AUDIO BOOK CLUB INC
8-K, 1999-01-14
CATALOG & MAIL-ORDER HOUSES
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                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549


                                   ----------


                                    FORM 8-K


                                 CURRENT REPORT


                     PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934



Date of Report (Date of Earliest Event Reported): December 31, 1998



                              AUDIO BOOK CLUB,INC.
             (Exact name of registrant as specified in its charter)



            FLORIDA                      1-13469                 65-0429858
(State or other jurisdiction           (Commission            (I.R.S. Employer 
     of incorporation)                 File Number)          Identification No.)




2295 Corporate Blvd., N.W., Boca Raton, FL 33431 
(Address of principal executive offices) (Zip Code)



Registrant's telephone number, including area code: 561-241-1426 


- --------------------------------------------------------------------------------
Former name or former address, if changed since last report




<PAGE>


Item 2. Acquisition or Disposition of Assets.

     On  December  31,  1998  (the  "Closing"),   Audio  Book  Club,  Inc.  (the
"Registrant")  consummated the acquisition (the  "Acquisition")  of The Columbia
House Audio Book Club (the "CH Audio Book Club") from the Columbia House Company
("Columbia  House"),  pursuant to the terms of an Asset Purchase Agreement dated
December 30, 1998 between  Columbia House and the Registrant,  and an Assignment
and Assumption  Agreement and Consent (the "Assignment  Agreement") by and among
the  Registrant,  CH  Acquisitions  Corp.,  a  wholly-owned  subsidiary  of  the
Registrant   ("CHAC"),   and  Columbia   House   (collectively,   the  "Purchase
Agreement").

     At the time of the  Acquisition,  the CH Audio  Book Club was the  industry
leading direct marketer of audiobooks using a membership club format. As part of
the  Acquisition,  CHAC  acquired  CH  Audio  Book  Club's  membership  file  of
approximately  600,000 members, as well as substantially all of Columbia House's
other assets relating exclusively to the CH Audio Book Club, including inventory
and certain accounts receivable.  The Registrant and Columbia House also entered
into a  mailing  agreement  (the  "Mailing  Agreement")  pursuant  to which  the
Registrant  received the rights to (i) utilize  Columbia  House's  compact disc,
VHS,  laser and DVD video club  membership  lists in its new member  acquisition
campaigns,  (ii) insert new member  acquisition  materials into Columbia House's
member  mailing  programs to its  various  clubs and (iii) be referred to as the
Columbia House recommended  source for audiobooks in a club format, for a period
of seven years.  Columbia  House also entered into a non-compete  agreement (the
"Non-Compete  Agreement")  pursuant  to which it agreed not to engage in certain
activities (as described in the  Non-Compete  Agreement)  which compete with the
Registrant's  operation  of its  audiobook  club for a period of five years.  In
addition, the Registrant and Columbia House entered into a Transitional Services
Agreement.

     As  consideration  for  the  Acquisition  and  the  related   transactions,
including the Mailing Agreement,  the Non-Compete Agreement and the Transitional
Services  Agreement  (as  defined in the  Purchase  Agreement),  Columbia  House
received cash consideration of $30,750,000.  In addition,  the Registrant issued
to Columbia House's designees (Sony Music Entertainment Inc. and WCI Record Club
Inc.) an aggregate  of 325,000  shares of its common  stock (the  "Shares")  and
warrants to  purchase  an  additional  100,000  shares of its common  stock (the
"Warrant  Shares") at a price of $11.125 per share.  The Registrant and Columbia
House also entered into a Registration and Shareholder Rights Agreement pursuant
to which,  among things,  the  Registrant  granted to Columbia House (i) certain
registration  rights with respect to the Shares and Warrant  Shares and (ii) the
right,

                                       -2-

<PAGE>



under certain  circumstances,  commencing six years from the Closing, to require
the Registrant to purchase from Columbia House and its designees the Shares at a
price of $15.00  per  Share.  The  consideration  paid for the  Acquisition  was
determined by  negotiations  between the  representatives  of the Registrant and
Columbia House.

     The  cash  consideration  paid  for the  Acquisition  was  obtained  by the
Registrant  from (i)  Fleet  National  Bank  ("Fleet")  and ING  (U.S.)  Capital
Corporation  pursuant to a credit  agreement  dated as of December 31, 1998 (the
"Credit Agreement") among the Registrant,  the banks, financial institutions and
other  institutional  lenders named therein,  as Initial Lenders,  and Fleet, as
Initial Issuing Bank,  Swingline Bank and Administrative  Agent, and (ii) Norton
Herrick, the Registrant's Co-Chief Executive Officer,  pursuant to a Convertible
Senior Subordinated Promissory Note due December 31, 2004.

     The  descriptions  of  the  Purchase  Agreement  and  Assignment  Agreement
described  herein are  qualified  in their  entirety by  reference  to the terms
contained therein copies of which are filed as exhibits to this Report.

Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.

A.   Financial Statements of the Business Acquired.

     It is  impracticable  to provide the required  financial  statements  of CH
Audio Book Club at this time. The required  financial  statements  will be filed
under cover of Form 8-K/A  within 60 days of the date this Form 8-K was required
to be filed.

B.   Pro Forma Financial Information.

     It is impracticable to provide the required pro forma financial information
at this time. The required pro forma financial  information  will be filed under
cover of Form 8-K/A  within 60 days of the date this Form 8-K was required to be
filed.

C.   Exhibits.

     Exhibit 2.1 - Asset Purchase  Agreement,  dated as of December 30, 1998, by
and among the Registrant and the Columbia House Company.

     Exhibit  2.2 - List of  Omitted  Schedules/Exhibits  to the Asset  Purchase
Agreement.


                                       -3-

<PAGE>


     Exhibit 2.3 - Assignment and Assumption Agreement and Consent,  dated as of
December 31, 1998, by and among the Registrant,  CH  Acquisitions  Corp. and The
Columbia House Company.

                                   SIGNATURES

     Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.



                                       AUDIO BOOK CLUB INC.



                                       By:  /s/ Michael Herrick      
                                            ---------------------------------
                                                Michael Herrick,
                                                Chief Executive Officer


Date: January 13, 1999

                                       -4-



                                                                [EXECUTION COPY]

================================================================================








                            ASSET PURCHASE AGREEMENT


                                      among


                           THE COLUMBIA HOUSE COMPANY


                                       and


                              AUDIO BOOK CLUB, INC.





                     ---------------------------------------

                             Dated December 30, 1998

                     ---------------------------------------








================================================================================




<PAGE>


                                TABLE OF CONTENTS

                                                                          Page #
                                                                          ------

ARTICLE 1.  SALE OF ASSETS...................................................  1
         1.1      Sale and Purchase of Assets................................  1

ARTICLE 2.  CLOSING, PURCHASE PRICE, LIABILITIES.............................  4
         2.1      Closing....................................................  4
         2.2      Purchase Price.............................................  5
         2.3      Liabilities................................................  5
         2.4      Instruments of Conveyance and Transfer.....................  6
         2.5      Ancillary Agreements.......................................  6

ARTICLE 3.  REPRESENTATIONS AND WARRANTIES OF SELLER.........................  7
         3.1      Organization and Qualification.............................  7
         3.2      Authority to Effect Transactions...........................  7
         3.3      Effect of Agreements.......................................  7
         3.4      Government Approvals.......................................  7
         3.5      Financial Statements.......................................  8
         3.6      Absence of Certain Developments............................  8
         3.7      Title to Properties, Absence of Liens and Encumbrances.....  8
         3.8      Masterfile Database........................................  9
         3.9      Inventory..................................................  9
         3.10     Accounts Receivable........................................  9
         3.11     List of Contracts..........................................  9
         3.12     Litigation.................................................  9
         3.13     Compliance With Law; Permits............................... 10
         3.14     Affiliated Parties......................................... 10
         3.15     Broker's or Finders' Fees.................................. 10
         3.16     Investment Intent.......................................... 10

ARTICLE 4.  REPRESENTATIONS AND WARRANTIES OF BUYER.......................... 11
         4.1      Organization............................................... 11
         4.2      Authority to Effect Transactions........................... 11
         4.3      Effect of Agreements....................................... 11
         4.4      Shares..................................................... 11
         4.5      Title to Shares............................................ 12
         4.6      SEC Filings; Financial Statements.......................... 12
         4.7      Capitalization............................................. 12
         4.8      Certificate of Incorporation............................... 13
         4.9      Absence of Certain Developments............................ 13

                                       -i-



<PAGE>


                                                                          Page #
                                                                          ------


         4.10     Litigation................................................. 13
         4.11     Governmental Approvals..................................... 13
         4.12     Broker's or Finder's Fees.................................. 13

ARTICLE 5.  COVENANTS ....................................................... 14

         5.1      Covenants of Seller........................................ 14
         5.2      Covenants of Buyer......................................... 15
         5.3      Hart-Scott-Rodino.......................................... 16
         5.4      Confidentiality............................................ 16
         5.5      Allocation of Purchase Price............................... 17
         5.6      Preparation of Certain Financial Information............... 17
         5.7      Further Assurances......................................... 18
         5.8      No Solicitation; Acquisition Proposals..................... 19
         5.9      Employees.................................................. 19
         5.10     Reasonable Efforts; Additional Actions..................... 19
         5.11     Notification of Certain Matters............................ 20

ARTICLE 6.  CONDITIONS PRECEDENT ............................................ 20
         6.1      Conditions Precedent to the Obligations of Buyer........... 20
                  (a)      Accuracy of Representations and Warranties........ 20
                  (b)      Material Adverse Change........................... 20
                  (c)      Compliance with Covenants......................... 20
                  (d)      Opinion of Counsel for Seller..................... 20
                  (e)      Legal Actions or Proceedings...................... 20
                  (f)      Regulatory Approvals.............................. 21
                  (g)      Ancillary Agreements.............................. 21
                  (h)      Supporting Documents.............................. 21
                  (i)      Seller Financial Statements....................... 21
         6.2      Conditions Precedent to the Obligations of Seller.......... 21
                  (a)      Accuracy of Representations and Warranties........ 21
                  (b)      Buyer Material Adverse Change..................... 21
                  (c)      Compliance with Covenants......................... 21
                  (d)      Opinions of Counsel for Buyer..................... 21
                  (e)      Legal Actions or Proceedings...................... 22
                  (f)      Seller Released................................... 22
                  (g)      Ancillary Agreements.............................. 22
                  (h)      Supporting Documents.............................. 22

         ARTICLE 7.  INDEMNIFICATION......................................... 22
         7.1      Indemnity by Seller........................................ 22

                                      -ii-





<PAGE>


                                                                          Page #
                                                                          ------


         7.2      Indemnity by Buyer......................................... 23
         7.3      Defense of Claims.......................................... 24
         7.4      Exclusive Remedies......................................... 25
         7.5      Survival................................................... 25
         7.6      Damages.................................................... 25
         7.7      Owners or Affiliates of Seller............................. 26
         7.8      Put Amount................................................. 26

ARTICLE 8.  TERMINATION...................................................... 27
         8.1      Termination................................................ 27
         8.2      Effect of Termination...................................... 27

ARTICLE 9.  MISCELLANEOUS.................................................... 28
         9.1      Bulk Sales Laws............................................ 28
         9.2      Expenses................................................... 28
         9.3      Further Actions............................................ 28
         9.4      Entire Agreement; Modification............................. 28
         9.5      Notices.................................................... 28
         9.6      Waiver..................................................... 29
         9.7      Binding Effect; Assignment................................. 30
         9.8      Separability............................................... 30
         9.9      Headings................................................... 30
         9.10     Counterparts............................................... 30
         9.11     Return of Information...................................... 30
         9.12     Sections of Disclosure Schedule............................ 31
         9.13     Incorporation by Reference................................. 31
         9.14     Governing Law.............................................. 31


                                      -iii-


<PAGE>


                                                                          Page #
                                                                          ------



                   DISCLOSURE SCHEDULES, EXHIBITS AND ANNEXES


                         SECTIONS OF DISCLOSURE SCHEDULE

Schedule 1.1(a)(viii)  Analytical Files
Schedule 2.3           Liabilities
Schedule 3.3           Effect of Agreements
Schedule 3.5           Financial Statements
Schedule 3.6           Absence of Certain Developments
Schedule 3.7           Title to Properties, Absence of Liens and Encumbrances
Schedule 3.8           Masterfile Database
Schedule 3.11          List of Contracts and Other Data
Schedule 3.12          Litigation
Schedule 4.7           Capitalization
Schedule 4.8           Certificate of Incorporation
Schedule 4.9           Absence of Certain Developments
Schedule 5.1           Covenants of Seller
Schedule 5.2           Covenants of Buyer

                       EXHIBITS

Exhibit A              Bill of Sale, Assignment and Assumption Agreement
Exhibit B              Mailing Agreement
Exhibit C              Registration and Shareholder Rights Agreement
Exhibit D              Non-Compete Agreement
Exhibit E              Transitional Services Agreement
Exhibit F              Warrant
Exhibit G(1)           Buyer Press Release
Exhibit G(2)           Seller Press Release

                       ANNEXES

Annex A                Form of opinion of Paul, Weiss, Rifkind, Wharton &
                       Garrison
Annex B                Form of opinion of Andrew J. Gerber, Esq.
Annex C                Form of opinion Werbel & Carnelutti/Atlas, Pearlman,
                       Trop & Borksin


                                      -iv-


<PAGE>

                            ASSET PURCHASE AGREEMENT


     AGREEMENT,  dated as of December 30, 1998, between Audio Book Club, Inc., a
Florida  corporation  ("Buyer"),  and The  Columbia  House  Company,  a New York
general partnership ("Seller").

