Document:

EXECUTION COPY

                                 AMENDMENT NO. 7
                                       TO
                      AMENDED AND RESTATED CREDIT AGREEMENT

      AGREEMENT made as of this 29th day of January 2004, by and among:

      MEDIABAY, INC. (formerly known as Audio Book Club, Inc.), a Florida
corporation ("MEDIABAY"), RADIO SPIRITS, INC., a Delaware corporation ("RADIO
SPIRITS") and AUDIO BOOK CLUB, INC., a Delaware corporation ("AUDIO BOOK CLUB",
collectively with MediaBay and Radio Spirits, the "BORROWERS" and each
individually, a "BORROWER");

      The banks, financial institutions and other institutional lenders which
have executed the signature page annexed thereto (each individually, a "LENDER
PARTY" and collectively, the "LENDER PARTIES"); and

      ING CAPITAL LLC, as Issuing Bank and as administrative agent for the
Lender Parties (in such capacity, together with its successors in such capacity,
the "ADMINISTRATIVE AGENT");

      WHEREAS:

      (A) The Borrowers are indebted to the Lender Parties pursuant to an
Amended and Restated Credit Agreement dated April 30, 2001 (as previously
amended, modified or supplemented and as it is hereby and as it may hereafter
from time to time be amended, modified or supplemented, the "CREDIT AGREEMENT");

      (B) The Borrowers have requested and the Lender Parties have agreed, upon
the terms and conditions set forth herein, to modify certain definitions,
covenants and other terms thereof;

      (C) All capitalized terms that are used herein without definition and
which are defined in the Credit Agreement shall have the respective meanings
ascribed thereto therein; NOW, THEREFORE, the parties hereto hereby agree as
follows:

                                    ARTICLE I
                         AMENDMENTS TO CREDIT AGREEMENT

      This Amendment No. 7 to Amended and Restated Credit Agreement shall be
deemed to be an amendment to the Credit Agreement, and shall not be construed in
any way as a replacement therefor. All of the terms and provisions of this
Amendment No. 7 are hereby incorporated by reference into the Credit Agreement
as if such terms and provisions were set forth in full therein. The Credit
Agreement is hereby amended, effective upon the satisfaction of the conditions
precedent set forth in Article V hereof, in the following respects:

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      1.1 The definition of "REVOLVING CREDIT TERMINATION DATE" set forth in
Article 1 of the Credit Agreement is amended and restated to read in its
entirety as follows:

      "REVOLVING CREDIT TERMINATION DATE" means September 30, 2004. In the event
      that at any time prior to April 15, 2004, (I) either (i) the maturity date
      of the $3,200,000 principal and convertible promissory note issued to ABC
      Investment, L.L.C. due December 31, 2004 (the "ABC INVESTMENT NOTE,") is
      extended to June 30, 2005 or later, or (ii) the ABC Investment Note is no
      longer outstanding due to the conversion of such ABC Investment Note to
      equity interests of the Borrower pursuant to the terms thereof, and (II)
      either (i) the maturity dates of the $1,065,000 aggregate principal
      promissory notes due October 30, 2004 (the "OCTOBER 2003 NOTES") are
      extended to June 30, 2005 or later, or (ii) the October 2003 Notes are no
      longer outstanding due to the prepayment or such October 2003 Notes in
      compliance with the provisions of this Agreement, such Revolving Credit
      Termination Date shall be automatically extended to March 31, 2005;
      provided, however, that (i) Administrative Agent shall have received prior
      written notice that the requirements of clauses (I) and (II) above will be
      met, such notice to include a detailed description of the proposed action
      to be taken in satisfaction of clauses (1) and (II) above (i.e. whether
      clause (i) or clause (ii) thereof will be met), (ii) Administrative Agent
      shall have received written confirmation that the requirements of clauses
      (I) and (II) above have been met, (iii) the satisfaction of the
      requirements of each of clauses (I) and (II) above shall be effective no
      later than April 15, 2004 and (iv) no Default or Event of Default shall
      have occurred or be continuing.

      1.2 Section 2.4(a) of the Credit Agreement, "REPAYMENT OF ADVANCES", is
amended by deleting the table set forth therein and replacing it with the table
set forth below:

--------------------------------------------------------------------------------
                   Date                                              Amount
--------------------------------------------------------------------------------
Each of July 31, 2002 and the last day of each month                $150,000
thereafter through and including August 31, 2002
--------------------------------------------------------------------------------
Each of September 30, 2002 and the last day of each                 $160,000
month thereafter through and including December
31, 2002
--------------------------------------------------------------------------------
Each of January 31, 2003 and the last day of each                   $170,000
month thereafter through and including March 31,
2003
--------------------------------------------------------------------------------
Each of April 30, 2003 and the last day of each                     $180,000
month thereafter through and including June 30,
2003
--------------------------------------------------------------------------------
July 31, 2003                                                       $190,000
--------------------------------------------------------------------------------

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<PAGE>

--------------------------------------------------------------------------------
                   Date                                                Amount
--------------------------------------------------------------------------------
Each of August 31, 2003 and the last day of each                      $75,000
month thereafter through and including January 31,
2004
--------------------------------------------------------------------------------
Each of February 29, 2004 and the last day of each                  $106,666.67
month thereafter through and including August 31,
2004
--------------------------------------------------------------------------------
September 30, 2004                                                  $853,333.36
--------------------------------------------------------------------------------

"; provided, however, in the event the Revolving Credit Termination Date is
extended to March 31, 2005 pursuant to the definition of Revolving Credit
Termination Date, the repayments shall be as follows:

--------------------------------------------------------------------------------
                   Date                                                 Amount
--------------------------------------------------------------------------------
Each of July 31, 2002 and the last day of each month                  $150,000
thereafter through and including August 31, 2002
--------------------------------------------------------------------------------
Each of September 30, 2002 and the last day of each                   $160,000
month thereafter through and including December 31,
2002
--------------------------------------------------------------------------------
Each of January 31, 2003 and the last day of each                     $170,000
month thereafter through and including March 31,
2003
--------------------------------------------------------------------------------
Each of April 30, 2003 and the last day of each                       $180,000
month thereafter through and including June 30, 2003
--------------------------------------------------------------------------------
July 31, 2003                                                         $190,000
--------------------------------------------------------------------------------
Each of August 31, 2003 and the last day of each                      $ 75,000
month thereafter through and including January 31,
2004
--------------------------------------------------------------------------------
Each of February 29, 2004 and the last day of each                  $114,285.72
month thereafter through and including March 31,
2005
--------------------------------------------------------------------------------

      1.3 Section 2.6 of the Credit Agreement, "PREPAYMENTS" is amended by
adding the following proviso at the end of clause (b)(iii) thereof:

            "provided, however: that with respect to the issuance of that
      certain unsecured Subordinated Debt pursuant to documentation satisfactory
      to Administrative Agent in its discretion, which unsecured Subordinated
      Debt shall be on substantially the same terms and conditions as set forth
      in the Duncan Capital Proposed Term Sheet dated as of

