Document:

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                                                                 EXHIBIT 10.8(q)

                             SUBORDINATION AGREEMENT

         This Subordination Agreement ("Agreement"), dated as of March 14, 2001,
is entered into between FOOTHILL CAPITAL CORPORATION, a California corporation
("Foothill"), and DIGITAL IMAGING TECHNOLOGIES, INC., a Delaware corporation
("Creditor"), in light of the following:

         A. Creditor is interested in the financial success of INTERNATIONAL
REMOTE IMAGING SYSTEMS, INC., a Delaware corporation ("Borrower"), and
acknowledges that Foothill and Borrower and certain of its affiliates have
entered into certain financing arrangements, including that certain Loan and
Security Agreement, dated as of May 5, 1998 (together with any present or future
amendments, restatements, or supplements thereto, the "Loan Agreement"); and

         B. Creditor agrees that the financing arrangements between Borrower and
Foothill are in Borrower's best interest.

         NOW, THEREFORE, Foothill and Creditor agree as follows:

         1. Definition of Obligations. The term "Obligations" is used in this
Agreement in its broadest and most comprehensive sense and shall mean all
present and future indebtedness of Borrower which may be, from time to time,
directly or indirectly incurred by Borrower, including, but not limited to, any
negotiable instruments evidencing the same, and all guaranties, debts, demands,
monies, indebtedness, liabilities, and obligations owed or to become owing,
including interest, principal, costs, and other charges, and all claims, rights,
causes of action, judgments, decrees, remedies, security interests, or other
obligations of any kind whatsoever and howsoever arising, whether voluntary,
involuntary, absolute, contingent, or by operation of law.

         2. Subordination of Creditor Obligations. Any and all Obligations owed
to Creditor ("Creditor Obligations") including, but not limited to, the
obligations of Borrower owing to Creditor under that certain Subordinated Note
Due 2004 in the principal amount of $7,000,000 (together with any extensions,
amendments, replacements, or substitutions therefor, the "Subordinated Note")
are hereby subordinated to any and all Obligations owed to Foothill, including,
but not limited to, those Obligations arising pursuant to the Loan Agreement or
any other agreement or agreements between Foothill and Borrower, now or
hereafter existing, whether matured or not, including any interest which, but
for the application of the provisions of the Federal Bankruptcy Code, would have
accrued on such amounts (collectively, the "Foothill Obligations"). Except as
may be expressly provided in this Agreement, no payment shall be made by
Borrower on the Creditor Obligations until: (a) all of the Foothill Obligations
have been indefeasibly paid by Borrower in full, in cash; and (b) all
obligations of Foothill under the Loan Agreement to make loans or advances to,
or to issue or guarantee letters of credit for the account of, Borrower shall
have terminated.

         3. Insolvency. In the event of any assignment by Borrower for the
benefit of Borrower's creditors, of any voluntary or involuntary bankruptcy
proceedings instituted by or against Borrower, of the appointment of any
receiver for Borrower or Borrower's business or

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assets, or of any dissolution or other winding up of the affairs of Borrower or
of Borrower's business (collectively, "Insolvency Proceedings"), and in all such
cases respectively, the officers of Borrower and any assignee, trustee in
bankruptcy, receiver, and other person or persons in charge, are hereby directed
to pay to Foothill the full amount of the Foothill Obligations (including all
interest accruing, and all interest which, but for the application of the
Federal Bankruptcy Code, would have accrued, after the commencement of any such
Insolvency Proceeding), in cash, before making any payments or distributions of
any kind to Creditor.

         4. Limitations on Creditor's Actions. Except as may be expressly
provided in this Agreement, so long as any of the Foothill Obligations remains
unpaid, in whole or in part, and so long as Foothill is committed or otherwise
obligated to make loans and advances to, or guarantee letters of credit for the
account of, Borrower pursuant to the Loan Agreement, Creditor agrees not to: (i)
accelerate or collect or receive payment upon, by setoff or in any other manner,
any portion of the Creditor Obligations; (ii) sell, assign, exchange, redeem,
transfer, pledge, or give a security interest in the Creditor Obligations,
except for a sale or other transfer of the Creditor Obligations in connection
with sale of Creditor's business (whether by merger, sale of assets or
otherwise); (iii) enforce, collect, realize upon, or apply any collateral
security now or hereafter existing for the Creditor Obligations; (iv) join in
any Insolvency Proceeding; (v) take any lien on or security interest in any of
Borrower's real or personal property; (vi) incur any obligation to, or receive
any loans, advances, or gifts from Borrower; and (vii) modify any of the terms
and conditions of the Creditor Obligations.