                              W I T N E S S E T H:

     WHEREAS, Seller operates a business for the direct marketing of audio books
by mail,  through  "Columbia  House  Audio Book  Club," a  membership  club (the
"Business"),  and owns or has the  right to use,  among  other  assets,  certain
databases, licenses, inventory and goodwill relating thereto; and

     WHEREAS,  Buyer  desires to acquire  those assets of Seller as set forth in
Section 1.1(a) herein, and Seller desires to sell such assets to Buyer, upon the
terms and subject to the conditions hereinafter set forth.

     NOW,  THEREFORE,  in  consideration  of  the  representations,  warranties,
convents and  agreements  contained  herein,  and  intending to be legally bound
hereby, Seller and Buyer agree as follows:


                                   ARTICLE 1.
                                 SALE OF ASSETS

     1.1 Sale and  Purchase  of  Assets.  (a) Upon the terms and  subject to the
conditions set forth in this Agreement,  including receipt of necessary Consents
(as defined in Section 1.1(b) hereof) for the assignment of Contested Assets (as
defined in Section  1.1(b)  hereof),  on the Closing Date (as defined in Section
2.1 hereof),  Seller shall sell, convey, assign,  transfer and deliver to Buyer,
and Buyer shall purchase and acquire from Seller,  all of Seller's right,  title
and interest at the Closing Date in and to those assets exclusively  relating to
the Business and listed in clauses (i) - (ix) below, and those additional assets
referred to in Section 1.1(b) hereof (only to the extent provided  herein),  but
excluding  those  assets  referred to in Section  1.1(c)  below (all said assets
exclusively relating to the Business to be sold, conveyed, transferred, assigned
and  delivered  being  hereinafter  collectively  referred to as the  "Purchased
Assets"):

          (i) Seller's Audio Book Club masterfile database,  including,  without
     limitation,  all (active and inactive)  customer  (member) data  (including
     addresses), sales/returns transaction history, payment history, promotional
     marketing  data and  history,  and  collections  history  (such  data being
     hereinafter collectively referred to as the "Masterfile Database");


<PAGE>


          (ii) the proprietary  "800" telephone number  exclusively  relating to
     the Business;

          (iii)   Seller's   inventories   of  (A)  audio  books,   (B)  premium
     merchandise,  if any, (e.g.,  audio cassette players) and (C) manufacturing
     components,  in each such case relating  exclusively to audio book club new
     member  recruitment and not imprinted with the name "Columbia House" or any
     related marks or derivations  thereof,  in each case wherever  located (the
     "Inventory");

          (iv)  Seller's  inventory of  brochures,  sales  literature,  creative
     advertising  materials,  art work,  promotional  material and other selling
     material  in each  case  exclusively  relating  to the  Business,  wherever
     situated,  including,  but not limited to, book cover images and title copy
     descriptions (collectively,  the "Promotional Assets");  provided, however,
     Seller will not be required to transfer to Buyer any  materials  containing
     the name "Columbia  House",  any other name used by Seller,  or any related
     marks or derivations thereof (collectively, "Seller Marks"), subject to the
     next  sentence.  If any  creative  materials,  duplicating  film  or  other
     "master"  duplicating  materials  constituting  Promotional  Assets contain
     Seller Marks,  Seller will so advise Buyer and will make printed  copies of
     the materials concerned available for Buyer's review. If Buyer so elects in
     respect of any such  materials,  Seller will transfer them to Buyer but may
     delete the Seller Marks from them at Buyer's expense;

          (v) Papers,  documents  (including  printed or computerized  copies of
     information  stored in  electronic  forms such as computer  disks,  CD Rom,
     computer tape,  computer hard drive and the like),  instruments,  books and
     records,  files,  books of account and other records by which the Purchased
     Assets might be identified or rights with respect thereto enforced.  Seller
     shall  not be  required  to  deliver  such  items  listed  in this  Section
     1.1(a)(v)  to  the  extent  that  such  delivery   would  violate  (i)  any
     confidentiality  agreement to which Seller is a party, or bound by, or (ii)
     any legal privilege;  provided, that in the case of clause (i) Seller shall
     use those efforts prescribed in Section 1.1(b) herein to obtain the consent
     of the parties to the relevant  confidentiality  agreements to the transfer
     of such items;

          (vi) the  rights of Seller  under all such  contracts,  agreements  or
     commitments  exclusively  relating  to  the  Business,  including,  without
     limitation,  license agreements,  marketing agreements (including,  without
     limitation,  agreements relating to rights to list rentals, package inserts
     and ride alongs), noncompetition agreements, confidentiality agreements and
     vendor agreements;

          (vii) all  accounts  receivable  of the Business net of credits due to
     customers, and all payments made relating thereto after the Closing Date;


                                       -2-

<PAGE>



          (viii) a complete set of  analytical  files,  as set forth on Schedule
     1.1(a)(viii)  hereto,  relating  exclusively to audio book club members and
     analysis  and testing  files of other  Columbia  House  Members as to audio
     books only; and

          (ix)  current   backorder   files  and   collections   files  relating
     exclusively to audio book club accounts.

     Promptly  following  the Closing  Date,  Seller shall  provide Buyer with a
certificate to the effect that all amounts  required to be refunded to customers
have been refunded.

     (b)  Notwithstanding  anything to the contrary contained in this Agreement,
to the extent that the sale,  assignment,  transfer,  conveyance  or delivery to
Buyer of any of the assets set forth in Sections 1.1(a)(ii), (iii)(A), (iii)(C),
(iv),  (v) and (vi) herein is prohibited by any  applicable law or would require
any  governmental  or third  party  consent,  authorization,  waiver or approval
(collectively, "Consents"), and any such Consent shall not have been obtained on
or prior to the Closing Date,  Seller shall assign the assets concerned to Buyer
on a quitclaim,  "as is, where is" basis, without liability;  provided, that, if
any third party  contests,  in writing,  the assignment of the assets  concerned
(the  "Contested  Assets"),  or such  third  party  commences  any legal  action
regarding  the same,  then Buyer and Seller shall  cooperate  in obtaining  such
Consent in accordance with the next paragraph.  If the parties hereto are unable
to obtain such  Consent  within 30 business  days of notice to either of them of
such third  party  claim  (such date of notice,  the  "Notice  Date"),  then the
assignment   concerned  shall  be  deemed  void  ab  initio  (the   "Retroactive
Cancellation  Date") unless  otherwise  agreed by Seller in writing and shall be
governed by the next  paragraph.  Any such assignment may be made void ab initio
before the end of that 30-day period by notice from either party to the other if
the  notifying  party  considers  such  action  advisable  to avoid  exposure to
material  liability  or  other  material  detriment  to its  business  or to the
business  of any of its  owners  or  affiliates,  and  considers  such  exposure
reasonably likely, in its sole and absolute  discretion (which will be exercised
in good faith).  From and after the Notice Date,  Buyer shall not exercise  (and
Seller  shall not be  obligated  under the  Transitional  Services  Agreement to
exercise on Buyer's  behalf) any rights with respect to the  Contested  Asset in
question, unless and until the relevant Consent shall have been obtained.

     To the extent that the sale, assignment,  transfer,  conveyance or delivery
to Buyer of any of the Contested Assets is deemed void ab initio pursuant to the
forgoing  paragraph,  this Agreement  shall not  constitute a sale,  assignment,
transfer,  conveyance or delivery  thereof,  nor create any  obligation to sell,
assign, transfer, convey or deliver such assets, nor shall failure to obtain any
such Consent  prior or  subsequent  to the Closing Date give rise to a breach of
this  Agreement  or  the  failure  of a  condition  to  Buyer's  obligations  to
consummate the transactions  contemplated hereby, or entitle Buyer to adjust the
Purchase  Price (as defined in Section 2.2(c)  hereof);  provided,  further,  no
Contested  Asset  for which  the  assignment  was  deemed  void ab initio  shall
constitute a Purchased  Asset until such Consent has been obtained in accordance
with the next sentence.  Following the Notice Date,  Seller's sole and exclusive
obligation in connection with any such Consent shall be to make a reasonable

                                       -3-


<PAGE>



number of oral and/or written requests or any other action reasonably  requested
by Buyer in writing  (subject  to the  limitation  set forth in the  penultimate
sentence of this Section  1.1(b)),  to any party whose  Consent is necessary for
the sale,  assignment,  transfer,  conveyance or delivery to Buyer of any of the
Contested  Assets,  and the parties shall  cooperate  with one another to obtain
promptly such Consents.  Pending any such Consent,  the parties shall  cooperate
with each other in any reasonable and lawful  arrangements  to provide Buyer the
economic  benefits  and  liabilities  of  use of  such  Contested  Assets  which
arrangements  shall be at Buyer's  expense.  Once any such  Consent is obtained,
Seller shall, at its own expense,  promptly assign, transfer, convey and deliver
such  Contested  Assets to Buyer for no  additional  consideration.  Buyer shall
indemnify  Seller against any  liabilities  arising from Buyer's use of any such
assets on or after the Closing Date in  accordance  with  Article 7 hereof.  The
Seller shall not be obligated to incur any costs in  connection  with  obtaining
any Consent except for incidental costs associated with Seller's  obligations as
set forth in this Section 1.1(b) (e.g.,  Seller shall not be required to pay any
party to a contract,  agreement,  license or other  commitment for any Consent).
Notwithstanding  anything to the contrary  contained in this  Agreement,  Seller
shall not use, sell, give away, rent,  liquidate,  assign,  transfer,  convey or
deliver any Purchased Assets (including Contested Assets) after the Closing Date
(as defined in Section 2.1 herein) except as otherwise provided for herein or in
the Transitional Services Agreement.

     (c) Anything herein  contained to the contrary  notwithstanding,  all other
rights, interests,  properties and assets of Seller not specifically referred to
in Section 1.1(a) herein are specifically excluded from the Purchased Assets and
shall be retained by Seller (all such other rights,  interests,  properties  and
assets of Seller not specifically covered pursuant to Section 1.1(a),  "Excluded
Assets"), including, without limitation:

          (i) all rights in and to the name  "Columbia  House"  and all  related
     marks and derivations thereof;

          (ii) all owned and leased personal property not specifically  acquired
     pursuant to Section 1.1(a),  including,  without  limitation,  all computer
     software;

          (iii) all owned and leased real property; and

          (iv) cash and cash equivalents.


                                   ARTICLE 2.
                      CLOSING, PURCHASE PRICE, LIABILITIES

     2.1 Closing. The closing of the transactions contemplated by this Agreement
(the  "Closing")  shall take place at the  offices of Werbel &  Carnelutti,  711
Fifth Avenue, New York, or at such other location as may be mutually agreed upon
by the parties  hereto,  on December 31, 1998, or, if later,  the first business
day following the date on which all of the  conditions set forth in Sections 6.1
and 6.2 hereof have been satisfied or

                                       -4-


<PAGE>



waived,  or such other date as shall be  mutually  agreed upon in writing by the
parties  hereto (such date and time of closing  being herein called the "Closing
Date").

     2.2 Purchase Price. As consideration for the Purchased Assets, Buyer shall:

     (a) pay to Seller  $32,750,000 as follows:  (i) $30,750,000 in cash by wire
transfer in immediately available funds at the Closing (the "Cash Amount");  and
(ii) $2,000,000 by Seller's retention of the first $2,000,000 actually collected
by Seller on account of the accounts receivable under the Transitional  Services
Agreement  (as  defined  below),  whether or not such  accounts  receivable  are
included in the Purchased  Assets (with the next $108,000 so collected by Seller
to be retained by Seller to be applied to payment of applicable sales taxes);

     (b) deliver at the Closing one or more stock certificates evidencing in the
aggregate  325,000  shares  (the  "Shares")  of common  stock of Buyer (the "ABC
Common Stock"),  no par value. The Shares shall have the rights,  and be subject
to the obligations,  as more fully set forth in the Rights Agreement (as defined
below);

     (c)  deliver at the  Closing  one or more  warrants  (the  "Warrant",  and,
together with the Cash Amount and the Shares,  the "Purchase Price") to purchase
in the  aggregate  100,000  shares of ABC Common Stock at an exercise  price per
share of ABC Common Stock equal to $11.125 (the "Exercise  Price"),  exercisable
during the period from the Closing Date to the fifth  anniversary of the Closing
Date, with such other terms as are set forth in the Warrant; and

     (d) simultaneously with the execution of this Agreement, Buyer shall pay to
Seller  $500,000  (the  "Transaction  Fee")  by  wire  transfer  in  immediately
available  funds,  which amount  shall be used to (i) reduce the Purchase  Price
payable at the Closing Date by a like amount or (ii) in the case the penultimate
sentence of Section 8.2 shall apply,  satisfy the  obligations of Buyer pursuant
thereto.  The Transaction Fee will be non-refundable  except in the event of the
termination of this Agreement under Sections 8.1(a), (c), (d) or (e).

