes and claims directly with account
     debtors for amounts, on terms and in any order that Bank considers
     advisable;

          (d)   Make any payments and do any acts it considers necessary or
     reasonable to protect its security interest in the Collateral. Borrower
     shall assemble the Collateral if Bank requests and make it available as
     Bank designates. Bank may enter premises where the Collateral is located,
     take and maintain possession of any part of the Collateral, and pay,
     purchase, contest, or compromise any Lien which appears to be prior or
     superior to its security interest and pay all expenses incurred. Borrower
     grants Bank a license to enter and occupy any of its premises, without
     charge, to exercise any of Bank's rights or remedies;

          (e)   Apply to the Obligations any (i) balances and deposits of
     Borrower it holds, or (ii) any amount held by Bank owing to or for the
     Credit or the account of Borrower;

          (f)   Ship, reclaim, recover, store, finish, maintain, repair, prepare
     for sale, advertise for sale, and sell the Collateral; and

                                       6
<PAGE>

           (g)   Dispose of the Collateral according to the Code.

     Notwithstanding anything to the contrary, so long as the Guaranty is in
full force and effect and no violation of the covenants has occurred thereunder,
the existence of any Event of Default prior to the earlier of a draw under the
Letter of Credit or the expiration of the Letter of Credit, shall not result,
except where the Borrower fails to comply with the financial reporting covenants
contained in Section 6.2 hereof, in the exercising of any rights or the
enforcement of any of Bank's remedies hereunder; provided further than in the
event of any such draw, the Obligations may only be accelerated in an amount
equal to the amount of such draw plus Bank's reasonable expenses incurred in
connection with the collection of said amount.

     9.2   Power of Attorney. Borrower hereby irrevocably appoints Bank as its
           -----------------
lawful attorney-in-fact, to be effective upon the occurrence and during the
continuance of an Event of Default, to: (i) endorse Borrower's name on any
checks or other forms of payment or security; (ii) sign Borrower's name on any
invoice or bill of lading for any Account or drafts against account debtors;
(iii) settle and adjust disputes and claims about the Accounts directly with
account debtors, for amounts and on terms Bank determines reasonable; (iv) make,
settle, and adjust all claims under Borrower's insurance policies; and (v)
transfer the Collateral into the name of Bank or a third party as the Code
permits. Borrower hereby appoints Bank its power of attorney to sign Borrower's
name on any documents necessary to perfect or continue the perfection of any
security interest regardless of whether an Event of Default has occurred until
all Obligations have been satisfied in full and Bank is under no further
obligation to make Credit Extensions hereunder. Bank's foregoing appointment as
Borrower's attorney in fact, and all of Bank's rights and powers, coupled with
an interest, are irrevocable until all Obligations have been fully repaid and
performed and Bank's obligation to provide Credit Extensions terminates.

     9.3   Accounts Collection. When an Event of Default occurs and continues,
           -------------------
Bank may notify any Person owing Borrower money of Bank's security interest in
the funds and verify the amount of the Account. Borrower must collect all
payments in trust for Bank and, if requested by Bank, immediately deliver the
payments to Bank in the form received from the account debtor, with proper
endorsements for deposit.

     9.4   Bank Expenses. If Borrower fails to obtain insurance as required
           -------------
under Section 6.5 or to pay any amount or furnish any required proof of payment
to third persons and the Bank, Bank may make all or part of the payment or
obtain such insurance policies required in Section 6.5, and take any action
under the policies Bank deems prudent. Any amounts paid by Bank as provided
herein are Bank Expenses and are immediately due and payable, bearing interest
at the then applicable rate and secured by the Collateral. No payments by Bank
are deemed an agreement to make similar payments in the future or Bank's waiver
of any Event of Default.

     9.5   Bank's Liability for Collateral. So long as the Bank complies with
           -------------------------------
reasonable banking practices regarding the safekeeping of collateral, the Bank
shall not be liable or responsible for: (a) the safekeeping of the Collateral;
(b) any loss or damage to the Collateral; (c) any diminution in the value of the
Collateral; or (d) any act or default of any carrier, warehouseman, bailee, or
other person. Borrower bears all risk of loss, damage or destruction of the
Collateral.