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<PAGE>

      January 16, 2004 as previously provided to Administrative Agent, or with
      respect to the issuance referred to in clause (ii) below, terms and
      conditions satisfactory to Administrative Agent in its sole discretion
      from which the Borrowers shall receive an aggregate of up to $8,500,000 in
      net proceeds as follows: (i) not less than $3,000,000 in net proceeds on
      or prior to January 30, 2004 (THE "JANUARY 2004 DEBT ISSUANCE FIRST
      INSTALLMENT"), and (ii) up to an additional $5,500,000 in net proceeds on
      or prior to April 15, 2004 (collectively, with the January 2004 Debt
      Issuance First Installment, the "JANUARY 2004 DEBT ISSUANCE"), one (1)
      Business Day following receipt by any Loan Party or any of its
      Subsidiaries of Net Cash Proceeds from the January 2004 Debt Issuance
      First Installment (i. e. on the first Business Day following receipt of
      such Net Cash Proceeds referred to in clause (i) above, which in no event
      shall be later than January 30, 2004), the Borrowers shall prepay the then
      outstanding Advances in an amount equal to $1,250,000, to be allocated and
      applied in equal amounts to the outstanding principal amount of the
      Revolving Credit Advances of each Lender hereunder, which repayment shall
      result in an automatic and permanent reduction of the aggregate Revolving
      Credit Commitments of the Revolving Lenders;"

                                   ARTICLE II
                          CONSENT AND ACKNOWLEDGEMENTS

      2.1 The Lenders and the Administrative Agent hereby consent to the January
2004 Debt Issuance (as defined above) and acknowledge that such January 2004
Debt Issuance constitutes "Subordinated Debt" pursuant to and as defined in the
Credit Agreement, including, without limitation, clause (v) of Section 6.2 of
the Credit Agreement. The Borrowers and each Loan Party hereby acknowledge that
such January 2004 Debt Issuance constitutes "Subordinated Debt" pursuant to and
as defined in the Credit Agreement, including, without limitation, clause (v) of
Section 6.2 of the Credit Agreement and clause (b) of Section 6.12 of the Credit
Agreement.

      2.2 Notwithstanding anything contained in the Credit Agreement to the
contrary, the Lenders and Administrative Agent hereby consent that Borrowers may
prepay the October 2003 Notes; provided, that, (i) Borrowers shall receive not
less than $6,000,000 in net proceeds in connection with the January 2004 Debt
Issuance (which proceeds shall in any event be received no later than April 15,
2004) or in connection with an Equity Issuance as otherwise permitted pursuant
to the terms of the Credit Agreement, (ii) Administrative Agent shall have
received prior written notice of the proposed prepayment of the October 2003
Notes; (iii) Administrative Agent shall have received a detailed description of
the net proceeds received by Borrowers pursuant to the January 2004 Debt
Issuance and/or Equity Issuance, as appropriate, prior to such proposed
prepayment; and (iv) no Default or Event of Default shall have occurred or be
continuing as of the date of such proposed prepayment.

      2.3 The consents contained herein is limited specifically as written to
the matter described in this Article II. Nothing contained in this Article II
shall be deemed to constitute a waiver, modification or release of any Event of
Default or other term or condition under the Credit Agreement. The consents set
forth in this Article 11 shall not constitute a consent to or waiver of any
other or subsequent actions or matters and shall not prejudice any

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<PAGE>

right, power or remedy which the Administrative Agent or Lender Parties now have
or may have in the future in connection with any Loan Document.

                                   ARTICLE III
                                  CERTAIN FEES

      3.1 Certain Fees.

      (a) On and as of the date of this Agreement, Lender Parties shall have
fully earned a fee (pro rata based upon each Lender Party's Pro Rata Share of
the Revolving Credit Commitment) in an amount equal to $100,000 (the "ADDITIONAL
FEE").

      (b) (i) The Additional Fee shall be payable in installments as follows:

            (A) $25,000 shall be paid in full in cash by Borrowers on June 30,
      2004 (the "ADDITIONAL FEE FIRST INSTALLMENT"), without any further action,
      consent or notice from or to Borrowers; provided, however, that, the
      Additional Fee First Installment shall not be required to be paid, and
      shall be waived, if on or before June 30, 2004 Borrowers shall have
      indefeasibly paid in full all Obligations under the Credit Agreement and
      the other Loan Documents and the Commitments of each Lender Party under
      the Credit Agreement and the other Loan Documents shall have been
      terminated;

            (B) $25,000 shall be paid in full in cash by Borrowers on September
      30, 2004 (the "ADDITIONAL FEE SECOND INSTALLMENT"), without any further
      action, consent or notice from or to Borrowers; provided, however, that,
      the Additional Fee Second Installment shall not be required to be paid,
      and shall be waived, if on or before September 30, 2004 Borrowers shall
      have indefeasibly paid in full all Obligations under the Credit Agreement
      and the other Loan Documents and the Commitments of each Lender Party
      under the Credit Agreement and the other Loan Documents shall have been
      terminated;

            (C) $25,000 shall be paid in full in cash by Borrowers on December
      31, 2004 (the "ADDITIONAL FEE THIRD INSTALLMENT"), without any further
      action, consent or notice from or to Borrowers; provided, however, that,
      the Additional Fee Third Installment shall not be required to be paid, and
      shall be waived, if either (i) on or before December 31, 2004 Borrowers
      shall have indefeasibly paid in full all Obligations under the Credit
      Agreement and the other Loan Documents and the Commitments of each Lender
      Party under the Credit Agreement and the other Loan Documents shall have
      been terminated or (ii) the Revolving Credit Termination Date is not
      extended to March 31, 2005 pursuant to the definition of "Revolving Credit
      Termination Date"; and

            (D) $25,000 shall be paid in full in cash by Borrowers on March 31,
      2005 (the "ADDITIONAL FEE FOURTH INSTALLMENT"), without any further
      action,

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<PAGE>

      consent or notice from or to Borrowers; provided, however, that, the
      Additional Fee Fourth Installment shall not be required to be paid, and
      shall be waived, if either (i) on or before March 31, 2005 Borrowers shall
      have indefeasibly paid in full all Obligations under the Credit Agreement
      and the other Loan Documents and the Commitments of each Lender Party
      under the Credit Agreement and the other Loan Documents shall have been
      terminated or (ii) the Revolving Credit Termination Date is not extended
      to March 31, 2005 pursuant to the definition of "Revolving Credit
      Termination Date".

                                   ARTICLE IV
                         REPRESENTATIONS AND WARRANTIES

      Each Borrower hereby represents and warrants to the Administrative Agent
and the Lender Parties that:

      4.1 After giving effect to this Amendment No. 7, there exists no Default
or Event of Default under the Credit Agreement, as amended hereby, as of the
date hereof

      4.2 (a) Each and every one of the representations and warranties set forth
in Article 4 of the Credit Agreement is true and correct in all respects as if
made on the date hereof, except for (i) such changes which were disclosed in the
Company's Form 10-Q for the quarter ended September 30, 2003, (ii) such changes
in the ordinary course of business not prohibited by the Credit Agreement, or
(iii) such matters as described in Schedule 1 hereto, as to which matters, in
each case with respect to the preceding clauses (i), (ii) and (iii), each
Borrower represents and warrants that such items listed in the preceding clauses
(i), (ii) and (iii) would not have a Material Adverse Effect individually or in
the aggregate, except that the item listed in the preceding clause (iii) may
have a Material Adverse Effect as to the Borrowers' results of operations under
clause (a) of the definition of Material Adverse Effect; provided that such
Material Adverse Effect does not modify the representations and warranties made
in Section 4.2(b) below.

      (b) The matters set forth in Schedule 1 hereto do not and will not (i)
affect the Borrowers' compliance with, or cause a breach of, any of the
covenants set forth in Article 6, Article 7 and Article 8 of the Credit
Agreement with respect to any of the periods covered by the restatement of the
financial statements as set forth in Schedule 1 hereto, except for those which
have been waived by the Lenders and Administrative Agent in Amendment No. 3 to
the Credit Agreement, or (ii) affect the Borrowers' compliance with the
covenants set forth in Article 6, Article 7 and Article 8 of the Credit
Agreement in future periods.