           Notwithstanding anything to the contrary contained in this Agreement,
so long as there does not exist an Event of Default under the Loan Agreement,
Creditor shall be entitled to receive regularly scheduled payments of principal
and interest on the Creditor Obligations (but not prepayments, redemptions, or
payments as a result of acceleration) in accordance with the terms of the
Subordinated Note as presently in effect.

         5. Intentionally Omitted.

         6. Legending Instruments. Creditor agrees that if part or all of the
Creditor Obligations shall be evidenced by one or more promissory notes or other
instruments, Creditor shall place or cause to be placed on the face of each such
note and instrument a legend stating that the payment thereof is subject to the
terms of this Agreement and is subordinate to the prior payment of all of the
Foothill Obligations and shall, within the later of seven days after the
execution of any such promissory note or instrument or seven days after the date
of this Agreement, deliver a copy of such legended promissory note or legended
instrument to Foothill. Creditor agrees to mark all books of account in such
manner as to indicate that payment thereof is subordinated pursuant to the terms
of this Agreement.

         7. Modification of Foothill Obligations. Creditor agrees that Foothill
shall have absolute power and discretion, without notice to Creditor (except
that Foothill will use its best efforts to provide Creditor with written notice
of any written default notices to Borrower or written amendments to the Loan
Agreement; provided, however, that Foothill shall not have any liability to
Creditor if it fails to provide such notice), to deal in any manner with the
Foothill Obligations, including, but not by way of limitation, the power and
discretion to do any of the following: (a) any demand for payment of any
Foothill Obligation may be rescinded in whole or

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in part, and any Foothill Obligation may be continued, and the Foothill
Obligations or the liability of Borrower or any other party upon or for any part
thereof, or any collateral security or guaranty therefor, or right of offset
with respect thereto, may, from time to time, in whole or in part, be renewed,
extended, modified, accelerated, compromised, waived, surrendered, or released;
and (b) the Loan Agreement and any document or instrument evidencing or
governing the terms of any other Foothill Obligations or any collateral security
documents or guaranties or documents in connection with the Loan Agreement or
the Foothill Obligations may be amended, modified, supplemented, or terminated,
in whole or in part, as Foothill may deem advisable from time to time, and any
collateral security at any time held by Foothill for the payment of any of the
Foothill Obligations may be sold, exchanged, waived, surrendered, or released.
Creditor will remain bound under this Agreement, and the subordination provided
for herein shall not be impaired, abridged, released, or otherwise affected
notwithstanding any such renewal, extension, modification, acceleration,
compromise, amendment, supplement, termination, sale, exchange, waiver,
surrender, or release. The Foothill Obligations shall conclusively be deemed to
have been created, contracted, or incurred in reliance upon this Agreement, and
all dealings between Borrower and Foothill shall be deemed to have been
consummated in reliance upon this Agreement.

         8. Creditor's Waivers. Except for the best efforts notice provided in
Section 7 hereof, Creditor waives: (a) any and all notice of the creation,
modification, renewal, extension, or accrual of any of the Foothill Obligations
and notice of or proof of reliance by Foothill upon this Agreement; (b) and
agrees not to assert against Foothill any rights which a guarantor or surety
could exercise; but nothing in this Agreement shall constitute Creditor a
guarantor or surety; (c) the right, if any, to require Foothill to marshal or
otherwise require Foothill to proceed to dispose of or foreclose upon collateral
in any manner or order; and (d) any right of subrogation, contribution,
reimbursement, or indemnity which it may have against Borrower arising directly
or indirectly out of this Agreement.