     2.3  Liabilities.  (A) Buyer  shall not  assume or be bound by any  duties,
responsibilities,  obligations  or  liabilities of Seller or the Business of any
kind or nature,  known,  unknown,  contingent or otherwise  (including,  without
limitation,  any benefit plan  maintained by Seller,  any trade  payables or any
professional  fees),  except as specifically  set forth on Schedule 2.3 attached
hereto. Such liabilities  retained by Seller are herein referred to as "Retained
Liabilities" and such liabilities expressly assumed by Buyer in Schedule 2.3 are
herein referred to as "Assumed  Liabilities." The parties agree to indemnify and
hold each other harmless  against any and all Retained  Liabilities  and Assumed
Liabilities in accordance with Article 7 hereof.


                                       -5-

<PAGE>


     (B)  Anything  herein  contained  to  the  contrary  notwithstanding,   the
following  liabilities  of Seller are  specifically  excluded  from the  Assumed
Liabilities and shall constitute Retained Liabilities:

          (i) Any and all income,  franchise,  sales,  use,  property,  payroll,
     employment,  transfer and any other taxes, charges, fees, levies,  imports,
     duties,  licenses or other assessments,  together with interest,  penalties
     and  any  other  additions  to tax or  additional  amounts  imposed  by any
     governmental or taxing authority, or liability for such amounts as a result
     of  Seller  being a member  of an  affiliated,  consolidated,  combined  or
     unitary  group or being a party to any  agreement  or  arrangement  whereby
     Seller may be liable for Taxes of any other  person for any period prior to
     (or up to and  including)  the  close of  business  on the day prior to the
     Closing Date;

          (ii)  Any and  all  employment  or  consulting  agreements,  executive
     compensation  plans,   collective  bargaining   agreements,   bonus  plans,
     guaranteed bonus arrangements,  deferred compensation agreements,  employee
     pension plans or retirement plans,  employee profit sharing plans, employee
     stock   purchase   and  stock   option   plans,   group   life   insurance,
     hospitalization  insurance  or other plans or  arrangements  providing  for
     benefits to employees of Seller; and

          (iii)  Any and all  credits  due to  customers  arising  prior  to the
     Closing Date in respect of which accounts receivable  otherwise included in
     the Purchased Assets are reduced pursuant to Section 1.1(a)(vii) herein.

     2.4  Instruments of Conveyance and Transfer.  At Closing,  (x) Seller shall
execute and deliver to Buyer (i) a bill of sale in the form included in the form
of the Bill of Sale,  Assignment  and  Assumption  Agreement  annexed  hereto as
Exhibit A (the "Bill of Sale") and (ii) such other  documents  of transfer  that
Buyer may reasonably request, transferring to Buyer the assets to be acquired by
Buyer under the terms of this Agreement and (y) Buyer shall execute (i) the Bill
of Sale and (ii) all other documents reasonably requested.

     2.5 Ancillary Agreements.  In connection with the transactions contemplated
hereby, Buyer and Seller hereby covenant and agree to enter into at the Closing,
as applicable, (i) the Mailing Agreement in the form annexed hereto as Exhibit B
(the  "Mailing  Agreement"),   (ii)  the  Registration  and  Shareholder  Rights
Agreement  in the form  annexed  hereto as Exhibit C (the  "Rights  Agreement"),
(iii) the  Non-Compete  Agreement in the form  annexed  hereto as Exhibit D (the
"Non-Compete  Agreement"),  (iv) the Transitional Services Agreement in the form
annexed hereto as Exhibit E (the "Transitional  Services Agreement") and (v) the
Warrant in the form annexed hereto as Exhibit F. The Warrant,  collectively with
the Transitional  Services  Agreement,  the Non-Compete  Agreement,  the Mailing
Agreement,   the  Rights   Agreement  and  the  Bill  of  Sale,  the  "Ancillary
Agreements").


                                       -6-

<PAGE>

                                   ARTICLE 3.
                    REPRESENTATIONS AND WARRANTIES OF SELLER

     As an  inducement  to Buyer to enter into this  Agreement and to consummate
the transactions contemplated hereby, Seller represents and warrants to Buyer as
follows:

     3.1 Organization and  Qualification.  Seller is a general  partnership duly
organized  and validly  existing  under the laws of the State of New York,  with
full  organizational  power and  authority  to own or lease its  properties  and
assets and to conduct its business as presently conducted.

     3.2   Authority   to  Effect   Transactions.   Seller  has  all   requisite
organizational  power  and  authority  to  execute,  deliver  and  perform  this
Agreement and the Ancillary Agreements.  All necessary partnership action on the
part of Seller has been duly taken to  authorize  the  execution,  delivery  and
performance  by Seller of this  Agreement  and the  Ancillary  Agreements.  This
Agreement has been duly authorized, executed and delivered by Seller, and is the
legal,  valid and binding  obligation of Seller,  enforceable  against Seller in
accordance  with its  terms.  Each of the  Ancillary  Agreements  has been  duly
authorized by Seller and, upon execution and delivery by Seller, as contemplated
hereby,  will be the legal, valid and binding obligation of Seller,  enforceable
against Seller in accordance with its terms.

     3.3 Effect of  Agreements.  Except,  in the case of clause (i) for any such
violation,  conflict,  breach or default as would not be material, and except as
set forth on Schedule  3.3, and assuming the  expiration or  termination  of any
applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976,  as amended (the "Act"),  the  execution and delivery by Seller of this
Agreement and the Ancillary  Agreements,  and the  performance  by Seller of its
obligations hereunder and thereunder, will not (i) violate any provision of law,
any order of any court or other agency of government,  or any judgment, award or
decree or any indenture,  agreement,  permit or other instrument in each case to
which Seller is a party,  or by which Seller or any of the Purchased  Assets are
bound or affected,  or conflict with,  result in a breach of or constitute (with
due  notice  or lapse  of time or both) a  default  under,  any such  indenture,
agreement,  permit  or other  instrument,  or (ii)  result  in the  creation  or
imposition of any material lien, charge, security interest or encumbrance of any
nature whatsoever upon any of the Purchased Assets.

     3.4 Government Approvals.  No approval,  authorization,  consent,  order or
action of or filing with any court,  administrative agency or other governmental
authority is required for the execution and delivery by Seller of this Agreement
or  any  of the  Ancillary  Agreements  or the  consummation  by  Seller  of the
transactions  contemplated  hereby or  thereby  except  for  termination  of any
applicable  waiting  period  under the Act or where the  failure  to obtain  any
approval,  authorization,  consent, order or action of or make a filing with any
court,  administrative  agency  or other  governmental  authority  would  not be
material.


                                       -7-

<PAGE>


     3.5 Financial  Statements.  The Audited Financial Statements (as defined in
Section 5.6 hereof) will be prepared from and in  accordance  with the books and
records of the Business,  will be prepared in accordance with generally accepted
accounting  principles  consistently  applied  and will  fairly  present  in all
material respects the financial position of the Business as of December 20, 1996
and December 19, 1997, as appropriate, and the results of its operations for the
periods then ended in accordance with generally accepted accounting  principles.
The Financial  Statements (as defined in Section 5.6 hereof) will be prepared on
a basis  consistent  with the  preparation of the Audited  Financial  Statements
(other than for normal year-end audit adjustments and the exclusion of notes and
other disclosures that may be required in audited annual financial  statements).
Set forth on Schedule  3.5 hereto is certain  additional  financial  information
with respect to Seller.  Notwithstanding  the  foregoing,  the Seller  Financial
Statements  will not  necessarily  be  indicative  of  results  that  would have
occurred  if the  Business  had been a separate  stand-alone  entity  during the
periods presented or of the future results of the Business.

     3.6 Absence of Certain  Developments.  Since  December 19, 1997 through the
date hereof, except as otherwise set forth on Schedule 3.6 hereto and except for
the transactions  contemplated hereby, Seller has: (i) maintained its audio book
club  membership  lists and its  promotions  to those  lists and its new  member
acquisition  programs  consistent  with  past  practices;  (ii)  maintained  its
policies with respect to the accounts receivable of the Business consistent with
past  practices and has not  accelerated  collection  efforts or made changes in
income recognition practices; (iii) continued to acquire inventory necessary for
the operation of the Business as a going concern, consistent with past practice,
and has not had any material write-downs or instituted any material changes with
respect to its policies on scrapping obsolete merchandise; (iv) not entered into
any long term  agreements for rental of its audio book club mailing  lists;  (v)
not  terminated  or revoked any  Material  Contract  (as defined in Section 3.11
herein) except in Seller's reasonable business judgment; and (vi) not, except in
connection  with  this  Agreement  and  the  transactions  contemplated  hereby,
suffered any material  adverse change with respect to the Purchased Assets taken
as a whole (a "Material  Adverse  Change");  provided  that a change in economic
conditions or response declines or any other changes in sales behavior which are
not related to policy or promotional  changes  instituted by Seller shall not be
deemed to give rise to a Material Adverse Change;  and provided,  further,  that
the effects of competition or changes in prices of products shall not constitute
a Material Adverse Change. Further, Seller has not entered into any agreement or
commitment  to take any action not  consistent  with  clauses  (i)  through  (v)
herein.

     3.7 Title to Properties,  Absence of Liens and Encumbrances.  Except as set
forth on Schedule 3.7 hereto,  Seller has good and  marketable  title to all the
Purchased  Assets,  free and  clear of all  liens,  charges,  pledges,  security
interests  or  other   encumbrances  of  any  nature   whatsoever,   subject  to
restrictions  on assignment or use in any  agreements  relating to any Purchased
Assets.


                                       -8-

<PAGE>


     3.8  Masterfile  Database.  Set forth on  Schedule  3.8  hereto is true and
correct information describing certain contents of the Masterfile Database as of
the date hereof.

     3.9 Inventory.  The Inventory of Seller to be transferred  pursuant to this
Agreement  consists  of audio book  manufacturing  components  and  merchantable
finished  goods,  and premium  merchandise  as  provided in Section  1.1(a)(iii)
herein,  all of which is fit in all material  respects for the purpose for which
it was procured or manufactured.

     3.10 Accounts  Receivable.  The accounts receivable of Seller are reflected
in all  material  respects  properly  on its  books  and  records  and are valid
receivables  subject to no material  setoffs or  counterclaims,  except customer
adjustments,  returns  and bad  debts  occurring  in the  normal  course  of the
Business.  Seller does not make any  warranty or  representation  regarding  the
collection of those receivables by Buyer.

     3.11 List of  Contracts.  Annexed as Schedule 3.11 hereto is a list setting
forth as of the date hereof with respect to the Purchased  Assets,  and relating
exclusively thereto, the following:

          (i) All material license agreements,  marketing agreements (including,
     without limitation,  agreements relating to rights to list rentals, package
     inserts  and  ride  alongs),  noncompetition  agreements,   confidentiality
     agreements and vendor agreements; and

          (ii) all contracts and commitments,  whether oral or written,  if any,
     to which  Seller is or may become a party or to which  Seller or any of its
     assets are or may become subject and which are not specifically referred to
     in this Section 3.11, and which is a contract or group of related contracts
     which  involve  payments  by or to Seller  exceeding  $25,000  per annum in
     amount.

     True and complete copies of all documents and complete  descriptions of all
oral contracts (if any) referred to in Schedule 3.11 hereto  (collectively,  the
"Material  Contracts")  have been  provided or made  available  to Buyer and its
counsel.  Except as set forth in  Schedule  3.11  hereto,  (i)  Seller is not in
material  breach  or  default  of any  of the  Material  Contracts  and,  to the
Knowledge  of Seller,  no other  party to any of the  Material  Contracts  is in
material  breach or  default  thereunder,  and (ii) no event has  occurred  with
respect to Seller or, to the Knowledge of Seller, any other party thereto which,
with notice or lapse of time,  would  constitute a material breach or default or
permit termination or modification thereof.  "Knowledge" with respect to Seller,
shall mean the actual knowledge of Richard C. Wolter, Mark J. Osterer and Andrew
J. Gerber.

     3.12  Litigation.  As of the date  hereof,  except as set forth in Schedule
3.12 hereto, there is no action,  suit,  investigation or proceeding pending or,
to the Knowledge of Seller,  threatened in writing  against or affecting  Seller
before any court or by or before any governmental  body or arbitration  board or
tribunal, the outcome of which individually or in

                                       -9-

<PAGE>



the aggregate  would have a Material  Adverse  Change or would enjoin or prevent
the consummation of the transactions contemplated by this Agreement.

     3.13 Compliance With Law; Permits. Except as would not result in a Material
Adverse Change, the conduct of the Business with respect to the Purchased Assets
by  Seller  does  not  violate  any  federal,  state or  local  laws,  statutes,
ordinances, rules, regulations,  decrees, orders, permits or other similar items
in force on the date hereof that are  applicable  to the  Purchased  Assets.  No
material  governmental  licenses,  franchises  or  permits  are  required  under
applicable  law as of the date  hereof  for the  conduct  of the  Business  with
respect to the Purchased Assets by Seller.

     3.14  Affiliated  Parties.  No  affiliate  of the  Seller is a party to, or
beneficiary   under,  any  Material   Contract  nor  are  any  Purchased  Assets
transferred hereunder held by, or in the name of, any affiliate of the Seller.

     3.15 Broker's or Finders' Fees. Seller has not employed, or consulted with,
any investment banker,  financial  advisor,  broker or finder in connection with
the transactions contemplated by this Agreement,  except for The Chase Manhattan
Bank ("Chase"),  or incurred any liability for any investment banking,  business
consultancy,  financial  advisory,  brokerage or finders' fees or commissions in
connection with the transactions  contemplated hereby,  except for fees that may
be payable to Chase, all of which such fees, if any, including any finder's fee,
brokerage commission or similar payment, have been or will be paid by Seller.