      4.3 Each Loan Party (a) to the extent it is a party thereto, has all
requisite corporate power and authority to execute and deliver this Amendment
No. 7, and each other agreement, instrument or document contemplated to be
executed or delivered by any Borrower, or any other Loan Party pursuant to
Amendment No. 7 (all such agreements, instruments and documents contemplated to
be executed or delivered in connection herewith by any Loan Party are sometimes
hereinafter referred to collectively, together with this Amendment No. 7, as the

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<PAGE>

"AMENDMENT NO. 7 DOCUMENTS") and to consummate the transactions contemplated
hereby and (b) has taken all action, corporate or otherwise, necessary to
authorize the execution and delivery of the Amendment No. 7 Documents and the
consummation of the transactions contemplated hereby.

      4.4 The execution, delivery and performance by each Loan Party of the
Amendment No. 7 Documents to which it is a party and the consummation of the
transactions contemplated thereby, are within such Loan Party's corporate
powers, have been duly authorized by all necessary corporate action, and do not
(a) contravene such Loan Party's charter or bylaws, (b) violate any law
(including, without limitation, the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, and the Racketeer Influenced and
Corrupt Organizations Chapter of the Organized Crime Control Act of 1970), rule,
regulation (including, without limitation, Regulation T, U or X of the Board of
Governors of the Federal Reserve System), order, writ, judgment, injunction,
decree, determination or award, (c) conflict with or result in the breach of, or
constitute a default under, any material contract, loan agreement, indenture,
mortgage, deed of trust, lease or other material instrument or agreement binding
on or affecting any Loan Party, any of its Subsidiaries or any of their
respective properties where the conflict, breach or default relates to an
instrument, agreement or other document involving assets, revenues or
liabilities in excess of $250,000 individually or $500,000 in the aggregate or
otherwise could reasonably be expected to have a Material Adverse Effect, or (d)
except for the Liens created under the Collateral Documents, result in or
require the creation or imposition of any Lien upon or with respect to any of
the properties of any Loan Party or any of its Subsidiaries. No Loan Party or
any of its Subsidiaries is in violation of any such law, rule, regulation,
order, writ, judgment, injunction, decree, determination or award or in breach
of any such contract, loan agreement, indenture, mortgage, deed of trust, lease
or other instrument or agreement, the violation or breach of which could
reasonably be expected to have a Material Adverse Effect.

      4.5 This Amendment No. 7 and the other Amendment No. 7 Documents have each
been duly executed and delivered by each Loan Party that is a party thereto and
each constitutes the valid and legally binding obligation of such Loan Party,
except (a) as such enforceability may be limited by applicable bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium or other similar
laws, now or hereafter in effect, relating to or affecting the enforcement of
creditors' rights generally, and to the extent such enforceability is subject to
general principles of equity (whether such enforcement is sought in a proceeding
at law or in equity), and (b) that the remedy of specific performance and other
equitable remedies are subject to judicial discretion.

      4.6 The Liens and security interests granted pursuant to the Collateral
Documents secure, without limitation, the indebtedness, liabilities and
obligations of the Borrowers to the Administrative Agent and the Lender Parties
under the Credit Agreement, as amended hereby, or the Guaranteed Obligations of
the Guarantors signatory hereto, whether or not expressly so stated in the
Collateral Documents, and the terms "Obligations", "Debt" and "Indebtedness" as
used in such Collateral Documents (or any other term used therein to describe or
refer to the indebtedness, liabilities and obligations of the Borrower to the
Administrative Agent and the Lender Parties) includes, without limitation, the
indebtedness, liabilities and obligations of the Borrowers under the Credit
Agreement as amended hereby.

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                                    ARTICLE V
                                   CONDITIONS

      The effectiveness of this Amendment No. 7 shall be subject to the
fulfillment by the Borrowers, in a manner satisfactory to the Administrative
Agent and the Lender Parties, of all of the conditions precedent set forth in
this Article V, and the date on which all such conditions shall have been
fulfilled to the satisfaction of the Administrative Agent and the Lender
Parties, and this Amendment No. 7 shall have become effective, shall be herein
called the "Effective Date".

      5.1 (a) The representations and warranties contained herein and each other
agreement, instrument, certificate or other writing delivered to the
Administrative Agent or any Lender Party pursuant hereto or to the Credit
Agreement shall be correct on and as of the date hereof after giving effect to
this Amendment No. 7 as though made on and as of such date, (b) no Default or
Event of Default shall have occurred and be continuing on the Effective Date or
would result from the taking effect of this Amendment No. 7 or the transactions
contemplated hereby, and (c) all of the conditions precedent to the
effectiveness of this Amendment No. 7 shall have been satisfied; and the
execution and delivery of this Amendment No. 7 constitutes the Borrowers'
certification to the Lender Parties and the Administrative Agent as to the
truth, accuracy and completeness of the matters set forth in this Section 5.1.

      5.2 The Administrative Agent shall have received copies of resolutions
adopted by MediaBay's board of directors, authorizing the execution, delivery
and performance of the Amendment No. 7 Documents, and all documents incidental
thereto shall be satisfactory to the Administrative Agent, the Lender Parties
and their counsel, and each such person shall have received all such information
and such counterpart originals or certified copies of documents as may have been
reasonably requested.

      5.3 The Borrowers shall have:

            (a) paid to Winston & Strawn LLP counsel to the Administrative
Agent, and Richards Spears Kibbe & Orbe LLP, counsel to Ark CLO 2000-1, Limited,
all outstanding fees and expenses incurred in connection with this Amendment No.
7 or otherwise; and

            (b) otherwise complied in all respects with the terms hereof and of
any other agreement, document, instrument or other writing to be delivered by
any Borrower in connection herewith.

      5.4 Each of the parties hereto shall have executed and delivered this
Amendment No. 7 to the Administrative Agent.

      5.5 All proceedings in connection with the transactions contemplated by
this Amendment No. 7 and all documents incidental thereto shall be reasonably
satisfactory to the Administrative Agent, the Lender Parties and their
respective counsel, and each such Person shall have received all such
information and such counterpart originals or certified copies of documents as
may have been reasonably requested.

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                                   ARTICLE VI
              ACKNOWLEDGMENTS, CONFIRMATIONS AND GENERAL AMENDMENTS

      6.1 Each Borrower and each Guarantor hereby acknowledges that (i) the
outstanding aggregate principal amount of the Advances as of the date of this
Amendment No. 7 is $2,925,000 and (ii) accrued interest on the unpaid principal
amount of the Advances has been paid through December 31, 2003.

      6.2 Each of the Guarantors hereby (i) acknowledges and consents to this
Amendment No. 7 (whether or not its consent is required); (ii) confirms and
agrees that the Subsidiary Guaranty to which it is a party is, and shall
continue to be, in full force and effect and is hereby ratified and confirmed in
all respects, and all references in any such Subsidiary Guaranty to "the Credit
Agreement," "thereof," "thereunder" or words of like import referring to the
Credit Agreement shall mean the Credit Agreement as amended by this Amendment
No. 7; (iii) confirms and agrees that, the "Guaranteed Obligations" as defined
in such Subsidiary Guaranty include the Obligations of the Borrowers to the
Lender Parties under the Credit Agreement as amended by this Amendment No. 7;
and (iv) confirms and agrees that the Liens and security interests granted by
each of them pursuant to the Collateral Documents secure, without limitation,
the indebtedness, liabilities and obligations of the Guarantors to the Lender
Parties and the Administrative Agent under the Subsidiary Guaranty, including
without limitation, the Guaranteed Obligations, which obligations include the
obligations of the Borrowers under the Credit Agreement as amended hereby.