     9.6   Remedies Cumulative. Bank's rights and remedies under this Agreement,
           -------------------
the Loan Documents, and all other agreements are cumulative. Bank has all rights
and remedies provided under the Code, by law, or in equity. Bank's exercise of
one right or remedy is not an election, and Bank's waiver of any Event of
Default is not a continuing waiver. Bank's delay is not a waiver, election, or
acquiescence. No waiver is effective unless signed by Bank and then is only
effective for the specific instance and purpose for which it was given.

     9.7   Demand Waiver. Except for the cure periods provided in Sections 8.1
           -------------
and 8.2 hereof, Borrower waives demand, notice of default or dishonor, notice of
payment and nonpayment, notice of any default, nonpayment at maturity, release,
compromise, settlement, extension, or renewal of accounts, documents,
instruments, chattel paper, and guaranties held by Bank on which Borrower is
liable.

                                       7
<PAGE>

     10    NOTICES
           -------

     All notices or demands by any party to this Agreement or any other related
agreement must be in writing and be personally delivered or sent by an overnight
delivery service, by certified mail, postage prepaid, return receipt requested,
or by telefacsimile at the addresses listed at the beginning of this Agreement.
Notices shall be deemed given when received or refused. Either Bank or Borrower
may change its notice address by giving the other written notice.

           If to Borrower:  CKG Media.com, Inc. d/b/a Phase 2 Media
                            420 Lexington Avenue
                            New York, New York 10170
                            Attn: Mr. Robert Chmiel
                            FAX: (917) 368-7207

           with a copy to:  Zukerman, Gore & Brandeis, LLP
                            Attorneys at Law
                            900 Third Avenue
                            New York, New York 10022
                            Attn: Andrew M. Chonoles, Esq.
                            FAX: (212) 223-6433

           If to Bank:      Silicon Valley Bank
                            40 William Street
                            Wellesley, Massachusetts 02481
                            Attn: Douglas W. Marshall, Vice President
                            FAX: (781) 431-9906

           with a copy to:  Riemer & Braunstein LLP
                            Three Center Plaza
                            Boston, Massachusetts 02108
                            Attn: David A. Ephraim, Esquire
                            FAX: (617) 880-3456

     11    CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER
           ------------------------------------------

     Massachusetts law governs the Loan Documents without regard to principles
of conflicts of law. Borrower and Bank each submit to the exclusive jurisdiction
of the State and Federal courts in Suffolk County, Massachusetts; provided,
however, that if for any reason Bank cannot avail itself of such courts in the
Commonwealth of Massachusetts, Borrower accepts jurisdictions of the courts and
venue in Santa Clara County, California.

BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY
CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER
CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS
AGREEMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.

     12    GENERAL PROVISIONS
           ------------------

     12.1  Successors and Assigns. This Agreement binds and is for the benefit
           ----------------------
of the successors and permitted assigns of each party. Borrower may not assign
this Agreement or any rights or Obligations under it without Bank's prior
written consent which may be granted or withheld in Bank's discretion unless
such assignment is pursuant to a merger or consolidation permitted under Section
7.3 hereof. Bank has the right, without the consent of or prior notice to
Borrower, but with reasonable subsequent notice to Borrower, to sell, transfer,
negotiate, or grant participation in all

                                       8
<PAGE>

or any part of, or any interest in, Bank's obligations, rights and benefits
under this Agreement, the Loan Documents or any related agreement.

     12.2 Indemnification. Borrower hereby indemnifies, defends and holds the
          ---------------
Bank and its officers, employees and agents harmless against: (a) all
obligations, demands, claims, and liabilities asserted by any other party in
connection with the transactions contemplated by the Loan Documents; and (b) all
losses or Bank Expenses incurred, or paid by Bank from or following transactions
between Bank and Borrower (including reasonable attorneys' fees and expenses),
except for losses caused by Bank's gross negligence or willful misconduct.

     12.3 Time of Essence. Time is of the essence for the performance of all
          ---------------
Obligations in this Agreement.

     12.4 Severability of Provision. Each provision of this Agreement is
          -------------------------
severable from every other provision in determining the enforceability of any
provision.

     12.5 Amendments in Writing, Integration. All amendments to this Agreement
          ----------------------------------
must be in writing signed by both Bank and Borrower. This Agreement and the Loan
Documents represent the entire agreement about this subject matter, and
supersedes prior or contemporaneous negotiations or agreements. All prior or
contemporaneous agreements, understandings, representations, warranties, and
negotiations between the parties about the subject matter of this Agreement and
the Loan Documents merge into this Agreement and the Loan Documents.