     3.16  Investment  Intent.  Except  as  otherwise  provided  in  the  Rights
Agreement,  Seller is  acquiring  the  Shares  which  are  issuable  under  this
Agreement for investment for its own account, not as a nominee or agent, and not
with the view to, or for resale in connection  with,  any  distribution  thereof
(except as contemplated by the Rights Agreement) and understands that the Shares
are being offered under an exemption contained in Section 4(2) of the Securities
Act  of  1933,  as  amended  (the  "Securities  Act"),  upon  reliance  on  such
representation.  Seller is an  "accredited  investor" as such term is defined in
Rule 501(a) under the Securities Act. Seller  understands  that the Shares which
are issuable  hereunder,  have not been, and will not as of the Closing Date be,
registered  under the Securities Act. Seller  acknowledges  that the Shares have
not been  registered  under the  Securities  Act and,  accordingly,  Seller  may
dispose of the Shares only pursuant to an effective registration statement under
the  Securities  Act or an exemption  therefrom or as otherwise  provided in the
Rights  Agreement.  Seller is aware of the  provisions  of Rule 144  promulgated
under the  Securities  Act which permit  limited resale of shares subject to the
satisfaction  of  the  requirements  set  forth  therein.   Notwithstanding  the
foregoing,  Seller may  distribute  the Shares and/or  Warrants to its direct or
indirect   owners  as  a  divided  or   distribution   without  the  payment  of
consideration.


                                      -10-


<PAGE>



                                   ARTICLE 4.
                     REPRESENTATIONS AND WARRANTIES OF BUYER

     As an inducement  to Seller to enter into this  Agreement and to consummate
the transactions contemplated hereby, Buyer represents and warrants to Seller as
follows:

     4.1 Organization.  Buyer is a corporation duly organized,  validly existing
and in good  standing  under  the laws of the  State of  Florida.  Buyer has all
requisite  corporate  power and  authority  to own or lease its  properties  and
assets and to conduct its business as presently conducted.

     4.2 Authority to Effect  Transactions.  Buyer has all  requisite  corporate
power and  authority  to execute,  deliver and perform  this  Agreement  and the
Ancillary  Agreements.  All necessary  corporate action on the part of Buyer has
been duly taken to authorize the  execution,  delivery and  performance  of this
Agreement and the Ancillary Agreements. This Agreement has been duly authorized,
executed and delivered by Buyer, and is the legal,  valid and binding obligation
of Buyer  enforceable  against Buyer in accordance  with its terms.  Each of the
Ancillary  Agreements have been duly authorized by Buyer and, upon execution and
delivery by Buyer as contemplated  hereby,  will be the legal, valid and binding
obligations of Buyer, enforceable against Buyer in accordance with their terms.

     4.3 Effect of Agreements.  Except for any such violation,  conflict, breach
or default as would not be material,  and assuming the expiration or termination
of any  applicable  waiting  period under the Act, the execution and delivery by
Buyer of this  Agreement and the Ancillary  Agreements,  and the  performance by
Buyer  of its  obligations  hereunder  and  thereunder,  will  not  violate  any
provision  of law,  any order of any court or other  agency of  government,  the
Certificates  of  Incorporation  or  By-laws of Buyer (or  equivalent  governing
instruments),  or any judgment,  award or decree or any indenture,  agreement or
other  instrument to which Buyer is a party or by which Buyer or its  properties
or assets are bound or  affected,  or  conflict  with,  result in a breach of or
constitute  (with due notice or lapse of time or both) a default under, any such
indenture,  agreement  or  other  instrument,  or  result  in  the  creation  or
imposition of any lien,  charge or encumbrance of any nature whatsoever upon any
of the properties or assets of Buyer.

     4.4  Shares.  The  Shares  and shares of ABC  Common  Stock  issuable  upon
exercise of the Warrant (the  "Warrant  Shares") (i) have been duly  authorized,
and upon issuance  pursuant to Section  2.2(b) hereof,  will be validly  issued,
fully paid,  non-assessable  and,  except as set forth in the Rights  Agreement,
will not have been issued in violation of the  preemptive  or similar  rights of
any individual, corporation, partnership, limited liability company, firm, joint
venture,  association,  joint-stock company, trust, unincorporated organization,
Governmental  Entity or other entity and (ii) Buyer, with respect to the Warrant
Shares, will reserve such shares for issuance.


                                      -11-

<PAGE>


     4.5 Title to Shares.  The Shares and  Warrant  Shares are free and clear of
any mortgages, deeds of trusts, liens, pledges, charges, encumbrances,  security
interests,  options, rights of first refusal, easements,  restrictive covenants,
encroachments  or any other  restrictions or third-party  rights  (collectively,
"Encumbrances").  Upon issuance of the Shares to Seller in  accordance  with the
terms of Section 2.2(b) hereof,  Seller will receive valid and marketable  title
to the Shares free and clear of all Encumbrances,  other than those set forth in
the Rights  Agreement and as imposed by applicable  federal and state securities
laws.

     4.6 SEC Filings; Financial Statements.  Buyer has made, or will make within
the  applicable  time period set forth in the  Securities  Act or the Securities
Exchange Act of 1934, as amended (the "Exchange  Act"),  all filings required to
be made with the  Securities and Exchange  Commission  (the "SEC") since October
27,  1997 and has  delivered  or made  available  to Seller  true,  correct  and
complete  copies of Buyer's  (a)  Annual  Report on Form 10-K for the year ended
December 31, 1997 (the "Buyer 1997 Form 10-K"), as filed with the SEC, (b) proxy
statements  relating to all of Buyer's meetings of stockholders  (whether annual
or special)  since October 27, 1997 and (c) all other  reports,  statements  and
registration  statements  (including  Quarterly Reports on Form 10-Q and Current
Reports  on Form  8-K)  filed  by Buyer  with the SEC  since  October  27,  1997
(collectively, and in each case including all exhibits and schedules thereto and
documents  incorporated by reference  therein,  the "Buyer SEC Filings").  As of
their respective  dates,  Buyer SEC Filings did not contain any untrue statement
of a  material  fact or omit to state a  material  fact  required  to be  stated
therein  or  necessary  to  make  the  statements   therein,  in  light  of  the
circumstances  under  which  they  were  made,  not  misleading.  The  financial
statements  of Buyer  included or  incorporated  by reference in Buyer 1997 Form
10-K and Buyer's  Quarterly Report on Form 10-Q for the quarters ended March 31,
1998, June 30, 1998 and September 30, 1998 have been prepared in accordance with
generally  accepted  accounting  principles applied on a consistent basis during
the periods  involved (except as may be indicated in the notes to such financial
statements)  and  fairly  present  in all  material  respects  the  consolidated
financial position of Buyer at the respective dates thereof and the consolidated
results of  operations  and cash  flows for the  respective  periods  then ended
(subject,  in the case of  unaudited  interim  financial  statements,  to normal
year-end  adjustments and the exclusion of notes and other  disclosures that may
be required in audited  annual  financial  statements).  As of the date  hereof,
Buyer is eligible to use Form S-3 under the Securities Act.

     4.7 Capitalization.  As of the date hereof, the authorized capital stock of
Buyer is as disclosed in the Buyer SEC Filings. Except as disclosed in the Buyer
SEC Filings or as set forth on Schedule 4.7, no shares of capital stock of Buyer
are authorized,  reserved for issuance or issued and outstanding. All issued and
outstanding shares of ABC Common Stock have been duly authorized and are validly
issued,  fully paid,  nonassessable  and free of  preemptive  rights.  Except as
disclosed in the Buyer SEC Filings or as set forth in Schedule  4.7,  Buyer does
not have outstanding any subscription, option, put, call, warrant or other right
or  commitment  to issue or any  obligation or commitment to redeem or purchase,
any of its  authorized  capital  stock  or any  securities  convertible  into or
exchangeable for any of its authorized capital stock. Except as disclosed in the
Buyer SEC  Filings,  there are no  shareholder  agreements,  voting  agreements,
voting trusts or other similar arrangements to

                                      -12-


<PAGE>



which Buyer is a party  which have the effect of  restricting  or  limiting  the
transfer, voting or other rights associated with the capital stock of Buyer.

     4.8 Certificate of Incorporation.  Buyer has heretofore delivered to Seller
copies of the Certificate of Incorporation  and By-laws of Buyer as in effect on
the date  hereof.  The minute book of Buyer,  which has been made  available  to
Seller for its inspection  contain all existing records of meetings and consents
in lieu of meetings of the board of  directors  (and any  committee  thereof) of
Buyer and of  stockholders  since the time of its  organization  and  accurately
reflect all  transactions  referred to in such  minutes and  consents in lieu of
meeting except as set forth in Schedule 4.8.

     4.9 Absence of Certain  Developments.  Since  December 31, 1997,  except as
otherwise  set forth on  Schedule  4.9 hereto  and  except for the  transactions
contemplated  hereby, Buyer has conducted its business in the ordinary course of
business,  consistent  with past  practice,  and except in connection  with this
Agreement  and  the  transactions  contemplated  hereby,  has not  suffered  any
material  adverse  change  in  the  business,  assets,  liabilities,   financial
condition  or results of  operations  of  Buyer's  business  taken as a whole (a
"Buyer Material Adverse Change");  provided that a change in economic conditions
or  response  declines  or any other  changes  in sales  behavior  which are not
related to policy or promotional changes instituted by Buyer shall not be deemed
to give rise to a Buyer Material Adverse Change; and provided, further, that the
effects of  competition  or changes in prices of products shall not constitute a
Buyer Material Adverse Change. Further, Buyer has not entered into any agreement
or commitment to take any action not consistent with this Section 4.9.

     4.10  Litigation.  There is no action,  suit,  investigation  or proceeding
pending or, to the  knowledge of Buyer,  threatened  against or affecting  Buyer
before any court or by or before any governmental  body or arbitration  board or
tribunal  that might  enjoin or prevent  the  consummation  of the  transactions
contemplated by this Agreement.

     4.11 Governmental Approvals. No approval,  authorization,  consent or order
or  action  of  or  filing  with  any  court,  administrative  agency  or  other
governmental  authority,  other  than  the  expiration  or  termination  of  any
applicable  waiting  period  under the Act, is required  for the  execution  and
delivery  by  Buyer  of  this  Agreement  or  the  Ancillary  Agreements  or the
consummation by Buyer of the transactions contemplated hereby or thereby.

     4.12 Broker's or Finder's Fees. All negotiations relative to this Agreement
and the transactions contemplated hereby have been carried out by Buyer directly
with Seller, without the intervention of any person on behalf of Buyer in such a
manner to give rise to any claim by any  person  against  Seller  for a finder's
fee, brokerage commission or similar payment.


                                      -13-

<PAGE>



                                   ARTICLE 5.
                                   COVENANTS

     5.1 Covenants of Seller.

     (a)  Seller  agrees  that,  at all times  between  the date  hereof and the
Closing  Date,  unless Buyer and Seller shall  otherwise  agree in writing,  and
except  as set  forth  in  Schedule  5.1,  Seller  shall  use  its  commercially
reasonable efforts to:

          (i)  manage  the  Purchased  Assets  only in the  usual,  regular  and
     ordinary manner generally  consistent with past practices taken as a whole;
     provided that Seller shall obtain the prior written consent of Buyer, which
     consent will not be  unreasonably  delayed or withheld,  prior to incurring
     any obligation,  or a related series of obligations,  in excess of $100,000
     to be included in the Assumed Liabilities;

          (ii) maintain the books of account and records exclusively relating to
     the Purchased Assets in the usual,  regular and ordinary manner, on a basis
     consistent with past practice, and comply with all material laws applicable
     to the conduct of the  Business  with respect to the  Purchased  Assets and
     perform its material  obligations  relating to the Business with respect to
     the Purchased Assets without default;

          (iii) Seller will not make any wholesale, remainder or other bulk sale
     of any portion of its  Inventory to a third-party  purchaser  unless making
     appropriate  provisions  to cause all accounts  receivable  (and  proceeds)
     derived therefrom to be included in the Purchased Assets in accordance with
     the provisions of Section  1.1(a)(vii)  herein, and will not factor,  sell,
     encumber or  otherwise  dispose of any  accounts  receivable  or offer on a
     widespread  basis  discounts  or  similar   incentives  to  accelerate  the
     collection of accounts receivable; and

          (iv) not agree,  commit or  arrange to take any action not  consistent
     with the foregoing.

     (b) Between the date of this  Agreement and the Closing Date,  Seller shall
afford to the officers, employees,  consultants,  attorneys, agents, accountants
and other  representatives  ("Agents")  of Buyer and the  lender to Buyer or its
Affiliates (the "Buyer's Lender") access, during regular business hours and upon
reasonable  advance written notice,  to the assets,  books and records of Seller
relating  exclusively to those assets set forth in Section 1.1(a) hereof,  other
than  those  assets  set  forth  in  Section  1.1(a)(viii)  hereof,  subject  to
reasonable rules and regulations of Seller, and furnish to Buyer, Buyer's Agents
or Buyer's Lender,  after delivery to Buyer of the Seller  Financial  Statements
(as defined in Section 5.6(b) hereof), interim financial statements, which shall
be  prepared  on a  basis  consistent  with  the  preparation  of the  Financial
Statements, as Buyer may reasonably request. No investigation by or on behalf of
Buyer shall affect the representations and warranties of

                                      -14-

<PAGE>



Seller  hereunder.  Buyer agrees to abide by the terms of Section 5.4  hereunder
with  respect to such  access and any  information  furnished  pursuant  to this
Section 5.1(b).