      6.3 All references the Credit Agreement and every other agreement,
instrument and document executed and delivered by each of the Loan Parties in
connection therewith, including, without limitation, any of the Collateral
Documents, to "Credit Agreement" and "Agreement", as applicable, and also, in
the case of the Credit Agreement to "this Agreement", shall be deemed to refer
to the Credit Agreement as amended and supplemented hereby.

      6.4 The Credit Agreement, the Collateral Documents and all agreements,
instruments and documents executed and delivered in connection with any of the
foregoing, shall each be deemed amended hereby to the extent necessary, if any,
to give effect to the provisions of this Amendment No. 7.

      6.5 Each Borrower and each Guarantor hereby acknowledges that (i) it has
been advised by counsel in the negotiation, execution and delivery of this
Amendment No. 7; (ii) neither the Lender Parties nor any of their
representatives have any fiduciary relationship to any Borrower or any Guarantor
and the relationship between the Lender Parties, on the one hand, and the
Borrowers and each Guarantor, on the other, is solely that of creditor and
debtor; and (iii) no joint venture exists among any of the Lender Parties and
any Borrower or any Guarantor.

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                                   ARTICLE VII
         CONTINUED EFFECTIVENESS OF CREDIT AGREEMENT; RELEASE OF CLAIMS

      The Credit Agreement and the other agreements to which any Borrower is a
party delivered in connection herewith or with the Credit Agreement are, and
shall continue to be, in full force and effect, and are hereby ratified and
confirmed in all respects except that on and after the date hereof (a) all
references in the Credit Agreement to "this Agreement", "hereto", "hereof',
"hereunder" or words of like import referring to the Credit Agreement shall mean
the Credit Agreement as amended and supplemented by this Amendment No. 7 and (b)
all references in the Credit Agreement and such other agreements to which any
Borrower is a party to the "Credit Agreement", "thereto", "thereof',
"thereunder" or words of like import referring to the Credit Agreement shall
mean the Credit Agreement as amended and supplemented by this Amendment No. 7.

      FOR GOOD AND VALUABLE CONSIDERATION, INCLUDING, WITHOUT LIMITATION, THE
AGREEMENT BY THE LENDER PARTIES TO ENTER INTO THIS AMENDMENT NO. 7, EACH
BORROWER, ITS SUBSIDIARIES AND EACH GUARANTOR SHALL RELEASE EACH OF THE LENDER
PARTIES AND THEIR OFFICERS, DIRECTORS, REPRESENTATIVES, MEMBERS, AGENTS,
EMPLOYEES AND PROFESSIONAL ADVISORS FROM ANY AND ALL CLAIMS (AS DEFINED IN 11
U.S.C. ss.101(5))(EACH A "CLAIM" AND COLLECTIVELY THE "CLAIMS") AND ANY AND ALL
ACTIONS, CAUSES OF ACTION, SUITS, DEBTS, DUES, SUMS OF MONEY, ACCOUNT,
RECKONINGS, RIGHTS TO LEGAL REMEDIES, RIGHTS TO EQUITABLE REMEDIES, RIGHTS TO
PAYMENT AND CLAIMS, BONDS, BILLS, SPECIALTIES, COVENANTS, CONTRACTS,
CONTROVERSIES, AGREEMENTS, PROMISES, VARIANCES OR TRESPASSES, WHETHER KNOWN OR
UNKNOWN, REDUCED TO JUDGMENT, NOT REDUCED TO JUDGMENT, LIQUIDATED, UNLIQUIDATED,
FIXED, CONTINGENT, MATURED, UNMATURED, DISPUTED, UNDISPUTED, SECURED OR
UNSECURED, AND WHETHER ASSERTED OR ASSERTABLE DIRECTLY OR INDIRECTLY OR
DERIVATIVELY, IN LAW, EQUITY OR OTHERWISE (EACH A "CAUSE OF ACTION", AND
COLLECTIVELY, THE "CAUSES OF ACTION"); PROVIDED, HOWEVER, THAT THE FOREGOING
SENTENCE SHALL NOT RELEASE OR AFFECT ANY OBLIGATIONS OF THE LENDER PARTIES SET
FORTH IN THIS AMENDMENT NO. 7.

      THE RELEASE SET FORTH ABOVE SHALL APPLY TO EACH CLAIM AND CAUSE OF ACTION
THAT ANY BORROWER, ITS SUBSIDIARIES OR ANY GUARANTOR OR ANY OF THEIR AFFILIATES
WOULD HAVE BEEN LEGALLY ENTITLED TO ASSERT IN THEIR OWN RIGHT (WHETHER
INDIVIDUALLY OR COLLECTIVELY) OR ON BEHALF OF THE HOLDER OF ANY CLAIM OR EQUITY
INTEREST IN ANY BORROWER, ITS SUBSIDIARIES OR ANY GUARANTOR OR OTHER PERSON OR
ENTITY, BASED IN WHOLE OR IN PART UPON ANY ACT OR OMISSION, TRANSACTION,
AGREEMENT, EVENT OR OTHER OCCURRENCE TAKING PLACE ON OR BEFORE THE DATE OF THIS
AMENDMENT NO. 6 FOR CLAIMS OR LIABILITIES (I) IN RESPECT OF ANY LOAN, ADVANCE OR
SIMILAR PAYMENT BY ANY BORROWER, ITS SUBSIDIARIES OR ANY GUARANTOR OR ANY

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OF THEIR AFFILIATES TO ANY SUCH PERSON, OR (II) IN RESPECT OF ANY CONTRACTUAL
OBLIGATION OWED BY SUCH PERSON TO ANY BORROWER, ITS SUBSIDIARIES OR ANY
GUARANTOR OR ANY OF THEIR AFFILIATES.

                                  ARTICLE VIII
                                 MISCELLANEOUS

      8.1 Except as specifically amended herein, the Credit Agreement shall
remain in full force and effect in accordance with its terms.

      8.2 This Amendment No. 7 shall be governed and construed in accordance
with the laws of the State of New York.

      8.3 No modification or waiver of or with respect to any provisions of this
Amendment No. 7 and all other agreements, instruments and documents delivered
pursuant hereto or thereto, nor consent to any departure by the Administrative
Agent or the Lender Parties from any of the terms or conditions thereof, shall
in any event be effective unless it shall be in writing and executed in
accordance with the provisions of the Credit Agreement, and then such waiver or
consent shall be effective only in the specific instance and for the purpose for
which given. No consent to or demand on any Borrower in any case shall, of
itself, entitle it to any other or further notice or demand in similar or other
circumstances. This Amendment No. 7, together with the Credit Agreement, as
amended, embodies the entire agreement and understanding among the Borrowers,
the Administrative Agent and the Lender Parties and supersedes all prior
agreements and understandings relating to the subject matter hereof

      8.4 The provisions of this Amendment No. 7 are severable, and if any
clause or provision shall be held invalid or unenforceable in whole or in part
in any jurisdiction, then such invalidity or unenforceability shall affect only
such clause or provision, or part thereof, in such jurisdiction and shall not in
any manner affect such clause or provision in any other jurisdiction, or any
other clause or provision in this Amendment No. 7 in any jurisdiction.

      8.5 This Amendment No. 7 may be signed in any number of counterparts with
the same effect as if the signatures thereto and hereto were upon the same
instrument. Delivery of an executed counterpart to this Amendment No. 7 by
facsimile machine shall be as effective as delivery of a manually executed
counterpart of this Amendment No. 7. Notwithstanding any provision of Article V
above, the provisions of Article V and this Article IX shall become effective
immediately upon the execution hereof.