     12.6 Counterparts. This Agreement may be executed in any number of
          ------------
counterparts and by different parties on separate counterparts, each of which,
when executed and delivered, are an original, and all taken together, are one
Agreement.

     12.7 Survival. All covenants, representations and warranties made in this
          --------
Agreement continue in full force while any Obligations remain outstanding. The
obligations of Borrower in Section 12.2 to indemnify Bank shall survive until
all statutes of limitations for actions that may be brought against Bank have
run.

     12.8 Confidentiality. In handling any confidential information, Bank shall
          ---------------
exercise the same degree of care that it exercises for its own proprietary
information, but disclosure of information may be made: (i) to Bank's
subsidiaries or affiliates in connection with their present or prospective
business relations with Borrower; (ii) to prospective transferees or purchasers
of any interest in the Loans; (iii) as required by law, regulation, subpoena, or
other order, (iv) as required in connection with Bank's examination or audit;
and (v) as Bank considers appropriate in exercising remedies under this
Agreement. Confidential information does not include information that either:
(a) is in the public domain or in Bank's possession when disclosed to Bank, or
becomes part of the public domain after disclosure to Bank; or (b) is disclosed
to Bank by a third party, if Bank does not know that the third party is
prohibited from disclosing the information.

     12.9 Attorneys' Fees, Costs and Expenses. In any action or proceeding
          -----------------------------------
between Borrower and Bank arising out of the Loan Documents, the prevailing
party shall be entitled to recover its reasonable attorneys' fees and other
costs and expenses incurred, in addition to any other relief to which it may be
entitled, whether or not a lawsuit is filed.

     13   DEFINITIONS
          -----------

     13.1 Definitions.
          -----------

     "Accounts" are all existing and later arising accounts, contract rights,
and other obligations owed Borrower in connection with its sale or lease of
goods (including licensing software and other technology) or provision of
services, all credit insurance, guaranties, other security and all merchandise
returned or reclaimed by Borrower and Borrower's Books relating to any of the
foregoing.

                                       9
<PAGE>

     "Affiliate" of a Person is a Person that owns or controls directly or
indirectly the Person, any Person that controls or is controlled by or is under
common control with the Person, and each of that Person's senior executive
officers, directors, partners and, for any Person that is a limited liability
company, that Person's managers and members.

     "Bank Expenses" are all expenses and reasonable costs or expenses
(including reasonable attorneys' fees and expenses) for preparing, negotiating,
administering, defending and enforcing the Loan Documents (including appeals or
Insolvency Proceedings) and audit fees incurred after the occurrence of an Event
of Default.

     "Borrower's Books" are all Borrower's books and records including ledgers,
records regarding Borrower's assets or liabilities, the Collateral, business
operations or financial condition and all computer programs or discs or any
equipment containing the information.

     "Business Acquisition" is defined in Section 7.3.

     "Business Day" is any day that is not a Saturday, Sunday or a day on which
the Bank is closed.

     "Closing Date" is the date of this Agreement.

     "Code" is the Massachusetts Uniform Commercial Code.

     "Collateral" is the property described on Exhibit A.
                                               ---------

     "Contingent Obligation" is, for any Person, any direct or indirect
liability, contingent or not, of that Person for (i) any indebtedness, lease,
dividend, letter of credit or other obligation of another such as an obligation
directly or indirectly guaranteed, endorsed, co-made, discounted or sold with
recourse by that Person, or for which that Person is directly or indirectly
liable; (ii) any obligations for undrawn letters of credit for the account of
that Person; and (iii) all obligations from any interest rate, currency or
commodity swap agreement, interest rate cap or collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices; but "Contingent
Obligation" does not include endorsements in the ordinary course of business.
The amount of a Contingent Obligation is the stated or determined amount of the
primary obligation for which the Contingent Obligation is made or, if not
determinable, the maximum reasonably anticipated liability for it determined by
the Person in good faith; but the amount may not exceed the maximum of the
obligations under the guarantee or other support arrangement.

     "Credit Extension" is the Letter of Credit or any other extension of credit
by Bank for Borrower's benefit.

     "Equipment" is all present and future machinery, equipment, tenant
improvements, furniture, fixtures, vehicles, tools, parts and attachments in
which Borrower has any interest.

     "ERISA" is the Employment Retirement Income Security Act of 1974, and its
regulations.

     "GAAP" is generally accepted accounting principles.