         9. Continuing Nature of This Agreement. Notwithstanding any action or
inaction by Foothill with respect to the Foothill Obligations or with respect to
any collateral therefor or any guaranties thereof, this Agreement, the
obligations of Creditor owing to Foothill, and Foothill's rights and privileges
hereunder, shall continue until indefeasible payment in full, in cash, of all of
the Foothill Obligations and termination of any obligation of Foothill to make
loans or advances to, or guarantee letters of credit for the account of,
Borrower. All rights, power, and remedies hereunder shall apply to all past,
present, and future Foothill Obligations, including those arising out of
successive transactions which may continue renew, increase, decrease, or from
time to time create new Foothill Obligations. The subordinations, agreements,
and priorities set forth herein shall remain in full force and effect,
regardless of whether any party hereto in the future seeks to rescind, amend,
terminate, or reform, by litigation or otherwise, its respective agreements with
Borrower.

         10. No Creditor Liens; etc. Creditor further agrees that in case
Creditor shall, in contravention of the terms of this Agreement, take or receive
any security interest in, or lien by way of attachment, execution, or otherwise,
on any of the real or personal property of Borrower, or should take or join in
any other measure or advantage contrary to this Agreement, at any time prior to
the payment in full, in cash, of all of the Foothill Obligations, Foothill shall
be entitled to have the same vacated, dissolved, and set aside by such
proceedings at law or otherwise as

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Foothill may deem proper, and this Agreement shall constitute full and
sufficient grounds therefor and shall entitle Foothill to become a party to any
proceedings at law or otherwise initiated by Foothill or by any other party, in
or by which Foothill may deem it proper to protect Foothill's interest
hereunder.

         11. Creditor To Receive Payments, etc. in Trust. Except as otherwise
expressly agreed to herein, if Creditor shall receive any payments, collateral
security, or other rights in any property of Borrower in violation of this
Agreement, such payment or property shall be received by Creditor in trust for
Foothill and shall immediately be delivered and transferred to Foothill.

         12. No Prior Subordinations. No currently effective subordinations of
the Creditor Obligations have previously been executed by Creditor for the
benefit of anyone else, and any such subordinations hereafter executed will be,
and shall be expressed to be, subject and subordinate to the terms of this
Agreement.

         13. Financial Condition of Borrower. Creditor represents and warrants
to Foothill that Creditor is currently informed of the financial condition of
Borrower and of all other circumstances which a diligent inquiry would reveal
and which bear upon the risk of nonpayment of the Foothill Obligations. Creditor
hereby covenants and agrees that Foothill does not have any obligation to keep
Creditor informed of Borrower's financial condition, the financial condition of
other guarantors of the Foothill Obligations, if any, and of any other
circumstances which bear upon the risk of nonpayment or nonperformance of the
Foothill Obligations.

         14. Assignees, etc. This Agreement shall be binding upon the heirs,
administrators, personal representatives, successors, and assigns of Creditor,
and shall inure to the benefit of Foothill's successors and assigns.

         15. Additional Documents. Creditor agrees to execute and deliver, upon
the request of Foothill, such documents and instruments (appropriate for filing
or recording, if requested) as may be necessary or appropriate to fully
implement or to fully evidence the understanding and agreements contained in
this Agreement.

         16. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.

         17. Choice of Law; Venue. The validity of this Agreement, its
construction, interpretation, and enforcement, and the rights of the parties
hereunder, shall be determined under, governed by, and construed in accordance
with the laws of the State of California. The parties agree that all actions or
proceedings arising in connection with this Agreement shall be tried and
litigated only in the County of Los Angeles, State of California, or in
Foothill's sole discretion, such other court in which Foothill shall initiate
legal or equitable proceedings and which shall have subject matter jurisdiction
over the matter in controversy. Creditor waives any

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rights it may have to assert the doctrine of forum non conveniens or to object
to such venue and hereby consents to any court ordered relief.

         18. Collection Costs; Attorneys' Fees. In the event it becomes
necessary for either party to commence any proceedings or actions to enforce the
provisions of this Agreement, the court or body before which the same shall be
tried shall award to the prevailing party all costs and expenses thereof,
including, but not limited to, reasonable attorneys' fees, the usual and
customary and lawfully recoverable court costs, and all other expenses in
connection therewith.

         19. Counterparts. This Agreement may be executed by the parties hereto
in any number of separate counterparts. All of such counterparts, taken
together, shall constitute one and the same instrument.