      8.6 This Amendment No. 7 shall be binding upon and inure to the benefit of
each Borrower and its respective successors and to the benefit of the
Administrative Agent and the Lender Parties and their respective successors and
assigns. The rights and obligations of any Borrower under this Amendment No. 7
shall not be assigned or delegated without the prior written consent of the
Lender Parties, and any purported assignment or delegation without such consent
shall be void.

      8.7 Time is expressly made of the essence of this Agreement.

                                       12
<PAGE>

        IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 7
to be duly executed on the date first above written.

                                        MEDIABAY

                                        By: /s/ John F. Levy
                                           -------------------------------------
                                        Title: Executive Vice President and
                                               Chief Financial Officer

                                        RADIO SPIRITS, INC. By:

                                        By: /s/ John F. Levy
                                           -------------------------------------
                                        Title: Executive Vice President and
                                               Chief Financial Officer

                                        AUDIO BOOK CLUB, INC.

                                        By: /s/ John F. Levy
                                           -------------------------------------
                                        Title: Executive Vice President and
                                               Chief Financial Officer

                                       13
<PAGE>

                                        ING CAPITAL LLC,
                                        as Administrative Agent and Lender

                                        By: /s/ John Lanier
                                           -------------------------------------
                                        Title: Director

                                        ARK CLO 2000-1, LIMITED,
                                        as Lender

                                        By: PATRIARCH PARTNERS, LLC,
                                        As Collateral manager

                                        By:
                                           -------------------------------------
                                        Title:
                                              ----------------------------------

                                       15
<PAGE>

                                        ING CAPITAL LLC,
                                        as Administrative Agent and Lender

                                        By:
                                           -------------------------------------

                                        Title:
                                              ----------------------------------

                                        ARK CLO 2000-1, LIMITED

                                        By: Patriarch Partners, LLC
                                            Its Collateral Manager

                                        By: /s/ Lynn Tilton
                                           -------------------------------------
                                        Name: Lynn Tilton
                                        Title: Manager

                                       16
<PAGE>

The undersigned, whether or not consent is required in respect of any of the
foregoing, hereby confirm, agree to and accept the terms of this Amendment No. 7
and confirm the truth and accuracy of the representations and warranties
relating to any of the undersigned.

                                        MEDIABAY.COM, INC.

                                        By: /s/ John F. Levy
                                           -------------------------------------
                                        Title: Executive Vice President and
                                               Chief Financial Officer

                                        AUDIOBOOKCLUB.COM, INC

                                        By: /s/ John F. Levy
                                           -------------------------------------
                                        Title: Executive Vice President and
                                               Chief Financial Officer

                                        ABC-COA ACQUISITION CO

                                        By: /s/ John F. Levy
                                           -------------------------------------
                                        Title: Executive Vice President and
                                               Chief Financial Officer

                                        MEDIABAY SERVICES, INC.

                                        By: /s/ John F. Levy
                                           -------------------------------------
                                        Title: Executive Vice President and
                                               Chief Financial Officer

                                        AUDIO BOOK CLUB, INC.

                                        By: /s/ John F. Levy
                                           -------------------------------------
                                        Title: Executive Vice President and
                                               Chief Financial Officer

<PAGE>

                                        ABC INVESTMENT CORP.

                                        By: /s/ John F. Levy
                                           -------------------------------------
                                        Title: Executive Vice President and
                                               Chief Financial Officer

                                        MEDIABAY PUBLISHING, INC.

                                        By: /s/ John F. Levy
                                           -------------------------------------
                                        Title: Executive Vice President and
                                               Chief Financial Officer

                                        RADIO CLASSICS, INC.

                                        By: /s/ John F. Levy
                                           -------------------------------------
                                        Title: Executive Vice President and
                                               Chief Financial Officer

<PAGE>

                                   SCHEDULE 1

      The Borrowers have notified the Lenders and Administrative Agent that they
have restated certain of the Company's financial statements that have previously
been delivered to Lenders and Administrative Agent to reflect non-cash charges
relating to previously disclosed financing transactions which were accounted for
erroneously in MediaBay's financial statements for the years ended December 31,
1999, 2000 and 2001 and the first three fiscal quarters of 2002. As set forth in
Section 4.2(b) of this Amendment, each Borrower hereby represents and warrants
to the Lenders and Administrative Agent that the matters set forth in this
Schedule 1 do not and will not (i) affect the Borrowers' compliance with, or
cause a breach of, any of the covenants set forth in Article 6, Article 7 and
Article 8 of the Credit Agreement for any of the periods covered by the
restatement of the financial statements as described above, except for those
which have been waived by the Lenders and Administrative Agent in Amendment No.3
to the Credit Agreement or (ii) affect the Borrowers' compliance with the
covenants set forth in Article 6, Article 7 and Article 8 of the Credit
Agreement in future periods. Each Borrower further represents and warrants to
the Lenders and the Administrative Agent that the non-cash charges as set forth
in this Schedule I are non-cash financing and non-cash compensation charges
which relate solely to the accounting treatment of notes and warrants issued in
the previously disclosed financial transactions and do not represent additional
cash compensation paid to any officers or directors.EXHIBIT 10.36

                              EMPLOYMENT AGREEMENT

      THIS  AGREEMENT  made as of the 28 day of  January,  2004,  by and between
MediaBay, Inc., a Florida corporation, with offices at 2 Ridgedale Avenue, Cedar
Knolls, New Jersey 07927 (the "Company"),  and Jeffrey A. Dittus residing at 600
Old Gulph Road, Penn Valley, Pennsylvania 19072 (the "Executive").

                              W I T N E S S E T H:

      WHEREAS, the Company is engaged in the audio book club, old time radio and
spoken audio digital download businesses; and

      WHEREAS, the Company desires to employ the Executive; and

      WHEREAS,  the  Executive  is willing to serve the Company on the terms and
conditions herein provided.

      NOW,  THEREFORE,  in  consideration  of the  promises  and the  respective
covenants  and  agreements of the parties  herein  contained and intending to be
legally bound hereby, the parties agree as follows:

      1. Recitals.  The Whereas clauses recited above are hereby incorporated by
reference as though they were fully set forth herein.

      2.  Employment.  The Company  shall employ the Executive and the Executive
shall  serve the  Company  on the terms and  conditions  set forth  herein.  The
employment  relationship  between  the  parties  shall also be  governed  by the
general employment  policies and practices of the Company,  except that when the
terms of this  Agreement  differ  from or are in  conflict  with  the  Company's
general employment policies and practices, this Agreement shall control.

      3. Term.  The term of this  Agreement  shall  commence on January 28, 2004
("Effective  Date") and shall end three (3) years from the Effective Date if not
terminated earlier pursuant to the termination  provisions contained herein (the
"Term"). If either the Company or the Executive wish to extend or renew the term
of this  Agreement  when it expires,  then any such extension or renewal will be
mutually agreed to in writing by the parties

      4.  Position  and  Duties.  Subject  to the terms set  forth  herein,  the
Executive  shall be  employed  by the  Company  as Chief  Executive  Officer  of
MediaBay,  Inc.  His power and  authority  shall be and  remain  subject  to the
direction and control of the Board of Directors and the Chairman of the Company.
The Executive shall have profit and loss  responsibility for the Company and its
subsidiaries   (including  Audio  Book  Club,  Inc.,  Radio  Spirits,  Inc.  and
MediaBay.com,  Inc.)  as well as  operational  and  marketing  oversight  of the
business  and  affairs  of the  Company  and its  subsidiaries,  and  any  other
businesses which the Company or its subsidiaries may acquire,  and at the option
of the  Company,  additional  lines of  business  and  products  related  to the
business.  The  Board of  Directors  has the  right to  assign  and  change  the
Executive's title, duties,  responsibilities,  and oversight at any time. During
the Term,  the Executive  shall be required to devote his best efforts and spend
his full  time and  attention,  without  other  outside  business  interests  or
activities,  in  the  performance  of his  duties  and  the  Company's  and  its
subsidiaries' business and affairs.