     (c) Except as otherwise  provided in the Ancillary  Agreements,  as soon as
practicable  after the expiration of the  Transitional  Services  Agreement (the
"Services  Termination Date"),  Seller shall delete or destroy all copies of the
Masterfile Database in Seller's possession or control except as set forth in the
next sentence  provided  that Buyer agrees that it will  maintain  copies of the
Masterfile  Database as of the (i) Closing  Date and (ii)  Services  Termination
Date.  Seller  will not be  obligated  to delete any  information  contained  in
Seller's (i) credit screening files, (ii) customer service correspondence files,
(iii)  decision  support  systems  that  are  used  exclusively  for  analytical
purposes,  (iv)  management  reporting  abstracts or (v) other  lists,  files or
databases historically maintained by Seller that may contain information that is
also contained in the Masterfile Database;  provided,  that, Seller will not use
any  information  contained in the above files that relate  exclusively to audio
book club accounts for the mailing of advertising  or  promotional  materials to
those  accounts or for any list rentals of those  accounts.  Buyer shall provide
Seller with access during normal business hours to the information  contained in
the  Masterfile  Database,  within two business  days after  written  request by
Seller,  for  use in  the  winding  down  of the  Business,  relationships  with
customers with respect to periods on or prior to the Services  Termination Date,
application and credit evaluation, adverse claims or litigation and tax matters,
and for such other purposes as Seller may reasonably request in writing.

     5.2 Covenants of Buyer.

     (a) Buyer agrees that, at all times between the date hereof and the Closing
Date,  unless Seller and Buyer shall otherwise  agree in writing,  and except as
set forth in Schedule 5.2, Buyer shall:

          (i) use  commercially  reasonable  efforts  to  operate  its  existing
     business  only  in  the  usual,   regular  and  ordinary  manner  generally
     consistent with past practices taken as a whole;

          (ii) not amend or propose to amend its Certificate of Incorporation or
     By-laws  (or  equivalent  governing  instruments)  in any manner that would
     adversely  affect  Seller's rights if Seller were a stockholder at the time
     thereof;

          (iii) not recapitalize, split, combine or reclassify any shares of ABC
     Common Stock unless appropriate adjustments reasonably acceptable to Seller
     are made to the  number  and kind of  Shares,  and the  number  and kind of
     shares of ABC Common Stock and exercise price under the Warrant, to provide
     Seller with the benefit of such transactions;

          (iv) not  declare,  pay or set aside for payment any dividend or other
     distribution  in respect of any ABC Common  Stock,  or redeem,  purchase or
     otherwise acquire any shares of ABC Common Stock;

                                      -15-

<PAGE>




          (v) not acquire or agree to acquire by merging or consolidating  with,
     or by purchasing a substantial portion of the stock or assets of, or by any
     other means, any business or any corporation,  partnership,  joint venture,
     association,  or other  business  organization  or division  thereof unless
     appropriate  adjustments are made to the number and kind of Shares, and the
     number and kind of shares of ABC Common Stock and exercise  price under the
     Warrant, to provide Seller with the benefit of such transactions; and

          (vi) not agree, commit or arrange to do any of the foregoing except to
     the extent that Seller is provided with the benefits of any such agreement,
     commitment or arrangement.

     (b) Between the date of this  Agreement and the Closing  Date,  Buyer shall
afford to the Agents of Seller access,  during  regular  business hours and upon
reasonable  advance written notice,  to the assets,  books and records of Buyer,
subject to  reasonable  rules and  regulations  of Buyer,  and from time to time
furnish to Seller or Seller's Agents such financial and operating data and other
information  concerning the results of operations of Buyer's  business as Seller
may reasonably  request including all interim financial  statements with respect
to Buyer's business. No investigation by or on behalf of Seller shall affect the
representations  and warranties of Seller  hereunder.  Seller agrees to abide by
the  terms  of  Section  5.3  hereunder  with  respect  to such  access  and any
information furnished pursuant to this Section 5.2(b).

     (c) SEC Filings.  Notwithstanding  anything in the Rights  Agreement to the
contrary,  Buyer agrees that it will use commercially reasonable efforts to file
with  the  SEC,  within  the time  periods  specified  in the  SEC's  rules  and
regulations,  (i) all quarterly and annual financial  information required to be
filed with the SEC on Forms 10-Q and 10-K, (ii) all current reports  required to
be filed with the SEC on Form 8-K and (iii) any other information required to be
filed  with the SEC.  Further,  Buyer  agrees  that it will,  for so long as any
Shares or  Warrants  Shares  remain  outstanding,  use  commercially  reasonable
efforts to qualify for use of Form S-3 under the Securities Act.

     5.3  Hart-Scott-Rodino.  Each of the parties shall file, or shall cause its
"ultimate  parent  entity," as defined in the Act, to file, and shall assist the
other party in filing,  any  Notification  and Report forms and related material
that it may be  required  to file  under the Act;  will use its best  efforts to
obtain an early termination of the applicable  waiting period; and will make any
further filings pursuant  thereto that may be necessary,  proper or advisable in
connection therewith.

     5.4  Confidentiality.  The  contents of this  Agreement  and the  Ancillary
Agreements,  and all information  provided by either party to the other, whether
or not marked confidential,  shall be governed by the Confidentiality Agreement,
dated July 8, 1998,  between Buyer and Seller,  and any amendments  thereto (the
"Confidentiality  Agreement"). If, at any time, counsel to Buyer shall determine
that a press release or other public

                                      -16-

<PAGE>



announcement  of the  transactions  contemplated  by  this  Agreement  shall  be
required  by the  federal  securities  laws on account  of  Buyer's  status as a
reporting company  thereunder,  Buyer shall inform Seller in writing and release
the press  release  substantially  to the effect set forth in Exhibits  G(1) and
G(2) hereto (with any changes  thereto subject to the written consent of Seller,
whose consent  shall not be  unreasonably  withheld).  No other press release or
other public  announcement  of the  transactions  contemplated by this Agreement
materially  different than the press release set forth in Exhibits G(1) and G(2)
hereto will be made or  authorized,  directly  or  indirectly,  by either  party
hereto without the prior written approval of the other party.

     5.5  Allocation  of Purchase  Price.  For all federal,  state and local tax
purposes,  Buyer and Seller  agree to allocate  the  Purchase  Price (i) as to a
portion  thereof,  to the  covenants and  agreements of Seller  contained in the
Non-Compete  Agreement  and (ii) as to the  balance,  in the  manner  reasonably
determined  by Buyer,  but  subject to the  written  approval  of Seller,  which
approval  shall not be  unreasonably  withheld.  Within 180 days  following  the
Closing  Date,  Buyer  shall  deliver  to  Seller a  schedule  (the  "Allocation
Schedule")  allocating  the Purchase Price  (including,  for the purpose of this
Section 5.5, any other  consideration paid to Seller,  including any liabilities
assumed  pursuant  hereto)  among the  Purchased  Assets and the covenant not to
compete granted pursuant to the Non-Compete  Agreement.  The Allocation Schedule
shall be reasonably  prepared by Buyer,  in accordance  with Section 1060 of the
Code and the  regulations  thereunder,  but subject to the  written  approval of
Seller, which approval shall not be unreasonably withheld.

     5.6 Preparation of Certain Financial Information.

     (a) In  contemplation  of  and in  order  to  comply  with  the  rules  and
regulations  (the "SEC Rules") of the  Securities and Exchange  Commission  (the
"SEC"), Seller shall use its reasonable efforts to cause  PricewaterhouseCoopers
LLP  ("Pricewaterhouse"),  the independent accountants of Seller, to prepare (i)
audited  carve out balance  sheets of the  Business as of December  20, 1996 and
December  19, 1997 and (ii)  audited  carve out  statements  of  operations  and
statements  of cash flows of the Business for the years ended  December 20, 1996
and December 19, 1997 (the "Audited  Financial  Statements")  and to provide all
necessary  assistance with respect  thereto,  it being  understood and agreed by
Seller that such assistance  shall include,  without  limitation,  (i) providing
Buyer and its representatives with all necessary financial  information and data
relating to the Business for such  periods,  (ii) making  available to Buyer all
employees of Seller  necessary to assist in the  preparation  of such  financial
statements,  and (iii) if requested by Pricewaterhouse,  delivering a management
representation letter reasonably acceptable to Pricewaterhouse.

     (b)  Seller  shall  prepare  and  use  its  reasonable   efforts  to  cause
Pricewaterhouse to review (i) unaudited carve out balance sheets of the Business
as of September 20, 1998 and (ii)  unaudited  carve out statements of operations
and statements of cash flows of the Business for the nine months ended September
20, 1998 (the "Financial

                                      -17-


<PAGE>



Statements"  and,  together with the Audited  Financial  Statement,  the "Seller
Financial Statements").

     (c) The fees and  expenses  of  Pricewaterhouse  in  preparing  the  Seller
Financial  Statements  as  provided  in this  Section  5.6  shall be borne  (and
reimbursed)  by Buyer in an amount up to $100,000 in accordance  with the August
14, 1998 letter  agreement by and between Buyer and Seller regarding the subject
matter hereof.

     (d) After the Closing  Date,  Buyer  shall  afford the  representatives  of
Seller  reasonable  access during normal business hours to such books of account
and other financial  records of Buyer pertaining to the Business and acquired by
Buyer pursuant to this  Agreement as Seller may  reasonably  request in order to
prepare,  file,  amend or respond to  questions  of any  governmental  authority
relating to its financial  statements  and Tax Returns for any period or portion
thereof that Seller owned the Business.  Seller shall  compensate  Buyer for its
out-of-pocket  expenses  incurred in assisting  Seller  pursuant to this Section
5.6(c).

     (e) After the Closing Date, as soon as reasonably practicable, Seller shall
reasonably   cooperate   with  the   Buyer   and   Pricewaterhouse   to   enable
Pricewaterhouse  to  prepare  (i) an  audited  carve  out  balance  sheet of the
Business  as of December  18,  1998 and (ii)  audited  carve out  statements  of
operations  and  statements  of cash  flows of the  Business  for the year ended
December 18, 1998 and all necessary notes and other disclosures  consistent with
the  statements and  information  provided for the year ended December 19, 1997.
Buyer shall be solely  responsible for all expenses  incurred in connection with
(i) and (ii),  including,  without  limitation,  Seller's out of pocket expenses
incurred  as a  result  of  such  cooperation  and  all  fees  and  expenses  of
Pricewaterhouse;  provided,  however,  Buyer  shall not be  responsible  for any
salary or other expenses  related to the personnel of Seller.  Such  cooperation
shall  include,  without  limitation  (i)  providing  Pricewaterhouse  with  all
necessary financial information,  data, work papers and analyses relating to the
Business for the period concerned;  and (ii) making available to Pricewaterhouse
all employees of Seller necessary to assist in the preparation of such financial
information,  data, work papers,  analyses and financial  statements  consistent
with the  information  provided  and  cooperation  provided for the audit of the
financial statements for the year ended December 19, 1997.

     5.7 Further  Assurances.  (a) From time to time following the Closing Date,
Seller shall (i) execute and deliver,  or cause to be executed and  delivered to
Buyer,  such other  instruments of assignment,  conveyance and transfer as Buyer
may reasonably  request or as may be otherwise  necessary  effectively to convey
and transfer to, and vest in, Buyer and put Buyer in possession  of, any part of
the  Purchased  Assets  and (ii) take any other  actions  necessary  to  reflect
Buyer's ownership of the Purchased Assets as of the Closing Date.

     (b)  With  respect  to any  Purchased  Assets  that  cannot  be  physically
delivered  to Buyer  because they are in the  possession  of third  parties,  or
otherwise, Seller shall give irrevocable instructions to the party in possession
thereof, if such be the case, with

                                      -18-


<PAGE>



copies to Buyer, that all right, title, and interest therein have been vested in
Buyer and that the same are to be held for Buyer's exclusive use and benefit.

     (c) Seller  shall use  commercially  reasonable  efforts to promptly  remit
payments  received  by Seller  after the Closing  Date with  respect to accounts
receivable  transferred to Buyer pursuant to Section 1.1(a)(vii) herein provided
that in any event Seller shall remit the payment  concerned no later than thirty
(30) days after receipt.

     5.8  No  Solicitation;   Acquisition  Proposals.  Upon  execution  of  this
Agreement  until the  Closing  Date or until this  Agreement  is  terminated  as
provided  in Article 8, Seller will not  directly or  indirectly  (i) solicit or
initiate  (including by way of furnishing any  information)  discussions with or
(ii) enter into  negotiations or agreements with, or furnish any information to,
any corporation, partnership, person or other entity or group (other than Buyer,
an  affiliate  of  Buyer  or its  authorized  representatives  pursuant  to this
Agreement)  concerning any proposal for a merger,  sale of substantial assets or
other takeover or business combination transaction, which, if consummated, would
prevent Seller from consummating the purchase and sale  contemplated  hereby (an
"Acquisition  Transaction");  and Seller will instruct its officers,  directors,
advisors and other  financial and legal  representatives  and consultants not to
take any action  contrary to the foregoing  provisions of this sentence.  Seller
will notify Buyer promptly in writing if Seller becomes aware that any inquiries
or  proposals  are  received  by, any  information  is  requested  from,  or any
negotiations  or discussions are sought to be initiated with Seller with respect
to an Acquisition  Transaction  and will  immediately  after receipt  provide to
Buyer a copy of any letter, proposal or other document in which any proposal for
an Acquisition  Transaction is made or expressed.  Seller will immediately cease
any existing  activities,  discussions  or  negotiations  with any third parties
which may have been  conducted on or prior to the date hereof with respect to an
Acquisition Transaction and shall direct and use reasonable efforts to cause its
officers,  advisors and  representatives  not to engage in any such  activities,
discussions or negotiations.