     "Guarantor" is any present or future guarantor of the Obligations,
including Vector Capital II, L.P.

     "Indebtedness" is (a) indebtedness for borrowed money or the deferred price
of property or services, such as reimbursement and other obligations for surety
bonds and letters of credit, (b) obligations evidenced by notes, bonds,
debentures or similar instruments, (c) capital lease obligations and (d)
Contingent Obligations.

     "Insolvency Proceeding" is any proceeding by or against any Person under
the United States Bankruptcy Code, or any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, compositions, extensions
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.

                                      10
<PAGE>

     "Inventory" is present and future inventory in which Borrower has any
interest, including merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products intended for sale or
lease or to be furnished under a contract of service, of every kind and
description now or later owned by or in the custody or possession, actual or
constructive, or Borrower, including inventory temporarily out of its custody or
possession or in transit and including returns on any accounts or other proceeds
(including insurance proceeds) from the sale or disposition of any of the
foregoing and any documents of title.

     "Investment" is any beneficial ownership of (including stock, partnership
interest or other securities) any Person, or any loan, advance or capital
contribution to any Person.

     "Letter of Credit" means a letter of credit or similar undertaking issued
by Bank pursuant to Section 2.1.1.

     "Lien" is a mortgage, lien, deed of trust, charge, pledge, security
interest or other encumbrance.

     "Loan Documents" are, collectively, this Agreement, any note, or notes or
guaranties executed by Borrower or Guarantor, and any other present or future
agreement between Borrower and/or for the benefit of Bank in connection with
this Agreement, all as amended, extended or restated.

     "Material Adverse Change" is: a material impairment in the perfection or
priority of Bank's security interest in a material portion of the Collateral or
in the value of such Collateral other than normal depreciation which is not
covered by adequate insurance occurs.

     "Maturity Date" is one day prior to the one-year anniversary of the Closing
Date.

     "Obligations" are debts, principal, interest, Bank Expenses and other
amounts Borrower owes Bank now or later, including letters of credit, if any,
and including interest accruing after Insolvency Proceedings begin and debts,
liabilities, or obligations of Borrower assigned to Bank.

     "Permitted Indebtedness" is:

          (a)   Borrower's indebtedness to Bank under this Agreement or the Loan
     Documents;

          (b)   Indebtedness existing on the Closing Date and shown on the
     Schedule;

          (c)   Subordinated Debt;

          (d)   Indebtedness to trade creditors incurred in the ordinary course
     of business; and

          (e)   Indebtedness secured by Permitted Liens;

          (f)   Indebtedness to Vector Capital II, L.P. relating to the
     Guaranty;

          (g)   Indebtedness to any Affiliate;

          (h)   rental obligations for leases and subleases of real property;

          (i)   Contingent Obligations arising out of endorsements of checks and
     other negotiable instruments for deposit or collection in the ordinary
     course of business;

          (j)   Indebtedness incurred in connection with a permitted Business
     Acquisition;

          (k)   Indebtedness not otherwise included in paragraphs (a)-(j) which
     does not at any time exceed the sum of Two Hundred Fifty Thousand Dollars
     ($250,000.00).

                                      11

<PAGE>

"Permitted Investments" are:

     (a)   Investments shown on the Schedule and existing on the Closing Date;

     (b)   (i) deposit accounts maintained by Borrower; (ii) investments
(including debt and equity) received in connection with the bankruptcy or
reorganization of suppliers and customers in settlement of delinquent
obligations;

     (c)   (i) marketable direct obligations issued or unconditionally
guaranteed by the United States or its agency or any State maturing within 1
year from its acquisition, (ii) commercial paper maturing no more than 1 year
after its creation and having the highest rating from either Standard & Poor's
Corporation or Moody's Investors Service, Inc., and (iii) certificates of
deposit issued by a nationally recognized bank maturing no more than 1 year
after issue;

     (d)   Business Acquisitions permitted hereunder and other acquisitions of
another entity's capital stock or assets to the extent not otherwise expressly
prohibited herein; and

     (e)   advances and loans to employees and officers in the ordinary course
of business.