                                       1
<PAGE>

      5. Compensation and Related Matters.

            (A) Base Salary.  For services  rendered pursuant to this Agreement,
the  Company  shall pay to the  Executive  an annual  base salary of $225,000 in
equal  semi-monthly  installments  in  arrears  on the 15th and last day of each
month subject to applicable  withholding and other taxes.  The base salary shall
be  increased  to  $250,000  per  year  (or a  pro-rata  portion  thereof)  upon
consummation of a debt,  equity,  or combination of debt and equity financing of
$10,000,000  or more prior to June 30, 2004 (as measured  against the  Company's
balance sheet as of December 31, 2003).  The base salary may be adjusted  upward
or downward in the sole discretion of the Board of Directors,  although it shall
not be adjusted  downward other than in conjunction with a general  reduction or
other  concessionary  arrangement  affecting  all  employees  or  affecting  all
executive level employees.

            (B) Bonus. The Executive will be eligible to receive a discretionary
annual  bonus to be  determined  by the  Compensation  Committee of the Board of
Directors of the Company in its  discretion.  Eligibility for such bonus will be
based  upon  a  set  of  financial  and  non-financial  objectives  set  by  the
Compensation  Committee  of the Board of  Directors  for each fiscal year (which
ends on December 31).  Executive must remain an employee  through the end of the
applicable  fiscal  year or he will not be  eligible  to receive  any bonus.  If
Executive's  employment  terminates for any reason, no partial or prorated bonus
payments will be made.  Determinations as to whether the Executive shall receive
any bonus,  including the determination as to whether  objectives have been met,
shall be made at the sole  discretion  of the Board.  Any bonus  awarded will be
paid no later than April 15 of the following year.

            (C) Expenses.  The Executive shall receive prompt  reimbursement for
all  reasonable  travel  and  business  expenses  in  connection  with  services
performed hereunder in accordance with normal Company policy, as the same may be
determined from time to time.

            (D) Insurance and Employee Benefits. The Executive shall be eligible
to receive such medical insurance and 401k benefits as are made available to all
officers of the Company,  subject to the general  eligibility and  participation
provisions  set forth in such plans.  The Company  reserves  the right to adopt,
amend, or discontinue any employee benefit,  plan, or program in accordance with
then applicable law.

            (E) Vacation.  The Executive  shall receive during each full year of
his employment, three (3) weeks (fifteen working days) paid vacation. Scheduling
of paid vacation  must be approved one (1) month in advance of taking  vacation,
and the Executive will make every effort to schedule the vacation time at a time
most  convenient  for the  Company.  Unused  vacation  days shall not be carried
forward  into the  following  year  and the  Executive  shall  not  receive  any
compensation for unused vacation.

                                       2
<PAGE>

            (F) Stock Options.  Subject to Board approval, the Executive will be
granted stock options to acquire one million five hundred  thousand  (1,500,000)
shares of Common Stock in the Company  pursuant to and in  accordance  with (and
therefore  subject to all terms and  conditions  of) the Company's  Stock Option
Plan.  The Executive  will receive these option grants  pursuant to six separate
option agreements.  All six stock option awards will be granted on the Effective
Date. The First Option with respect to Two Hundred and Fifty Thousand  (250,000)
shares  shall vest on April 30,  2004 at a price per share of $0.99.  The Second
Option with  respect to Two Hundred and Fifty  Thousand  (250,000)  shares shall
vest on July 30,  2004 at a price  per share of $0.99.  The  Third  Option  with
respect to Two Hundred and Fifty Thousand (250,000) shares shall vest on January
30, 2005 at a price per share of $1.55.  The Fourth  Option with  respect to Two
Hundred and Fifty  Thousand  (250,000)  shares  shall vest on July 30, 2005 at a
price per share of $1.55. The Fifth Option with respect to Two Hundred and Fifty
Thousand (250,000) shares shall vest on the Jnaury30,  2006 at a price per share
of $1.86. The Sixth Option with respect to Two Hundred Fifty Thousand  (250,000)
shares shall vest April 30, 2006 at a price per share of $1.86. The options will
vest in each instance  provided that the Executive is an employee of the Company
at the time such  vesting  is to occur.  Such  options  will be on the terms and
conditions as more specifically  provided for in the Company's Stock Option Plan
and will be exercisable as set forth in the Plan.

      6. Executive's Representations and Warranties.

            (A) Authority to Enter into Agreement.  Executive hereby  represents
and  warrants  that  Executive  has full right and  authority to enter into this
Agreement and to perform Executive's obligations hereunder.

            (B)  Affirmation  of  Truthfulness  of  Representations.   Executive
represents  and warrants that all facts he has  represented  and conveyed to the
Company,  whether  contained  in  his  resume  or  other  written  materials  or
transmitted  verbally,  are true and  complete,  and are  without  consequential
omissions  of  any  kind  whatsoever.  Executive  understands  that  falsity  of
statements  or answers  or  consequential  omissions  shall be deemed a material
breach of this Agreement.

            (C) No Breach of Contract.  Executive  represents  and warrants that
the  execution  and  delivery  of  this  Agreement  by  the  Executive  and  the
performance of the Executive's  obligations  hereunder will not conflict with or
breach any  agreement,  order or decree to which the  Executive is a party or by
which the Executive is bound.

            (D) No Conflict of Interest.  Executive  warrants that  Executive is
not, to the best of Executive's knowledge and belief,  involved in any situation
that might create,  or appear to create, a conflict of interest with Executive's
loyalty to or duties for the Company.

            (E)  Notification  of Materials or Documents  from Other  Employers.
Executive  further warrants that Executive has not brought and will not bring to
the Company or use in the  performance  of Executive's  responsibilities  at the
Company any  materials or documents of a former  employer that are not generally
available  to  the  public,   unless  Executive  has  obtained  express  written
authorization from the former employer for their possession and use.

            (F)  Notification of Other  Post-Employment  Obligations.  Executive
also  understands  that,  as part of  Executive's  employment  with the Company,
Executive is not to breach any obligation of confidentiality  that Executive has
to former  employers,  and  Executive  agrees to honor all such  obligations  to
former  employers  during  Executive's  employment  with the Company.  Executive
warrants  that  Executive is subject to no employment  agreement or  restrictive
covenant preventing full performance of Executive's duties under this Agreement.

                                       3
<PAGE>

            (G)  Indemnification  for  Breach;  Survival.  In  addition to other
remedies  which the Company might have for breach of this  Agreement,  Executive
agrees  to  indemnify  and hold the  Company  harmless  from any  breach  of the
provisions  of this  Section 6. The terms of this  Section 6 shall  survive  any
termination of this Agreement.

      7. Termination by the Company.

            (A)  General.  The Company  shall have the right to  terminate  this
Agreement with or without Cause at any time during the term of this Agreement by
giving written notice to the Employee. The termination shall become effective on
the date  specified in the notice,  which  termination  date shall not be a date
prior to the date  fourteen  (14)  days  following  the  date of the  notice  of
termination  itself,  provided,  however,  that the termination of Executive may
become  effective  on the date of the notice or on any date during the  fourteen
(14) day period following the notice provided that the Company  continues to pay
the Employee's Base Salary during the fourteen-day  period following the date of
the notice.