     5.9  Employees.  Buyer shall have no  obligation to employ any employees of
Seller.

     5.10 Reasonable Efforts;  Additional Actions. Upon the terms and subject to
the conditions of this Agreement,  including Section 1.1(b) hereof,  each of the
parties hereto shall use all  commercially  reasonable  best efforts to take, or
cause to be taken, all action,  and to do or cause to be done, and to assist and
cooperate  with the other  parties  in doing,  all things  necessary,  proper or
advisable  to  consummate  and make  effective  as promptly as  practicable  the
transactions  contemplated  by this  Agreement,  including  using all reasonable
efforts to (a) effect  promptly all necessary or appropriate  registrations  and
filings  with  governmental  or  taxing  authorities,   including,  filings  and
submissions  pursuant to the Act and the Securities  Act, (b) defend any lawsuit
or other legal proceedings, whether judicial or administrative, challenging this
Agreement or the  consummation  of the transaction  contemplated  hereby and (c)
fulfill or cause the  fulfillment  of conditions  precedent to the other party's
obligations hereunder.

                                      -19-

<PAGE>


     5.11 Notification of Certain Matters. Each of the parties hereto shall give
written  notice to the other  party,  promptly  upon  becoming  aware of (i) the
occurrence of a Material Adverse Change or a Buyer Material  Adverse Change,  as
appropriate,  (ii) any  occurrence,  or  failure to occur,  of any event,  which
occurrence  or failure to occur has caused or could  reasonably  be  expected to
cause  any  representation  or  warranty  in  this  Agreement  to be  untrue  or
inaccurate  in any material  respect at any time after the date hereof and prior
to the Closing Date or (iii) any material failure on the part of either party to
comply with or satisfy any covenant,  condition or agreement to be complied with
or satisfied by such party  hereunder;  provided that the delivery of any notice
pursuant to this Section  5.11 shall not limit or otherwise  affect the remedies
available hereunder to the party receiving such notice.

                                   ARTICLE 6.
                              CONDITIONS PRECEDENT

     6.1 Conditions  Precedent to the  Obligations of Buyer.  The obligations of
Buyer  under  this  Agreement  are  subject,  at the  option  of  Buyer,  to the
satisfaction  at or  prior  to  the  Closing  Date  of  each  of  the  following
conditions:

     (a) Accuracy of Representations  and Warranties.  The  representations  and
warranties  of Seller  contained  in this  Agreement  or in any  certificate  or
document  delivered  to Buyer  pursuant  hereto shall be true and correct in all
material respects on and as of the Closing Date as though made at and as of that
date,  except to the extent  specifically  made as of an earlier date and except
that any such  representations  and warranties that by their terms are qualified
by a  "materiality"  or  similar  standard  should  be true and  correct  in all
respects, and Seller shall have delivered to Buyer a certificate to that effect.

     (b)  Material  Adverse  Change.  Since the date  hereof,  there has been no
Material Adverse Change.

     (c) Compliance with Covenants.  Seller shall have performed and complied in
all material  respects with all terms,  agreements,  covenants and conditions of
this Agreement to be performed or complied with by it at or prior to the Closing
Date, and Seller shall have delivered to Buyer a certificate to that effect.

     (d) Opinion of Counsel for Seller.  Buyer shall have received the favorable
opinion from Paul, Weiss,  Rifkind,  Wharton & Garrison,  counsel to Seller, and
Andrew J. Gerber,  Esq., General Counsel of Seller, each dated the Closing Date,
substantially to the effect set forth in Annexes A and B hereto.

     (e) Legal Actions or Proceedings.  No legal action or proceeding shall have
been  instituted or threatened  which would  reasonably be expected to restrain,
prohibit or invalidate the consummation of the transactions  contemplated hereby
or which would reasonably be expected to cause a Material Adverse Change.

                                      -20-


<PAGE>




     (f)  Regulatory   Approvals.   All  applicable  waiting  periods  (and  any
extensions  thereof)  under  the  Act  shall  have  expired  or  otherwise  been
terminated.

     (g)  Ancillary  Agreements.  Seller shall have  executed and  delivered the
Ancillary Agreements and, subject to Buyer's execution thereof,  said Agreements
shall be in full force and effect as of the Closing Date.

     (h)  Supporting  Documents.  Buyer and its  counsel  shall have  received a
certificate  of a  representative  of Seller  (1)  certifying  that the Board of
Representatives of Seller has authorized the execution, delivery and performance
of this Agreement and the Ancillary Agreements and the transactions contemplated
hereby and thereby;  and (2) as to the incumbency and specimen signature of each
officer of Seller  executing  this  Agreement and any  certificate or instrument
furnished  pursuant hereto,  and a certification by another officer of Seller as
to the incumbency and signature of the officer signing the certificate  referred
to in this Section 6.1(h).

     (i) Seller  Financial  Statements.  Buyer shall have  received  the Audited
Financial  Statements  and Financial  Statements  prior to the Closing,  and the
Audited Financial Statements shall reflect the information set forth in Schedule
3.5 hereto.

     6.2 Conditions  Precedent to the Obligations of Seller.  The obligations of
Seller  under this  Agreement  are  subject,  at the  option of  Seller,  to the
satisfaction  at or  prior  to  the  Closing  Date  of  each  of  the  following
conditions:

     (a) Accuracy of Representations  and Warranties.  The  representations  and
warranties  of  Buyer  contained  in this  Agreement  or in any  certificate  or
document  delivered to Seller  pursuant  hereto shall be true and correct in all
material respects on and as of the Closing Date as though made at and as of that
date,  except to the extent  specifically  made as of an earlier date and except
that any such  representations  and warranties that by their terms are qualified
by a  "materiality"  or  similar  standard  should  be true and  correct  in all
respects, and Buyer shall have delivered to Seller a certificate to that effect.

     (b) Buyer Material Adverse Change. Since the date hereof, there has been no
Buyer Material Adverse Change with respect to Buyer's business.

     (c) Compliance with  Covenants.  Buyer shall have performed and complied in
all material  respects with all terms,  agreements,  covenants and conditions of
this  Agreement  to be  performed  or  complied  with by them at or prior to the
Closing Date,  and Buyer shall have  delivered to Seller a  certificate  to that
effect.

     (d) Opinions of Counsel for Buyer. Seller shall have received the favorable
opinion  of  Werbel  &  Carnelutti  and  Atlas,  Pearlman,  Trop &  Borksin,  as
appropriate,  counsel for Buyer,  dated the Closing Date,  substantially  to the
effect set forth in Annex C hereto.

                                      -21-


<PAGE>



     (e) Legal Actions or Proceedings.  No legal action or proceeding shall have
been  instituted or threatened  which would  reasonably be expected to restrain,
prohibit or invalidate the consummation of the transactions  contemplated hereby
or which would  reasonably be expected to cause a Buyer Material  Adverse Change
with respect to Buyer's business.

     (f) Seller  Released.  Seller shall have been released from any obligations
under any  agreements  and contracts  assigned to Buyer under this  Agreement or
Buyer has specifically assumed such obligations.

     (g)  Ancillary  Agreements.  Buyer shall have  executed and  delivered  the
Ancillary Agreements and, subject to Seller's execution thereof, said Agreements
shall be in full force and effect as of the Closing Date.

     (h) Supporting Documents. Seller and its counsel shall have received copies
of the following supporting documents:

          (i) (1) copies of the  Certificate of  Incorporation  of Buyer and all
     amendments thereto, certified as of a recent date by the Secretary of State
     of the State of Florida, (2) a certificate of said Secretary of State, with
     respect to Buyer,  dated as of a recent date,  as to the due  incorporation
     and good  standing of Buyer and listing all documents of Buyer on file with
     said Secretary; and

          (ii) a certificate of the Secretary or an Assistant Secretary of Buyer
     dated the Closing Date and certifying:  (1) that attached thereto is a true
     and complete copy of resolutions  duly adopted by the Board of Directors of
     Buyer authorizing the execution, delivery and performance of this Agreement
     and the Ancillary  Agreements and the transactions  contemplated hereby and
     thereby  and that all such  resolutions  are still in full force and effect
     and are all the  resolutions  adopted in connection  with the  transactions
     contemplated by this  Agreement;  and (2) as to the incumbency and specimen
     signature  of each  officer  of  Buyer  executing  this  Agreement  and any
     certificate or instrument furnished pursuant hereto, and a certification by
     another  officer of Buyer as to the incumbency and signature of the officer
     signing the certificate referred to in this paragraph (ii).

                                   ARTICLE 7.
                                 INDEMNIFICATION

     7.1  Indemnity by Seller.  Seller  agrees that,  from and after the Closing
Date, it will  indemnify and hold harmless  Buyer and its successors and assigns
and its and their respective officers, directors,  controlling persons (if any),
employees,  attorneys,  agents, affiliates,  partners and stockholders,  in each
case  past,  present,  or as they may  exist at any time  after the date of this
Agreement  (including  Buyer,  the  "Buyer  Indemnitees"),  with  respect to the
matters set forth below in this Section 7.1; provided, however, Seller shall not
be liable to Buyer  Indemnitees for any losses as set forth in Section 7.1(a)(i)
below unless

                                      -22-

<PAGE>



and until the losses thereon  exceed an aggregate  amount equal to $100,000 (the
"Basket")  and then  only  for any and all such  losses  without  regard  to the
Basket,  but only up to an amount  equal to $16.0  million;  provided,  further,
Seller  shall be liable  for all losses  arising  (i) as a result of a breach of
Sections  3.7 and 3.8 herein up to an amount  equal to the Cash  Amount and (ii)
out of  Sections  7.1(a)(ii),  7.1(a)(iii)  and 7.1(b)  herein.  Notwithstanding
anything in this Agreement to the contrary,  Seller agrees to indemnify and hold
harmless Buyer Indemnitees against and in respect of any and all:

     (a)  claims,   suits,   actions,   proceedings   (formal   and   informal),
investigations,  judgments,  deficiencies,  damages,  settlements,  liabilities,
losses,  costs and reasonable  legal and other expenses  arising out of or based
upon (i) any breach of any  representation,  warranty,  covenant or agreement of
Seller  contained  in this  Agreement  or in any other  agreement  executed  and
delivered  by Seller  hereunder  or in  connection  herewith,  (ii) any Retained
Liabilities  and (iii)  the  waiver by Buyer of  compliance  by Seller  with the
provisions of applicable bulk sales laws; and

     (b) claims, suits, actions and proceedings (formal and informal) of persons
not  a  party  to  this   Agreement  and  related   investigations,   judgments,
deficiencies,  damages, settlements,  liabilities,  losses, costs and reasonable
legal and other expenses arising from events occurring prior to the Closing Date
relating to the Purchased Assets (other than Assumed Liabilities).

     7.2 Indemnity by Buyer. Buyer agrees that, from and after the Closing Date,
it will  indemnify and hold harmless  Seller and its  successors and assigns and
their respective partners,  controlling persons (if any), employees,  attorneys,
agents, affiliates, partners and stockholders, in each case past, present, or as
they may exist at any time after the date of this Agreement  (including  Seller,
the "Seller  Indemnitees"),  with respect to the matters set forth below in this
Section 7.2; provided,  however, Buyer shall not be liable to Seller Indemnitees
for any  losses as set forth  below in  Section  7.2(a)(i)  unless and until the
losses thereon exceed an aggregate  amount equal to the Basket and then only for
any and all such  losses  without  regard to the Basket but only up to an amount
equal to $4.5 million (the "Buyer Cap") except as provided in the next sentence;
provided,  further, Buyer shall be liable for all losses arising (i) as a result
of a breach of Sections  4.4 and 4.5 herein or (ii) out of  Sections  7.2(a)(ii)
and 7.2(b)  herein.  If Seller is obligated for any reason to return,  refund or
reimburse  all or any  portion of the  Purchase  Price to Buyer  (other than any
payment  by Seller to Buyer  pursuant  to  Section  7.1  herein),  or any person
claiming through or on behalf of Buyer,  Buyer shall indemnify and hold harmless
Seller for the amount of the Purchase Price so returned,  refunded or reimbursed
without  regard to the Basket or Buyer  Cap.  Notwithstanding  anything  in this
Agreement to the  contrary,  Buyer  additionally  agrees to  indemnify  and hold
harmless Seller Indemnitees against and in respect of any and all:

     (a)  claims,   suits,   actions,   proceedings   (formal   and   informal),
investigations,  judgments,  deficiencies,  damages,  settlements,  liabilities,
losses,  costs and reasonable  legal and other expenses  arising out of or based
upon (i) any breach of any  representation,  warranty,  covenant or agreement of
Buyer contained in this Agreement, or in

                                      -23-


<PAGE>



any other  agreement  executed and delivered by Buyer hereunder or in connection
herewith and (ii) the Assumed Liabilities; and

     (b) claims,  suits,  actions and  proceedings  (formal and informal) of any
party,   and   related   investigations,   judgments,   deficiencies,   damages,
settlements, liabilities, losses, costs and reasonable legal and other expenses,
arising on or after the Closing Date  relating to the  Purchased  Assets  (other
than Retained  Liabilities) or from Seller's  transfer to Buyer hereunder of any
of the Purchased  Assets  transferred in accordance  with Section 1.1(b) herein)
without having obtained the Consent of such party.