"Permitted Liens" are:

     (a)   Liens existing on the Closing Date and shown on the Schedule or
arising under this Agreement or other Loan Documents;

     (b)   Liens for taxes, fees, assessments or other government charges or
levies, either not delinquent or being contested in good faith and for which
Borrower maintains adequate reserves on its Books, if they have no priority over
any of Bank's secured interests or if additional Collateral acceptable to Bank
has been granted to Bank;

     (c)   Purchase money Liens (i) on Equipment acquired or held by Borrower
or its Subsidiaries incurred for financing the acquisition of the Equipment, or
(ii) existing on equipment when acquired, if the Lien is confined to the
                                          --
property and improvements and the proceeds of the equipment, including insurance
proceeds on a casualty thereof;

     (d)   Leases or subleases and licenses or sublicenses granted in the
ordinary course of Borrower's business (wherein Borrower is the lessor,
sublessor or licensor, as the case may be), if the leases, subleases, licenses
                                            --
and sublicenses do not prohibit Borrower from granting Bank a security interest;

     (e)   Liens incurred in the extension, renewal or refinancing of the
indebtedness secured by Liens described in (a) through (c), but any extension,
                                                            ---
renewal or replacement Lien must be limited to the property encumbered by the
existing Lien and the principal amount of the indebtedness may not violate the
Permitted Indebtedness covenant;

     (f)   pledges or deposits in connection with the Worker's Compensation,
unemployment insurance and other Social Security legislation;

     (g)   easements, rights of ways, restrictions and covenants, provided some
do not materially impair value or use of asset;

     (h)   Liens in connection with judgment, subject to the cap otherwise
provided herein;

     (i)   landlord's lien's; and

                                      12
<PAGE>

          (j)   mechanics and materialsmen liens, provided same are legally
                contested and Borrower sets aside adequate reserves.

     "Person" is any individual, sole proprietorship, partnership, limited
liability company, joint venture, company, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity or government agency.

     "Responsible Officer" is each of the Chairman, Chief Executive Officer,
President, Chief Financial Officer and Controller.

     "Schedule" is any attached schedule of exceptions.

     "Subordinated Debt" is debt incurred by Borrower subordinated to Borrower's
debt to Bank (pursuant to a subordination agreement entered into between the
Bank, the Borrower and the subordinated creditor).

     "Subsidiary" is for any Person, joint venture, or any other business entity
of which more than 50% of the voting stock or other equity interests is owned or
controlled, directly or indirectly, by the Person or one or more Affiliates of
the Person.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as a scaled instrument under the laws of the Commonwealth of
Massachusetts as of the date first above written.

BORROWER:
--------

CKG MEDIA.COM, INC.
d/b/a PHASE 2 MEDIA

By  /s/ Robert E. [illegible]
  ----------------------------
Name: Robert E. [illegible]
     -------------------------
Title: President & CEO
      ------------------------

BANK:
----

SILICON VALLEY BANK, d/b/a
SILICON VALLEY EAST

By  /s/ Douglas W. Marshall
  ----------------------------
Name: Douglas W. Marshall
     -------------------------
Title: Vice President
      ------------------------

                                      13
<PAGE>

SILICON VALLEY BANK

By /s/ Heidi Fetty
   ------------------------------
Name:  Heidi Fetty
     ----------------------------
Title: Assistant Vice President
      ---------------------------
(Signed in Santa Clara County, California)

                                      14
<PAGE>

                                   EXHIBIT A

     The Collateral consists of all right, title and interest of Borrower in and
to the following:

     All goods, equipment, inventory, contract rights (to the extent a security
interest may be obtained), general intangibles, accounts, documents,
instruments, chattel paper, cash, deposit accounts, fixtures, letters of credit,
investment property, and financial assets, whether now owned or hereafter
acquired, wherever located; and

     All Borrower's Books relating to the foregoing and any and all claims,
rights and interests in any of the above and all substitutions for, additions,
attachments, accessories, accessions and improvements to and replacements,
products, proceeds and insurance proceeds of any or all of the foregoing.

     The Collateral does not include:

Any copyright rights, copyright applications, copyright registrations and like
protections in each work of authorship and derivative work, whether published or
unpublished, now owned or later acquired; any patents, trademarks, service marks
and applications therefor; any trade secret rights, including any rights to
unpatented inventions, know-how, operating manuals, license rights and
agreements and confidential information, now owned or hereafter acquired; or any
claims for damages by way of any past, present and future infringement of any of
the foregoing.

                                      15
<PAGE>

                          Schedule of Permitted Liens

Lien relating to lease of copier from Canon Financial Services, Inc.
Lien taken by Vector Capital II, L.P. as Collateral Agent

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00009-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00009-of-00352.parquet"}]]