            (B) Cause.  In the event that the Executive is terminated  for Cause
(as defined  below),  the Company shall pay the Executive any unpaid base salary
due  Executive  through  the date of  termination  and notice  pay,  if any,  as
provided  in  subparagraph  (a) above.  Executive  shall not be  entitled to any
additional salary, bonus payments, severance, or other compensation.

            (C) Without  Cause.  In the event that the  Executive is  terminated
Without  Cause,  pursuant  to this  Section  7(c),  in  addition  to paying  the
Executive  through the date of termination  and, if  applicable,  complying with
subparagraph (a) above,  provided  Executive executes a full, general release of
claims  against the Company,  the Company shall pay to the  Executive  severance
compensation  equal to a  certain  number of months  (as  defined  below) of the
Employee's Base Salary as of the date of  termination,  payable on the Company's
regular payroll dates in accordance with normal payroll practices and subject to
deductions  as  required  by law.  The  number of months of  severance  shall be
determined  as  follows:   (i)  if  the  termination  occurs  within  the  first
twenty-four  (24)  months  of this  Agreement,  then the  number  of  months  of
severance shall be the number of months worked by Executive hereunder subtracted
from  twenty-four  (24);  and (ii) if the  termination  occurs  after  the first
twenty-four  (24)  months  of this  Agreement,  then the  number  of  months  of
severance shall be the number of months worked by Executive hereunder subtracted
from thirty six (36).

            (D) Cause  Defined.  For purposes of this  Section 7, "Cause"  shall
mean that the Board of Directors has determined in its sole  discretion that the
Executive  has engaged in any of the  following:  (i) any act or omission  which
constitutes  a  material  breach of, or  material  failure or refusal to perform
duties under, this Agreement and any covenant or condition thereof, after notice
of such and failure to cure the same within fifteen  business days; (ii) any act
constituting dishonesty, fraud, immoral or disreputable conduct which is harmful
to the Company or its reputation;  (iii) any conduct which  constitutes a felony
under applicable law; (iv) any act of gross misconduct which is injurious to the
Company;  (v)  refusal  to abide by or  implement  a  directive  of the Board of
Directors after notice of such and failure to cure the same within five business
days; (vi)  negligence or incompetence in the performance of Employee's  duties;
(vii) breach of  fiduciary  duty;  or (viii)  threats or acts of violence in the
workplace  or in the  course  and  scope  of  any  business  activity,  unlawful
harassment,   actual  or  attempted   misappropriation  or  embezzlement  of  or
intentional damage to any property of the Company.

                                       4
<PAGE>

      8. Termination by the Employee.

            (A) General. The Executive may terminate this Agreement at any time,
with or without  Good Reason (as  defined  below),  by giving at least  fourteen
days' written notice to the Company. Any such termination shall become effective
on the date specified in such notice,  provided that if the Executive gives more
than fourteen days written notice the Company may elect to have such termination
become  effective  on any date on or after the  fourteenth  (14th) day after the
date  of  the  notice  and  prior  to  the  date   specified   in  the   notice.
Notwithstanding the foregoing,  at the option of the Company, the termination of
Executive's  employment may become effective on any date on or after the date of
the notice  upon notice to the  Executive  by the Company and the payment by the
Company of the Executive's base salary during the fourteen-day  period following
the date of Executive's notice of termination of employment.

            (B) Without Good Reason. In the event that the Executive  terminates
his employment without Good Reason (as defined below), the Company shall pay the
Executive any unpaid base salary due Executive  through the date of  termination
and notice pay, if any, as provided in subparagraph  (a) above.  Executive shall
not be entitled to any additional salary,  bonus payments,  severance,  or other
compensation.

            (C) Good Reason. In addition to any unpaid base salary due Executive
through  the  date of  termination  and  notice  pay,  if any,  as  provided  in
subparagraph  (a)  above,  if such  termination  is for  Good  Reason,  provided
Executive  executes a full,  general release of claims against the Company,  the
Company shall pay to the  Executive  severance  compensation  equal to a certain
number of months (as defined below) of the Employee's base salary as of the date
of  termination,  payable on the Company's  regular  payroll dates in accordance
with normal payroll  practices and subject to deductions as required by law. The
number  of  months of  severance  shall be  determined  as  follows:  (i) if the
termination  occurs within the first  twenty-four (24) months of this Agreement,
then the number of months of severance  shall be the number of months  worked by
Executive  hereunder  subtracted from twenty-four  (24), which sum shall then be
divided  by two  (2);  and  (ii)  if the  termination  occurs  after  the  first
twenty-four  (24)  months  of this  Agreement,  then the  number  of  months  of
severance shall be the number of months worked by Executive hereunder subtracted
from  thirty six (36),  which sum shall  then be  divided  by two (2).  (D) Good
Reason Defined. For purposes of this Agreement, "Good Reason" shall mean:

                  (i) a material  reduction  in the  Employee's  Base Salary not
agreed to by the Employee, except for any reduction which is a part of a general
reduction  or  other  concessionary   arrangement  affecting  all  employees  or
affecting all executive level employees; or

                                       5
<PAGE>

                  (ii) a  material  adverse  change  made by the  Company in the
Executive's core functions,  duties or responsibilities  that would constitute a
demotion and that is not agreed to by the Employee; or

                  (iii) a requirement  that the Executive  relocate to an office
more than 75 miles from the office of the Company at which the Executive  spends
the majority of his time on the date of relocation without Executive's consent.

provided  however,  that any  actions  taken by the  Company  to  accommodate  a
disability  of the  Executive  or pursuant  to the Family and Medical  Leave Act
shall not be a Good Reason for purposes of this Agreement and provided  further,
in each such event listed in (i) through (iii) above,  the Executive  shall give
the  Company  notice  thereof  which  shall  specify  in  reasonable  detail the
circumstances  constituting Good Reason,  and there shall be no Good Reason with
respect to any such  circumstances  if cured by the Company  within  thirty (30)
days after such notice.

      9. Termination by Death or Disability of the Executive.

            (A) Death. In the event of the Executive's  death during the term of
this  Agreement,  all  obligations  of the  parties  hereunder  shall  terminate
immediately,  and the Company shall pay to the Executive's legal representatives
the Base Salary (and any earned  bonuses) due the  Executive  through the day on
which Executive's death shall have occurred.

            (B)  Disability.  Subject to  applicable  state and federal law, the
Company shall at all times have the right, upon written notice to the Executive,
to terminate  this  Agreement  based on the  Executive's  Disability (as defined
below). Upon any termination  pursuant to this Section, the Company shall pay to
the Executive any unpaid Base Salary  through the effective  date of termination
specified in such notice. The Company shall have no further liability  hereunder
(other than for reimbursement for reasonable business expenses incurred prior to
the date of termination, subject, however to the provisions hereof). Termination
by the Company of the Executive's  employment  based on "Disability"  shall mean
termination  because the Executive is unable to perform the essential  functions
of Executive's  position with or without  accommodation  due to a disability (as
such term is defined in the Americans with  Disabilities  Act) for six months in
the  aggregate  during  any  twelve  month  period.  This  definition  shall  be
interpreted and applied consistent with the Americans with Disabilities Act, the
Family and Medical Leave Act and other applicable law.