         20. Waiver, Amendments, Etc. The subordination provisions contained
herein are for the benefit of Foothill and its successors and assigns and may
not be rescinded, cancelled, or modified in any way, nor, unless otherwise
expressly provided for herein, may any provision of this Agreement be waived or
changed, without the prior written consent thereto of Foothill or its successors
or assigns.

         21. Waiver of Jury Trial. TO THE MAXIMUM EXTENT PERMITTED BY LAW, EACH
OF FOOTHILL AND CREDITOR EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY
ACTION, CAUSE OF ACTION, CLAIM, DEMAND, OR PROCEEDING ARISING UNDER OR WITH
RESPECT TO THIS AGREEMENT, OR IN ANY WAY CONNECTED WITH, RELATED TO, OR
INCIDENTAL TO THE DEALINGS OF CREDITOR AND FOOTHILL WITH RESPECT TO THIS
AGREEMENT, OR THE TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING
OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE. TO
THE MAXIMUM EXTENT PERMITTED BY LAW, EACH OF FOOTHILL AND CREDITOR HEREBY AGREES
THAT ANY SUCH ACTION, CAUSE OF ACTION, CLAIM, DEMAND, OR PROCEEDING SHALL BE
DECIDED BY A COURT TRIAL WITHOUT A JURY AND THAT FOOTHILL OR CREDITOR MAY FILE
AN ORIGINAL COUNTERPART OF THIS SECTION WITH ANY COURT OR OTHER TRIBUNAL AS
WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES TO THE WAIVER OF THEIR RIGHTS TO
TRIAL BY JURY.

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         This Agreement has been executed and delivered as of the date set forth
in the first paragraph hereof.

                                    DIGITAL IMAGING TECHNOLOGIES, INC.,
                                    a Delaware  corporation

                                    By: /s/ TIMOTHY D. BURKETT
                                       -----------------------------------------
                                    Title: Vice President
                                          --------------------------------------

                                    Address: 1900 St. James #700
                                            ------------------------------------
                                             Houston, Texas 77056
                                            ------------------------------------

                                    FOOTHILL CAPITAL CORPORATION,
                                    a California corporation

                                    By: /s/ ANDREW HALL
                                       -----------------------------------------
                                    Title: Senior Vice President
                                          --------------------------------------

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         INTERNATIONAL REMOTE IMAGING SYSTEMS, INC., a Delaware corporation,
being the Borrower named in the foregoing Subordination Agreement, hereby
accepts and consents thereto and agrees to be bound by all of the provisions
thereof and to recognize all priorities and other rights granted thereby to
FOOTHILL CAPITAL CORPORATION, a California corporation ("Foothill"), and to pay
Foothill in accordance therewith.

Dated:  March 14, 2001.

                                  INTERNATIONAL REMOTE IMAGING
                                  SYSTEMS, INC., a Delaware corporation

                                  By: /s/ JOHN A. O'MALLEY
                                      ---------------------------------------
                                  Title: President
                                        -------------------------------------

                                        7<PAGE>   1
                                                                   EXHIBIT 10.18
                                                                    Confidential

                                  July 7, 2000

Spencer A. McClung, Jr.
2700 Pennsylvania Avenue
Santa Monica, CA 90404

         RE:      CONTINUED EMPLOYMENT AGREEMENT

Dear Spencer:

         Pursuant to our recent discussions, this letter sets forth the terms of
your continued employment with Launch Media, Inc. (the "Company").

         1.       Position. You will continue to be employed by the Company as
its Executive Vice President, Advertising Sales & Business Development,
reporting to the CEO and President. You accept continued employment with the
Company on the terms and conditions set forth in this Agreement, and you agree
to devote your full business time, energy and skill to your duties at the
Company.

         2.       Term of Employment. Your employment with the Company is for no
specified period, and may be terminated by you or the Company at any time, with
or without cause, subject to the provisions of Paragraphs 4 and 5 below.

         3.       Compensation. You will be compensated by the Company for your
services as follows:

             (a) Salary and Benefits. You will continue to receive your current
base salary and employee fringe benefits.