     7.3  Defense of Claims.  Any Buyer  Indemnitee  or Seller  Indemnitee  (the
"Indemnified Party") seeking  indemnification under this Agreement shall give to
the party obligated to provide  indemnification  to such Indemnified  Party (the
"Indemnitor")  a written  notice (a "Claim  Notice")  describing  in  reasonable
detail the facts giving rise to any claim for  indemnification  hereunder within
30 days of learning of the existence of such claim; provided,  however, that the
Indemnified  Party's  failure  to provide  such  notice in not more than 30 days
shall not preclude the Indemnified  Party from being  indemnified for such claim
or demand,  except to the extent that the failure to give timely notice  results
in a forfeiture of substantive  defenses  available to the  Indemnifying  Party.
Upon receipt by the Indemnitor of a Claim Notice from an Indemnified  Party with
respect to any claim of a third party,  such  Indemnitor  may assume the defense
thereof with counsel  reasonably  satisfactory to the Indemnified  Party and, in
such event, shall agree to pay and otherwise discharge with the Indemnitor's own
assets all judgments, deficiencies,  damages, settlements,  liabilities, losses,
costs and legal and other expenses  related thereto;  and the Indemnified  Party
shall  cooperate in the defense or  prosecution  thereof and shall  furnish such
records,  information and testimony and attend all such  conferences,  discovery
proceedings,  hearings,  trials and appeals as may be  reasonably  requested  in
connection therewith. If the Indemnitor does not assume the defense thereof, the
Indemnitor shall similarly  cooperate with the Indemnified Party in such defense
or prosecution. The Indemnified Party shall have the right to participate in the
defense or  prosecution  of any lawsuit with respect to which the Indemnitor has
assumed the defense and to employ its own counsel  therein,  but the  reasonable
fees and  expenses of such  counsel  shall be at the expense of the  Indemnified
Party  unless  (i) the  Indemnitor  shall  not have  promptly  employed  counsel
reasonably  satisfactory to such Indemnified Party to take charge of the defense
of such action or (ii) such  Indemnified  Party shall have reasonably  concluded
that there exists a significant conflict of interest with respect to the conduct
of such Indemnified Party's defense by the indemnitor, in either of which events
such  reasonable  fees  and  expenses  of one  counsel  shall  be  borne  by the
Indemnitor and the Indemnitor  shall not have the right to direct the defense of
any such action on behalf of the Indemnified  Party.  The Indemnitor  shall have
the  right,  in its sole  discretion,  to settle any claim  solely for  monetary
damages for which  indemnification  has been sought and is available  hereunder.
The  Indemnified  Party  shall  give  written  notice to the  Indemnitor  of any
proposed  settlement of any suit,  which  settlement the  Indemnitor  may, if it
shall have assumed the defense of the suit,  reject in its  reasonable  judgment
within 10 days of receipt of such  notice.  Notwithstanding  the  foregoing  the
Indemnified  Party  shall  have the  right to pay or  settle  any suit for which
indemnification has been sought and is available hereunder,

                                      -24-

<PAGE>



provided,  that,  if the  defense of such claim  shall have been  assumed by the
Indemnitor,  the Indemnified Party shall  automatically be deemed to have waived
any right to indemnification hereunder.

     7.4 Exclusive Remedies.  Notwithstanding  anything in this Agreement to the
contrary,  the  remedies  provided  in this  Section  7 shall  be the  sole  and
exclusive  remedies from and after the Closing Date for any  inaccuracy  and for
any  breach  of any  representation,  warranty,  covenant  or  agreement  of, or
obligation or liability of, Buyer or Seller; provided,  however, that nothing in
this  Section 7.4 shall be  construed to limit any right or remedy that Buyer or
Seller may have with respect to fraud or willful misconduct.

     7.5  Survival.  Except  as  otherwise  provided,  the  representations  and
warranties  of the parties  hereto  contained  in this  Agreement,  the covenant
contained  in Section  5.11 and all claims and causes of action with  respect to
the foregoing shall expire  eighteen  months from the Closing Date,  except that
(i) the  representations  and  warranties  in Sections 3.2  (Authority to Effect
Transactions), 3.7 (Title to Properties, Absence of Liens and Encumbrances), 4.2
(Authority to Effect Transactions), 4.4 (Shares) and 4.5 (Title to Shares) shall
have no  expiration  date and shall survive  indefinitely.  In the event a Claim
Notice  (within  the  meaning of Section  7.3) for breach of  representation  or
warranty  under  Section  7.1 or  Section  7.2 is given  within  the  applicable
survival period, the representations and warranties that are the subject of such
indemnification  Claim  Notice  survive  solely with respect to such claim until
such time as such claim is finally resolved.

     7.6 Damages.  Notwithstanding  anything in this  Agreement to the contrary,
the Indemnitor  shall not be obligated to indemnify the  Indemnified  Party with
respect to any losses, liabilities, obligations, damages, costs (including costs
of  investigation)  and  expenses  (including  reasonable  attorneys'  and other
professionals' fees and expenses) (collectively,  the "Losses") to the extent of
any  proceeds  received in  connection  with any such Losses by the  Indemnified
Party  under any  insurance  policy of the  Indemnified  Party.  Notwithstanding
anything in this Agreement to the contrary,  in no event whatsoever shall either
the Seller or Buyer be  entitled  to make a claim  against  the other party (the
"Non-Complying  Party")  for lost  profits or other  consequential,  incidental,
indirect,  special or punitive damages ("Special Losses") by reason of a failure
by the Non-Complying Party to comply with this Agreement in any instance,  other
than (i) in the case of fraud or willful  misconduct or (ii) as set forth in the
next sentence.  In the case of any breach of Sections 3.5, 3.7 or 3.8 herein, if
Buyer's  actual  damages  arising solely with respect to a breach or breaches of
any such Section or Sections, are greater than $6.0 million,  individually or in
the aggregate (the "Actual Damages Threshold"),  then Buyer shall be entitled to
make a claim  against  Seller  for  Special  Losses by  reason  of such  breach;
provided  that in no event  shall  Seller be  obligated  to  indemnify  Buyer in
respect of such Special  Losses in excess of $6.0 million (the  "Special  Losses
Cap") in the aggregate for all such Special Losses; and provided,  further, that
in  the  event  the  Masterfile   Database   contains  less  than:  (i)  155,000
Announceable Names but more than 135,000  Announceable Names, then Buyer, at its
option,  shall be entitled to (A) receive  from Seller  $55.00 per  Announceable
Name for the shortfall  (between  154,999 and the actual amount of  Announceable
Names); or (B) if the Actual Damages Threshold is exceeded, make

                                      -25-


<PAGE>



a claim  against  Seller for  Special  Losses by reason of such breach up to the
Special Losses Cap (subject to the Basket); and (ii) 135,000 Announceable Names,
then Buyer shall be entitled to (A) receive from Seller $55.00 per  Announceable
Name for the shortfall (between 154,999 Announceable Names and the actual amount
of Announceable Names) and (B) if the Actual Damages Threshold is exceeded, make
a claim  against  Seller for  Special  Losses by reason of such  breach (in each
case,  subject  to the next  sentence).  The amount of such  Special  Losses and
payments  in respect of (i)(A) and ii(A)  above  shall be taken into  account in
determining  whether the Basket shall have been  exceeded  and Seller's  maximum
liability under the relevant provisions of the introductory paragraph of Section
7.1 shall have been reached.

     7.7  Owners  or  Affiliates  of  Seller.  Except  in  the  event  of (a) an
assignment  permitted pursuant to Section 9.7(b) herein, (b) an assignment to an
affiliate  or owner by  operation  of law  (i.e.,  as a  result  of a merger  or
consolidation) or (c) a sale of all or substantially all of the assets of Seller
to  an  affiliate  or  owner,   Buyer  acknowledges  that  the  obligations  and
liabilities  of Seller arising out of or relating to: (i) this  Agreement;  (ii)
the  Purchased  Assets;  (iii)  the  Business;  or (iv)  any  other  transaction
contemplated hereby (other than the Ancillary  Agreements which will be governed
by the terms thereof),  whether arising before, on or after the Closing Date and
whether known or unknown,  actual, fixed, contingent or otherwise,  shall not be
binding  upon,  enforceable  against  or extend to the owners or  affiliates  of
Seller.

     7.8 Put Amount.  In the event that  Seller is  required to make  payment to
Buyer  under  Section  7.1  hereof  for  reasons  other  than  fraud or  willful
misconduct  pursuant to a final order of a court of competent  jurisdiction  not
subject to further appeal (a "Section 7.1 Payment"),  Seller shall:  (a) deposit
in an escrow  account held by a commercial  bank  reasonably  acceptable  to the
parties an amount (the "Escrow  Amount") equal to the Section 7.1 Payment or the
Buyer's then current  obligation under the Stockholders Put Right (as defined in
the Rights Agreement) ("Put Amount"), whichever is less; and (b) promptly pay to
Buyer the amount,  if any,  by which the  Section  7.1  Payment  exceeds the Put
Amount.  In  addition,   as  the  Buyer's  then  current  obligation  under  the
Stockholders  Put Right is reduced  whether by (i) the lapsing or  reduction  of
Stockholder  Put Rights by time or by sale of ABC Common Stock by Seller (or the
Stockholders)  or (ii) the  payment by Buyer to Seller and  Stockholders  of its
obligations under the Stockholder Put Right, the amount by which such obligation
is reduced shall be promptly  paid from the Escrow  Amount to the Buyer.  In the
event Buyer fails to pay any amount  under the  Stockholders  Put Right when due
(without  giving  effect to the final  sentence  of  Section  5(e) of the Rights
Agreement),  such amount  shall be promptly  paid from the Escrow  Amount to the
Seller in satisfaction of Buyer's obligation to pay such amount.


                                      -26-


<PAGE>



                                   ARTICLE 8.
                                  TERMINATION

     8.1 Termination.  This Agreement may be terminated at any time prior to the
Closing Date:

     (a) by Buyer,  if the  conditions  set forth in Section  6.1 shall not have
been complied  with or performed in any material  respect by Seller on or before
January 6, 1999 and such  noncompliance  or  nonperformance  shall not have been
waived, cured or eliminated (or by its nature cannot be cured or eliminated);

     (b) by Seller,  if the  conditions  set forth in Section 6.2 shall not have
been  complied  with or performed in any material  respect by Buyer on or before
January 6, 1999 and such  noncompliance  or  nonperformance  shall not have been
waived, cured or eliminated (or by its nature cannot be cured or eliminated);

     (c) by Buyer or Seller,  in the event the Closing  Date has not occurred on
or prior to the close of  business  on or before  January  6, 1999 or such later
date as the  parties  hereto  may agree in writing  (unless  such event has been
caused by the breach of this Agreement by the party seeking such termination);

     (d) by either  Seller or Buyer if (i) there shall be a final  nonappealable
order of a federal  or state  court in  effect  preventing  consummation  of the
transactions  contemplated  by this  Agreement or (ii) there shall be any action
taken, or any statute, rule, regulation or order enacted,  promulgated or issued
or deemed  applicable to the transactions  contemplated by this Agreement by any
governmental   entity  which  would  make   consummation  of  the   transactions
contemplated by this Agreement illegal; or

     (e) by either  Seller or Buyer if there shall be any action  taken,  or any
statute,  rule,  regulation or order  enacted,  promulgated  or issued or deemed
applicable  to  the   transactions   contemplated   by  this  Agreement  by  any
governmental  entity, which would (i) prohibit Buyer's ownership or operation of
all or a material portion of the Purchased Assets, or compel Buyer to dispose of
or hold separate all or a material  portion of the Purchased  Assets or of Buyer
and  its  subsidiaries  taken  as a  whole,  as a  result  of  the  transactions
contemplated  by this  Agreement  or (ii)  render  Seller  or  Buyer  unable  to
consummate  the  transactions  contemplated  by this  Agreement,  except for any
waiting period provisions.

     8.2  Effect  of  Termination.  In the  event  of the  termination  of  this
Agreement pursuant to Section 8.1 hereof, this Agreement shall thereafter become
void and have no effect,  and no party  hereto  shall have any  liability to the
other  party  hereto or its  stockholders,  directors  or  officers  in  respect
thereof,  except  that in the event of any breach  hereof by either  party,  the
other party shall be entitled to any remedy available to it at law or in equity,
including specific performance.  Notwithstanding the foregoing,  in the event of
the  termination of this  Agreement  pursuant to Section 8.1(b) (other than as a
result of a material  breach of this  Agreement by Seller),  Seller shall retain
the Transaction Fee, which shall

                                      -27-

<PAGE>



constitute Buyer's payment to Seller of liquidated damages, and Buyer shall have
no further  liability to Seller by reason of such  termination.  Such liquidated
damages are the sole remedy available to Seller by reason of such termination.