      10. Termination by Mutual Consent.  If at any time during the term of this
Agreement the parties by mutual consent decide to terminate this Agreement, they
shall do so by separate agreement setting forth the terms and conditions of such
termination.

      11.  Non-Competition  and  Confidentiality  Covenant.  As a  condition  of
employment and a material term of this Agreement, the Executive hereby agrees to
execute  and  abide  by the  Confidential  Information,  Inventions  Assignment,
Non-Solicitation and Non-Competition Agreement attached hereto as EXHIBIT A. The
provisions   of   the   Confidential    Information,    Inventions   Assignment,
Non-Solicitation  and  Non-Competition  Agreement are intended by the parties to
survive and do survive termination or expiration of this Agreement.

                                       6
<PAGE>

      12.  Indemnification.  To the maximum extent permitted under the corporate
laws  of the  State  of New  Jersey  or,  if more  favorable,  the  Articles  of
Incorporation  and/or  By-Laws  of the  Company as in effect on the date of this
Agreement,  and provided the Executive acted in good faith, did not act wantonly
or recklessly,  was not grossly negligent or engaged in willful misconduct,  and
acted in a manner he  reasonably  believed  to be in or not  opposed to the best
interests if the Company, and, with respect to any criminal proceedings,  had no
reasonable  cause to  believe  his  conduct  was  unlawful,  the  Company  shall
indemnify and hold harmless the Executive from and against (i) any claim,  loss,
liability,  obligation, damage, cost, expense, action, suit, proceeding or cause
of action  (collectively,  "Claims")  arising  from or out of or relating to the
Executive's acting as an officer, director,  employee or agent of the Company or
any of its affiliates or in any other capacity,  including,  without limitation,
any  fiduciary  capacity,  in which the  Executive  serves at the request of the
Company, and (ii) any cost or expense (including,  without limitation,  fees and
disbursements of counsel)  (collectively,  "Expenses") incurred by the Executive
in  connection  with the  defense  or  investigation  thereof.  If any  Claim is
asserted or other matter arises with respect to which the Executive  believes in
good faith the Executive is entitled to indemnification as contemplated  hereby,
the Company  shall,  at its election,  to be determined in its sole and absolute
discretion,  either assume the defense or  investigation of such Claim or matter
or pay the Expenses  incurred by the Executive in connection with the defense or
investigation of such Claim or matter,  when and as incurred,  provided that the
Executive  shall  reimburse the Company for such amounts,  plus simple  interest
thereon  at the  then  current  Prime  Rate as in  effect  from  time  to  tune,
compounded  annually,  if the Executive  shall be found,  as finally  judicially
determined  by a court of competent  jurisdiction,  not to have been entitled to
indemnification hereunder.

      13. Arbitration Agreement.  The parties hereto have simultaneously entered
into an Arbitration  Agreement attached hereto as EXHIBIT B which may be amended
by the parties from time to time without regard to this  Agreement.  The parties
expressly  agree that  disputes  arising out of or  relating to the  Executive's
employment,  including  any  disputes  under  or  relating  to  this  Employment
Agreement,  will be resolved by  arbitration  under the  Arbitration  Agreement;
provided  however,  that any dispute arising out of or relating to Section 11 of
this Agreement will not be subject to arbitration.

      14.  Governing  Law.  Except as preempted by federal law,  this  Agreement
shall be executed,  construed and  performed in accordance  with the laws of the
State of New Jersey  without  reference  to  conflict  of laws  principles.  The
parties  agree  that the venue for any  dispute  hereunder  will be the state or
federal  courts in New  Jersey and the  parties  hereby  agree to the  exclusive
jurisdiction thereof:

      15.  Binding  Agreement.  This  Agreement  and all rights and  obligations
hereunder  shall inure to the benefit of and be  enforceable  by the parties and
their personal or legal representatives,  executors, administrators, successors,
heirs,  distributees,  devisees  and legatees  and  assigns,  including  without
limitation any successor to the Company whether by merger,  consolidation,  sale
of stock or otherwise.

      16. Notice.  For the purpose of this Agreement,  notices,  demands and all
other  communications  provided  for in this  Agreement  shall be in writing and
shall be deemed to have been duly given when delivered personally, or by private
overnight  courier  or  mail  service,  postage  prepaid  or  (unless  otherwise
specified)  mailed by United Stares registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:

                                       7
<PAGE>

If to the Executive:        To his home address as listed in Company  records
                            at the time notice is given

If to the Company:          To its  corporate  headquarters  at the time  notice
                            is given, "Attention:  Board of Directors"

or to such other address as the patties may furnish to each ether in writing.
Copies of all notices, demands and communications shall be sent to the home
addresses of all members of the Board of Directors of the Company.

      17. Waiver and Modification.

            (A) No  provision  of this  Agreement  may be  modified,  waived  or
discharged unless such waiver, modification or discharge is agreed to in writing
signed by the parties  hereto,  provided,  however,  that this  Agreement may be
modified, waived or discharged by mutual agreement in writing.

            (B) No delay, waiver, omission or forbearance (whether by conduct or
otherwise) by any party hereto at any time to exercise any right,  option,  duty
or power  arising  out of breach  or  default  by the other  party of any of the
terms,  conditions or provisions of this Agreement to be performed by such other
party shall constitute a waiver by such party or a waiver of such party's rights
to  enforce  any  right,  option or power as  against  the other  party or as to
subsequent  breach or default by such other party,  and no explicit waiver shall
constitute a waiver of similar or dissimilar terms,  provisions or conditions at
the same time or at any prior or subsequent time.

      18.  Severability.  The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or  enforceability of
any other provision of this Agreement, and, in the event that any one or more of
the  words,  phrases,  sentences,  clauses,  provisions,  sections  or  articles
contained in this Agreement shall be declared  invalid,  this Agreement shall be
construed  as if such  invalid  word or words,  phrase or  phrases,  sentence or
sentences, clause or clauses,  provisions or provisions,  section or sections or
article or articles had not been  inserted and the  remainder of this  Agreement
shall remain in full force and effect.

      19.  Counterparts.   This  Agreement  may  be  executed  in  one  or  more
counterparts,  each of which shall be deemed to be an original  but all of which
together will constitute one and the same instrument.

      20. Entire  Agreement.  This Agreement and the  Confidential  Information,
Inventions Assignment,  Non-Solicitation and Non-Competition  Agreement attached
hereto contains the entire  understanding  of the Company and the Executive with
respect to the  subject  matter  hereof.  This  Agreement  supersedes  all prior
agreements and understandings  whether written or oral between the Executive and
the Company with respect to such subject matter,  and there are no restrictions,
agreements,  promises,  warranties or covenants  other than those stated in this
Agreement.

                                       8
<PAGE>

      IN WITNESS  WHEREOF,  the parties have executed this Agreement on the date
shown below effective as of the date first written above.

                                    "COMPANY"

Date Signed:  January 28, 2004      MEDIABAY, INC., a Florida corporation

                                    By:  /s/ Carl Wolf
                                       -----------------------------
                                    Printed Name: Carl Wolf
                                                 -------------------
                                    Title:        Chairman
                                          --------------------------

                                   "EXECUTIVE"

Date Signed:  January 28, 2004      /s/ Jeffrey A. Dittus
                                    --------------------------------
                                    Jeffrey A. Dittus

                                       9
<PAGE>

                                    EXHIBIT A

                [CONFIDENTIAL INFORMATION, INVENTIONS ASSIGNMENT,
                NON-SOLICITATION AND NON-COMPETITION AGREEMENT]

                                       10
<PAGE>

                                    EXHIBIT B

                             [ARBITRATION AGREEMENT]

                                       11

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