             (b) Stock Options. Concurrently herewith, you will be granted an
option to purchase 150,000 shares of the Company's common stock under the
Company's stock option plan at an exercise price equal to the fair market value
of that stock on the grant date. Provided you remain employed by the Company,
this option will vest over a four-year period. Your option will be governed by
and subject to the terms and conditions of the Company's standard form of stock
option agreement, which you will be required to sign in connection with the
issuance of your option.

             (c) Change of Control Bonus: In the event of a Change of Control
(as defined below), you will receive the following:

                  (i) upon the closing of the Change of Control, you will
receive a bonus payment of $500,000, less applicable withholding; and

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Spencer A. McClung, Jr.
[Date]
Page 2

                  (ii) the Company will loan you the sum of $1 million, which
loan will bear interest at the minimum rate necessary to avoid the imputation of
interest, and will be secured by appropriate security as agreed to by you and
the Company; the loan will be conditioned upon your execution of an appropriate
form of promissory note and security agreement; and

                  (iii) if you remain an employee of the Company in good
standing throughout the one-year period following the Change of Control, the
Company will forgive the loan described in subsection (ii), including all
principal and accrued interest on the following issues: 50% of principal and
interest after six (6) months and the balance at twelve (12) months. The Company
will also forgive all other outstanding loans made to you by the Company as of
the date hereof that currently total approximately $380,000. Such loans will be
forgiven 25% on each January 15 beginning January 15, 2001 and ending on January
15, 2004; provided, however, that any remaining balance on such loans will be
forgiven upon your termination of employment for any reason. The Company agrees
that the above schedule for the forgiveness of loans shall apply to the
currently outstanding loans regardless whether the loan upon a Change of Control
is provided.

                  (iv) This subparagraph (c) will terminate and be of no further
legal effect if a Change of Control does not occur within twelve months
following the date of this Agreement or at such time as the Company's trading
window for senior officers opens. Notwithstanding the foregoing, this paragraph
shall not apply to the forgiveness of the approximately $380,000 in loans
described in subparagraph (c) (iii) above.

                  (v) Additional Payment upon Change of Control

                           (A) In the event that any payment or benefit received
or to be received by Employee pursuant to this Agreement (collectively, the
"Payments") would be subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code"), or any similar or
successor provision (the "Excise Tax"), the Company shall pay to Employee within
ninety (90) days of the date Employee becomes subject to the Excise Tax, an
additional amount (the "Gross-Up Payment") such that the net amount retained by
Employee, after deduction of (1) any Excise Tax on the Payments and (2) any
federal, state and local income or employment tax and Excise Tax upon the
payment provided for by this Section, shall be equal to the Payments; provided,
however, that in no event shall the amount of the Gross-Up Payment exceed
$1,000,000.

                           (B) For purposes of determining whether any of the
Payments will be subject to the Excise Tax and the amount of such Excise Tax:

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Spencer A. McClung, Jr.
[Date]
Page 3

                                    (I) Any other payments or benefits received
or to be received by Employee in connection with transactions contemplated by a
Change in Control event or Employee's termination of employment (whether
pursuant to the terms of this Agreement or any other plan, arrangement or
agreement with the Company), shall be treated as "parachute payments" within the
meaning of Section 280G of the Code or any similar or successor provision, and
all "excess parachute payments" within the meaning of Section 280G or any
similar or successor provision shall be treated as subject to the Excise Tax,
unless in the mutual opinion of tax counsel selected by the Company and tax
counsel selected by Employee such other payments or benefits (in whole or in
part) do not constitute parachute payments, or such excess parachute payments
(in whole or in part), not subject to the Excise Tax.

                                    (II) The amount of the Payments which shall
be treated as subject to the Excise Tax shall be equal to the total amount of
the Payments.

                                    (III) The value of any non-cash benefits or
any deferred payment or benefit shall be determined by the Company's independent
auditors in accordance with the principles of Section 280G of the Code.

                           (C) For purposes of determining the amount of the
Gross-Up Payment, Employee shall be deemed to pay federal income taxes at the
highest marginal rate of federal income taxation in the calendar year in which
the Gross-Up Payment is to be made and state and local income taxes at the
highest marginal rate of taxation in the state and locality of Employee's
residence on the date the Gross-Up Payment is to be made, net of the maximum
reduction in federal income taxes which could be obtained from deduction of such
state and local taxes.