                                   ARTICLE 9.
                                  MISCELLANEOUS

     9.1 Bulk Sales Laws. Buyer waives  compliance by Seller with any applicable
bulk sales law by Seller.

     9.2 Expenses.  Each party hereto shall pay its own expenses incident to the
negotiation,  preparation  and  consummation  of this  Agreement  and all  other
agreements,  instruments and documents executed and delivered by it hereunder or
in  connection  herewith,  including  all  fees  and  expenses  of its or  their
respective counsel and accountants, whether or not the transactions contemplated
hereby or  thereby  are  consummated  provided  that,  (i) Buyer  shall bear the
expenses of the audit  pursuant  to Section  5.6 and (ii) on the  Closing  Date,
Buyer shall  reduce the Cash Amount in an amount equal to one-half of the filing
fee for the  "Notification and Report Form For Certain Mergers and Acquisitions"
under the Act ($22,500).

     9.3 Further  Actions.  At any time and from time to time after the Closing,
each party  hereto  agrees,  at its own expense  (except as  otherwise  provided
herein),  to take such actions and to execute and deliver such  documents as may
be reasonably necessary to effectuate the purposes of this Agreement.

     9.4  Entire  Agreement;   Modification.   This  Agreement   (including  the
Disclosure  Schedules,  Exhibits  and Annexes  attached  hereto)  sets forth the
entire  understanding  of the parties with respect to the subject matter hereof,
supersedes all existing agreements among them concerning such subject matter and
may be modified only by a written instrument duly executed by each party hereto.

     9.5  Notices.  Any notice  given  pursuant to this  Agreement  to any party
hereto  shall be deemed to have been duly given  when  mailed by  registered  or
certified mail, return receipt requested,  or by overnight courier, or when hand
delivered as follows:

                  If to Seller:

                           The Columbia House Company
                           1221 Avenue of the Americas
                           New York, New York  10020-1090
                           Attention: General Counsel


                                      -28-

<PAGE>



                           -and-

                           The Columbia House Company
                           1221 Avenue of the Americas
                           New York, New York  10020-1090
                           Attention: Chief Financial Officer

                  with a copy to;

                           Paul, Weiss, Rifkind, Wharton & Garrison
                           1285 Avenue of the Americas
                           New York, New York  10019-6064
                           Attention: James H. Schwab, Esq.

                  If to Buyer:

                           Audio Book Club, Inc.
                           20 Community Place
                           P.O. Box 2346
                           Morristown, New Jersey  07962-2346
                           Attention:  Norton Herrick, CEO

                           -and-

                           The Herrick Company, Inc.
                           Corporate Blvd, N.W.
                           Suite 222
                           P.O. Box 5010
                           Boca Raton, FL  33431-0810
                           Attention:  Norton Herrick, CEO

                  with a copy to;

                           Werbel & Carnelutti
                           711 Fifth Avenue
                           New York, New York  10022
                           Attention: Guy N. Molinari, Esq.

or at such other address as either such party shall from time to time  designate
by written notice, in the manner provided herein, to the other party hereto. All
references to days in this Agreement  shall be deemed to refer to calendar days,
unless otherwise specified.

     9.6 Waiver. Any waiver must be in writing, and any waiver by any party of a
breach of any provision of this  Agreement  shall not operate as or be construed
to be a waiver of any other  breach of that  provision  or of any  breach of any
other provision of this

                                      -29-


<PAGE>



Agreement. The failure of a party to insist upon strict adherence to any term of
this  Agreement  on one or more  occasions  will not be  considered  a waiver or
deprive that party of the right  thereafter  to insist upon strict  adherence to
that term or any other term of this Agreement.

     9.7 Binding Effect;  Assignment.  (a) Neither this Agreement nor any of the
rights,  interests or obligations  hereunder  shall be assigned by either of the
parties  hereto  without the prior written  consent of the other party,  and any
purported  assignment without such consent shall be void, except that (i) either
party may  assign  any and all of its  rights  and  remedies  and  delegate  its
obligations  under this  Agreement  to an  affiliate  without the consent of the
other party as long as such affiliate agrees in writing to be bound by the terms
of this  Agreement  and (ii) Buyer may grant a security  interest  in its rights
under this  Agreement  to Fleet  National  Bank,  as  administrative  agent (the
"Agent"),  in connection with the financing of the transactions  contemplated by
this Agreement  (although  receipt of such financing shall not be deemed to be a
condition to closing hereunder);  provided,  that the Agent will not be entitled
to exercise  any rights  granted to Buyer in  connection  with the  transactions
contemplated  by this Agreement  unless an "Event of Default" under the relevant
financing documents has occurred or been declared and is continuing. By agreeing
to the  granting  of a  security  interest  in this  Agreement  to the  Agent in
connection  with  the  financing  of  the  transactions   contemplated  by  this
Agreement,  Seller  does not incur any  obligations  to the Agent Bank those set
forth  herein or  therein  or agree to grant the  Agent  any  additional  rights
herein;  provided,  further,  any  foreclosure  on the assets  concerned will be
deemed a Change of Control with  respect to Buyer as set forth in Section  14(c)
of the  Mailing  Agreement.  No  assignment  or  delegation  shall  relieve  the
assigning or delegating party hereto of its obligations hereunder.

     (b) This  Agreement  shall be binding  upon and inure to the benefit of the
parties hereto and their permitted successors and assigns.

     9.8 Separability. If any provision of this Agreement is invalid, illegal or
unenforceable,  such provision  shall be ineffective to the extent,  but only to
the  extent  of,  such  invalidity,  illegality  or  unenforceability,   without
invalidating the remainder of such provision or the remaining provisions of this
Agreement, unless such a construction would be unreasonable.

     9.9 Headings.  The headings in this Agreement are solely for convenience of
reference and shall be given no effect in the construction and interpretation of
this Agreement.

     9.10  Counterparts.  This  Agreement  may  be  executed  in any  number  of
counterparts,  each of  which  shall be  deemed  an  original,  but all of which
together shall constitute one and the same instrument.

     9.11 Return of Information.  If for any reason  whatsoever the transactions
contemplated by this Agreement are not consummated, the parties hereto shall, in
addition to

                                      -30-


<PAGE>



satisfying the requirements of the Confidentiality  Agreement,  or any amendment
thereto,  promptly  return to the other  party or destroy  (and  certify to such
party the return or destruction of) all books and records and other  information
furnished by or on behalf of Buyer, Seller or their respective Agents (including
all copies,  if any,  thereof),  and shall not use or disclose  the  information
contained  in such books and records  for any  purpose or make such  information
available to any other entity or person.

     9.12 Sections of Disclosure  Schedule.  The disclosure of any matter in any
section of the  Disclosure  Schedule  shall be deemed to be a disclosure for all
purposes of the  Disclosure  Schedule to which such matter could  reasonably  be
expected to be  pertinent,  but shall  expressly  not be deemed to constitute an
admission  by  Seller or Buyer or to  otherwise  imply  that any such  matter is
material for the purposes of this Agreement.

     9.13  Incorporation by Reference.  The Disclosure  Schedules,  Exhibits and
Annexes  attached  hereto  and the  letters  referred  to herein as having  been
executed or delivered  concurrently  with the execution of this Agreement are an
integral part of this Agreement and are incorporated herein by reference.

     9.14 Governing  Law. This Agreement  shall be governed by, and construed in
accordance  with, the internal laws of the State of New York.  Each party hereto
agrees  that it shall  bring any  action or  proceeding  in respect of any claim
arising out of or related to this Agreement or the transactions  contained in or
contemplated by this Agreement or the Ancillary  Agreements,  whether in tort or
contract or otherwise or at law or in equity,  exclusively  in the United States
District  Court for the Southern  District of New York (the "Chosen  Court") and
(i) irrevocably submits to the exclusive  jurisdiction of the Chosen Court, (ii)
waives any  objection  to laying venue in any such action or  proceeding  in the
Chosen  Court  and  (iii)  waives  any  objection  that the  Chosen  Court is an
inconvenient forum or does not have jurisdiction over any party hereto.



                            [SIGNATURE PAGE FOLLOWS]


                                      -31-

<PAGE>





     IN WITNESS  WHEREOF,  the parties hereto have executed this Agreement as of
the day and year first above written.


                            THE COLUMBIA HOUSE COMPANY



                            By: _____________________________________
                            Name:  Richard C. Wolter
                            Title: Chairman and Chief Executive Officer


                            AUDIO BOOK CLUB, INC.



                            By: _____________________________________
                            Name: Norton Herrick
                            Title: Chairman and Chief Executive Officer
















                  [SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT]



                                      -32-


                                   Exhibit 2.2

                       LIST OF OMITTED SCHEDULES/EXHIBITS
                           TO ASSET PURCHASE AGREEMENT


     Except as otherwise  indicated  herein,  the list identifies  schedules and
exhibits  annexed to the Asset Purchase  Agreement but omitted from this filing.
In accordance  with Item 601 of Regulation  S-B,  copies of any such schedule or
exhibit  will  be  furnished  by the  Company  to the  Securities  and  Exchange
Commission upon request.


Exhibit/Schedule/Annex          Description
- ----------------------          -----------

Schedule 1.1(a)(viii)           Analytical Files
Schedule 2.3                    Liabilities
Schedule 3.3                    Effect of Agreements
Schedule 3.5                    Financial Statements
Schedule 3.6                    Absence of Certain Developments
Schedule 3.7                    Title to Properties, Absence of Liens and
                                Encumbrances
Schedule 3.8                    Masterfile Database
Schedule 3.11                   List of Contracts and Other Data
Schedule 3.12                   Litigation
Schedule 4.7                    Capitalization
Schedule 4.8                    Certificate of Incorporation
Schedule 4.9                    Absence of Certain Developments
Schedule 5.1                    Covenants of Seller
Schedule 5.2                    Covenants of Buyer

Exhibit A                       Bill of Sale, Assignment and Assumption
                                Agreement
Exhibit B                       Mailing Agreement
Exhibit C                       Registration and Shareholder Rights
                                Agreement
Exhibit D                       Non-Compete Agreement
Exhibit E                       Transitional Services Agreement
Exhibit F                       Warrant
Exhibit G(1)                    Buyer Press Release
Exhibit G(2)                    Seller Press Release

Annex A                         Form of opinion of Paul, Weiss, Rifkind,
                                Wharton & Garrison
Annex B                         Form of opinion of Andrew J. Gerber, Esq.
Annex C                         Form of opinion of Werbel & Carnelutti/
                                Atlas, Pearlman, Trop & Borkson




                       ASSIGNMENT AND ASSUMPTION AGREEMENT
                                   AND CONSENT

     This ASSIGNMENT AND ASSUMPTION  AGREEMENT AND CONSENT,  made as of December
31, 1998 between AUDIO BOOK CLUB, INC., a Florida  corporation (the "Assignor"),
CH ACQUISITIONS CORP., a Delaware  corporation and a newly formed,  wholly-owned
subsidiary of the Assignor (the "Assignee"),  and THE COLUMBIA HOUSE COMPANY,  a
New York general  partnership (the "Seller").  Capitalized terms used herein and
not  defined  shall have the  meanings  ascribed to them in that  certain  Asset
Purchase  Agreement by and between  Assignor and Seller dated as of December 30,
1998 (the "Asset Purchase Agreement").

                                 R E C I T A L S

     WHEREAS,  the Assignor has entered into the Asset Purchase  Agreement,  the
Mailing  Agreement,  the  Non-Compete  Agreement and the  Transitional  Services
Agreement (collectively, the "Agreements"); and

     WHEREAS,  the  Assignor  has  agreed  to  assign  all  of  its  rights  and
obligations  under the Agreements to the Assignee and the Assignee has agreed to
assume all of the obligations of the Assignor thereunder; and

     WHEREAS,  pursuant to each of Section 9.7 of the Asset Purchase  Agreement,
Section 14 of the Mailing  Agreement,  Section 13 of the Non-Compete  Agreement,
and  Section  14 of  the  Transitional  Services  Agreement  (collectively,  the
"Assignment  Provisions"),  the Assignor may assign all of its rights under each
such Agreement and may delegate all of its obligations under each such Agreement
to an Affiliate;

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

     Assignment and Assumption of the Agreements.

          (a) The Assignor  hereby  assigns to the  Assignee all the  Assignor's
     rights under each of the  Agreements  and  delegates to the Assignee all of
     the Assignor's obligations under each of the Agreements.

          (b) The Assignee  agrees to perform all of the Assignor's  obligations
     under  each of the  Agreements  arising  after the date  hereof;  provided,
     however, that the assignment and delegation by Assignor hereunder shall not
     release  Assignor  from  its  obligations  under  each  of the  Agreements.

     Consent  of  Seller.   Seller  hereby   acknowledges  that  the  Assignment
Provisions do not require the consent of Seller for the assignments contemplated
herein.  Notwithstanding the foregoing, Seller hereby consents to this Agreement
and  affirms  that all of the  rights  and  

<PAGE>

powers of Assignor,  and remedies  available to it under the  Agreements,  shall
extend to and be enforceable by the Assignee.

     Miscellaneous. This Agreement shall be construed and governed in accordance
with the laws of the State of New  York.  This  Agreement  may be  executed  and
accepted in separate  counterparts,  each of which shall be an original, but all
of which together shall constitute one and the same instrument.

     IN WITNESS  WHEREOF,  the  Assignor,  the  Assignee  and  Seller  have duly
executed this Agreement as of the date first above written.

                                 AUDIO BOOK CLUB, INC.,
                                 as Assignor



                                 By:    _______________________________
                                 Name:
                                 Title:


                                 CH ACQUISITIONS CORP.
                                 as Assignee



                                 By:    _______________________________
                                 Name:
                                 Title:


                                 THE COLUMBIA HOUSE COMPANY,
                                 as Seller



                                 By:    _______________________________
                                 Name:
                                 Title:


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