                           (D) In the event that the Excise Tax is subsequently
determined to be less than the amount taken into account hereunder, Employee
shall repay to the Company at the time that the amount of such reduction in
Excise Tax is finally determined the portion of the Gross-Up Payment
attributable to such reduction (plus the portion of the Gross-Up Payment
attributable to the Excise Tax and federal, state and local income and
employment taxes imposed on the Gross-Up Payment being repaid by Employee if
such repayment results in a reduction in Excise Tax and/or a federal, state or
local income or employment tax deduction) plus interest on the amount of such
repayment at the rate provided in Section 1274(b)(2)(B) of the Code.

                           (E) In the event that the Excise Tax is determined to
exceed the amount taken into account hereunder (including by reason of any
payment the existence or amount of which cannot be determined at the time of the
Gross-Up Payment), the Company shall

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Spencer A. McClung, Jr.
[Date]
Page 4

make an additional gross-up payment in respect of such excess (plus any interest
payable with respect to such excess) at the time that the amount of such excess
is finally determined, subject to the limitation contained in Paragraph
3(c)(v)(A).

             (d) Loan and Stock Purchase. In the event that a Change of Control
does not occur within twelve months following the date of this Agreement, or on
the date that the Company's trading window for senior officers first opens prior
to the expiration of such 12 month period, the Company will loan you the sum of
$1.5 million of which $1 million must be used by you solely for the purpose of
purchasing Company stock in market transactions, except as provided below. The
loan will bear interest at the minimum rate necessary to avoid the imputation of
interest, and will be secured by the stock purchased with the loan proceeds or
other security as agreed to by you and the Company. The loan will be
non-recourse except as to 25% of the principal amount which will be full
recourse. The loan will be conditioned upon your execution of an appropriate
form of promissory note and security agreement. If you are unable to purchase
shares, using the loan proceeds, at a price of $10 or less in market
transactions, the Company will sell you that number of shares you are unable to
purchase at a price of $10 or less in market transactions at a price equal to
$10 per share.

         4.       Voluntary Termination. In the event that you voluntarily
resign from your employment with the Company, or in the event that your
employment terminates as a result of your death or disability (meaning that you
are unable to perform your duties for any 90 days in any one year period as a
result of a physical and/or mental impairment), you will be entitled to no
compensation or benefits from the Company other than those earned under
Paragraph 3 through the date of your termination, and any loan made to you by
the Company pursuant to this Agreement will become due and payable within ninety
days after such termination. You agree that if you voluntarily terminate your
employment with the Company for any reason, you will provide the Company with at
least 30 days' written notice of your resignation. The Company may, in its sole
discretion, elect to waive all or any part of such notice period and accept your
resignation at an earlier date. Notwithstanding the foregoing, the release
referenced above will not extinguish any unfulfilled contractual obligation of
the Company to you, including without limitation, indemnification obligations.
Concurrently, the Company will provide a similar release to you.

         5.       Other Termination. Your employment may be terminated under the
circumstances set forth below.

             (a) Termination for Cause: If your employment is terminated by the
Company for cause as defined below, you shall be entitled to no compensation or
benefits from the Company other than those earned under Paragraph 3 through the
date of your termination for cause, and any loan made to you by the Company
pursuant to this Agreement will become due and payable immediately.

<PAGE>   5

Spencer A. McClung, Jr.
[Date]
Page 5

         For purposes of this Agreement, a termination "for cause" occurs if you
are terminated for any of the following reasons: (i) theft, dishonesty or
falsification of any employment or Company records; (ii) improper disclosure of
the Company's confidential or proprietary information; (iii) any improper action
by you which has a material detrimental effect on the Company's reputation or
business; or (iv) your conviction (including any plea of guilty or no contest)
for any felony that impairs your ability to perform your duties under this
Agreement.

             (b) Termination Without Cause/Resignation for Good Reason: If your
employment is terminated by the Company without cause (and not as a result of
your death or disability) or if you resign from your employment with the Company
for Good Reason (as defined below), and if you sign a general release of known
and unknown claims in form satisfactory to the Company, the Company will forgive
any outstanding loans made to you pursuant to Paragraph 3(c) or (d), including
all principal and accrued interest.

         6.       Change of Control/Good Reason.

             (a) For purposes of this Agreement, a "Change of Control" of the
Company shall be deemed to have occurred if:

                           (i) any "person" (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), other than a trustee or other fiduciary holding securities of
the Company under an employee benefit plan of the Company, becomes the
"beneficial owner" (as defined in Rule 13d-3 promulgated under the Exchange
Act), directly or indirectly, of securities of the Company representing 30% or
more of (A) the outstanding shares of common stock of the Company or (B) the
combined voting power of the Company's then-outstanding securities entitled to
vote generally in the election of directors; or

                           (ii) the Company (A) is party to a merger,
consolidation or exchange of securities which results in the holders of voting
securities of the Company outstanding immediately prior thereto failing to
continue to hold at least 50% of the combined voting power of the voting
securities of the Company, the surviving entity or a parent of the surviving
entity outstanding immediately after such merger, consolidation or exchange, or
(B) sells or disposes of all or substantially all of the Company's assets (or
any transaction having similar effect is consummated).

             (b) For purposes of this Agreement, "Good Reason" means any of the
following conditions, which condition(s) remain(s) in effect 10 days after
written notice to the Board from you of such condition(s):

                           (i) a decrease in your base salary and/or a material
decrease in any of your employee benefits;

<PAGE>   6

Spencer A. McClung, Jr.
[Date]
Page 6

                           (ii) an adverse change in your title, authority or
duties, as measured against your title, authority or duties immediately prior to
such change; or

                           (iii) the relocation of your workplace for the
Company to a location that is more than 50 miles from the location of your
current workplace for the Company.

         7.       Confidential and Proprietary Information. As a condition of
your continued employment, and if you have not already done so, you agree to
sign the Company's standard form of employee confidentiality and assignment of
inventions agreement.

         8.       Dispute Resolution. In the event of any dispute or claim
relating to or arising out of your employment relationship with the Company,
this agreement, or the termination of your employment with the Company for any
reason (including, but not limited to, any claims of breach of contract,
wrongful termination or age, sex, race, sexual orientation, disability or other
discrimination or harassment), you and the Company agree that all such disputes
shall be fully, finally and exclusively resolved by binding arbitration
conducted by the American Arbitration Association in Los Angeles County,
California. You and the Company hereby knowingly and willingly waive your
respective rights to have any such disputes or claims tried to a judge or jury.
Provided, however, that this arbitration provision shall not apply to any claims
for injunctive relief.

         9.       Severability. If any provision of this Agreement is deemed
invalid, illegal or unenforceable, such provision shall be modified so as to
make it valid, legal and enforceable, and the validity, legality and
enforceability of the remaining provisions of this Agreement shall not in any
way be affected.

         10.      Assignment. In view of the personal nature of the services to
be performed under this Agreement by you, you cannot assign or transfer any of
your obligations under this Agreement. In the event that this Agreement is
assigned by the Company to another party, prior to the assignment being
effective, the assignee will be required to execute a formal assumption
agreement pursuant to which it expressly assumes this Agreement and delivers the
assumption agreement to you.

         11.      Entire Agreement. This Agreement and the agreements referred
to above constitute the entire agreement between you and the Company regarding
the terms and conditions of your employment, and they supersede all prior
negotiations, representations or agreements between you and the Company
regarding your employment, whether written or oral.

         12.      Modification. This Agreement may only be modified or amended
by a supplemental written agreement signed by you and an authorized
representative of the Company.

<PAGE>   7

Spencer A. McClung, Jr.
[Date]
Page 7

         Spencer, we look forward to continuing to work with you at Launch
Media. Please sign and date this letter on the spaces provided below to
acknowledge your acceptance of the terms of this Agreement.

                                   Sincerely,

                                   Launch Media, Inc.

                                   By:    /s/ Robert D. Roback
                                        --------------------------------
                                          Robert D. Roback
                                          President

         I agree to and accept continued employment with Launch Media, Inc. on
the terms and conditions set forth in this Agreement.

         Date:  July _7__, 2000          /s/ Spencer A. McClung, Jr.
                                   --------------------------------------------
                                           Spencer A. McClung, Jr.

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